Saturday, 5 August 2017

Empty homes and second homes >>> the kleptocracy and the UK housing market

It wasn't just the Guardian which relished the accidental publication of owners of empty second homes in Kensington:
Grenfell: names of wealthy empty-home owners in borough revealed | UK news | The Guardian

Other sections of the press were gleefully revealing how the super rich are reaping the rewards of the UK property market:
Oligarchs and royalty who keep homes empty near Grenfell | Daily Mail Online
Grenfell Tower: Wealthy property owners with wealthy homes - Business Insider

It's actually quite serious, as noted by Mary Dejevsky in the Independent this week:

Investigations after Grenfell have revealed that London's housing market is a global centre for dirty money

A document released apparently in error by RBKC provides the details of some of its housing which is owned by oligarchs and kept empty. Last year, some of the buildings were included in a series of coach trips – 'Kleptocracy Tours' – organised by a Russian expatriate to expose London as a destination for questionable foreign money

Mary Dejevsky @IndyVoices 2 days ago 20 comments

Grenfell Tower ‘has become a cypher for all the ills that afflict London’ Getty

Almost two months on, most of its surviving residents still wait for the permanent new homes they were promised; the traumas and tragedies of that June night remain real. But across the capital, if not the country, Grenfell Tower now means more even than that vast conflagration in which more than 80 people died. Its charred hulk has become a cypher for all the ills that afflict London.

From the sharp wealth divide to the neglect of social housing; to the unaffordability for many of a decent home; to the safe haven it provides for dubiously acquired, often foreign, money; to the “light touch” regulation which clearly contaminated building safety as well as banking; to the greed, if not actual corruption, behind planning decisions; it is hard to find much to like in the way London has developed in the past 20 years. At a time when so many other big European cities have regulated and invested for quality of life, London exemplifies in so many respects the very opposite.

The latest chapter of the Grenfell Tower inquest, as it is being conducted at popular level, concerns the scandal of empty accommodation, including in the very same borough as the estate that included Grenfell Tower. Jeremy Corbyn’s call for such housing to be requisitioned for the benefit of former Grenfell residents might have been widely ridiculed as an echo of failed communism, but it struck a chord. What is more, it seems to have shamed the Royal Borough of Kensington and Chelsea (RBKC) into buying up a whole block of flats that was nearing completion to house some of the Grenfell homeless.

This move alone should demonstrate that there are things that can be done to provide more relatively low-cost housing in London, but it all depends on whether central and local government want to find remedies, which – even after Grenfell Tower – is by no means evident. And while empty housing is an obvious place to start, it has different layers that need to be tackled in different ways.

Let’s start at the “oligarch” end of the scale. Thanks to a document released, apparently in error, by RBKC, details of some unused homes in the borough and who owns them are now public (although not all the information was accurate). The vacant properties include some awaiting, or in the process of, redevelopment – including the site of a disused tube station which has remained derelict since its purchase by the Ukrainian oligarch, Dmytro Firtash, who is in Switzerland fighting extradition to the US. There is also a completely empty mansion block, which – according to the owners, the Candy brothers (of the hideous and largely unoccupied One Hyde Park fame) – awaits planning permission for redevelopment.

Last year, as it happens, some of the same buildings were included in a series of coach trips – “Kleptocracy Tours” – organised by a Russian expatriate, Roman Borisovich, to expose London as a destination for questionable foreign money. But the vacant mansions and penthouses of oligarchs and their ilk are never likely to be freed up for social housing. The problem here is less that so many stand empty than that their owners were allowed to buy them in the first place.

It is all very well proclaiming that London is “open for business”, but should we not be more fussy about the sort of business? There is a mass of money-laundering and anti-corruption legislation, but how much of it is actually used to identify or confiscate ill-gotten gains, or the lawyers and financiers right here who facilitate the multi-million pound purchases? Other cities and countries seem better at deterring, if not detecting, dirty money. Some restrict property ownership to citizens. Some impose swingeing charges on unused premises. London and the UK could do, too.

London could do more to manage other parts of the market, too. From the kitchen of our flat, we can see the ribbon of new high-rises that have sprung up over the past 10 years along the south bank of the Thames. How, you wonder, when all this is complete, could London possibly have a housing shortage? But, of course, it is the “wrong” sort of housing. If, as is not impossible, London has built itself a glut of million-pound two-bed flats, what then?

Do prices fall to the point where these flats are “affordable”? If so, do those largely foreign investors with multiple “units” take fright? Could more “Londoners” decide to buy them? Might some of the blocks be bought up for social housing? There is no reason why much of this land should not have been redeveloped, but many cities elsewhere in the developed world would have kept a far tighter rein on developers, in terms of purpose and design. Will London ever be prepared to do the same?

As for those sky-high prices, they are not just a reflection of shortage. Successive governments may have paid lip service to “the market”, even as they rigged it in so many ways. “Right to buy” without “duty to replace” depleted the social housing sector, and has now been absurdly extended to housing associations. Initially restricted to long-time residents, discounts soon applied to tenants of barely two years’ standing, making the allocation of a council flat in a high-price area even more of a bonanza than it already was.

“Buy to let”, designed to remedy a real shortage of rental housing, has grown into an under-taxed monster which distorts the lower end of the market. Only now are big investors starting to emulate the US and continental model of long-term, professionally managed, in-town blocks. Why were the tax breaks not directed towards this sort of development? Was a patchwork of amateur landlords really a better solution?

And now, just as a saturated London market might finally be pushing prices down, there is a combination of “help to buy” schemes and ultra-low mortgage rates – both, in the end, political decisions – which seems calculated to push prices higher. It does not have to be like this. But so long as it is, any penalty for leaving property vacant will be offset by the expected capital gain.

The super-rich have more freedom than most to choose where they live, and that freedom cannot be taken away. But they are not the only guilty party in the scourge of empty homes. Elected governments and councils also have choices. They can choose how to regulate in their domain. They can decide on their planning criteria, their tax provisions, on who has access to the market and on what conditions. If they have not turned their attention to the empty housing in their midst, it is because they have seen no imperative to do so. Maybe Grenfell Tower will help change their minds. 

Investigations after Grenfell have revealed that London's housing market is a global centre for dirty money | The Independent

This follows on from suggestions - in the wake of the Grenfell fire - that the state could seize such assets to house the homeless:
Reality Check: Can the government requisition homes? - BBC News

There has been further comment this week on the EDA blog here in East Devon:

One thought on “Should empty homes bought for investment be requisitioned?”

Diana N says:
4 Aug 2017 at 4:30pm

There is also the issue of second homes, whichever home is lived in by the owner, the other home is sitting empty. So one home is always unoccupied, what a waste. Many people have two or three homes, some others would like a chance to own one.

Should empty homes bought for investment be requisitioned? | East Devon Watch

Which follows on from a piece in yesterday's Guardian:

A right to shelter should trump the right to be a profiteer

Dawn Foster

If people hoarded food the way they hoard homes, hungry people would riot. No wonder proposals to help councils requisition empty properties are popular


There are 1,652 empty properties in the Royal Borough of Kensington and Chelsea. Photograph: Alamy

Friday 4 August 2017

This week the Guardian revealed the names of some of owners of the 1,652 empty properties in the Royal Borough of Kensington and Chelsea , after the names, addresses and council tax details were accidentally sent in response to a freedom of information request.

Some familiar names crop up – the Candys, of course, via an offshore company; former New York mayor, Michael Bloomberg; and a string of sheikhs and oligarchs. As of 2016, there were 2,753 households on the council’s waiting list.

For some, the link between empty homes and homelessness is moot: the two are unrelated and no links and correlations should be drawn between them. This misunderstands the reason homes are left empty. Most people buy homes to live in, with good reason; the chances are that your home, rented or bought, is what you will spend the most money on in your lifetime.

Most people don’t have the capital sloshing around to buy two homes, let alone one to leave empty. So to buy homes to leave empty is to treat them as money-making machines; the wealthy increasingly view housing as a liquid investment, due to its low volatility. This may change slightly, though not substantially, with warnings that the top end of the market is tailing off.

But it also changes how we view housing as a nation. After the Grenfell Tower fire, when scores of families were left homeless, and still remain in hotel accommodation, the idea floated by Jeremy Corbyn that we might requisition empty homes to temporarily house survivors was met with shrieking from the commentariat and political classes alike. The idea, they said, was ludicrous, communist and made a mockery of property rights. As it happened, the public disagreed: 59% of those polled by YouGov agreed with Corbyn’s proposal and only half as many opposed it.

The requisitioning argument, and revelations on empty homes in Kensington, reveals the battle lines being drawn on housing in the UK. What matters more, our human right to shelter, or people’s right to use property as equity?

Treating housing as an asset is not benign. Hoarding homes pushes prices up, and encourages market supply to boost what is most profitable – luxury flats that can be left empty and flogged when the market is booming, not family homes that can be bought on a modest income. And when land values soar as a result of a keen market interest in buying up property, unscrupulous local authorities eye up the land social housing is built on, and consider whether turfing out council tenants to make a quick buck on the ground homes stand on is worth a punt.

The public seems to be accepting the idea that a right to shelter should trump a right to profiteering: the histrionic claims that requisitioning empty homes will lead to families being turfed out of their properties reveals there is no proper argument to be made for letting homes lie empty while people sleep on the streets.

We accepted homelessness while the rich left houses empty. No more
Read more

No one will be kicked out of a home they live in, but consistently allowing people to hoard an asset that is in short supply has no ethical argument behind it. If people hoarded food the way they hoard homes, hungry people would riot. The outcry over the revelations of these empty homes and support for Corbyn’s proposal to boost powers for councils to requisition empty properties, shows the public is in agreement.

A right to shelter should trump the right to be a profiteer | Dawn Foster | Housing Network | The Guardian

With a particularly scathing piece here:
The religion of property is to blame for the deaths of those at Grenfell | openDemocracy

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