Empty mansions owned by super rich killing affordability in London

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

The Government and the Mayor of London need to get a handle on the rise in overseas property investment in the capital with a view to directing it into new affordable housing.

That call has come from left-leaning think-tank, the Smith Institute, which says that overseas buyers – mainly from the Far East – seeking out homes for investment purposes are pushing up prices and reducing affordable homes for local people.

It highlights that over 60% of new homes in central London are currently being bought by overseas investors and that investment in luxury homes has doubled to over £5bn a year – five times more than the annual investment in affordable homes in London.

Anecdotal reports, it says, suggest that a high proportion is kept empty as investors wait for capital appreciation or the homes are used as a ‘Pied a terre’ – empty for much of the year.

Last year Channel 4's Great British Property scandal revealed how in one area of Mayfair there are six £20 million properties lying empty.

The Smith Institute report calls on the Greater London Authority (GLA) and the Government to find out more about the effects of overseas investment on the London housing market - particularly the extent to which properties held by investors domiciled abroad are kept empty and the impact on price, affordability and supply.

London’s housing market has become “distorted and dysfunctional”, warns the report, and a new approach is needed which seeks to direct such investment into positive areas such as new affordable housing rather than capitalising on the asset values of new and second-hand luxury properties.

In March, Mick Sweeney - group chief executive of One Housing Group, which operates across London and the South East - called for the cash raised from taxing foreign investors on UK property to be ploughed into the building of new affordable homes. 

He said the Government should look at a "Robin Hood-style” measure where the income raised from a tougher tax regime for foreign property investors is "ring-fenced" to help finance more affordable homes.