London council plans to fine 'buy-to-leave' investors

London council plans to fine 'buy-to-leave' investors
Islington seeks to 'end the scandal of new homes being wasted' by investors who buy properties and then leave them empty



"Buy-to-leave" investors could be fined up to £60,000 in an assault on empty housing being considered by a London council.

The charge on the growing phenomenon of vacant homes in high-value areas, exemplified this year by the scandal of empty mansions on the Bishop's Avenue in north London, has been proposed by Islington council. Close to 300 of homes built in the area since 2008 still have no one on the electoral roll, which the council says may mean they are vacant.

Owners would be obliged to ensure properties are occupied "regularly throughout the year" or face a charge as high as £60,000, a discussion paper set before the council last week suggests. On request, owners would be expected to supply evidence such as utility bills to prove someone lives there. The fines would help fund affordable housing elsewhere and would be written into planning agreements.

The move represents an escalation in efforts to stop those investors content to enjoy house price rises in London in excess of 10% a year without occupying or renting out homes. Councils are able to charge an extra 50% on a council tax bill only if a home is empty for two years – little more than £1,000 even for large homes.

"We want to use planning policy to end the scandal of new homes being wasted in this way," said James Murray, executive member for housing and development. "The criticism of 'buy-to-leave' is straightforward: it is wrong when new homes fail to house people. Londoners' need for somewhere to live should come ahead of global financial investments. It is clear that timidity in the face of an unbridled market will fail."

The property industry immediately said the plan did not "add up". "Will it only apply to the first sales of a development, or to subsequent sales, which are clearly totally outside the control of the developer, as well?" said Ian Fletcher, policy director at the British Property Federation. "How will the council stop developers just increasing the price of the units in line with the fee charged? As there are already tools in place for councils to deal with empty homes, we would suggest Islington council's efforts would be better spent focusing on their efforts on initiatives that will boost development, rather than make it more difficult."

Islington's move reflects growing concern at the practice of "buy to leave" and last week's budget, the chancellor, George Osborne, said anyone buying a property worth more than £500,000 through a company would be required to pay 15% stamp duty unless the property was rented out. The move was aimed at stopping wealthy speculators and investors buying up housing and leaving it empty.

Islington analysed electoral roll data for half a dozen new apartment buildings constructed since 2008 and found that, of the 587 dwellings, a third had no registered voter living in them or were marked as empty. For the Orchard Building, a block of 45 flats, 23 fell into that category.

The proposed fines were welcomed by Empty Homes, a campaigning charity. "It's an innovative idea and the principle is exactly right," said David Ireland, chief executive. "It is wrong that we have a huge need for housing in London and quite a lot of what is built is not being lived in. This won't be in the interests of some developers but it will be in the interests of Londoners."

http://www.theguardian.com/society/2014/mar/31/london-council-plans-fine-housing-developers-buy-leave-investors

About time someone took a stand, it's a scandal.