Buying
to leave empty
In
the 1970s Centrepoint, a 32-storey office block in the centre of
London at the junction between Oxford Street and Tottenham Court
Road, was the centre of a scandal. It had been built with money put
up by a notorious property tycoon of the time, Harry Hyams. Once
built Hyams kept it empty for many years because, with a boom in the
property market, its value rose constantly –
but only as long as it remained empty; if it had been let the rent,
and so its value, would have been fixed for 10-15 years. A classic
case of property speculation.
At
the same time homelessness was becoming a problem and people, quite
rightly, asked why was a building with the amount of space that
Centrepoint had being kept empty when more and more people had to
sleep on the streets or in hostels. It became a symbol of what Edward
Heath, the Prime Minister of the time, called in another context “the
unacceptable face of capitalism”. There
is still a housing charity pointedly called “Centrepoint”.
Today
the same problem has arisen again, though not in such a spectacular
fashion. According to an article in the Bricks and Mortar section of
the Times (19 October) there are over a “million
vacant homes” in the UK, made up,
according to the Empty Homes Agency, of 840,000 actual homes (houses
and flats) and 420,000 homes that could be provided in disused
commercial property.
One
reason is that some owners can’t afford
to repair them. But there’s another
reason:
“Another
factor is speculation, where a buyer has bought a property for its
investment potential but does not wish to find tenants. David
Ireland, chief executive of the Empty Homes Agency, says that this is
a growing problem, especially in the new-build market, which has
attracted ‘buy-to-leave’ investors who take the view that keeping
the property empty will extend its new-build premium. House prices in
recent years have made this worse, as generous capital appreciation
has reduced the need of some buyers to secure rental income.”
So,
once again, there is homelessness alongside empty homes because
market conditions make it more beneficial for the owners to keep them
empty rather than let them.
This
is par for the course under capitalism where houses are not built
primarily for people to live in, but are commodities produced for
sale with a view to profit. This is why people have to buy or rent
their homes, so realising a profit for the building firms or the
landlord – and the middlemen such as banks, building societies and
estate agencies.
Houses
are different from other commodities in one important respect: they
last a long time and are fixed on land. It was in fact the price of
the land on which Centrepoint was built that went up, not that of the
building itself. It’s the same with the buy-to-leave-empty houses.
And it is this that allows owners, big and small, to speculate on
rising land values.
The
price of land is “irrational” in the sense that, land, not being
the product of labour, has no value in the Marxian sense. Its price
depends purely on supply and demand, a pure monopoly price which an
owner is able to extract from the rest of society simply because they
happen to have a legal right to a piece of the Earth’s surface. But
then, as a system geared to making profits instead of satisfying
needs, the whole capitalist system is irrational from the human point
of view.