The Bishops Avenue in Hampstead is “ranked the second most expensive street in Britain,” but according to Robert Booth in the Guardian it’s also a slum:

“A Guardian investigation has revealed there are an estimated £350m worth of vacant properties on the most prestigious stretch…

“At least 120 bedrooms are empty in the vacant properties.

“The empty buildings include a row of 10 mansions worth £73m which have stood largely unused since they were bought between 1989 and 1993, it is believed on behalf of members of the Saudi royal family.”

Some of the homes are in a shocking state of disrepair:

“Exclusive access to now derelict properties has revealed that their condition is so poor in some cases that water streams down ballroom walls, ferns grow out of floors strewn with rubble from collapsed ceilings, and pigeon and owl skeletons lie scattered across rotting carpets.”

Other properties, while adequately maintained, are empty for most of the year – a phenomenon that has sucked the life out of this and other London neighbourhoods.

It could be argued that this is nobody’s business but that of the owners. After all, an Englishman’s home is his castle – if even he is a Saudi. And yet, a city isn’t an inert collection of assets – it’s a living, working community. London is an especially successful example, partly because it doesn’t make too many demands on how its people live and work. But when whole chunks of the city become devoid of both life and work, there’s a serious problem. Empty upmarket properties are essentially parasitic, accumulating value thanks to the surrounding hive of activity while contributing nothing towards it.

Unlike the last Labour government, the Coalition is beginning to put things right – most notably by removing the capital gains exemption on foreign-owned residential property. Nevertheless, many Londoners, including the Mayor, want to go further:

“Boris Johnson has defied Downing Street to call for taxes to be cranked up on owners of vacant properties. He told City investors this month: “London homes aren’t … just blocks of bullion in the sky.” He called for owners to live in their homes or rent them out. But the government has resisted attempts by councils, backed by the mayor, to multiply council tax rates on homes left empty for two years.”

This, surely, is exactly the sort of decision that local communities should be allowed to make for themselves – and if the Government is at all serious about decentralisation it should devolve this power without delay.

One might also consider why it is that foreign billionaires would want to own London property that they hardly use. Obviously, there’s the return on investment; then there’s the basic issue of security: London is a welcoming place to world’s rich and likely to remain so. London property has been described as a global reserve currency – which, unlike the dollar or the euro, also gives the owner somewhere to live should things turn nasty back home.

Of course, if you’re lucky enough to control a reserve currency, the thing to do is print more of it (just ask the Americans). As the global centre of financial innovation, London ought to be able to come up with some clever scheme for doing so. For instance, the Greater London Authority could issue planning permission for the development of high end property in the form of tradable certificates. These could come bundled with residency rights, thereby providing all the advantages of owning London property, but without the hassle of maintaining it. At any one time, most of these certificates would be held by or traded between investors – only a fraction would be ‘cashed-in’ to get permission for an actual development. Thus in the best traditions of fractional reserve banking, the GLA could issue many more permissions than it has room to accommodate.

If this scheme sounds utterly mad, then that’s because it is – but in a place like London that needn’t be a deal breaker.

41 comments for: Billionaires Row – a bigger scandal than Benefits Street

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