An inconvenient truth about Britain’s growing housing crisis

IT WAS hard not to despair at the latest scare story on empty homes – apparently, there are 60,000 of them being “hoarded” by rich “buy to leave” investors in London alone, and the Labour leader is going to do something about it. There’s just a problem. The figures are nonsense, they don’t relate to rich foreign investors at all, and the situation has already improved dramatically with the number of vacant homes collapsing long before Ed Miliband decided to focus on it.

So here are the facts: the number of long-term vacant properties (empty for  a year) fell by a third over the past four  years in England, from 316,251 in 2009 to 216,050 in 2013, according to the latest figures from the Department for Communities and Local Government. There are a total of 23.236 million homes in England, so just 0.93 per cent have been vacant for over a year.

In London, the numbers of such homes have collapsed from 36,645 in 2009 to just 21,852 in 2013; they have almost halved since 2004, when 42,600 homes had been vacant for at least a year in London. Given that there are 3.404 million homes in London, this means that just 0.64 per cent have been left vacant for more than a year.

It is thus factually incorrect to pretend that this is a problem that is getting worse, or that yet more punitive taxation and a wholesale disregard of property rights is needed to tackle it. Of course, some foreign investors are buying homes and leaving them empty (though the vast majority of overseas buyers rent them out or use them on a part-time basis); and there are a few hundred empty expensive residences scattered about the capital in a derelict state.

But their numbers are too small to be meaningful, and the recent wave of overseas buying is entirely undetectable in the statistics. No market is entirely devoid of slack or wastage: there will sadly always be some unemployment, for example, some food ends up being thrown away and some homes will be empty at any one point. But these figures are moving in the right direction, and that is great news.

Some people prefer to look at homes empty for just six months; such figures capture far too many short-term issues, including homes being repaired, those that have seen the recent death of their owners or a move into care. But even on that inadequate measure, which fails to account for the fact that some homes will remain temporarily empty in the normal course of events, vacant properties are down substantially, from 783,119 in 2008 to 635,127 in 2013 for the UK as a whole. For London, they fell from 85,062 in 2009 to 59,313 last year, or 1.74 per cent of the total.

That, of course, is where the “60,000” number comes from. Yet it is absurd to conflate a home that is empty because the widow who lived there passed away six months ago, and an abandoned ruin  left to rot. It is not true that these numbers are primarily, or even substantially, caused by foreign investors.

We are in the midst of a nasty housing crisis. Tens of thousands of extra homes need to be built every year in London to keep prices under control and make sure that there is enough housing for everybody. We should focus on the real problem – a lack of supply of regular family homes –  and not allow ourselves to be distracted by demagogic and tired attempts at blaming rich foreign investors for all of our problems.

LET THE MARKET DECIDE

ON WHICH note, what is George Osborne playing at? Until now, he has rightly resisted those calling for the government to block Pfizer’s proposed takeover of Astrazeneca. Yet yesterday he attacked Labour “for time after again, when there were takeovers, [doing] nothing to protect Britain’s national economic interest”. The truth is that Labour was right then, even though it’s wrong today.  We need to stop all of this protectionist nonsense, and let the market and shareholders decide the outcome of takeovers.

allister.heath@cityam.com
Follow me on Twitter: @allisterheath

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