Campaigners and politicians have hit out at the growing number of empty London homes languishing vacant while so many struggle to find affordable — or any — accommodation.
Analysis of latest Council Tax data published by the Department for Levelling Up, Housing and Communities showed 34,327 vacant residences in the capital in March 2022 — an increase of five per cent in a year.
But with sale prices and rents so high in London, why do so many people fail to monetise their assets and bring them into use?
Tip of the iceberg
Chris Bailey, national campaign manager for the group Action on Empty Homes, said the recently published empty home statistics could represent the “tip of the iceberg”.
The true picture — including second homes, those exempt from Council Tax and properties empty for less than six months — could be closer to 134,000, he said.
“The number started rising when the government stopped more active discouragement of the practice” he said.
The coalition government allocated £156m between 2012 and 2015 under two rounds of the Empty Homes Programme, which provided cash to bring vacant dwellings back into use.
An additional £60m was allocated as part of the Clusters of Empty Homes Programme, which aimed to tackle concentrations of poor quality uninhabited residences in areas of low housing demand.
But Mr Bailey said this support had dwindled over time and urged a strenthening of powers created decades ago to allow councils to take over properties for fixed periods of time using Empty Dwelling Management Orders. The usefulness of this tool had been diluted over time, he claimed.
On the causes of empty homes, Bailey pointed to a select committee report from 2015 that highlighted claims of £100bn of money laundering in the UK every year – including through London property. One witness to that inquiry asked MPs if a buyer was “the second son of a world leader in a country in the middle of South America - how does he have £8 million to buy a flat in Mayfair?”
Huge amounts of money are also legally stored in British bricks and mortar to protect them from a range of threats from other countries, Mr Bailey stressed.
Empty homes as investment
With property prices steadily rising over the long term, there was little incentive for many owners to sell or let their assets, he added. “Keeping a house empty makes it flexible, removes a layer of responsibility for tenants, and means it stays in good-as-new condition ready to sell,” he said.
Liberal Democrat London Assembly member Hina Bokhari agreed that the ultra-rich often purchase London property with no intention of inhabiting it.
“We have seen a rapid rise in the number of properties purchased in London from abroad, including by Russian oligarchs who keep the properties empty as a form of investment,” she said. “We cannot allow people to continue to extort our city like this while so many are struggling to find an affordable place to live.”
Ms Bokhari pointed out that Singapore had recently doubled the amount of tax on foreign home purchases to 60 per cent to try to bring more empty homes back into use by local residents.
“In the UK, the equivalent tax is a mere 2 per cent for most purchases and only 12 per cent even on the highest band of properties worth over £1.5m,” she said. “If we want to protect our vibrant communities and ensure there is a future for young people in their boroughs, we must consider taking stronger action.”
However, Marcus Dixon, director of UK residential research at property specialists JLL, said the UK had one of the lowest rates of vacant dwellings in the world.
“Figures from the Organisation for Economic Co-operation and Development suggest less than one per cent of homes nationally are vacant, compared to 11.1 per cent in the US, 7.8 per cent in France and eight per cent in Germany,” he said.
Mr Dixon added that the role of overseas buyers in creating empty homes was overplayed.
“Investors who buy properties and leave them empty are very much in the minority, with many homes left empty due to owners moving into residential care, lengthy legal wranglings or renovations rather than them being voluntarily unoccupied.”
Tower Hamlets mayor Lutfur Rahman said growth in the number of vacant properties was “problematic”.
“We have families who have been on the waiting list for appropriate housing for years in some cases, and a national crisis of homelessness that has dramatically worsened over the past decade,” he said.
“While not all second-home vacancies in the borough are the result of asset and investor speculation, many are. This, of course, reflects a London-wide and indeed national problem, and fundamentally requires regional and national solutions.”
Any private property in Tower Hamlets left unoccupied for more than two years will have its Council Tax bill doubled, Mr Rahman pledged, adding: “We are seriously looking at other measures to reduce second home inoccupancy at a time of such dire need.”
Regional context
Savills found that London’s long-term vacancy rate of 0.9 per cent was comparable with other cities such as Bristol and Manchester, and less than half Liverpool’s 2.2 per cent.
Analyst Toby Parsloe said “significantly more new homes” were needed in the capital.
“However, long-term vacant properties are not the answer,” he added. “We estimate that London currently needs to build 85,000 new homes a year to address need. Even if all 34,000 properties were brought back into reuse, that translates to less than five months’ worth of supply.”
Around a quarter of London’s vacant properties are in local authority or housing association ownership, Mr Parsloe added.
Empty goals
Anthony Breach, senior analyst at think tank Centre for Cities, said it would actually be good for London to have more empty homes as they create market forces that keep prices down.
“It’s paradoxical, but healthy housing markets need some empty homes,” he said. “In countries where housing is much more affordable, vacancy rates are much higher – almost four per cent of homes are long-term empty in Netherlands, as are almost six per cent are in Japan.
“London’s housing market is not in good health, by comparison. In London, less than one per cent of the housing stock is empty for more than six months, and many of these homes will be dilapidated and uninhabitable, or stuck in probate.”
Breach added: “Only a huge increase in the rate of housebuilding will address the UK’s backlog of 4.3m homes that are missing from the housing market because the UK has consistently fallen short of housebuilding targets.”
A government spokesperson said: “Councils have a raft of powers to bring empty properties back into use and we are clear they should be using them to deliver new homes for communities.
“They can increase council tax by up to 300 per cent on long-term empty properties, take over empty homes by Compulsory Purchase Orders and Empty Dwelling Management Orders, and convert commercial buildings to residential without the need for a full planning application.
“We have delivered over 2.2m homes since 2010 and reduced the number of long-term empty homes by more than 50,000 over the same period.”
A spokeswoman for mayor of London Sadiq Khan said last month: “[The] statistics show that the number of long-term empty homes is rising across the country, while the rate of empty homes is lower in London than the rest of England. This is a national issue which demands a national response from government.
“Decisions taken by ministers to date have taken us backwards, by dramatically weakening councils’ ability to use Empty Dwelling Management Orders to crack down on empty homes.”
