The recent discovery by Inside Housing that most of the 86 apartments in the ludicrously expensive One Hyde Park development have no one living in them - "a dormitory village in a built-up area," as Stuart from Leyton tweeted - coincides nicely with the publication of a discussion paper from the Smith Institute making the case for a property speculation tax.
Authors Paul Hackett and Andrew Heywood (the latter also wrote the recent Future of London report on the government's dysfunctional "affordable rent" policy) explore a measure, well-established in Germany and Malaysia, which, they argue, "would be a timely means of helping change the behaviour of investors" and "help constrain the unsustainable rise in house-prices in London and the south-east."
They produce stats, sourced from Savills, showing that around 85% of newly built central London properties and 38% of re-sold ones have been bought by overseas buyers in the last year. Even housing associations, whose historic mission has been to provide homes for the less well-off, are beginning to depend on the speculators:
With Government grant for affordable housing now increasingly limited, cross subsidy from open market and shared ownership sales becomes ever more important if affordable development levels are to be maintained. Housing associations (and some councils) seeking to build properties for open market sale in order to provide the cross-subsidy are becoming reliant on overseas buyers to sustain demand (and prices). Some are actively marketing properties for open – market sale to potential investors in the Far East.
Such a tax could be tailored to exclude owner-occupiers and "tapered" so that it was levied at his highest on properties "bought and sold over very short periods" and reduce the threat of a ruinous bubble - a threat Boris Johnson has been downplaying at the Conservatives' conference in Manchester.
Green Party AM Darren Johnson has called for a tax on speculators in his recent critique of the Mayor's housing strategy. Should more of us be doing the same? Read the Smith Institute paper here.
