Tuesday, 22 July 2008

The Lights Aren't On And No-ones Home

This isn’t something I’ve only just noticed. It’s been around a while. It’s called Buy To Leave Empty, and for tenants in buildings like Dovecot Towers it’s the root cause of yet another fresh hell.

The property boom bought with it not just saturation low-rise newbuilds, but other forms of development. Most cities have their eye-catching architect’s masturbation fantasy: a phallic symbol, thrusting into the clouds. Then there are those slightly-out-of-town canal side/dockside dreamscape buildings, which - at the time of their inception - seemed like an excellent idea.

These larger, better fitted-out ‘apartments’ (we’ve reached the level of value where you must no longer say flats) were marketed as luxurious, but - dislocated from the trappings and requirements of a happy life, like ordinary shops and neighbourhood pubs - they’ve been shunned. They are often sited close to drive-in theme bars, multiplex cinemas, outlet stores and US style ‘diners.’ Better paid workers passing through on short term corporate contracts are usually the only inhabitants.

Many buildings, medium, plain and grand alike, are left deliberately empty. If you’ve ever walked past a building and counted how many houselights are switched on of a Monday at nine pm, you might think the occupants are crazy, decadent and debauched socialites, having too much fun. Some flats might still be let at unrealistic prices, and are waiting for deluded buy-to-let chancers to see sense and drop the asking price.

Elsewhere, investors have found caring for pesky residents to be a major pain, so magnates who live on the other side of the world don’t bother finding renters to rattle around in their investment. Sensible owners make a slower buck on the equity, not by ramping up the rents. They snap up bargains, hold tight and yet still enjoy the many generous tax advantages.

In Dovecot Towers, many overseas owners were domiciled in Hong Kong. I’m noticing less Chinese occupants round here now: I think the owners previously let to their children and other relatives, but now prefer a simple life, allowing their investment to stand empty. I’d should welcome the quiet, and an end to other annoyances great and small, but empty flats distort the nature of a neighbourhood, encouraging a block to seem hollow, even dead.

If these ‘apartments’ were released onto an already flooded market, rents would plummet to a reasonable level. Just imagine having so much money you can snap up a massive portfolio of mortgage-free property to mothball until the crisis ends. This means that whenever you notice an empty building, it’s possible that someone somewhere is making millions. You might think: that’s capitalism, and fair play to them. It’s just that, while these concrete embodiments of a deflated property bubble disdainfully flaunt their eventual worth, corridors are left in desolation, deathly quiet, cold and empty.

There is another side to calmly sitting out the crunch/recession/whatever, accumulating property for the eventual equity to accrue. Way down below, in the semi-landscaped garden, homeless men and women are sleeping in the shrubbery.

6 comments:

the reaper said...

it's been a real bug bear of mine when I hear all these p[roperty rampers say there's a shortage of propertyy over the last few years.thats just bull.

'it’s possible that someone somewhere is making millions.'more likely they're losing a f***ing fortune.these flats-barring hyperinflation-will take thrity years to get back to purchase price.seriously over valued.

Darsalon said...

We're getting a lot of these anonymous stack em high blocks in Basingstoke where I live. An old IBM office block is the latest to be done and although the location is good, next to the railway station etc I can just see them being snapped up by people and left empty. Or with high rents stuck on them.
Can just see them being the next set of shite flats that you see in most places and not being "executive apartments" as the advertising blurb likes to put them as.

TimA said...

I don't think that these absent owners will make any money. Even with no mortgage they will still be shelling out on council tax and utilites. With prices unlikely to recover for 15 years and the high chance that what they bought was massivly overpriced anyway they might have well stuck the money under a mattress. With the quality of new builds being what it is, in 15 years they will be in a bad state so won't go for much.

TimA said...

Oh and half empty block also seems to affect central London flats on the thames, you know the prime ones that won't fall in value!

Anonymous said...

Hi RG

Tax property. 2% per annum standard rate, based on purchase price if within the last 2 years (else a formula based on banding plus a local index of sale prices). Massive discount for principal residence. Discount for second residence. 'Standard rate' to be set and controlled by an independent Housing Agency whose mission is to control prices to those of 2005 plus inflation. Housing agency to be empowered to raise tax above standard rate for empty houses (empty for more than six months). Housing agency empowered to value houses. The tax would largely replace the rates (which would pay for purely local services like rubbish collection and libraries). The tax can be rolled over for elderly owners as a charge on the property to be paid on death.

Might work.

Housing agency could also publish a range of "fair contracts" for renting with an incentive: reduction in tax for houses let using to it. No more sneaky clauses set by lawyers acting for the purchaser.

Cheers, David

RenterGirl said...

There is a shortage of a certain sort of property. Well built property. Generously proportioned, live-inable property, for humans not ants. So why build rabbit hutches? The tax breaks are beyond my understanding, but there are massive empty patches in in many developments nationwide. And many people actually want to lose money for tax reasons, so buy-to-leave empty is good way to do that, perhaps.
Just because magnates can afford to develop and build, shouldn't give them free to actually do so unrestrained by common sense.
Thanks for reading!