The myth of London's empty homes
Britain's problem is that it doesn't have enough vacant properties
There are few things more likely to turn someone into a communist than the London property market. You would need to work a year behind the bar at the most obnoxious nightclub in Chelsea, while spending your days at a food bank, to be more radicalised than simply renting in the capital; hardly surprising, then, that renters are a solid Left-wing bloc.
While the system has become grossly dysfunctional for the average person, the city’s housing market retains a Premier League-like attraction to the world’s richest. As the Financial Times recently put it, London attracts so many foreign investors ‘because of its robust property laws and the ability to purchase discreetly, leaving virtually no trace of ultimate ownership.’ Or, as Charles Moore once said of the capital’s property market, it’s ‘a form of legalised international money laundering’.
This is obviously grossly dysfunctional, and with so many London homes being used by the global elite as a means of storing capital, this aggravates the housing crisis because so many properties are left empty. In Westminster, at least, there has been a significant increase in the number of empty properties, presumably bought by investors keen on our robust and discreet property laws.
Housing inflation is a social catastrophe, and because of it an increasingly Left-wing electorate will naturally demand something is done. In Westminster, one of the Tory boroughs that went Labour last year, residents will now be able to report their rich neighbours for leaving homes empty for six months of the year. The empty home hoarders are being targeted at last.
The idea that housing costs are being pushed up by empty homes is an attractive one, and intuitive. It’s also good politics, because absent landlords tend to come from abroad, and wealthy foreigners are an out-group it’s acceptable to dislike.
Certainly, many politicians believe it. Last year Canada’s Justin Trudeau banned foreign investors from buying property, apparently a cause of the housing crisis. Britain hasn’t gone that far yet, although in 2016 newly-elected Mayor Sadiq Khan ordered an investigation into overseas investors, telling the Guardian that ‘it’s clear we need to better understand the different roles that overseas money plays in London’s housing market’. And following the Grenfell fire, Harriet Harman talked of ‘requisitioning’ empty flats (or ‘land banks’) in super-wealthy Kensington.
The empty home hoarder explanation is popular among the public. I’ve heard this theory from several people, who explain that wealthy Chinese investors are buying up all the property in their part of London and deliberately keeping them empty. People who tell me this always have some brilliantly convoluted explanation for why they would do this, rather than just renting the properties out and making loads of money.
Yet the land bank theory is not real. An analysis by the LSE found no evidence of homes being left deliberately empty. And as data man Tom Forth shows, England has the lowest rate of empty homes in the OECD, and Greater London has about one-tenth the level of Paris, just 0.7% of properties being empty compared to 6.5%. Rather than London having a problem with land banks, we have alarmingly low levels of empty homes, which is itself a warning sign that something is seriously wrong.
As Forth writes: ‘When people in England get on a bus or a train, they are happy to see a seat empty. When people in England go to the shop to buy milk, they are happy to see an unsold bottle rather than an empty shelf. But when it comes to homes, many people in England think about things differently. Empty homes, they say, are a bad thing, to be reduced by policy, and to be filled before any new homes should be permitted.’ This makes no sense.
Even if Westminster has seen an increase in empty properties, it is still small, and the effect on the general housing crisis is minuscule. London, Oxford, Cambridge, Brighton and other cities have eye-wateringly expensive housing because of high demand and low supply. That’s the obvious and boring answer.
There is huge demand in these economically dynamic cities, driven by the changing nature of the economy and by huge inward migration; and there is not enough supply, because we are constrained by a 1940s planning system.