'Non-doms' and 'buy-to-leave' investors are killing London
- By Rob Welham
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E-mail China.org.cn, February 17, 2015
The situation concerning housing has become so serious that it is likely to become a key issue in the upcoming general election in May.
There are indications that both the central and local government are beginning to take notice of the effects foreign investors are having on the property market.
Wealthy foreigners who are long-term residents of the U.K. may now face an annual charge of up to ?90,000 and higher taxes on homes held through companies after Chancellor George Osborne said they should pay "a fair contribution."
Of course, there are fears that this could scare off much needed foreign investment. Indeed, the number of non-dom residents dropped by almost 16,000 in the year following the Labour government's announcement of a plan to bring in a ?30,000 levy in 2008.
Some local authorities are also beginning to act against so-called "buy-to-leave" investors. One London council plans to impose heavy restrictions on any new property purchased solely as an investment and left unoccupied, with punitive consequences if breached.
There is even a threat of jail for transgressors. Under the proposals, put forward by Islington council, property found to be unoccupied for more than three months would be subject to legal action leading to injunctions, the breaking of which could lead to a fine, the seizure of the empty property or even prison.
However critics say the proposals are merely a cosmetic exercise, designed to look enticing to voters. Moreover, given that the rules will only apply to new homes, the fear is that existing properties will become even more desirable and push prices higher and further out of reach.
With an ever growing number of people migrating further away from London due to rising property prices in the capital, something needs to be done at a state level rather than at local level.
There are around 635,000 empty homes in Britain according to the latest statistics from the government, and around 72,100 in London alone.
But while the U.K. government says it is committed to helping local people bring empty homes back into use, it has not announced specific measures to deal with so-called "buy to leave" properties.
Of course, property might be left for any number of reasons. But all such situations should be tackled lest many parts of the country be left as virtual ghost towns, which could have a detrimental effect upon investors too. After all, who would want to buy an apartment or house in an area where few people live and where all the shops have shut?
The writer is a British freelance journalist with a special focus on current affairs, technology and the arts.
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