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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Tony Blair might be a toxic figure - but his influence endures

Politicians at home and abroad are borrowing from the former prime minister's playbook. 

On 24 May at Methodist Central Hall, Westminster, a short distance from where he once governed, Tony Blair resurfaced for a public discussion. Having arrived on an overnight flight, he looked drawn and puffy-eyed but soon warmed to his theme: a robust defence of liberal globalisation. He admitted, however, to bafflement at recent events in the world. "I thought I was pretty good at politics. But I look at politics today and I’m not sure I understand it."

Blair lost power in the summer of 2007. In the ensuing nine years, he lost reputation. His business ventures and alliances with autocrats have made him a pariah among both the public and his party. A YouGov poll published last year found that 61 per cent of voters regarded Blair as an electoral liability, while just 14 per cent viewed him as an asset. In contrast, John Major, whom he defeated by a landslide in 1997, had a neutral net rating of zero. It is ever harder to recall that Blair won not one general election (he is the only living Labour leader to have done so) but three.

His standing is likely to diminish further when the Iraq inquiry report is published on 6 July. Advance leaks to the Sunday Times suggest that he will be censured for allegedly guaranteeing British military support to the US a year before the invasion. Few minds on either side will be changed by the 2.6 million-word document. Yet its publication will help enshrine Iraq as the defining feature of a legacy that also includes the minimum wage, tax credits, Sure Start, devolution and civil partnerships.

Former leaders can ordinarily rely on their parties to act as a last line of defence. In Blair’s case, however, much of the greatest opprobrium comes from his own side. Jeremy Corbyn inclines to the view that Iraq was not merely a blunder but a crime. In last year’s Labour leadership election, Liz Kendall, the most Blair-esque candidate, was rewarded with 4.5 per cent of the vote. The former prime minister’s imprimatur has become the political equivalent of the black spot.

Yet outside of the Labour leadership, Blairism endures in notable and often surprising forms. Sadiq Khan won the party’s London mayoral selection by running to the left of Tessa Jowell, one of Tony Blair’s closest allies. But his successful campaign against Zac Goldsmith drew lessons from Blair’s election triumphs. Khan relentlessly presented himself as “pro-business” and reached out beyond Labour’s core vote. After his victory, he was liberated to use the B-word, contrasting what “Tony Blair did [in opposition]” with Corbyn’s approach.

In their defence of the UK’s EU membership, David Cameron and George Osborne have deployed arguments once advanced by New Labour. The strategically minded Chancellor has forged an unlikely friendship with his former nemesis Peter Mandelson. In the domestic sphere, through equal marriage, the National Living Wage and the 0.7 per cent overseas aid target, the Conservatives have built on, rather than dismantled, significant Labour achievements."They just swallowed the entire manual," Mandelson declared at a recent King’s College seminar. "They didn’t just read the executive summary, they are following the whole thing to the letter."

Among SNP supporters, "Blairite" is the pejorative of choice. But the parallels between their party and New Labour are more suggestive than they would wish. Like Blair, Alex Salmond and Nicola Sturgeon have avoided income tax rises in order to retain the support of middle-class Scottish conservatives. In a speech last August on education, Sturgeon echoed the Blairite mantra that "what matters is what works".

Beyond British shores, political leaders are similarly inspired by Blair – and less reticent about acknowledging as much. Matteo Renzi, the 41-year-old centre-left Italian prime minister, is a long-standing admirer. "I adore one of his sayings,” he remarked in 2013. “I love all the traditions of my party, except one: that of losing elections."

In France, the reform-minded prime minister, Manuel Valls, and the minister of economy, Emmanuel Macron, are also self-described Blairites. Macron, who in April launched his own political movement, En Marche!, will shortly decide whether to challenge for the presidency next year. When he was compared to Blair by the TV presenter Andrew Marr, his response reflected the former prime minister’s diminished domestic reputation: “I don’t know if, in your mouth, that is a promise or a threat.”

The continuing attraction of Blair’s “third way” to European politicians reflects the failure of the project’s social-democratic critics to construct an alternative. Those who have sought to do so have struggled both in office (François Hollande) and out of it (Ed Miliband). The left is increasingly polarised between reformers and radicals (Corbyn, Syriza, Podemos), with those in between straining for relevance.

Despite his long absences from Britain, Blair’s friends say that he remains immersed in the intricacies of Labour politics. He has privately warned MPs that any attempt to keep Corbyn off the ballot in the event of a leadership challenge would be overruled by the National Executive Committee. At Methodist Central Hall, he said of Corbyn’s supporters: “It’s clear they can take over a political party. What’s not clear to me is whether they can take over a country.”

It was Blair’s insufficient devotion to the former task that enabled the revival of the left. As Alastair Campbell recently acknowledged: “We failed to develop talent, failed to cement organisational and cultural change in the party and failed to secure our legacy.” Rather than effecting a permanent realignment, as the right of the party hoped and the left feared, New Labour failed to outlive its creators.

It instead endures in a fragmented form as politicians at home and abroad co-opt its defining features: its pro-business pragmatism, its big-tent electoralism, its presentational nous. Some of Corbyn’s ­allies privately fear that Labour will one day re-embrace Blairism. But its new adherents would never dare to use that name.

George Eaton is political editor of the New Statesman.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad