Probe into London housing market offshore investment amid 'dirty money' fears

Sadiq Khan has ordered an inquiry into the scale and impact of foreign investment in the London housing market amid fears over a potential "surge" in money flowing in from overseas.

The Mayor of London said there was an urgent need for more transparency around the flow of offshore investment in property to ensure the capital is not being flooded with "dirty money".

Spiralling prices in parts of central London have left many unable to get a foot on the property ladder, leading to concerns over gentrification and the creation of "ghost towns" where swathes of foreign-owned real estate lies empty.

The inquiry will map how the problem is affecting the capital, from the building of affordable homes to luxury developments, and attempt to examine who is investing and where the money comes from.

Mr Khan told the Guardian that foreign investment in building new homes was welcome.

"At the same time, as more and more Londoners struggle to get on the property ladder, there are real concerns about the prospect of a surge in the number of homes being bought by overseas investors," he said.

"We urgently need more transparency around overseas money invested in London property.

"Londoners need reassuring that dirty money isn't flooding into our property market, and ministers must now make all property ownership in London transparent so we can see exactly who owns what."

Mr Khan made his comments as property website Zoopla revealed that over 666,000 homes across the UK are now estimated to be worth at least £1 million, with nearly two thirds of those in London.

The rapid rise of property prices in the capital fuels interest from overseas investors, with the Chinese said to be the biggest buyers.

According to the Guardian, a booming middle class in China is expected to quadruple the amount of money it pours into the UK annually to £150 billion over the next 10 years.

"It's clear we need to better understand the different roles that overseas money plays in London's housing market, the scale of what's going on, and what action we can take to support development and help Londoners find a home," Mr Khan said.

"That's why we are commissioning the most thorough research on this matter ever undertaken in Britain - the biggest look of its kind at this issue - so we can figure out exactly what can be done."