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London's Empty Mansions

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http://online.wsj.com/article/SB124752462689735243.html

Keeping Up Appearances: London Turns Eye to Empty Mansions

By JENNIFER MARTINEZ

LONDON -- At an abandoned home with yellowing newspapers on its front stoop, Paul Palmer peeks through a mail slot to find letters and leaves carpeting the entryway. The house next door has a dead plant chained to its porch, which is covered in faded utility bills.

Mr. Palmer investigates abandoned homes for a living. But his turf isn't a poverty-stricken corner of this financial capital. It's the Mayfair district, home to wealthy financiers, celebrities, the U.S. Embassy -- and a few squatters.

In the city of Westminster, where Mayfair is located, homes can cost up to £50 million ($81 million). Yet Westminster is fifth among London's 33 boroughs in the number of unoccupied properties. In 2008, 1,737 homes had been vacant six months or more, the third highest number among all London boroughs, according to the Empty Homes Agency, a nonprofit group that seeks to put empty homes back into use.

Unlike people facing foreclosures in other neighborhoods around the world, Mayfair's homeowners aren't down on their luck. Rather, the properties serve as investments for owners who pay the bills to keep them empty -- something the neighbors and city object to when the homes fall into disrepair. Many owners decline to rent the homes due to local council tax rules, which tax properties at a lower rate if they are empty and unfurnished. That loophole frustrates Mr. Palmer. "We shouldn't be rewarding these people," he says.

As the Westminster City Council's empty-property officer, Mr. Palmer strolls the area's streets six hours each day to identify vacant homes and track down their owners. Under British law, local authorities have the power to seek an order to claim ownership of the ghost properties and put them up for sale.

On a recent mission in Mayfair, Mr. Palmer -- an impeccably dressed man with a jovial demeanor -- walked barely half a mile to canvass 22 empty homes. Many have been collecting dust and cobwebs for six years or more. Mr. Palmer tries to determine whether a house is inhabited by glimpsing through the mail slot.

"Ah! Smell that wood! It's lovely, isn't it?" he said after getting a whiff of a house with mahogany-lined walls.

The high concentration of rundown, empty homes is striking for a posh neighborhood like Mayfair, with its ornately gated manses. The hub of aristocratic society before World War II, Mayfair's modern-day image is demonstrated by its prominent place on the British Monopoly board.

In real life, the empty-home phenomenon touches some of the U.K.'s more famous residents. A few years ago, Mr. Palmer met comedian Tracey Ullman and her husband, Allan McKeown. They wanted to know why the house next door to theirs was derelict, recalls Mr. McKeown.

To Mr. Palmer's delight, refurbishment began on the home in question after he spent years wrestling with the owners.

On a recent visit, Mr. Palmer phoned a colleague to share the sweet sound of renovation: "Do you hear that noise? They're on site, which is fantastic!"

Former Prime Minister Tony Blair's home is adjacent to a crumbling property that's been vacant for more than a decade. The owner keeps up on its payments, according to Mr. Palmer. But one look inside indicates they likely haven't visited in years.

Ron Mowlam, who lives across the street, pines to buy the home and refurbish it, but he can't locate the owners. So far, they've evaded Mr. Palmer as well. "It's just sitting there rotting, which is bizarre," says Mr. Mowlam.

Once he identifies a vacant house, Mr. Palmer consults property records. After that, he often finds himself sending letters to the British Virgin Islands, a known tax haven for foreign companies, and a place where many of the property owners in question have mailing addresses. He says he rarely receives a response back. Except, that is, when a court action is about to begin.

If a property is still empty after six months, with no effort on the owner's part to occupy, rent or renovate it, Mr. Palmer begins a "compulsory purchase" -- a process that forces an owner to relinquish possession. After assessing the value of the property, officials typically sell the house. If the original owner hasn't come forward, funds are paid to a local court where they remain for up to seven years. Most owners eventually turn up to claim the cash.

The compulsory purchase, says Mr. Palmer, is a "tool we use as a last resort to take empty property away from owners who refuse to do anything to it."

The problems surrounding the abandonment of high-end real estate were exposed last winter when a group of young squatters occupied two £20 million homes on Park Lane overlooking Hyde Park. Before the squatters settled in, the homes had been empty for seven years. During that time, Mr. Palmer had tried three times to contact their British Virgin Islands-based property owners: Red Line Ltd. and Perfectil Ltd.

Following two years of silence, the property owners surfaced once multiple British newspaper accounts outed the squatters. "We're the REAL Slumdog Millionaires," read a headline in the Sun.

Red Line and Perfectil couldn't be reached for comment. The houses remain empty. Mr. Palmer says he intends to seek a compulsory purchase order.

Mr. Palmer often takes a more sympathetic view to squatters than he does toward the owners of an abandoned property. After finding out about another group of squatters in Mayfair, he stopped by to introduce himself.

"I sat on the floor and had tea with them," he says. "It enabled me to get into properties I've been chasing for a long, long time." He has saved their mobile phone numbers. "At the end of the day, they have a similar goal of putting empty properties back into use," he says. "We just go about it in two very different ways."

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Unlike people facing foreclosures in other neighborhoods around the world, Mayfair's homeowners aren't down on their luck. Rather, the properties serve as investments for owners who pay the bills to keep them empty -- something the neighbors and city object to when the homes fall into disrepair. Many owners decline to rent the homes due to local council tax rules, which tax properties at a lower rate if they are empty and unfurnished. That loophole frustrates Mr. Palmer. "We shouldn't be rewarding these people," he says.

It's a strange person who forgoes income of 500 pounds per week to avoid a CT bill of perhaps 2K per year.

It's especially strange give that the empty house concession only lasts for 6 months, after which full tax is due, occupied or not.

Nope, this reasoning is ********

tim

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Best make sure I use my car every day or the socialist thieves that run this country might decide to steal it.

- always remember: Property is theft. At least it is in this country for about 7 of the 14 year price cycle, credit conditions not withstanding.

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Do all Local Authorities employ people like this?

Only ask because where i live there quite a few houses & bungalows, including some nice Edwardian Villas going to slow ruin, that are just asking to be renovated or squatted.

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This has been going on for years. An old school pal of mine lived in Mayfair in the '80s with his parents and there was only one other occupied property in the row. It made my heart sink to see such a magnificent property so empty. Most of them are long-term investments, tied-up in trusts or the attempt to dispose of laundering funds.

It’s a sign of how long this country has been hawking the silver to keep going.

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I lived in Maida Vale and St John's Wood for a while and the situation is similar there. Many of the flats in the mansion blocks and houses in the better streets are unoccupied and I suspect are kept as an "insurance policy" should some of the seedier regimes in the world be violently overthrown. Our neighbour in MV was an Iranian exile and she told us she was able to get out precisely because she and her now dead husband (an exec. in the Iranian national oil co, apparently) moved all their cash offshore from Iran and bought property with it.

Edit to add "and"

Edited by bagsos

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Do all Local Authorities employ people like this?

Only ask because where i live there quite a few houses & bungalows, including some nice Edwardian Villas going to slow ruin, that are just asking to be renovated or squatted.

I thought that they were meant to, but when I checked with Oxford Council a few years back they didn't have someone doing it, nor did they have a vacancy for someone to do it.

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Guest happy?
Best make sure I use my car every day or the socialist thieves that run this country might decide to steal it.

Ownership confers obligations as well as rights. Socialism is about common ownership. You're clearly confused on both points.

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