Islington Council is moving to penalise landlords who buy flats in new highrises and leave them sitting empty, using a new term I haven’t heard before but describes perfectly a new phenomenon of housing assets instead of homes: Buy-to-Leave. In summary from the Guardian:
Property investors who leave homes empty just to make money from property price rises could be fined or even jailed under proposals made by a London council.
Islington plans to force owners of newly built homes to prove they are occupied. If homes are left empty for longer than three months owners will face high court injunctions which if breached, could bring fines, repossession and, in the worst cases, jail for owners, the council said.
The drastic action has been proposed as the north London borough revealed that 30% of 2,000 homes built in the last six years have nobody on the electoral register and, even when students and foreign tenants are discounted, close to a quarter of homes in five of the newest residential developments appear to be empty.
I’ve been wondering for some time just how many of these new highrise flats going up all over the city were occupied — and racking my brains as to how to measure it — especially as a lot of them are being built in Vauxhall, and there is a possibility that they will be appearing in Brixton. Islington Council has tried to use the electoral register to look at how many are actually serving as permanent residences. The Guardian states:
The boom in investment in homes is being felt across the capital. Research consultancy Molior has found that in developments of more than 20 units in London, over 70% of new-build sales in the £1,000-£1,500 per square foot range were to investors, and over 50% in the £700 to £1,000 per square foot range. It said some are “held as permanently available hotel suites” by the owners.
So I imagine that data is where the below graph published with the story comes from — but aside from being an indictment of greed in a city where so many people are desperate for housing, the sources of the data are remarkably opaque. Perhaps because Molior is a high-price research service for real estate interests.
Islington’s announcement has, of course, caused a ripple of shock and horror across the business community. I saw a link to Forbes, clicked it, and while it was loading this quote appeared on my screen:
Those who condemn wealth are those who have none and see no chance of getting it.
–William Penn Patrick
It made me throw up a little in my mouth. In a world facing sky-rocketing inequality and still reeling from the crisis caused by bankers, not to mention environmental collapse, the condemnation of wealth is not just sour grapes. But such a quote just tells you to expect to a string of cliches rather than any kind of considered response to a council fighting for its constituents and their quality of life. Tim Worstall’s An Englishman’s Home Is No Longer His Castle does not disappoint. In claiming that the council is ‘micromanaging the London housing market’ he writes:
But the most important point really is that property is property. You own something then you get to do as you will with it. If you can’t do what you will then in a certain sense then you don’t in fact own that thing. So this is another step along that road of killing off the idea of private property altogether:
But leave that aside: if people wish to leave a house empty, given that they own that house then they’ve a perfect, nay an absolute, right to do so. Just because that local council isn’t issuing enough planning permissions for new homes doesn’t seem to be a good enough reason to overturn this most basic right to the ownership of those things that, umm, one owns.
This ignores centuries of restrictions on property, because we’ve had centuries of comfort, nay better lives all around, due to a concept of the public good. He’d probably be the first one to complain if a strip club was built next to his house (lowered property values, nuisances, loud drunks, licentious behaviour, umm, I can hear him rant now). Luckily he’s probably protected by zoning or other planning measures. For the public good. We have parks for that too, and public drains and shared streets and street lights even, all sorts of things he takes advantage of without second thought.
Just imagine the terrible impact that vast amounts of uninhabited housing have on a community. I don’t have to imagine it, because I’ve been interviewing older folks living in the remaining social housing in Limehouse. It breaks my heart to hear them mourn the destruction of their communities, as their children have had to move miles away to find housing they can afford. They don’t feel safe because their neighbourhoods no longer bustle, no longer have life. Those people who do live in those new highrises tend to be there only for a few months at a time, or from Monday to Thursday. Churches are sharing their pastors and shutting down almost all their services and events, local businesses are disappearing, pubs are closing, the streets are empty come weekends. Flats sit empty when council waiting lists for housing run to the tens of thousands. Worstall asks:
What is it about “private property” that the local council doesn’t get here?
But really, what is it about not just urban planning, but the value of the public and society and a community safe to live in that you don’t get?
Islington Council member James Murray writes in the New Statesman the reasoning behind this effort, and he is certainly eloquent (this is for you Tom Bridgman, delivery lead on Regeneration for Lambeth Council):
Off-plan profits hit the headlines last week with reports that a studio flat in Battersea power station, sold for close to £1m in the spring, is now due to go back on the market for up to £1.5m before it has even been built. The old free market assumption that building more housing meets demand and makes prices fall is turned on its head – in this case new housing is not helping the crisis and, by pushing up prices generally, could actually be making it worse.
And among these flats that are sold off-plan, people get particularly outraged when they are bought as “buy-to-leave” investments – flats which are built and then left empty as their values rise. It’s one of the grimmest expressions of how new housing built in London can become a prized asset over a place to live.
It shows, I think, at least a little bit more sophistication in understanding London’s housing market than that shown by Lambeth’s council I’m sad to say — and they really should know by now given what’s happening in the rest of the borough, particularly Myatt’s Field — and more willingness to work to find solutions. This is just a start in addressing the bigger problems, as Murray writes:
Of course ending buy-to-leave would only take the very sharpest end off the housing crisis in London. We also need to help councils build more, to elect a mayor who takes affordability seriously, and to make the private rented sector fit for purpose. But we need to challenge the injustice people feel when new towers rise out the ground and sit there empty. We need to stop a cynicism that threatens to undermine support for building when people can’t see how new homes will help.
When we’re building homes in London, buy-to-leave shows it really matters what we build – and at the very least, new “housing” must provide homes. That really shouldn’t be too much to ask.
It’s definitely something Lambeth’s council should be supporting, looking to implement, and at the least learning from as the planning measures move forward through the challenges from developers.