The London Assembly has been told that ultra-wealthy foreign investors are artificially inflating London's housing market by leaving homes empty and pushing residents to the outskirts of the city. According to data from the Ministry of Housing, Communities and Local Government (MHCLG), there were 105,138 empty homes in London in 2025, representing 2.7 per cent of total homes and an 81 per cent increase since 2016. Of these, 88 per cent are privately owned, while the remainder are local authority-owned.
Empty homes concentrated in expensive areas
Dr Jonathan Bourne from the Centre for Advanced Spatial Analysis at University College London told the London Assembly Housing Committee on Wednesday, July 7, that overseas investors are now the only buyers who can afford the most expensive properties in the capital. Most empty homes are located in the priciest parts of the city, meaning properties are either used as a 'leisure related' investment or left empty for future financial return.
“The people who would be living in luxury houses – stockbrokers, partners – now cannot afford to,” Dr Bourne said. “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.”
Ripple effect on housing market
Dr Bourne explained that the concentration of empty homes acts like a lever on the housing market, causing intense bubbles of high demand and high prices that ripple outward. “While the number of empty homes may not be large in absolute terms, it's the concentration that has an impact,” he said. “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.”
He noted that no part of London is so deprived that no one wants to live there, but in the most affordable parts there are no empty homes, while at the least affordable end, rates of empty homes are much higher. He argued that focusing on housing supply is misplaced and that City Hall needs to work with developers to make new properties unattractive to foreign investors.
Risk of a 'doughnut' London
Dr Bourne warned that ignoring London's position as a global prime city and the financialisation of the housing market risks creating a 'doughnut' London, where people move from the centre to the outskirts because they cannot afford a family home in areas where they grew up. “Their property in the centre of London is then converted into an empty home,” he said. “Housing is attractive because it has a phenomenal return on investment 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.”
Existing measures and proposed solutions
The Mayor of London has taken some steps to address the issue. The 2021 London Plan states that “boroughs should promote efficient use of existing housing stock to reduce the number of vacant and under-occupied dwellings” and that “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 are needed. He noted that the current empty homes surcharge, which adds extra council tax to unoccupied and substantially unfurnished properties, only extracts sums that “have no relevance” to the overall wealth of many investors. He highlighted Vancouver's system of charging a percentage of the property's value every year it is empty, but suggested the lack of a detailed housing register may make this unviable in London.
Instead, he proposed the most “legally plausible” lever is changing what sort of homes are built so they are affordable for residents but “unappealing for the investment class.”
Deputy Mayor defends record
Deputy Mayor for Housing Tom Copley defended the Mayor's record, suggesting that many so-called “luxury” flats are simply “ordinary flats with luxury price tags.” He told Assembly Members that the most effective way to bring down prices is to build more homes overall. “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,” he said.
He added that the primary way of resolving the housing crisis is delivering the social and affordable homes that Londoners need. 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.
