Assetz® News - The Boris plan

The Boris plan

21st November 2008 |

When it comes to investing in London property, the situation has been a difficult one for many, given the widespread affordability issues that exist. According to the latest Land Registry figures, the average London price is £328,927, roughly twice the £168,814 figure for England and Wales as a whole. For most buyers, be they investors or owner occupiers, these can be pretty eye watering.

Things may not be expected to get better during the recession, with housebuilding levels already well down this year on last. For all that there is demand for property, those wishing to live somewhere better, less crowded or just have a home of their own - or on the other hand add to their portfolios - have less access to mortgage finance and therefore reduced buying power even as prices do creep down.

However, London mayor Boris Johnson's £5 billion, three-year plan launched yesterday is aimed at tackling all this. In particular, it is aimed at using the funds to restart work on projects that had stalled, buy up unsold homes and resell them as affordable properties and acquire more local authority land for building.

With households whose income is now up to £72,000 per annum being eligible for low cost ownership schemes and more rent-to-buy homes to be made available, the strategy is clearly aimed at first-time buyers. Confirming this, Mr Johnson said: "It is designed to meet the needs of Londoners aspiring to get a foot on the housing ladder. For far too long London's finest have been priced out of the capital's housing market and, as a result, forced out of town with the capital losing their skills and expertise."

Those involved in private renting will play a part in the plan too, with the intention being to provide more large family homes for rent and a doubling of the number of accredited landlords in the sector. This may bring new opportunities with it for investors.

Reflecting on the plans, property firm Knight Frank gave it a warm welcome, with head of development research Jon Neale commending the move to spend public money on revitalising housebuilding.

He added: "However, the really radical move in this document is the decision to use public funds to help develop subsidised rent and rent-to-buy properties. It is clear that the appetite for house purchase is lower than it has been for some time, given the market. Providing a stimulus for developers to produce rental homes which can be sold at a later date, or converted to social housing, will be vital in ensuring that homes are still built at a time in which sales are proving difficult to achieve." This, he suggested, should be copied all over England.

So whatever the previous predictions for the fortunes of the London property market in the next few years, now may be the time to tear them up and reassess everything. For property investors, the key will be to see where new opportunities - particularly in the rental sector – may work for them.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4501.html. Alternatively, please see our full press release archive.