London Skyline Planner Sees Empty Luxury Homes Hurting City

[interestrateripoff]

http://www.bloomberg.com/news/2014-04-08/london-skyline-planner-sees-empty-luxury-homes-hurting-city.html

International buyers of London apartments who leave them vacant are hurting the city’s economy by making it too expensive for people who come to the capital to work, former City of London planning officer Peter Rees said.

“They’re buying those apartments, furnishing them, locking the door and leaving them empty,” said Rees, 65, who left his post last week after 29 years in charge of planning. “Large parts of London are becoming ghost towns and a lot of the young people who come to work here can’t find anywhere to live.”

Record property prices and rising rents have triggered a backlash against absentee landlords, prompting the government to impose a tax on companies that own empty homes. In December, under pressure from city officials, a group of 11 U.K. homebuilders agreed to stop giving overseas residents the first shot at buying London homes sold before they’re built.

Homebuilders can agree that because lots of Londoners can't afford to buy, meaning they can be sold to foreigners.

[Wurzel Of Highbridge]

If only the incentive was there to let out those apartments,

[Wurzel Of Highbridge]

Thinking about it.

Most MP's are London landlords so must must love the empty properties as it restricts rental supply and pushes up prices.

Don't expect any changes at government level.

[@contradevian]

Its quite funny to see rich foreigners pour billions into a derelict power station though. Its the only way to get anything done in the UK. Give the super rich and rentiers first roll of the dice.

[Billy soy]

Its quite funny to see rich foreigners pour billions into a derelict power station though. Its the only way to get anything done in the UK. Give the super rich and rentiers first roll of the dice.

And first dibs on turning over the indigenous plebs.

[latterdaysinner]

There already is an incentive to let out those apartments. It's called rent. The only way that it can be rational to leave a place empty is if the fixed costs of getting tenants in and then out again exceed the expected rent, i.e. if the owners hope to sell quickly and make a fast buck. I can see how that would happen in the current environment, but it won't make sense when the bubble finally bursts.

I actually hope this lasts a few years longer, and that's coming from someone who wants to buy in London. Lots of quite cool developments are either planned or being built in London, way more than there was in 2007. Most of them will lose money, but if it's greedy foreign speculators who take the loss, I'm just fine with that. On the other hand, if there was a crash now, half of them wouldn't be built, and the crash wouldn't be quite as spectacular. Shame to let good popcorn go to waste :-)

[@contradevian]

There already is an incentive to let out those apartments. It's called rent. The only way that it can be rational to leave a place empty is if the fixed costs of getting tenants in and then out again exceed the expected rent, i.e. if the owners hope to sell quickly and make a fast buck. I can see how that would happen in the current environment, but it won't make sense when the bubble finally bursts.

I actually hope this lasts a few years longer, and that's coming from someone who wants to buy in London. Lots of quite cool developments are either planned or being built in London, way more than there was in 2007. Most of them will lose money, but if it's greedy foreign speculators who take the loss, I'm just fine with that. On the other hand, if there was a crash now, half of them wouldn't be built, and the crash wouldn't be quite as spectacular. Shame to let good popcorn go to waste :-)

I would think a lot of the investment is oligarch/dirty money. If they get 50% back they'll be happy (50% loss) as that will be 'clean' money.

Happened to some apartments I moved into when I moved back ooop North. Sold originally for £150k. Ended up being resold at auction for £60k. If the apartments were really only worth £60k the block would never have got built.

So London renters/buyers may yet end up with a 'bargain'

This is how capitalism really works. Not the crap you read in 19th century economic text books. Just study history and railways/canals and any mass speculative house/construction project in the past.

Edited April 9, 2014 by aSecureTenant

[Frank Hovis]

There already is an incentive to let out those apartments. It's called rent. The only way that it can be rational to leave a place empty is if the fixed costs of getting tenants in and then out again exceed the expected rent, i.e. if the owners hope to sell quickly and make a fast buck. I can see how that would happen in the current environment, but it won't make sense when the bubble finally bursts.

I actually hope this lasts a few years longer, and that's coming from someone who wants to buy in London. Lots of quite cool developments are either planned or being built in London, way more than there was in 2007. Most of them will lose money, but if it's greedy foreign speculators who take the loss, I'm just fine with that. On the other hand, if there was a crash now, half of them wouldn't be built, and the crash wouldn't be quite as spectacular. Shame to let good popcorn go to waste :-)

I would think a lot of the investment is oligarch/dirty money. If they get 50% back they'll be happy (50% loss) as that will be 'clean' money.

Happened to some apartments I moved into when I moved back ooop North. Sold originally for £150k. Ended up being resold at auction for £60k. If the apartments were really only worth £60k the block would never have got built.

So London renters/buyers may yet end up with a 'bargain'

This is how capitalism really works. Not the crap you read in 19th century economic text books. Just study history and railways/canals and any mass speculative house/construction project in the past.

Absolutely: build build build.

And because it's mug foreign "investors" snapping it up there isn't mortgage debt or developer debts sitting in UK banks that is going to need a bail out.

So when it all goes pop then you can have a (genuine) luxury flat for a fraction of the price the mug paid for it.

Thank you to all the Chinese, Arabs, and Russians who belive the propaganda about property only ever going up, espeically in London, and are paying for the homes we will be living in in five years wiht money they won't see again

Remember - Kirsty says Property Only Ever Goes Up (rinse and repeat).

[Wurzel Of Highbridge]

Absolutely: build build build.

And because it's mug foreign "investors" snapping it up there isn't mortgage debt or developer debts sitting in UK banks that is going to need a bail out.

So when it all goes pop then you can have a (genuine) luxury flat for a fraction of the price the mug paid for it.

Thank you to all the Chinese, Arabs, and Russians who belive the propaganda about property only ever going up, espeically in London, and are paying for the homes we will be living in in five years wiht money they won't see again

Remember - Kirsty says Property Only Ever Goes Up (rinse and repeat).

Just ensure that your savings are not tied into sterling, as it is most likely that if property does crash so will sterling - so once again you will be fighting off foreign investors.

Both the Pound and London property are looking toppy at the moment.

[Frank Hovis]

Just ensure that your savings are not tied into sterling, as it is most likely that if property does crash so will sterling - so once again you will be fighting off foreign investors.

Both the Pound and London property are looking toppy at the moment.

I'm steadily shifting into dollar denominated stuff (oil, gold) which the strength of the pound is making look attractive at the moment.

[@contradevian]

Just ensure that your savings are not tied into sterling, as it is most likely that if property does crash so will sterling - so once again you will be fighting off foreign investors.

Both the Pound and London property are looking toppy at the moment.

I wouldn't say GBPUSD is looking 'toppy.' Can see it going to 1.68 pretty shortly.

Yes, like you I think its a turd, but 'smart money' thinks otherwise (for the time being).

[winkie]

International buyers of London apartments who leave them vacant are hurting the city’s economy by making it too expensive for people who come to the capital to work, former City of London planning officer Peter Rees said.

You don't say......time the economy was shared out with the rest, buy your home where your home is more affordable and work in a place where you will be better appreciated.