Labour Government Scraps Foreign Buyer Restrictions – Policy Downgraded to 'Option'

The Labour government has confirmed it is shelving its flagship election pledge to restrict foreign buyers from purchasing new-build homes in the UK. The policy, which was intended to tackle the issue of new-build apartments being sold en masse to non-resident investors—particularly in the Asian market—has been quietly downgraded from a "commitment" to an "option".

What Was Promised vs. What Happened:

• 2024 Manifesto Pledge: Labour promised to give local first-time buyers priority, with new-build properties reserved for UK buyers for the first six months, and overseas investors limited to no more than 50% of any single development.
• 2026 Reality: More than two years on, the policy has not been consulted on, drafted, or legislated. The Ministry of Housing, Communities and Local Government confirmed it is now just "one of the options" being considered.

Why the U-Turn?
Developers—particularly in London—opposed the plan, arguing that many large schemes rely on pre-sales to overseas investors, especially from the Far East, to secure project funding. Industry sources noted that first-time buyer demand is currently insufficient to absorb the volume of new-build stock without overseas buyers stepping in.

Reaction:
Liberal Democrat housing spokesperson Gideon Amos accused Labour of letting young people down, saying the government had "quietly abandoned" its promise without explanation.

What's Still in Place:

• Non-UK residents pay an additional 2% stamp duty surcharge in England and Northern Ireland
• Second home buyers pay higher stamp duty rates
• First-time buyers benefit from stamp duty exemption on properties up to £300,000
• The Bank of England has relaxed loan-to-income ratios
• A new mortgage guarantee scheme and first-time buyer savings account are being introduced