This town is coming like a ghost town

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?

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3 thoughts on “This town is coming like a ghost town

  1. Hi Nick
    I read your blogs with great interest.
    I wonder how you relate what you think and say here to what you see and hear at your Ask Nick events?
    And of course there is a down side to what has been happening with our very own local bowl effect here.
    I think the other side of the coin to the destruction of successful communities all over the borough is the power that has been granted somehow to developers.
    I also wonder when we decided as a nation that those with money and property are worth so much more than those without.
    I think that London and K+C have changed so much that we may never see a lovely balance of communities and activities again.
    I am aware that there is more care shown by our council to these matters than in other areas but wonder still how we could have let such a long waiting list develop for social housing, how we could have allowed our private rented market to become unattainable for anybody other than young flat sharers or rich business visitors.
    Amongst the joy of living in what is a ghost town right across the borough at Christmas in August and at Easter we have rising numbers of children living poverty, we have families living with the help of food banks, and we have some of the highest numbers of multimillionaires living amongst us.
    The challenge of all of this for a free marketeer,such as yourself, is to decide how much intervention there should be to adjust some of the unfairness that looks us in the eye every day in this borough.
    I think you are doing an amazing job in beginning to be so much more transparent, I am hoping some solutions will emerge for these issues that are more than acknowledging that they possibly exist.
    I am aware this response is all over the place but I keep meeting local people who are so frustrated by their area being torn part who wonder who they can talk to.
    To me this situation is very like the feeling in The Grapes of Wrath when everyone was looking for someone to blame for the loss of homes and communities .
    In the end they just became aware of how powerless they were.
    Like many residents I love this borough and feel lucky for having spent most of my adult years here.
    But I wonder what the future looks like and whether all of the efforts to,create such a rich town will end up being a bit of a mistake?

  2. Dear Nick,
    I cannot really see what your argument is here. Of course it’s a bad thing. The fundamentals of your discussion are defeatist and all wrong. This should anger you as our representative, not leave you feeling benignly thwarted by the machinations of the Asian property speculators. And as for Osborne’s move – it is merely redressing an imbalance so unfair that no one dreamed it wasn’t in place already.
    Property has always been an asset but this has got completely out of control now. We have collectively forgotten that the purpose of non-commercial property is primarily to house residents. For everyone’s sake. An economy so reliant on asset is unhealthy and one where the global free market is allowed to run rife is denying normal people the right to an affordable home. You command a borough where people are not even allowed onto a housing waiting list, and those who do get housed are now placed outside the borough. Meanwhile RBKC seem to have demolished a load of the estate north of portobello and sold it to private developers for new luxury flats. I have watched my part of the borough turn into an absurdly wealthy area full of itinerant international bankers. The ones I have met are all very nice, but the overall effect is to drive everyone else out, creating sterile mono-wealth streets for the rest of us. (It is an interesting observation that rich people do not create rich communities) The house behind my flat is applying for permission for a further basement below the one it has already created, having recently been bought by an overseas Chinese investor. This global freemarket is not right when it comes to housing and I cannot see why anyone of your obvious intelligence, who has sought to rise to your position of trust is even asking such a question. Areas of mixed housing is the correct answer for everyone, it prevents the wealthy from believing the world is one big bubble of easy living where other peoples problems are out of sight, and the poorer element from feeling ghettoised and disenfranchised. Let’s paraphrase your question: Is it right to let people who don’t live here own houses and leave them empty, while we have a terrible housing problem for the young and less well of in our country?
    You seem to be uncertain, the rest of us have far less doubt. The question you should be asking yourself is a far harder one – what am I going to do to seriously redress the balance?
    With respect
    Eddie

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