According to a recent Guardian report, the property developer converting London’s famous Centre Point skyscraper from office to residential use has “given up” trying to sell the building’s expensive flats rather than lowering their price. The article went on to say that a “glut” of “swanky £1m-plus flats, complete with private gyms, swimming pools and cinema rooms,” in the capital are “lying empty as hundreds of thousands of would-be first time buyers struggle to find an affordable home.”
This item from the house journal of Britain’s liberal-left intelligentsia, which has been put before a global readership of millions and shared over 3,000 times through social media, merits a closer look. A little scrutiny reveals that certain facts about the Centre Point flat sales have not been included in it and that the construction of the story helps furnish two of the several misleading London housing narratives that do brisk, emotive business among the Protest Left, but very little to explain the true causes of London’s housing affordability problems and how these might best be addressed.
The first thing to note is that the Centre Point developer, Almacantar, has not “given up” trying to sell the building’s flats at all. There are 82 altogether in the scheme and more than half of them have already been purchased. What Almacantar has done now is stop using the services of investment specialists CBRE and estate agent Knight Frank to help it sell the rest, at least for the time being, in response to the well-documented fall off in demand for the capital’s most expensive residential properties over the last couple of years. However, potential buyers can still make inquiries to the Almacantar in-house sales team.
In other words, the developer has decided to spend less money on trying to sell the flats while the top end of the market is in a dip and hopes it will revive when various factors in the UK’s uncertain, Brexit-related financial climate stabilise. Quoted in Estates Gazette, Almacantar chief executive Mike Hussey says that current offers for the Centre Point flats “are now reflecting uncertainty on potential changes to stamp duty, taxation of overseas investors and other fiscal policy proposals”. And Knight Frank chairman Alistair Elliott told the Gazette that relaunching a full-on sales drive after the UK’s scheduled departure from the EU next spring, and when the delayed opening of the Crossrail Elizabeth Line will be nearer, “makes a lot of sense.”
Whatever else it is, Almacantar’s decision appears a commercially logical one for a commercial property developer to make – it has decided to scale back its sales drive for now in the belief that doing so will help things will turn out better for it in the longer run, much as ordinary homeowners looking to move will ponder the best time to put their house or flat up for sale. However, the Guardian article seems to imply that in seeking to secure the highest possible price for the remaining Centre Point flats, Almacantar is contributing to the capital’s wider housing affordability crisis. Why else connect the notion of a “glut” of expensive flats “lying empty” with the indisputable existence of “hundreds of thousands of would-be first time buyers struggling to find an affordable home” in the same sentence?
Are the two things related? Can this “glut”of posh empty flats be held responsible for London’s wider shortage of “affordable” homes? Not really.
For one thing, the posited “glut” doesn’t amount to very much in the wider scheme of things. The Guardian report says that “more than half the 1,900 ultra-luxury apartments built in London last year failed to sell,” but it doesn’t define “ultra-luxury” or say what length of time any sort of newly-built property might normally have to wait before being bought. In any case, around 1,000 deluxe dwellings without inhabitants is a drop in the ocean in a city of over 3.4 million households. And if the “ultra-luxury” flats hadn’t been built at all, what might have been built in their place? Given the high price of land in “prime” parts of London, which guarantees that new market-priced homes built there will be high priced too, quite possibly nothing at all.
Indeed, if anything, the fall-off in residential sales at the very top end of the market is a matter for regret in terms of the supply of what are officially defined as “affordable” homes in London. The Centre Point conversion actually makes this point quite well. The Guardian did not mention that the planning consent for the scheme granted by Labour-run Camden Council in 2013 required Almacantar to provide 13 flats for social rent in a neighbouring location and £6m for local street and transport improvements. Some will argue that Camden could and should have driven a harder bargain (and Camden has already said otherwise). Whatever, without the advance sale of those 40-odd “luxury” flats, the 13 for social rent would not exist.
Juxtaposing the (very real) frustrations of would-be first time buyers with the possibility of a relatively small number of extremely expensive flats standing unoccupied is an effective way to stir up moral indignation, but misleads readers into subscribing to the populist simplification, endlessly perpetuated in the Guardian and across the Left landscape, that “rich foreign investors” are “pushing out the poor”. The truth is that, indirectly, they often pay to house them. The different parts of London’s housing supply mechanisms are all connected, as Richard Brown has elegantly explained. Unsatisfactory? Yes, in many ways. But still reality. Why pretend it isn’t?
The Guardian Centre Point piece also reinforces another recurring, reductive London housing crisis trope, the one that compares the number of dwellings officially designated long-term empty – that is, unoccupied for six months or more – with the number of homeless households in London, and invites you to draw your own damning conclusions. Again, it is an easy way to scandalise but very little help to readers who might, quite reasonably, ask why such a situation exists. Leaving aside the practical and legal challenges raised by requisitioning homes left causally empty for a long time, the sizes and locations of such dwellings won’t neatly meet the accommodation needs of those who have no home, and there aren’t nearly enough of them anyway. Indeed, the number of long-term empty homes in London has fallen considerably in recent years. The situation just isn’t that simple.
London’s many problems with housing – the cost of it, the quality of it, the difficulty of getting the right types and quantities of it supplied to meet the needs of the city and its people – have been around in differing forms and to varying degrees for a very long time indeed. They arise from an array of intersecting factors tied up with land availability, building costs, economic conditions, population change, planning rules, public investment, personal tastes and political will. Practical options for resolving them are frequently limited and even the most virtuous of those deployed have a way of not having quite the desired effect. Pointing an outraged finger at 38 empty flats in the new model Centre Point does precious little to help find solutions – not least because, I am reliably informed, 36 of them aren’t even finished yet.