Cooking the Books: Buying to leave empty (2007)

The Cooking the Books column from the December 2007 issue of the Socialist Standard

In the 1970s Centre Point, 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 Centre Point 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 Centre Point 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.