Trellick Tower in west London. Photo: Getty
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Vast swathes of London are becoming unaffordable even to those on “good” incomes

London property is seen as a safe place for overseas investors to park their money. But with a lack of affordable housing in the capital while these properties sit empty, something has to change.

Barely a week goes by without a news story about overseas buyers snapping up London property. London housing has been described as a global reserve currency, with many seeing it as a safe place to park their money. There are anecdotal reports of areas of London becoming ghost towns as swathes of properties are left empty, with the architect of one such “ghost” development calling for a severe tax on those who leave homes empty.

London is a diverse global city where we rightly celebrate the fact that people from across the world want to live and work here. Yet there is a growing feeling that people with no intention of ever living or working here are profiting from our booming property market while those who do live here, wherever they’re from, are being squeezed harder and harder by our housing crisis.

But what is the real extent of overseas investment in London, what are the consequences of this and what, if anything, should be done about it?

These were the questions put to experts at a roundtable discussion hosted by me at City Hall. The event brought together a diverse range of voices from politicians and academics to developers and estate agents.

What is clear is that for all the newspaper headlines, very little research exists into the extent and effect of overseas investment. Estate agents Knight Frank have estimated that in the two years to October 2013 49 per cent of all new build purchases in ‘prime’ central London were made by overseas investors, 20 per cent in the wider inner-London area and 7 per cent in outer-London. In June 2012 the Smith Institute reported that 60 per cent of new homes in central London were bought by overseas investors.

The problem is that these figures rely primarily on data assembled by estate agents with differing methodology for a variety of purposes. No definitive data exists and no official monitoring takes place. The Greater London Authority would be in a prime position to commission such research. However, despite repeated requests from the London Assembly, the Mayor has so far refused to do so.

What we do know is that vast swathes of London are becoming unaffordable even to those on “good” incomes. The average house price is soaring towards the £500,000 mark. With most first time buyers unable to raise a deposit without help from their parents, and with historically low interest rates making saving unattractive, demand for housing is increasingly coming from those who already own a home as people enter the buy-to-let market.

For this reason it is clear that overseas investment cannot be looked at in isolation from domestic property speculation. However, with many new developments being funded by off-plan sales to overseas buyers how can local people feel that they are benefiting when a new block of luxury flats rises up over them?

There is a clear need to distinguish between different types of overseas investment: capital appreciation investment, where a home is bought purely to appreciate in value, and supply-generating investment, which results in an increase in the supply of housing for those who need to live and work here.

Perhaps the real question we should be asking is “how can we make overseas investment work for Londoners?”

Data from Islington suggest that homes being bought up by overseas buyers are increasingly being left empty. Across 10,000 homes built over the last six years in the borough there is a 3 per cent rate of properties in which no one is on the electoral register. Yet in several new developments in the south of the borough bordering the City that figure rises to almost 50 per cent. While the level of electoral registration is by no means a perfect measure of whether or not a home is actually being left empty, this level of discrepancy does suggest that something strange is going on.

In a city with an acute housing crisis, buying homes and leaving them empty is an obscene luxury that Londoners can ill-afford. Councils must be given much stronger powers to raise taxes on empty and even second homes. Given the level of capital appreciation we are talking about, the government’s decision to allow councils to charge 150% council tax on empty properties does not go anywhere near far enough.

Local authorities could also follow Islington Council's lead and impose planning conditions which specify that new homes must be occupied, requiring payments for those that are not.

Ultimately the reason people want to buy London property, whether they are from overseas or not, is that our houses are seen as commodities more than they are seen as homes. With house prices seeming to rise inexorably, property is becoming the only game in town for people with a bit of money to invest. After all, with most investments there is a risk that its value may go down instead of up. That risk in London’s property market is perceived to be very small indeed. The government’s announcement in the budget to allow people to cash in their pension will only stoke this problem as pensioners decide to enter the buy-to-let market.

The real solution is therefore twofold: making other forms of investment more attractive, and doing something to arrest the rise in house prices. The latter will require significant investment in new homes. What government, the Mayor and local authorities need to do is ensure that overseas investment contributes to an increase in the supply of affordable properties, rather than simply fuelling demand.

Tom Copley is a Labour member of the London Assembly

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“Trembling, shaking / Oh, my heart is aching”: the EU out campaign song will give you chills

But not in a good way.

You know the story. Some old guys with vague dreams of empire want Britain to leave the European Union. They’ve been kicking up such a big fuss over the past few years that the government is letting the public decide.

And what is it that sways a largely politically indifferent electorate? Strikes hope in their hearts for a mildly less bureaucratic yet dangerously human rights-free future? An anthem, of course!

Originally by Carly You’re so Vain Simon, this is the song the Leave.EU campaign (Nigel Farage’s chosen group) has chosen. It is performed by the singer Antonia Suñer, for whom freedom from the technofederalists couldn’t come any suñer.

Here are the lyrics, of which your mole has done a close reading. But essentially it’s just nature imagery with fascist undertones and some heartburn.

"Let the river run

"Let all the dreamers

"Wake the nation.

"Come, the new Jerusalem."

Don’t use a river metaphor in anything political, unless you actively want to evoke Enoch Powell. Also, Jerusalem? That’s a bit... strong, isn’t it? Heavy connotations of being a little bit too Englandy.

"Silver cities rise,

"The morning lights,

"The streets that meet them,

"And sirens call them on

"With a song."

Sirens and streets. Doesn’t sound like a wholly un-authoritarian view of the UK’s EU-free future to me.

"It’s asking for the taking,

"Trembling, shaking,

"Oh, my heart is aching."

A reference to the elderly nature of many of the UK’s eurosceptics, perhaps?

"We’re coming to the edge,

"Running on the water,

"Coming through the fog,

"Your sons and daughters."

I feel like this is something to do with the hosepipe ban.

"We the great and small,

"Stand on a star,

"And blaze a trail of desire,

"Through the dark’ning dawn."

Everyone will have to speak this kind of English in the new Jerusalem, m'lady, oft with shorten’d words which will leave you feeling cringéd.

"It’s asking for the taking.

"Come run with me now,

"The sky is the colour of blue,

"You’ve never even seen,

"In the eyes of your lover."

I think this means: no one has ever loved anyone with the same colour eyes as the EU flag.

I'm a mole, innit.