Ultra-wealthy foreign investors are artificially inflating London’s housing market by leaving homes empty and pushing residents to the outskirts of the city, the London Assembly has been told.
By Kumail Jaffer, Local Democracy Reporter
Ultra-wealthy foreign investors are artificially inflating London’s housing market by leaving homes empty and pushing residents to the outskirts of the city, the London Assembly has been told.
There were 105,138 empty homes in London in 2025, according to data from the Ministry of Housing, Communities and Local Government (MHCLG). This is 2.7 per cent of the total homes in London respectively and represents an 81 per cent increase since 2016.
While the absolute number of local authority-owned empty homes has increased in recent years, the majority – 88 per cent – are owned privately.
Earlier this week, the London Assembly Housing Committee was told that overseas investors are now the only buyers who can afford to purchase the most expensive properties in the capital, and that most empty properties were in the most pricey parts of the city.
It means that, despite London’s housing crisis, properties are either being used as a “leisure related” investment or left empty for a future financial return, according to Dr Jonathan Bourne from the Centre for Advanced Spatial Analysis at University College London.
“The people who would be living in luxury houses – stockbrokers, partners – now cannot afford to,” he told the Housing Committee.
“So they get pushed out into a nearby area, and that’s what causes this ripple. The international super rich can afford to spend more than the London super rich.
“While the number of empty homes may not be large in absolute terms, it’s the concentration that has an impact. High levels [in one area] act like a lever on the housing market and cause intense bubbles of high demand and high price that ripple out.
“The housing market is hot, there is no part of London that is so deprived that no one wants to live there. In the most affordable parts of London, there are no empty homes. At the least affordable end, you see much higher rates of empty homes.”
He said that focus on the supply of housing was misplaced, and that City Hall needed to work with developers to make new properties unattractive to foreign investors.
“[We cannot] ignore London’s position as a global prime city and the financialisation of the housing market – it’s conceivable we risk a ‘doughnut’ London, where people move from the centre to the outskirts, because they cannot afford a family home in areas where they’ve grown up in,” Dr Bourne added. “Their property in the centre of London is then converted into an empty home.
“We need to consider London as a global prime city – housing is attractive because it has a phenomenal return on investment (ROI) and provides a lot of lifestyle benefit. This can result in a lot of external investment into the city, resulting in a lot of empty homes.”
The Mayor has already taken some steps to address this, with the 2021 London Plan stating that “boroughs should promote efficient use of existing housing stock to reduce the number of vacant and under-occupied dwellings”. It also says “the Mayor will support boroughs with identified issues of new homes being left empty, sometimes known as ‘buy to leave’ properties, to put in place mechanisms which seek to ensure new homes are occupied.”
However, Dr Bourne suggested more radical interventions were needed to prevent the hollowing out of the city centre.
The current empty homes surcharge – extra council tax added to properties that are unoccupied and substantially unfurnished – levied by local authorities only extracts sums of money that “have no relevance” to the overall wealth of many investors.
He noted Vancouver’s system of charging a percentage of the property’s value every year that it is empty, but suggested the lack of a detailed housing register may make this unviable in London.
Instead, he suggested the most “legally plausible” lever City Hall could pull is changing what sort of homes are built so that they are affordable for residents but “unappealing for the investment class”.
Deputy Mayor for Housing Tom Copley defended the Mayor’s record and suggested a proportion of the so-called “luxury” flats being built were simply “ordinary flats with luxury price tags”, telling Assembly Members that the most effective way to bring down prices was to build more homes overall.
He added: “Supply is constrained and has not kept up with demand – there are those who just want to buy a property, but the problem is the luxury price tag and that is the result of supply and demand.
“The primary way of resolving the housing crisis is delivering the social and affordable homes that Londoners need.”
He also noted that while the Mayor does not have “direct power” over empty homes – that sits with boroughs – recent Right to Buy-back programmes launched by City Hall have enabled councils to buy 2,400 homes back.
“It is fair to assume a number of them will have been empty homes,” he said.
