Landlords who don't live in a new build home, and don't rent it to tenants, could be fined up to £60,000 under proposals which are aimed to clamp down on empty housing in London. Islington Council said that new homes that are sold as investments and left to stand empty are rapidly becoming a problem in the borough, especially in EC1.
As many as half the homes in some recent EC1 developments have no-one on the Electoral roll, according to the the Council. This phenomenon is also being seen in other parts of London, especially Zone 1.
The discussion paper can be downloaded for reference.
Highlights from the Discussion Paper
1. The Affordability Crisis in Islington and London (pg 6)
In the first half of 2013, the median property price was 12.36 times higher than the median income in Islington . This was the 9th highest ratio amongst London boroughs, worsening from 11.37 in the first half of 2012. By comparison, the highest ratio in 2013 was in Kensington & Chelsea, where the median property price was 31.27 times greater than the median income.
The spike in price-to-earnings ratio is unsurprising when sales values are examined. In Islington, the median property price has increased from £119,000 in 1997 to £350,000 in 2008 and now £462,726 across 2013.
2. Overseas Purchasers
Using reliable Government data, Knight Frank conclude that “the majority of demand for new-build property in London from overseas remains focussed on the relatively small and concentrated market made up for the central London postcodes.” Islington’s part of EC1 is included in this market.
There is a concentration of vacancy in the South of the Borough, part of the London PCL.
The council is proposing to place the responsibility for demonstrating occupancy on the owners of individual dwellings to which the new planning obligation will apply. This could be via submission of evidence such as utility bills upon request from the council in cases where it is suspected that properties are left unoccupied.. Local planning authorities gather evidence of residential occupancy in a similar way when determining applications for a Certificate of Lawful Use.
Observations
This phenomenon is consistent with the claim that Prime Central London properties are a different asset class of its own. Overseas investors are just parking their money there. In another blog post, I had highlighted research showing that PCL prices were going up, while rents were coming down.
Where affordability is concerned, I wonder what the equivalent statistics for Singapore are. Perhaps I will do some fact finding when I have more time.
Happy Investing!
References
http://www.islington.gov.uk/islington/news-events/news-releases/2014/march/Pages/PR5243.aspx
http://atkinsonmcleod.briefyourmarket.com/Newsletters/Atkinson-McLeod---April-2014-Newsletter/London-council-plans-to-fine-buy-to-leave-investors.aspx
http://www.theguardian.com/society/2014/jan/31/inside-london-billionaires-row-derelict-mansions-hampstead
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