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I seriously doubt that 40% figure. Why would "foreign buyers" who by flats as investments not take home the (very substantial) London rents? It would be financi

I seriously doubt that 40% figure. Why would "foreign buyers" who by flats as investments not take home the (very substantial) London rents? It would be financially imprudent. I suspect that this is really a form of xenophobia, used, among other things, to sensationalise newspaper articles.

suvelx 12y ago
Use diminishes value. Having tenants requires work, adds cost, and might just not be worth your time. You might just want a house for a weekend, and not want plebs messing your shit up. And it probably has some degree of truth, You can stand outside 'new' buildings for a week and never see lights on in some windows.
- NotableAlamode 12y ago
  Use diminishes value, but this is nicely compensated for by rent, and more than compensated by London rental levels. Leaving a property empty is also not without problems (think heating, burglary, squatting, taxes). The number of people rich enough to buy pied-a-terres in (one of) the world's most expensive real estate markets is too small to justify the 40% figure (or anything like it).
  - AmirS2 12y ago
    These buy-to-leave flats are generally newly built (and were bought off plan), in high rise buildings with concierge / security, so there are no worries about heating, burglary or squatting... I'd guess the price of these is around £350k - £1.5m (for a reasonable 1 - 3 bed flat in a new build), which is well within the reach of well off foreign middle class investors.
    - NotableAlamode 12y ago
      It is within reach, but it would be financially wildly imprudent to forgo the £1000 - £3000 monthly rental income that such properties would fetch. Bear in mind that you will have to pay council tax and other fixed costs anyway. It would be a desperately terrible investment, much worse than other, more liquid assets. The global middle class cannot afford such investments. Maybe members of the Saudi royal family, but they won't be that interested in 1 bedrooms in Islington.
      - NotableAlamode 12y ago
        It's interesting that I'm being downvoted for the message above. What's wrong with it? Incidentally, I just had lunch with an architect and a guy who runs a building company, both London-based. I asked them about this. They both agreed that no sane investor would leave flats bought as investments empty. Investment means basically having tenants. The agreed that there is a media-driven moral panic about this. The architect said he had one client who had a 12 bed-room house in central London that was empty for most of the year ... that customer was a member of Kuwait royal family.
  - justincormack 12y ago
    There is not much of a rental market for these £1m flats which to cover costs would have to rent at £40-50k a year. The number of people who can afford this us minute.
    - NotableAlamode 12y ago
      True, but rent and property value are strongly positively correlated, so there would also not be a very liquid market for buying and selling such flats. That would make it even worse as a speculative investment. ` I'm not saying such speculative investment doesn't exist, I just doubt it is as ubiquitous a phenomenon as claimed.
awjr 12y ago
http://www.theguardian.com/business/2014/dec/04/property-investors-islington-london-homes-empty-jail http://www.theguardian.com/business/2014/dec/04/property-inv... http://www.theguardian.com/commentisfree/2014/dec/08/islington-council-buy-to-leave-investors-uk-housing http://www.theguardian.com/commentisfree/2014/dec/08/islingt... It's called "buy-to-leave" and no it's not xenophobia, it's a symptom of a housing bubble very much centred on London.
- NotableAlamode 12y ago
  The article is a bit sketchy on the methodology used. The fact that not everybody flat investigated has somebody on the electoral register can easily be explained by several factors. - The central London population is very transient. Many stay only for a few weeks, months or at most a year or two. Why bother registering? - Many central Londoners, especially the young and newly arrived, move about quite a lot before they settle in one place for longer. They would not bother with registration. - Many, probably the majority of central Londoners are foreign and don't bother with the electoral register because they can't vote in the general elections anyway, and may not know that the can vote for the major (or may not care). - There's a lot of legally questionable subletting going on (think AirBnB), where the subletter and / or sublettee might not necessarily want to be on an official register. - Some owners may simply fail to find a tenant, for example because they pitch rent too high. As a piece of anecdotal evidence, I offer myself: I only got on the electoral register about 10 years after I moved to London.
teh_klev 12y ago
Because it's probably less hassle to sit on the property while it increases in value. Seriously, this is becoming a major problem in London, especially from overseas buyers. There was an article posted on HN a few months back (which I can't locate right now) which explained this problem.
matthewmacleod 12y ago
The rental income from properties is not worth the hassle. It turns a relatively liquid asset into a much more illiquid one – tenancy rights in the UK are quite strong. If you want to park your money in property, the worst thing you could do is hand control of that money to a group of people with legal right to keep if for certain periods.
- NotableAlamode 12y ago
  I agree on liquidity, but housing, occupied or not, is quite illiquid anyway. If you care about liquidity, you'd rather invest in other asset classes. Property prices and rental income in London are extremely high. I cannot see how anyone but the extremely wealthy could afford letting London property stay empty as an investment. And there are not enough extremely wealthy around to account for the large number of empty properties that London is allegedly seeing.
lmm 12y ago
> I seriously doubt that 40% figure. Why would "foreign buyers" who by flats as investments not take home the (very substantial) London rents? It would be financially imprudent. Would they be? What's a realistic amount of rent to charge on a GBP 5,000,000 flat? How many people can afford that and are looking to rent? (Also I think many appreciate having their London flat available for the few days a year they're in town)
- NotableAlamode 12y ago
  I don't know about rent for such luxirious flats. There are so few of them that they cannot account for the 40% empty rate that has been claimed. Almost all new housing in London are small 1 and 2 bedroom flats that cost under £1,000,000.
DanBC 12y ago
They've already shown financial imprudence by buying property at over the market rates.

suvelx 12y ago

Use diminishes value. Having tenants requires work, adds cost, and might just not be worth your time. You might just want a house for a weekend, and not want plebs messing your shit up. And it probably has some degree of truth, You can stand outside 'new' buildings for a week and never see lights on in some windows.

NotableAlamode 12y ago
Use diminishes value, but this is nicely compensated for by rent, and more than compensated by London rental levels. Leaving a property empty is also not without problems (think heating, burglary, squatting, taxes). The number of people rich enough to buy pied-a-terres in (one of) the world's most expensive real estate markets is too small to justify the 40% figure (or anything like it).
- AmirS2 12y ago
  These buy-to-leave flats are generally newly built (and were bought off plan), in high rise buildings with concierge / security, so there are no worries about heating, burglary or squatting... I'd guess the price of these is around £350k - £1.5m (for a reasonable 1 - 3 bed flat in a new build), which is well within the reach of well off foreign middle class investors.
  - NotableAlamode 12y ago
    It is within reach, but it would be financially wildly imprudent to forgo the £1000 - £3000 monthly rental income that such properties would fetch. Bear in mind that you will have to pay council tax and other fixed costs anyway. It would be a desperately terrible investment, much worse than other, more liquid assets. The global middle class cannot afford such investments. Maybe members of the Saudi royal family, but they won't be that interested in 1 bedrooms in Islington.
    - NotableAlamode 12y ago
      It's interesting that I'm being downvoted for the message above. What's wrong with it? Incidentally, I just had lunch with an architect and a guy who runs a building company, both London-based. I asked them about this. They both agreed that no sane investor would leave flats bought as investments empty. Investment means basically having tenants. The agreed that there is a media-driven moral panic about this. The architect said he had one client who had a 12 bed-room house in central London that was empty for most of the year ... that customer was a member of Kuwait royal family.
- justincormack 12y ago
  There is not much of a rental market for these £1m flats which to cover costs would have to rent at £40-50k a year. The number of people who can afford this us minute.
  - NotableAlamode 12y ago
    True, but rent and property value are strongly positively correlated, so there would also not be a very liquid market for buying and selling such flats. That would make it even worse as a speculative investment. ` I'm not saying such speculative investment doesn't exist, I just doubt it is as ubiquitous a phenomenon as claimed.

awjr 12y ago

http://www.theguardian.com/business/2014/dec/04/property-investors-islington-london-homes-empty-jail http://www.theguardian.com/business/2014/dec/04/property-inv... http://www.theguardian.com/commentisfree/2014/dec/08/islington-council-buy-to-leave-investors-uk-housing http://www.theguardian.com/commentisfree/2014/dec/08/islingt... It's called "buy-to-leave" and no it's not xenophobia, it's a symptom of a housing bubble very much centred on London.

NotableAlamode 12y ago
The article is a bit sketchy on the methodology used. The fact that not everybody flat investigated has somebody on the electoral register can easily be explained by several factors. - The central London population is very transient. Many stay only for a few weeks, months or at most a year or two. Why bother registering? - Many central Londoners, especially the young and newly arrived, move about quite a lot before they settle in one place for longer. They would not bother with registration. - Many, probably the majority of central Londoners are foreign and don't bother with the electoral register because they can't vote in the general elections anyway, and may not know that the can vote for the major (or may not care). - There's a lot of legally questionable subletting going on (think AirBnB), where the subletter and / or sublettee might not necessarily want to be on an official register. - Some owners may simply fail to find a tenant, for example because they pitch rent too high. As a piece of anecdotal evidence, I offer myself: I only got on the electoral register about 10 years after I moved to London.

teh_klev 12y ago

Because it's probably less hassle to sit on the property while it increases in value. Seriously, this is becoming a major problem in London, especially from overseas buyers. There was an article posted on HN a few months back (which I can't locate right now) which explained this problem.

matthewmacleod 12y ago

The rental income from properties is not worth the hassle. It turns a relatively liquid asset into a much more illiquid one – tenancy rights in the UK are quite strong. If you want to park your money in property, the worst thing you could do is hand control of that money to a group of people with legal right to keep if for certain periods.

NotableAlamode 12y ago
I agree on liquidity, but housing, occupied or not, is quite illiquid anyway. If you care about liquidity, you'd rather invest in other asset classes. Property prices and rental income in London are extremely high. I cannot see how anyone but the extremely wealthy could afford letting London property stay empty as an investment. And there are not enough extremely wealthy around to account for the large number of empty properties that London is allegedly seeing.

lmm 12y ago

> I seriously doubt that 40% figure. Why would "foreign buyers" who by flats as investments not take home the (very substantial) London rents? It would be financially imprudent. Would they be? What's a realistic amount of rent to charge on a GBP 5,000,000 flat? How many people can afford that and are looking to rent? (Also I think many appreciate having their London flat available for the few days a year they're in town)

NotableAlamode 12y ago
I don't know about rent for such luxirious flats. There are so few of them that they cannot account for the 40% empty rate that has been claimed. Almost all new housing in London are small 1 and 2 bedroom flats that cost under £1,000,000.

DanBC 12y ago

They've already shown financial imprudence by buying property at over the market rates.