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Dave Beans

Islington To Consider "buy To Leave" Fines

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

"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."

I wonder if that's a one-off £60k? If so, surely developers will just tag on the extra when they come to sell..

They'd probably pay someone to live there for bit..

Edited by Dave Beans

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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.

For sure supplying utility bills would be an impossible hurdle for billionaire (even millionaire) non-occupiers :rolleyes:

Edited by billybong

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For sure supplying utility bills would be an impossible hurdle for billionaire (even millionaire) non-occupiers :rolleyes:

Leave the heating on low, a tap dripping and avoid paying the £60k :lol:

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Just let this actually sink in. This is the UK in 2014.

In a way this seems even more disturbing than the pre crash housing boom. At least that was about leverage, this is just full on unhinged.

And I'd imagine the inertia of property must be pretty much removed if you are reselling a new, never occupied flat. If I sit down and think about it, London is a massive accident waiting to happen.

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TBH this is too little too late.

It is now properly insane in Islington. My rent for a 2/3 bedroom terrace house is now £3000 per month. A house in my road sold for £950k at the end of last year, a price that I thought was nuts for a house that 100 years ago according to the census was inhabited by a labourer and his house wife. An identical house in this road just went on the market yesterday for £1.4m and the sad truth of it is that this isn't kite flying. I've got every reason to believe that they'll get that.

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A house in my road sold for £950k at the end of last year, a price that I thought was nuts for a house that 100 years ago according to the census was inhabited by a labourer and his house wife.

That's the sort of point that always seems to get overlooked by people going on about "affordable housing." So much housing was built as arguably just that and is now anything but affordable.

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That's the sort of point that always seems to get overlooked by people going on about "affordable housing." So much housing was built as arguably just that and is now anything but affordable.

It's a deliberately confusing category error IMHO. If I say I want more affordable housing I am talking about housing in general being more affordable (i.e. cheaper). Far too often 'affordable housing' in the politics/media is used to mean what used to be called council/social housing.

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The insanity is that house builders (who are helped and protected by the govt with tax payers money) usually have to build a small percentage of 'affordable houses' in order to get govt blessing. By definition most of the houses they are building are 'unaffordable'.

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If property is left empty then it's high time for an army of squatters to get to work. I don't suppose the desirable new-build flats will be so attractive to overseas buyers then. It would be worth a little social disorder and a few jail sentences to make a point. I'm amazed it isn't already happening. It did in the 70s. Public policy would have to change then in the way Islington are proposing (or other similar ways) in order to get housing lived in.

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TBH this is too little too late.

It is now properly insane in Islington. My rent for a 2/3 bedroom terrace house is now £3000 per month. A house in my road sold for £950k at the end of last year, a price that I thought was nuts for a house that 100 years ago according to the census was inhabited by a labourer and his house wife. An identical house in this road just went on the market yesterday for £1.4m and the sad truth of it is that this isn't kite flying. I've got every reason to believe that they'll get that.

People will be desperate to get Labour back in for an in control commonsense house price policy :lol:

In hindsight Brown now seems almost Cromwellian and puritan with his housing policy.

UKIP must be able to take advantage of all the loonyness of the people "running" the UK these days.

Edited by billybong

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As a Clerkenwell resident I'd agree with Repetitive Beats about the insanity that's the Islington Buy to Leave market. The local paper covered it a few days ago and goes into a bit more detail than the Guardian, giving the breakdown of unoccupied flats in recent developments. Over 50% empty in one case, but mostly 30-40%.

My link

What's interesting is that two of the blocks mentioned - Dance Square and Worcester Point - are part of the same Central Sq development which attracted attention in the Guardian last year. It's by One Housing Group, a Housing Association which got a £20m government grant, billed the flats as 'affordable housing' and then set a price tag of £705,000 for a three bed.

My link

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I don't get it. If you are an investor and have bought a flat/house as an investment, why would you disregard an additional £4000 a month in income? Surely you'd buy the thing, throw it at Foxtons and tell them where to send the cash?

I can confirm property prices in Islington are properly bonkers. Keeping our place there and renting it out is the best financial decision I have made.

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I don't get it. If you are an investor and have bought a flat/house as an investment, why would you disregard an additional £4000 a month in income? Surely you'd buy the thing, throw it at Foxtons and tell them where to send the cash?

I can confirm property prices in Islington are properly bonkers. Keeping our place there and renting it out is the best financial decision I have made.

Absolute disgrace

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