Last year a study by the London School of Economics and University of York was released, revealing the contribution overseas investors made to the housing supply. Perhaps more importantly though, the research looked into the number of properties investors purchased and left vacant. Although the data found this to only be a small percentage of homes in total, it is worse in high value areas including the City of Westminster.
In response to the findings the Mayor of London has called for London’s Borough Councils to have the power to increase council tax on those homes left intentionally vacant. It is believed this additional charge would help to incentivise investors to ensure that properties are occupied. If owners chose to leave properties empty the extra tax income the council would earn could be used to invest in new building.
The idea is an interesting one that could have a big impact on investors if it comes into force. Local Councils would gain more power as a result and be able to exert a little more pressure on property owners to ensure they are not holding on to homes purely as an investment without finding occupants.
When looking at areas with the highest number of vacant investment properties City of Westminster is right near the top. The Borough has some of the highest prices in London but also struggles with relatively low supplies. As a result investors are encouraged to hold on to assets and wait for the values to rise as demand pushes them up. Leaving the homes vacant means fewer costs for upkeep and management so it is an option a number of investors choose. Sadly this is not acceptable with the current housing crisis.
Investors should keep an eye on this topic to ensure they can react if councils receive new authority to levy higher taxes on vacant homes. If this power is granted they need to be prepared for higher expenses or the need to seek out tenants.
At Finefair we can offer flexible services and handle the management of investment properties City of Westminster investors want to let out. We can arrange a number of options and deliver the very highest standards. Our team are experienced and adapt to suit any needs, including managing very high value homes.
If you have any questions about the services we can offer please get in touch.