It could be argued that the pressure for housing is coming not only from a genuine need for affordable homes but also from international investors. It is estimated that non-resident investors currently buy approximately 85% of new homes in London, and they are now casting their eyes on the home counties. These investors leave homes empty – these are not Buy To Let homes, which are homes for rent; these are Buy To Leave. Apparently, it is possible to buy a flat in London from China or Hong Kong with a 10% deposit, with an option arrangement so that the price is paid for by the increase in capital value over a lengthy period, provided that the home is left empty and unspoiled by residents. No one will live in these homes – no one may even visit them – they are left empty, with an impact on neighbourhoods, services, shops. Central London has increasing numbers of empty luxury flats; this problem is noted, but the Mayor of London is not at present resisting this because the “growth” that comes from building those empty flats is seen as desirable. However, because there are homes in central London that are unavailable to those who actually live in this country, those resident in London are looking to move outward, perhaps in greater numbers than would otherwise be the case. And, in turn, that pushes more people into the next area – and so on. This means that our countryside is being eroded in order to provide a safe investment for overseas buyers. These properties will even be exempt from capital gains tax until April 2015, so this huge gain for overseas investors is virtually tax free – at our expense.
I would argue that one solution might be that we should have an aggressive tax on “Buy to Leave” properties. Obviously significant safeguards would need to be built in – holiday or second homes are in a different category – and there would need to be proper provisions for protection in the context of selling a home after bereavement, divorce, or where a home was difficult to sell. Holiday and buy to let homes are different from investment only properties, and should not be included in this category. These have a place in our society. But there is no place for the empty home which is a tangible bank account for overseas investors who don’t even come here, staying empty and unused but wrecking our cities. So it would be possible to construct a system where a home that had not been inhabited for more than – say 12 -18 months (to allow for those exceptional circumstances)- could be subject to Empty Home tax. This could be punitive, because there is no national interest in conserving this empty status – it could, for example, be as high as 25% of the current market value. This would quickly trigger a response among owners. One solution for the empty home investors would be to make homes available for rent – but that would be beneficial for us as a society, because the homes would be used, and rents will fall to more affordable levels. Some of these homes would be sold, in order to avoid the problem, and so house prices in London would stabilise. Provided safeguards are in place (e.g. short term dispensations for those who inherit property and have to deal with probate), such a solution would free up empty homes very quickly – and would probably help to solve both our housing crisis and the affordability issue.
Over to you, Mr Osborne.