London Mayor Boris Johnson said councils should increase taxes by as much as ten times on homes in the capital that lie empty because they were bought as investments.
“What is certainly not acceptable is people buying homes as assets in places like Kensington and Chelsea and keeping them” empty, he told LBC Radio today. Local authorities are being encouraged “to whack up council tax on them” if a house lies empty for more than a year, he said.
Increased demand for property by foreign investors has resulted in many homes in central London lying empty. Data from housing charity Empty Homes shows that 3 percent of houses in the capital’s exclusive Kensington and Chelsea district were empty in 2013, with 2 percent being classified as long-term unoccupied.
London house prices have surged as foreign demand, cheaper credit and a lack of supply push up prices, and the Bank of England is coming under increasing pressure to curb what some economists say may be the start of a property bubble. A report by Nationwide Building Society yesterday showed U.K. home values rose to a record last month, while the European Commission this week raised concern about the lack of housing supply in the U.K., particularly in the capital.
“London has a massive shortage and we need to accelerate our house building program,” Johnson said. “We need to build hundreds of thousands more homes, affordable or not.”
The EU Commission report, published on June 2, also said “reforms to the taxation of land and property should be considered to alleviate distortions in the housing market.”