Unlocking the Debate: The Case of Foreign Buyers in Cambridge’s Real Estate Market
The recent controversy surrounding the development at 3-4 Station Square, Cambridge, has shed light on the issue of foreign buyers in the local property market. Cambridge City Council, South Cambridgeshire Borough Council, and the Greater Cambridge Shared Planning Service have responded to a series of questions from a media organization about the development and the wider CB1 project. Here’s what they had to say.
The Case of 3-4 Station Square
One in five of the apartments at 3 and 4 Station Square have been leased to overseas buyers after being marketed internationally. The media organization asked whether the council supports its planning officer’s analysis that the proposals for Murdoch House are not required to include affordable housing.
The council responded that planning requests must be considered based on the material in front of the planning authority at the time of determination. With respect to the 3&4 Station Square development, the applicants argued that the development was not feasible if affordable housing was included. The council employed independent feasibility experts to review the applicant’s financial assessment in accordance with national practice guidance. The valuation exercise partly reflected the existing high use value of the former commercial building. The council followed an approved practice and national planning policy requirements, which still apply to developments, even though subsequent market conditions and costs may have changed.
The CB1 Development
The media organization also inquired about a councilor’s claim that the CB1 development has ‘done nothing for the local community’ and has not ‘delivered on promises.’ The council responded noting that the original master plan for the CB1 area sought to achieve a comprehensive redevelopment of the area around the railway station with a range of new uses.
As development of the CB1 area has progressed, significant new office and retail space has been created, attracting blue-chip global businesses and jobs to the heart of the city. The development has also delivered 325 new homes (121 affordable or 37%) and 1,085 student apartments, along with 6,000 new bike parking spaces, over £10m of private sector contributions to the station, railway, public art, transportation infrastructure, education, and public open space. The CB1 development has also delivered new spaces and a new public arrival point outside the train station.
The Need for Control on Foreign Buyers
The media organization asked to what extent the council accepts that overseas new-build property sales are adding more heat to the Cambridge property market, driving up property prices and making the city less affordable for people looking to live and work there. The council responded that they have seen no evidence that the increase in property prices in the city is caused by foreign or foreign sales of a small number of properties (relative to the total housing stock in the city) to persons who reside abroad. Moreover, there is currently no mechanism available that allows the board to control the purchase of property interests through the planning process.
Some councils have introduced measures to manage the occupancy of homes (such as second homes) and have introduced incentives to reduce vacancy rates, but that is a separate matter from ownership of the buildings or property, which the council would not have the ability or resources to control. If such controls were available, the council could consider introducing them. For market sales of residential properties on council-owned land, the council generally focuses on local/national marketing and restricts purchases to one purchase per buyer with the aim of removing the attractiveness of the properties to mainstream investors who prefer to buy in large quantities.
Lessons Learned
The media organization asked whether the council has taken any enforcement action against the owners of 3&4 Station Square. The council replied that it is not aware of any development breaching planning controls; on that basis, there is no case to take enforcement action.
Finally, the media organization asked whether the council conducted any “lessons learned” or similar exercises since the planning, construction, and sale of 3&4 Station Square, and if so, what lessons were learned and how were the changes implemented. The council responded that it always reviews its decisions, keeping in mind the possibility of learning lessons about the processes they follow and the result obtained through the planning process.
Additional Piece
Foreign buyers in the real estate market have been a contentious issue for a long time. While some experts argue that foreign investments generate revenue and employment opportunities, many others believe that such purchases reduce domestic property availability, increase prices, and create a housing affordability crisis for the local population. The situation is no different in Cambridge.
Cambridge’s property market is one of the most expensive in the UK and has recorded significant growth in recent years, prompting concerns about its sustainability. In 2019, Cambridge was found to have the second most expensive property market in the country after London, with an average house price of £465,617. Interestingly, Cambridge’s high property prices have not deterred buyers from overseas, who have been increasingly investing in the local real estate market.
According to recent data, foreign buyers purchased around 130 homes in Cambridge between 2019 and 2020, which represents roughly 7% of the total property sales. Further, the top countries of buyers in Cambridge over the past decade are China, Singapore, and Hong Kong.
The sharp increase in foreign investments has become a cause for concern among local authorities and policymakers, who worry that the infusion of foreign capital may lead to property bubbles, reducing the available housing stock for the domestic population, and limiting the chances of first-time buyers from getting onto the property ladder. Additionally, the rise in foreign investments can exacerbate already existing housing problems, such as homelessness and overcrowding.
As the Cambridge City Council notes, a comprehensive solution to the issue of foreign buyers in the property market is not straightforward. However, councils can look at various policies and initiatives that can help manage the situation. For instance, councils can collaborate with foreign investors to develop affordable housing for local residents, establish more stringent regulations concerning foreign investment in certain areas, and incentivize residential property investors to rent homes instead of leaving them vacant.
While the situation concerning foreign buyers may remain controversial, policymakers, councils, and other relevant authorities must work together to find a balance between local economic needs, housing affordability, and foreign investments. It is essential to engage all the stakeholders in a constructive dialogue and develop solutions that benefit the wider community.
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Cambridge City Council, South Cambridgeshire Borough Council and the Greater Cambridge Shared Planning Service recently received a series of questions from a media organization about the development at 3-4 Station Square, Cambridge (formerly Murdoch House) and the wider development ‘CB1’. The questions, along with full responses submitted to the media organization, were as follows.
Given that one in five of the apartments at 3 and 4 Station Square have been leased to overseas buyers after being marketed internationally, does the council support its planning officer’s analysis that the proposals for Murdoch House are not required that affordable housing be included? ?
Planning requests must be considered based on the material in front of the planning authority at the time of determination. With respect to 3&4 Station Square, the applicants argued that the development was not feasible if affordable housing was included.
The council employed independent feasibility experts to review the applicant’s financial assessment in accordance with the government’s national practice guidance. The valuation exercise partly reflected the existing high use value of the former commercial building.
Subsequent market conditions and costs may have changed, however the process the council followed was consistent with approved practice and national planning policy requirements that still apply to developments.
What is the council’s response to a councilor’s claim that the CB1 development has ‘done nothing for the local community’ and has not ‘delivered on promises’?
The original master plan for the CB1 area sought to achieve a comprehensive redevelopment of the area around the railway station with a range of new uses.
As development of the CB1 area has progressed, significant new office and retail space has been created, attracting blue-chip global businesses and jobs to the heart of the city. Some 325 new homes (121 affordable or 37%) have also been built and 1,085 student apartments delivered, along with 6,000 new bike parking spaces and over £10m of private sector contributions to the station. railway, public art, transportation infrastructure, education. and public open space. CB1 has also delivered new spaces and a new public arrival point outside the train station.
There will always be a variety of views on holistic development as a CB1. The council therefore continues to listen to the views of residents, businesses and the wider community and evolve its policies and approach to planning and design accordingly.
To what extent does the council accept that overseas new build property sales are adding more heat to the Cambridge property market, driving up property prices and making the city less affordable for people looking to live and work? here?
The council has seen no evidence that the increase in property prices in the City is caused by foreign or foreign sales of a small number of properties (relative to the total housing stock in the City) to persons who reside abroad.
To what extent does the council believe there is a need for controls on developers selling new build properties on the international market?
There is currently no mechanism available that allows the board to control the purchase of property interests through the planning process. Some councils have introduced measures to manage the occupancy of homes (such as second homes) and have introduced incentives to reduce vacancy rates, but that is a separate matter from ownership of the buildings or property, which the council would not have the ability to not even the resources to control. if such controls were available.
For market sales of residential properties on council-owned land, the council generally focuses on local/national marketing and restricts purchases to one purchase per buyer with the aim of removing the attractiveness of the properties to mainstream investors who prefer buy in large quantities.
Has the council taken any enforcement action against the owners of 3&4 Station Square?
The council is not aware of any development breaching planning controls. On that basis, there is no case to take enforcement action.
Has the council conducted any “lessons learned” or similar exercises since the planning, construction and sale of 3&4 Station Square and, if so, what lessons were learned and how were the changes implemented?
The council always reviews its decisions, keeping in mind the possibility of learning lessons about the processes we follow and the result obtained through the planning process.
Affordable Housing Note: The National Framework of Planning Policies defines affordable housing – and indicates a range of potential forms it can take within a development. However, Cambridge City Council has a stricter definition than the Social Housing Rental Policy Statement published in February 2019 (which states “rent for affordable rental housing (including service charges) not to exceed 80% of gross market rent”). Cambridge City Council’s position in The Greater Cambridge Housing Strategy 2019-2023 – Annex 11 (Affordable Rent Policy) defines affordable rent as: “Rent for affordable rental housing (including eligible property-related service charges) must not exceed 60% of the gross median market rent in the City of Cambridge for that size of property, type of location, and provision of services, or the current local housing allowance rate, whichever is less.
However, the City uses 80% of market rents for properties developed above the policy requirement of 40% of housing developments, targeting intermediate rental need. This remains in line with point 12 of the housing strategy: “Where the design and quality of homes are above national or local standards to help achieve council goals for zero carbon housing and combating energy poverty, homes will be considered Affordable Rents are charged up to 80% of a median market rent”.
https://www.cambridge.gov.uk/news/2023/06/13/statement-on-3-4-station-road-and-cb1-development
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