Britain desperately needs more housing. Yet every day, flats are built that people at the sharp end of this housing crisis can’t or don’t want to buy. A uniquely absurd modern British phenomenon is gradually taking shape: cities and towns full of ghost homes.
New build flats continue to appear across the country: in London, Manchester, Leeds, Bristol, Cardiff. In many ways, they represent a solution to Britain’s housing crisis, particularly in towns and cities. Flats are high-density – you can pack more homes into limited space by building upwards in a tower block than you can by building low-rise houses.
But there’s a problem: increasingly few people want to buy the expensive new flats that developers have built. As a result, we are being left with shiny new homes that sit empty, particularly in London.
It’s estimated that there are currently just over 3,500 unsold completed homes in London. Some of them may have been intended as so-called “affordable” shared ownership homes.
Take the brand new block not too far from where I live, which appears to be sitting unoccupied. It’s been finished for almost a year. And yet, at night, there are barely any lights on. One reason could be the cost: one-bedroom flats in this development are priced at nearly £1m, despite looking fairly ordinary.
In May, there was outrage at statistics that showed 19 newly built homes for private sale had actually been sold in London. The Government blamed this on problems with the process of buying a home in Britain – the complex and expensive conveyancing process, plus the occasionally obstructive behaviour of conveyancers and estate agents.
We’re still building tens of thousands of flats in London, but not as many as we used to. And, certainly, not as many as the Government needs to if they’re going to hit their 1.5 million new homes target.
It wasn’t always like this. Between 1997 and 2007, when Labour was last in Government, flats were the joint fastest-growing property type in England, rising in number, on average, 13 per cent per year. And then, after the financial crisis, when the number of new homes appearing on the market was low, they continued to increase by around three per cent a year on average.
This is because flats were desirable and relatively affordable starter homes, city stopover pads or buy-to-let investments.
Today, flats are expensive. Even relatively basic flats are regularly marketed as “luxury homes”. In one development in Cardiff, for example, a two-bedroom flat will set you back more than £400,000.
Over the last three decades, house prices have risen to historic highs. In London, the market became so heated after the first Coronavirus lockdown in 2020, that prices have actually stalled and fallen slightly since. This has all coincided with higher interest rates, which make it harder for people, particularly first-time buyers, to get mortgages, and inflation, which has made building materials and labour more expensive, putting London’s housing market between a financial rock and a hard place.
I live in a one-bedroom new-build flat and I love it. It has large windows that open on two walls in the living room. My home gets loads of light and I never feel boxed in. It is also really good quality, with fixtures and fittings that are almost as good as they were when I moved in back in 2017. On top of that, along with my neighbours, I own the building that contains our flats, which means we don’t have to deal with useless managing agents or feckless freeholders.
Even so, my flat cost me almost half a million pounds in 2017. At several points in recent years, it’s been valued at less than that, which was concerning. However, now it’s probably worth around the same, which will make it harder to buy something bigger.
Another reason why new flats may struggle to sell is that people are becoming more and more aware of what is often called “the new build premium”. Put simply, like a new car, new flats don’t hold their value in the short to medium-term.
Across the country, new build leasehold flats are causing misery. Whether that is because of unsafe cladding, poor quality buildings that have left people with serious defects or expensive service charges and freeholder landlords who don’t care, Britain has a new-build flats crisis. This could be the real reason developers aren’t selling as many as they used to. After watching what unfolded after Grenfell, with young people caught in starter homes they can’t sell while facing huge bills, why would anyone in their right mind want to buy a flat in a block?
The Government’s long-awaited Leasehold and Commonhold Reform Bill has also been delayed by a fallout between Number 10 Downing Street and the Treasury over whether Labour should deliver on their promise to cap expensive ground rents for homeowners.
This has meant there is still a hell of a lot of uncertainty in the market, and it won’t reassure people who otherwise might buy a new-build flat.
As a result, building more of these homes could well be a major folly that leaves us with sparkling ghost towers. Don’t be surprised if those homes end up being bought by investors who rent them out or, worse, leave them to sit empty because renting isn’t as lucrative as it once was.
The terrible stories that have emerged about building safety since Grenfell, as well as the feudal and exploitative leasehold system, have “shown potential buyers that flats are not desirable,” says housing market expert Neal Hudson.
“Most people would much prefer to try and buy a house if they can afford it,” he adds. Developers know this, which is another reason why construction starts in London, where flats are usually built in high volumes, are slowing.
And therein lies the rub. All over the country, but particularly in our towns and cities, buying a house is expensive and difficult to do. Indeed, the average house price is now almost eight times the average income.
Labour is in a bind. Hitting their target of 1.5 million new homes will rely heavily on the construction of new flats, as well as houses. But as things stand, flats are simply not desirable, and with the Leasehold and Commonhold Reform Bill only just making its way through Parliament, wise buyers will look at the mess flat owners have been caught up in and decide they’re better off waiting to see how the reforms shake out.
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