The gains to London property investors from leaving homes empty has far outstripped the penalties they face doing so, a Guardian investigation has learned. Owners of homes with a combined value of over £500m in the ultra-rich borough of Kensington and Chelsea were fined a total of just £85,000 for leaving them empty last year, a survey of vacant properties suggests. The figures can be reported due to the accidental release earlier this year of a confidential database, which for the first time identified hundreds of properties left empty for at least two years, as well as their owners. The single largest penalty imposed on any of the 89 properties examined for the survey was just £1,426, even though the property – a £9m, six-storey mansion in the Notting Hill area – has increased in value by approximately £1.1m since it was acquired three years ago. Polly Neate, the chief executive officer of the housing charity Shelter, said the data revealed how the empty homes premium – a penalty measure of an additional 50% council tax for long-term empty properties – was effectively “meaningless”. “It’s much easier for [owners] to just incur the penalty,” Neate said. “That’s actually the easiest option for them; it should be the hardest option. It should be harder for them to keep the home empty than to do something with it.” The problem of buy to leave, whereby investors acquire property and deliberately leave it empty so as not to incur any of the costs of renting, is not limited to Kensington and Chelsea. A buyer for the property company Savills described buy to leave as “endemic” in the capital’s most desirable areas. During the leadup to London’s mayoral election last year, both candidates pledged to clamp down on the problem. No official figures on the practice is compiled. However, it is in the city’s most expensive boroughs that house prices have risen most sharply. While UK house prices rose by an average of 20% over the last decade, according to the Office for National Statistics, prices in Kensington and Chelsea rose by 65% over the same period. Earlier this month it was reported that only ten of the households left homeless by the Grenfell Tower disaster had been permanently rehoused. To assess the scale of the potential profits earned by owning empty homes, the Guardian compared the purchase price of the list of empty properties accidentally released by Kensington and Chelsea council with Zoopla estimates for what those properties are currently worth. The estimates are based on recent sales from other properties in the local area. Both data points were available for 89 of the properties on the list. The data also reveals how much the owners of the properties were charged in empty homes premium as a penalty for leaving them empty for longer than two years. The properties, which were bought for a combined total of £395m at different times, are currently worth £504m. The average increase in value was £1.2m; those who owned larger properties, or held them for longer periods, enjoyed even more lucrative returns. One flat, worth £99,000 in 2001, is now worth an estimated £1.5m. Yet the owner of the property, an apartment in the attractive ward of Courtfield, was charged just £1,077 last year for leaving it empty. In another case, a four-storey property in the Campden ward worth £1.8m in 2001 is now estimated to be worth over £6m. Neighbours said the house, a few hundred metres from Kensington High Street, had been empty “for years”. The owner was fined £1,062 last year for leaving it empty. In total, the owners of the 89 properties now worth an estimated half a billion pounds were charged just £85,373 in empty homes premium last year, or 0.02% of the properties’ current combined estimated value. Kensington’s recently elected Labour MP, Emma Dent Coad, accused prime property buyers and developers of profiteering from the country’s housing crisis. “This is a deliberate thing, to inflate prices ever further while shoving people on low incomes out on to the edges, next to railways lines, next to busy roads and at the end of industrial estates,” she said. “That’s not right for anybody.” Calls for tougher sanctions have been made for some time from both Conservative and Labour politicians. In 2014, then mayor Boris Johnson said he thought 1,000% tax rates should be imposed. A report for the Greater London Authority earlier this year also called for central government to permit larger fines. Such calls have thus far been unsuccessful. The government’s position is yet to change from the one expressed in a 2013 letter from then housing minister Brandon Lewis to Camden councillor Theo Blackwell, implying that tougher sanctions would be too severe a penalty for owners of empty properties. “The government believes the current empty home premium is appropriate and has no plans to make the changes you suggested,” he wrote, before going on to criticise “the last government’s punitive approach to empty homes” as “counterproductive”. Additional reporting by Niamh McIntyre Follow Guardian Cities on Twitter, Facebook and Instagram to join the discussion, and explore our Archive here
Owners of long-term empty properties with a combined value of over £500m ($655m) in one of London's wealthiest areas, Kensington and Chelsea, incurred fines of just £85,000 last year, according to the Guardian. The average fine was only about half that for those who had been found guilty of breaching planning regulations, but it is still higher than most other parts of London. A buyer for estate agent Savills said the buy to leave issue, in which owners leave their properties vacant to avoid renting costs, was "endemic" across London's most attractive areas. Polly Neate, the CEO of charity Shelter, said the government's buy to leave penalty – charging an extra 50% council tax – was "meaningless".