THE housing crisis in London and its commuter belt can be blamed on one simple problem: there is an under-supply of property. All of the other explanations – interest rates remain low, the impact of quantitative easing or the government’s ridiculous help to buy subsidies – are merely secondary.
It is certainly not the case that the crisis is being caused by buyers snapping up new builds, and then leaving them empty. Sure, this does occasionally happen, especially in a handful of very expensive areas – but in too small numbers to make any meaningful difference to overall supply. Take the situation in Islington, an authority where the local politicians seem to believe that vacant homes are a problem (and whose objections to a new 995-unit group of high-rises from Berkeley Homes have just been overruled by Boris Johnson).
The official document from Islington Council calculates that since 1 April 2008, 9,784 new homes have been registered for council tax across the borough. Of these, just 295 (or three per cent of the increase) appear to have no registered elector living at the address, with 72 of these (or well under one per cent of the total new homes) registered as second homes.
Even though we don’t actually know why the other 223 don’t have a registered elector, the council document goes on to claim that “this can be seen as a baseline, or an indication of what can be expected in terms of levels of vacancy.”
There is, of course, a snag: in many cases, the tenants or owners may simply have chosen not to belong to the electoral register, or forgotten to add their names. In many cases, they will be foreign nationals who aren’t entitled to vote in general elections and who therefore have no interest in joining the register. The idea that a home must be vacant if nobody has signed up to be able to vote is rather strange, to say the least.
In a few cases, homes will be temporarily empty – perhaps because somebody has died and families are seeking to resolve inheritance tax bills, or because a home is lingering on the market. As to second homes, not only is their number tiny – but it is equally wrong to assume that their status means that they must be vacant. In many cases, they will be lived in several days a week by people who use them as a base for work, and then commute back to their families at the weekend.
These figures for Islington are meant to show that there is a problem of vacant new builds. In fact, they demonstrate the exact opposite: the issue is a trivial distraction. One single new development in the borough will add more than three times the number of supposed “problem cases” accrued over the past six years.
As property prices continue to increase, and especially with higher interest rates due in the next 12-18 months, the cost of keeping a home empty will continue to rise.
The opportunity cost – foregone rental payments – is already massive, which explains why so few homes are in fact genuinely vacant. We need to spend less time worrying about what people decide to do with their property and more time ensuring that far more homes get built.
TOO DIM TO CHOOSE
We are, apparently, profoundly irrational, even when it comes to buying groceries. The House of Lords EU Committee is urging shops to end buy one, get one free offers on food, arguing that this leads to massive waste.
In reality, supermarkets have already largely ended the practice, switching to price cuts instead, and there is no evidence that such promotions actually increase waste – but what really grates is the idea that shoppers are too dim to make the right choices. The logical conclusion is that all freedom needs to be ended, and that do-gooders should control everything.