I think it was Stanley Baldwin who described press barons as exercising “power without responsibility…”
The Council’s situation is sometimes the exact opposite in that we find ourselves being held responsible for things over which we have no real control. The ghost town phenomenon is a case in point.
So-called ghost towns have had a lot of coverage just lately and an Evening Standard article a few weeks ago sought to label the entire borough a ghost town when the reality is that this is an issue confined only to certain streets in certain wards. Which is not to try and minimise the problem. We do indeed have many hundreds of homes being left empty by overseas investors.
Now I’m far from against wealthy people from overseas coming to live here in Kensington and Chelsea. If they obey the law, bring high level skills to our economy, shop in our shops and pay their taxes, that’s all positive I think. What isn’t so positive however are foreigners using the assets of the UK as a sort of stuccoed safety deposit box, thereby sucking the life from our streets and plunging into cold storage homes that might otherwise be lived in by people who would actually contribute to the UK rather than simply profit from it.
We are doing what we can to tackle the problem. We have already acted to limit the two forms of development we know are much beloved of overseas investor types – mega basements, and supersized flats. We have also made sure the issue is on the radar of both city and national politicians because in the end truly effective action can only come at that level. But let’s not pretend this is an easy one for the Government to solve, it isn’t and for two main reasons:
First, our economy remains frail and unbalanced and we are in terrible debt. Property is a key sector at a time when we badly need investment and growth. In those circumstances it wouldn’t be surprising if the Government felt itself between a rock and a hard place on how to respond to the ghost town challenge. And to be fair to George Osborne, he is extending capital gains tax to overseas buyers from 2015, which is a meaningful measure.
The second reason is the property market itself. I was recently shown a magazine called Asian Banker. It was one of the least interesting mags I’ve ever seen which is saying something given some of those that cross my desk!
There was one article that caught my eye though, on REITs or real estate investment trusts. The piece brought home to me just how huge and sophisticated the global property market is. It has its own tradable financial instruments and investment vehicles and so much liquid capital that, with London property prices far outstripping other investment opportunities, it’s inevitable that some of that huge reservoir of capital is going to wash up here.
Now if this all seems like a counsel of despair, let me assure you that the Council is not entirely out of ideas. One of the things we are certainly interested in is whether our own property assets can be remodelled to provide more affordable and intermediate units as a way to rebalance our community. But that of course would be a difficult and long-term undertaking.
But I’d like to hear from you Do you agree that overseas investment of the ghost town variety is bad for the borough and/or bad for Britain? Are there things you think the Council could be doing and isn’t? How do we ensure that, in the future, people on reasonable but not spectacular salaries can make a home in the borough?