Mortgages  

‘Increased supply will only attract foreign wealth’: Diane Abbott MP

Housebuilding alone will not turn London into a “functioning” property market because of an influx of foreign wealth and “exploitative” letting practices, MP Diane Abbott has warned.

Speaking at Westminster Hall, Ms Abbott, the Labour MP for Hackney and Stoke Newington, said measures were needed to stabilise rents, allow councils to borrow money in order to build houses and disincentivise wealthy foreign investors from using property in the capital as a “deposit box”.

She said: “The London market is not a functioning market, and simply increasing the supply will not bring prices down for ordinary Londoners.”

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RegionAverage house price in August 2014
UK£274,000
North East£154,000
North West£175,000
Yorkshire and the Humber£177,000
East Midlands£190,000
West Midlands£198,000
East£285,000
London£514,000
South East£338,000
South West£250,000

Source: ONS House Price Index, August 2014

Ms Abbott described property prices in the city as “superheated”, claiming that a garage in her Hackney constituency had recently been put on the market for £375,000.

She said rents were also high, meaning younger residents were putting a “vast chunk” of their income into a “black hole”, adding: “The dream of owning their own home is just a dream.”

In October, figures released by the Office for National Statistics showed that in the year to August 2014, house prices in London had grown by 19.6 per cent, reaching an average of £514,000.

This spike was followed by a 12.3 per cent increase in the south east and an 11.6 per cent increase in the east.

House price growth for the UK as a whole was 11.7 per cent.

The 25-page statistical bulletin, House Price Index, August 2014, said: “London, the south east and the east all had prices higher than the UK average price of £274,000.”

Ms Abbott said: “We need to allow councils to borrow to build. We need some measure of rent stability or rent control.

“They have [rent controls] in New York. They have these in San Francisco. They have these in Berlin. These are not Marxist municipalities.”

Adviser view

Christopher Taylor, director of London-based The London Mortgage Brokers, said: “It is very difficult to get onto the housing ladder in London, but I am not sure how measures such as rent controls could be enforced.”