On Monday I went along as people from across London turned out in support of long-standing tenants of the New Era estate, as they protested outside the Mayfair office of the remote US pension fund that recently bought their homes and is now threatening their eviction.
Two months ago, local residents and I argued against Boris Johnson as he handed Royal Mail shareholders a huge windfall by approving their Mount Pleasant planning application with no genuinely-affordable housing.
And at Christmas time two years ago, I found new flats being advertised as investments on the website of Knight Frank Hong Kong in the “Canaletto” tower on City Road, EC1 – a tower that to this day is still not complete.
New Era, Mount Pleasant, and Canaletto are all products of London’s failed housing market: international investors profit as Londoners struggle to find a home. The relentless pursuit of a quick buck leaves Londoners forced from their homes, robbed of affordable housing, or without even a look-in at new flats that are sold off-plan.
Off-plan profits hit the headlines last week with reports that a studio flat in Battersea power station, sold for close to £1m in the spring, is now due to go back on the market for up to £1.5m before it has even been built. The old free market assumption that building more housing meets demand and makes prices fall is turned on its head – in this case new housing is not helping the crisis and, by pushing up prices generally, could actually be making it worse.
And among these flats that are sold off-plan, people get particularly outraged when they are bought as “buy-to-leave” investments – flats which are built and then left empty as their values rise. It’s one of the grimmest expressions of how new housing built in London can become a prized asset over a place to live.
In a 2012 paper about overseas investment in London property the Smith Institute set out how “anecdotal reports suggest that a high proportion is in fact kept empty”, while acknowledging that quantitative research is lacking. It’s true that definitive data is very hard to come by, though there are proxy indicators like electoral registration that suggest something is not right.
In detailed analysis of electoral roll data in Islington, we found a very high proportion of flats in expensive new developments with no-one registered to vote. In one building, it was almost half the flats – even after cross-referencing against council tax data to take out those occupied by students who hadn’t registered or those clearly sublet to people who might not be eligible to vote.
On the back of this evidence, we have produced a draft planning measure to prevent new homes being “wasted”. It would stop homes being empty for longer than three months – requiring regular occupation through a legal agreement, which could then be enforced through a High Court injunction if necessary. If an owner persistently failed to comply then a judge could issue an unlimited fine, seizure of assets, or ultimately a custodial sentence.
When we first mooted doing something along these lines earlier this year, we heard from dozens of residents in support. It’s unusual to get so many residents responding to a planning consultation; it really struck a chord. One respondent said they supported our goal “as an Islington resident for the last five years, with an above average income for London and a Master’s degree, who is unable to buy even an ex-council studio in my borough”. Meanwhile some organisations responded to voice their opposition to our initiative – including Savills, Berkeley Homes, and Royal Mail.
Of course ending buy-to-leave would only take the very sharpest end off the housing crisis in London. We also need to help councils build more, to elect a mayor who takes affordability seriously, and to make the private rented sector fit for purpose. But we need to challenge the injustice people feel when new towers rise out the ground and sit there empty. We need to stop a cynicism that threatens to undermine support for building when people can’t see how new homes will help.
When we’re building homes in London, buy-to-leave shows it really matters what we build – and at the very least, new “housing” must provide homes. That really shouldn’t be too much to ask.
Cllr James Murray is Islington Council’s executive member for housing and development