The UK government has scaled back plans to restrict foreign buyers from purchasing new homes before construction is completed, effectively shelving a key Labour manifesto pledge from the 2024 election. The original proposal aimed to grant local residents, particularly first-time buyers, the first opportunity to purchase new-build properties, addressing concerns over significant sales of flats to non-resident investors, especially from Asia.

The policy, initially championed by Labour leader Sir Keir Starmer while in opposition in 2021, was included in the party’s 2024 manifesto. It proposed that new homes should be sold exclusively to first-time buyers for the first six months after completion and that no more than half the homes in any development could be sold to overseas investors. The manifesto described this as a measure to prevent entire new developments from being bought off-plan by international buyers prior to construction.

However, after more than two years in government, no consultation papers, policy documents, or draft legislation have emerged to implement the plan. The Ministry of Housing, Communities and Local Government, headed by Angela Rayner, acknowledged the shift, describing the policy as an “option” rather than a definitive commitment. The ministry stated it continues to explore various measures to support first-time buyers, with giving local residents “first refusal” on new-build homes remaining under consideration.

The proposed restrictions faced opposition from property developers, particularly in London, where off-plan sales to overseas investors have been fundamental to the viability of many projects. Industry representatives warned that some schemes, especially those relying heavily on sales to buyers from the Far East, may become unfeasible if the policy were enacted. Some developers also pointed to the ongoing shortage of first-time buyers, noting the absence of a replacement scheme following the end of the Help to Buy program.

Critics have expressed disappointment at the apparent abandonment of the pledge. Gideon Amos, housing spokesperson for the Liberal Democrats, described the quiet downgrade as a setback for young people struggling to enter the housing market, suggesting it undermines efforts to improve homeownership accessibility.

While the stricter foreign buyer restrictions have been shelved, the government highlighted other initiatives aimed at first-time buyers. These include a Mortgage Guarantee scheme, plans for a new First-Time Buyer ISA product, and exemptions on stamp duty up to £300,000. Additionally, non-UK residents pay a 2 percent surcharge on top of the standard stamp duty when purchasing property in England or Northern Ireland, and higher stamp duty rates apply to second homes in general. Officials also pointed to recent easing of loan-to-income limits by the Bank of England, designed to facilitate lending to prospective first-time homeowners.

The government stated it remains committed to addressing housing affordability challenges but has yet to clarify if or when the specific foreign buyer restriction policy will be formally reintroduced or legislated.