It’s wrong when new homes fail to house people

Walk around much of central London and you see huge new blocks of flats springing up all over the place. And yet, despite our city’s housing crisis, many of these new homes are out of reach for most Londoners.

They are out of reach because of their eye-watering prices. But as well as their cost, more and more new homes are sold off-plan overseas before people looking for a home here even know about them. And it’s outrageous that, once sold, many of them sit empty for most or all of the year: ghostly blocks of flats that rise in value in the middle of a city gripped by a housing crisis.

Take the ‘Canaletto’ building – a 31-storey tower under construction on Islington’s City Road, EC1, where studios start at over half-a-million pounds. Properties of this price not only put new homes well beyond the reach of most Londoners, but they also – as the Future of London think-tank’s report ‘London for sale?’ concluded – push up prices across the capital. The idea of higher values rippling out across the city certainly seems to accord with this week’s data from Nationwide.

It’s worth saying that although much of the debate on this phenomenon is focused around overseas buyers, this is ultimately about inequality; we see the wealth of these new homes’ owners rise, whilst an ever-increasing number of Londoners find it ever-harder to find somewhere to live.

But it is wealth on a global scale that seems, at least in part, to be driving this problem, as the developments that are popular with overseas buyers are those where we see some of the highest prices. Beyond the prices alone, it is galling for Londoners to walk past the first dozen of Canaletto’s storeys that have risen out the ground, only to realise that its flats were already being advertised as an investment on Knight Frank Hong Kong’s website two years ago.

And it will be an outrage if flats in this new tower follow the example of many of their neighbours by sitting empty for all or much of the year. Precise statistics on this ‘buy-to-leave’ phenomenon are hard to come by, but electoral roll data can give at least a suggestion that something is awry.

To give a sense of the problem, look at the newest ten thousand homes in Islington: amongst them, around 3% have had no-one registered to vote. Compare this with three recent developments in EC1: in the Bezier Apartments, 40% of flats have no one registered to vote; in Worcester Point it’s 45%; and in the Orchard Building it’s 51%.

The criticism of ‘buy-to-leave’ is straight-forward: it is wrong when new homes fail to house people. In London, we particularly need more affordable homes for people to rent, but it is also wrong when any new homes are wasted in light of London’s housing crisis.

In the face of international finance and big developers, we must not to be resigned to this unfolding problem – as huge wealth, particularly from overseas, exploits new apartments as anonymous commodities whilst denying people who live here homes to rent or buy.

No doubt any action to rein this in will be attacked by some in the property industry, perhaps claiming that it would threaten developments. But in London’s housing market this really doesn’t seem plausible, and it is hard to imagine a developer openly defending ‘buy-to-leave’. Either way we cannot simply stand back.

We know that something is going on, but the question is what are we going to do about it?

In Islington, we have set out proposals to use our planning policy to end ‘buy-to-leave’ in new homes. If homes are left empty we would fine the owners; this charge could be in the tens of thousands of pounds, and could then be used to fund new affordable housing in other developments.

Our proposals would shift the onus to prove regular occupancy from the council to the owner of the new home – thereby getting around one of the weaknesses of current empty property legislation. If the council suspected apartments of not being regularly occupied, we could require evidence of occupation, such as utility bills, for the owner to avoid incurring the charge.

These proposals from Islington come on top of shadow housing minister Emma Reynolds saying that Labour would block overseas investors from buying new homes in Britain until local people have been offered first refusal. There is an emerging sense that we can and should do something about this.

And there is a wider argument that all Londoners – all the diverse people who live here and make this city great – should have some right to live in new homes that are built here. Their need for somewhere to live should come ahead of global financial investments, and we should not sit back as their need is frustrated.

Like no other dilemma, the housing crisis gripping London is focusing debate about the future of our city. It is clear we need to make housing work for people who live, or want to live, in London as their home. And is it also clear that timidity in the face of an unbridled market will fail – we can only hope to make the future work if we are bold.