Vast swathes of London are being bought up by foreign investors and leaving parts of the capital like ghost town. And as populations dwindle in parts of the city, local businesses are seeing a decline in trade forcing some to shut up shop.
The latest victim to the growing trend of "buy-to-leave" was one of London's best loved French restaurants, Racine, which finally shut its doors after a little over 12 years serving up such classics as côte de boeuf with Béarnaise sauce and veal chop and Roquefort butter.
Despite being a favourite of the singer Bryan Ferry and the American actor and producer Harvey Keitel, such kudos was not enough to pay the bills. Owner and chef patron Henry Harris said he had made the decision largely because of a falling clientele as well as rising rents and other costs.
"Non-doms" and "buy-to-leave" investors
"The non-doms have bought up large chunks of central London and then only live here for certain months of the year," Harris says. "It is very noticeable in Knightsbridge and South Kensington" which he describes as resembling a ghost town.
So-called non-doms, or non-domiciled residents, have changed the face of London and other parts of the country. There is also the so-called "buy-to-leave" investor who is helping create ghost towns.
According to research consultancy Molior, in developments of more than 20 units across London, over 70% of new-build sales in the £10,700 to £16,000 per square metre range were to investors, with some "held as permanently available hotel suites" by the owners.
Some property investments are even making money for their owners before they've even been built. A flat in Battersea in West London made the headlines in November after it was revealed to have been bought for £1 million in the spring but was later put on the market for £1.5 million less than 8 months later despite not even being built.
Rising property prices
The effects of all this buying up is not only creating ghost towns, it's also driving up property prices for ordinary Londoners who are struggling to find affordable homes in the capital.
And as property prices rise many families are finding themselves unable to climb aboard the property ladder. This has in turn increased the numbers of people on council house waiting lists.
Tackling the problem
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 concerns about private rental costs and a lack of housing stock, particularly council housing. But despite such concerns, none of the political parties have made housing central to their campaign.
Nonetheless there are indications that both 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 UK 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".
However 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 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.
Growing problem
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.
Whilst there is a shortage of hard evidence, the indications are that "buy to leave" is an issue. It may however be localised to certain areas and associated with certain types of property, specifically city centre apartment blocks. Indeed it is mainly confined to large cities.
There are around 635,000 empty homes in Britain according to the latest statistics from the government, and around 72,100 in London alone. Many have been bought up by Chinese, Arab and Russian investors.
But while the UK 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 virtual ghost towns and 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?
Further reading: propertyinvestmentsuk / Buy to Leave Empty [PDF] / BBC / Guardian / FT / Telegraph / Standard / New Statesman / Guardian / Standard / Sky News / Sky News / BBC documentary Inside Out / Inside Out clip [YouTube]
The latest victim to the growing trend of "buy-to-leave" was one of London's best loved French restaurants, Racine, which finally shut its doors after a little over 12 years serving up such classics as côte de boeuf with Béarnaise sauce and veal chop and Roquefort butter.
Despite being a favourite of the singer Bryan Ferry and the American actor and producer Harvey Keitel, such kudos was not enough to pay the bills. Owner and chef patron Henry Harris said he had made the decision largely because of a falling clientele as well as rising rents and other costs.
"Non-doms" and "buy-to-leave" investors
"The non-doms have bought up large chunks of central London and then only live here for certain months of the year," Harris says. "It is very noticeable in Knightsbridge and South Kensington" which he describes as resembling a ghost town.
So-called non-doms, or non-domiciled residents, have changed the face of London and other parts of the country. There is also the so-called "buy-to-leave" investor who is helping create ghost towns.
According to research consultancy Molior, in developments of more than 20 units across London, over 70% of new-build sales in the £10,700 to £16,000 per square metre range were to investors, with some "held as permanently available hotel suites" by the owners.
Some property investments are even making money for their owners before they've even been built. A flat in Battersea in West London made the headlines in November after it was revealed to have been bought for £1 million in the spring but was later put on the market for £1.5 million less than 8 months later despite not even being built.
Rising property prices
The effects of all this buying up is not only creating ghost towns, it's also driving up property prices for ordinary Londoners who are struggling to find affordable homes in the capital.
And as property prices rise many families are finding themselves unable to climb aboard the property ladder. This has in turn increased the numbers of people on council house waiting lists.
Tackling the problem
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 concerns about private rental costs and a lack of housing stock, particularly council housing. But despite such concerns, none of the political parties have made housing central to their campaign.
Nonetheless there are indications that both 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 UK 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".
However 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 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.
Growing problem
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.
Whilst there is a shortage of hard evidence, the indications are that "buy to leave" is an issue. It may however be localised to certain areas and associated with certain types of property, specifically city centre apartment blocks. Indeed it is mainly confined to large cities.
There are around 635,000 empty homes in Britain according to the latest statistics from the government, and around 72,100 in London alone. Many have been bought up by Chinese, Arab and Russian investors.
But while the UK 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 virtual ghost towns and 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?
Further reading: propertyinvestmentsuk / Buy to Leave Empty [PDF] / BBC / Guardian / FT / Telegraph / Standard / New Statesman / Guardian / Standard / Sky News / Sky News / BBC documentary Inside Out / Inside Out clip [YouTube]
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