A new 21st century phenomenon: prime luxury real estate in big global cities that is empty, has always been empty, and may always be empty. It’s real estate meant for investors, often from outside the city (or country), to park money. London has a particularly big problem with this.
On this measure, we find that half of residences in new builds in general are empty, as are 19 per cent of dwellings across London’s inner boroughs. The likelihood that a home is empty rises alongside its market value: 39 per cent of homes worth £1m to £5m are underused, and 64 per cent of homes worth more than £5m. Of the homes owned by foreign investors, 42 per cent are empty.
This causes problems from exacerbating a housing crisis (and most of the cities where this happens have housing crises) to sapping the vitality of prime neighborhoods by filling up space with empty homes, instead of actual housing for residents.
Using housing solely as an investment vehicle is a social ill. When it happens a little, it’s fine; the wealthy person who decides to buy a flat in a city she visits a couple of times a year, for example. What we’re seeing now is our urban spaces being used as giant piggybacks, to the detriment of the people who live around them.
We might consider a residental-use factor in property taxes; like, the owner of a property who isn’t living in it or renting it for an extended period of time pays 10x property taxes until the property is in use again. (Yes, I said 10x. They can afford it, and you need to make the practice less appealing than other investment options.)
That might sound crazy, but actually it’s the most basic tool of a market-based capitalist democracy: set tax policy to support the good of the community.