“The London housing crisis” is no stranger to headlines. Less familiar is the phenomenon of ‘ghost’ homes and the game of monopoly creating them.
Across London, 20,000 so-called ‘ghost homes’ sit, uninhabited. Across England, multiply that statistic by 10! 200,000 empty homes with a total value of £43bn were empty for at least six months during 2016. Co-existing alongside thousands of empty properties are thousands of homebuyers scrambling to find a property and 255,000 homeless people desperate for shelter. With 200,00 vacant homes, why do headlines persistently broadcast a shortage of housing across England?
Whilst a small proportion of homes are vacant due to renovation or the cyclical nature of housing market, the larger proportion of vacant homes are in use in a game of monopoly played by foreign investors. Investors buy London’s most luxurious properties, wait for their value to rise and then sell them on. The problem with this game of monopoly however, is that it affects more than just the players. From the investor’s point of view, these properties are no more meaningful than those on a monopoly board. Having bought the property, they take the ‘receipt’ and sell where necessary with no intention to live in the property. It is simply a source of revenue for them, a house and not a home. Domestic homebuyers at a higher income level are then left unable to find a luxury home in a convenient location for them meaning they must commute to send their kids to the best schools. Those at the lower income level are then pushed even further out of the housing market, left unable to afford a home full stop. According to Molior, in developments across London, over 70% of new-build sales in the £1,000-£1500 sq ft range were to investors. This isn’t only unfair but inefficient, and a huge waste of scarce resources.
To be dismissed as inevitable considering the nature of supply and demand, and the globalised world we live in, or a game of monopoly which the government should regulate? As for the latter, councils could follow the lead of Camden council and levy punitive levels of council tax on owners of long unoccupied homes, thereby making buy-to-leave properties more expensive and therefore less attractive to foreign investors. Going further, councils could follow the lead of Islington in 2014 and impose the threat of jail on those who do not comply. However, this may prove difficult as identifying the owners of ghost houses is often difficult as they are hidden behind solicitors and layers of complex offshore company structures.
What’s clear is that something must be done to slow down and diminish the power of super-rich investors demanding a house to price those demanding a home off the market. As noted by Lord Rogers, homebuyers have a social responsibility as well as an economic one and houses are built to be homes, not to pose as source of revenue.
By Chloe Pryce