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Home / World

London struggles with empty units in city bereft of affordable housing

By William Booth, Karla Adam
Washington Post·
18 Sep, 2017 10:14 PM8 mins to read

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Mayor of London, Sadiq Khan, takes part in a release of doves for Grenfell Tower victims during the Notting Hill Carnival last month. Photo / AP file

Mayor of London, Sadiq Khan, takes part in a release of doves for Grenfell Tower victims during the Notting Hill Carnival last month. Photo / AP file

They are not hard to spot, if you know where to look, especially at night - the floors of swanky, new apartments, most of the windows dark, almost all the time.

The zombie flats. Owned, but empty.

And on this cobbled mews in Chelsea? On that private walk in Kensington? No one home, either. There's enough empty property here to be given a name in the British news media: the "ghost mansions" of "lights-out London," the streets where it is alleged that 7 in 10 addresses are second - or third or fourth - homes.

The blight of conspicuous empty homeownership is a big story in London - and around the globe.

But a solution is surprisingly elusive.

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London faces a crushing shortage of affordable housing - because the city is a global magnet for aspirational newcomers, a safe refuge for stash-your-cash capital and a victim of its own smashing success, even in these anxious Brexit days.

"Affordable" here being a relative term, where the average price for a flat last year was US$713,143. It is especially brutal for young people, middle incomes and first-time buyers.

So London Mayor Sadiq Khan vowed to tax the empties.

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The rising Labour Party star, who has sparred with US President Donald Trump, campaigned on the populist issue of the injustice of foreign ownership and ghost mansions, promising that Londoners should get "first dibs" on new construction.

This month, Khan appealed to Parliament to give London's local governments new authority to seriously jack up taxes for high-value homes left empty by the international elite.

Whether Khan's plan to tax the vacant rich will do much to solve the affordable housing crunch is unknown.

The experts say it is dubious.

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Why? In part, because the rich are immune from a relatively puny bump in taxes. And it's not like they are going to move out of their rarely occupied townhouses and a dozen needy families will move in.

The London Mayor is not alone in casting about for ways to solve his city's housing shortage.

The "empty home" phenomenon has gone viral in hot postal codes around the world - and it is especially visible in cities such as Miami, Hong Kong, Vancouver, BC, Dubai, Singapore, San Francisco and Sydney, where foreign buyers and their shell companies gobble up units as investment properties and piggy banks.

Dubai is another major city that has an empty home phenomenon. Photo / AP
Dubai is another major city that has an empty home phenomenon. Photo / AP

In Manhattan, the New Yorker had a look at Census Bureau numbers, which revealed that in midtown - from 49th to 70th streets, between Fifth and Park avenues - nearly one in three residences are unoccupied at least 10 months a year.

Newsweek estimated in Paris "one apartment in four sits empty most of the time."

In Jerusalem, the deputy mayor said the number of ghost flats is triple the official estimate - and bemoaned the impact on young families searching for a bit of living space.

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But how to stop or slow or tax the empty units is uncharted territory - including whether it is even possible or desirable.

Susan Emmett, head of housing and urban regeneration at Policy Exchange, a London-based think-tank, said the city has a real housing problem but that empty luxury apartments are a scapegoat.

"What it does," she said, "it gives us a focal point for a sense of injustice, and people can point to something that is big and shiny and say, 'Look, I'm struggling to pay my rent for a rubbish flat and there's this enormous building and nobody is living there.' You can understand that anger and it's pretty real, and I can understand Khan wants to do something about it."

My new London housing strategy sets out the first steps to ensure the genuinely affordable homes Londoners need to buy and rent get built. pic.twitter.com/8ZZiKZdnWR

— Sadiq Khan (@SadiqKhan) September 8, 2017

Yet it's not clear the Mayor's proposals would make a dent. Labour leaders have proposed tripling taxes on the highest-end properties - from today's tops of about US$2500 to tomorrow's US$7500 a year.

Most of London's 20,000 empty units aren't owned by the super-rich, but by the middle and lower rungs - and studies show most homes are empty because they are the subject of inheritance tussles or uninhabitable or in need of repairs.

When faced with the reports, Khan retreated to say in London "just one home left unoccupied is one too many," which is not much of a campaign slogan.

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Housing experts say Khan's tax plan could hurt the middle class and will not likely change the behaviour of the most wealthy absentee owners.

"The global ultrarich, they're a strange breed, so far at the end of the income distribution curve, that they're essentially immune from such pressure," said Kath Scanlon, a housing expert at the London School of Economics and Political Science.

Scanlon, who wrote one of the reports for the mayor, said she imagined that tripling property taxes for the well-to-do with empty homes will do little.

Sadiq Khan is right: only London can solve its own housing crisis | Jonn Elledge https://t.co/zyNeRhXBQi

— Patch Thompson (@Patch_Thompson) September 8, 2017

She called proposed bumps "trivial" for the mega-rich owners. "It's pocket change for them," Scanlon said.

Studies commissioned by the Mayor revealed that the number of entirely empty homes in London overall is actually quite low - maybe 1 per cent - and although 20,000 empty units in London sounds large, this is a city of almost nine million residents.

Still, a lot of the most visible high-end empty property is in central London.

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Ghost mansions and zombie penthouses were once a stealthy phenomenon, propelled by Saudi sheikhs and Russian oligarchs. They're still players.

But now an overseas investor for new property in London is more likely to be a middle-class family from China, Malaysia or Singapore, and they're not buying US$25 million Georgian mansions, as former New York Mayor Michael Bloomberg did - and then left it mostly empty, according to the Guardian newspaper.

Instead these foreign buyers from Singapore and Hong Kong are snapping up apartments worth less than US$500,000, and most of these flats are quickly rented out, according to a pair of studies by the London School for Economics and the University of York.

The affordable housing revolution in London continues. Studio 10 km from work, 18x annual wages. Queezy 😭 @MayorofLondon #affordablehousing pic.twitter.com/mIBnwOGTUK

— Dr Alex Norori-McCormac (@DrAlexMcC) September 18, 2017

London is struggling to increase the number of affordable homes in a highly politicised environment, where average mortals feel squeezed out of their own city by the moneyed classes and overseas buyers.

The inequalities were placed in stark relief after the devastating conflagration in June at Grenfell Tower, a 24-storey public housing building, and a proven firetrap, where at least 80 people died.

Grenfell Tower is in London's Kensington and Chelsea Borough - home to a high number of ghost mansions, and a neighbourhood of sharp contrast between rich and poor.

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After the Grenfell fire, Labour politicians declared it was "simply unacceptable" that there were 1652 empty homes in Kensington. Labour leader Jeremy Corbyn suggested the properties could be "requisitioned if necessary".

"It can't be acceptable that in London we have luxury buildings and luxury flats left empty as land banking for the future while the homeless and the poor look for somewhere to live," Corbyn said at the time.

On the streets, ordinary residents appear divided.

The St George Wharf Tower is a gleaming, glassy 50-storey apartment complex in London's Vauxhall neighbourhood, singled out by the British news media as a vivid symbol of the empty house crisis. More than half of the homes in the building are in foreign ownership, according to an investigation by the Guardian and many barely lived in.

This week's podcast: @AnnaMinton and @ollywainwright on London and the housing crisis https://t.co/VvkxRKPygQ pic.twitter.com/nYZe68Fg2t

— LRB Bookshop (@LRBbookshop) September 17, 2017

Nearby residents weren't surprised, nor did they seem to mind. Rich foreigners bought apartments that locals could not, and brought money into the area. Taxing them wouldn't help solve London's housing issue, they said.

Plus, there are upsides to living next to absentee neighbours.

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"I would shudder to imagine if this was running at 80 per cent occupancy," said Suruchi Shukla, a 38-year-old consultant, with her head cranked skyward at the building.

James Hope, 50, a personal trainer who lives in the neighbourhood, acknowledged that the low occupancy rates meant that local businesses were perhaps not as busy as they could be, but he dismissed Khan's idea of slapping on new taxes.

"It's really not a huge problem for me," he said, nodding toward the Tower. "I'd much rather spend money on a nice old Victorian flat than on something that's like a hamster cage and costs a few million pounds. So, for me, it's really not a problem."

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