Taxing homes of super-rich would raise more than £86m a year for social housing, research shows

Taxing luxury homes in London bought by the global super-rich would raise more than £86m a year for social and affordable housing, according to research undertaken by experts from Goldsmiths, University of London.

Properties in the capital worth £5m or more sold for a combined £5.2bn between 2011 and 2013 – with sales to wealthy overseas buyers making up half that amount.

A 10% levy on those sales would have generated £260m - or £86.7m a year - to help key workers and those on low incomes struggling to buy or rent in the capital.

The research was undertaken by academics at Goldsmiths, the University of Sheffield and the University of York.

Professor Roger Burrows, formerly Pro-Warden (Interdisciplinary Development) was lead on the project for Goldsmiths supported by colleagues from the Department of Sociology.

One of the lead researchers, Professor Rowland Atkinson from the University of Sheffield, said a tax imposed by central government on luxury property sales could be used to create an inclusive city fund to help counteract the adverse impact of super-rich investment on London’s housing market.

Atkinson said the research suggested that a 10% levy would not deter the super-rich from investing in the capital because no other international city offered the same level of luxury services, cultural attractions and relative safety.

Professor Atkinson said: “We need a kind of billionaire bonus fund where [the super-rich] publicly say, ‘I’ve got all this money and I will sink some of this into a housing infrastructure fund that tackles the problem of affordable housing for key workers.”

The researchers write that the UK government “appears to see its function increasingly as that of an auctioneer presiding over the discounted sale of state assets, including swaths of the capital’s land to foreign investors … This latent bias towards the wealthy emerges in planning diktats, welfare changes and housing plans, as the city acts to divest itself of what is seen as redundant human capital, now marked by the displacement of welfare recipients and, symbolically, through the demolition of public housing estates in favour of ‘mixed-use’ sites”.

In a briefing paper, the researchers also call for higher bands of council tax for the global super-rich, with the top level imposed on those who leave their homes vacant for more than three months a year.

There has been a dramatic rise in overseas buyers of London property since 2007, according to the researchers. In 2011 alone, they accounted for more than £5bn worth of housing sales. The global uber-wealthy are concentrated in Kensington and Chelsea, Westminster and Camden. Within Westminster, 69% of homebuyers in Knightsbridge in 2011 were from overseas, while in both Belgravia and St John’s Wood the figure was 60% and in Mayfair just over half.