Property speculators are hurting London

It's time we learnt a housing lesson from the Swiss.

London estate agents like to talk about some multi-million-pound house or other making a "delightful family home", says Ross Clark in The Times. A more accurate description might be: "This property will make an ideal speculative investment for a tax-dodging corporate vehicle registered in the Cayman Islands." It is the latter type of buyer who is driving up central London property prices to ever more absurd levels.

Clark points out that, in Kensington and Chelsea, 7.8% of properties are now registered as second homes higher than in the Lake District and many other areas notorious for their number of holiday homes. In places like Belgravia, the proportion is even higher walk the streets at night and you will see precious few lighted windows. (True enough: I've done it.)

Meanwhile, it gets ever-harder for people who actually work in London to afford somewhere decent to live. "Why do we allow our housing stock to be commandeered as instruments of speculative investment by individuals and companies which do not even pay tax in the UK?" wonders Clark. Other tax havens are not so foolish.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Switzerland, for example "hardly a country that seeks to repel the rich" sets a strict limit on the number of foreign nationals allowed to buy property. You only get a permit if you can prove you intend to live in the country. And don't even consider trying to buy-to-let.

The Federal Office of Justice puts it like this: "The acquisition of residential real estate by foreigners for rental requires prior authorisation and is prohibited because there are no grounds for granting authorisation."

Clark thinks London should follow suit. His solution banning all foreign speculators may be extreme, but he's surely right that cities need to make sure their property markets work for the people who live in them and that London is failing "miserably" to do this.

There are some anomalies which are easily addressed. Take the council-tax discount which enables rich owners of second homes, or long-term empty properties, to claim a refund each year. In Kensington Palace Gardens, says The Sunday Times, where houses change hands for £15m or so, one in five property owners qualifies for this particular tax break. Thus last year the Sultan of Brunei enjoyed a second-home discount of 10% on his mansion in the street last year, reducing his annual bill from £2,158 to £1,942.

This anomaly, at least, is on the way out. From April, councils will have the power to remove the discount: Kensington and Chelsea plans to scrap it, and so does Westminster. It may not add up to much, but it's a tiny step in the right direction.

We can't ban wealthy foreigners from buying houses in London, and nor should we: they spend lots of money in the city and, directly or indirectly, generate jobs. But the speculators are another matter. Clark is right it's time we changed the rules and learnt a lesson from the Swiss.

Tabloid money "Was bunga bunga worth all that wonga wonga?"

Transport under-secretary Norman Baker says rail fares are so dear because we have a "premium service", writes Rod Liddle in The Sun. I suspect someone has "sucked his brain out of his ear through a straw then pumped in a tin of Crosse & Blackwell oxtail soup.

Our rail fares are the dearest in the known universe and as for a premium service, tell that to the people who pay upward of £100 a ticket and must stand for two hours Fares are dear because it was a botched privatisation and the private companies milk the system, with far too little spent on investment."

"Italian sleazeball/former PM Silvio Berlusconi has been ordered to pay his ex-wife £2.5 million a month in maintenance," says Alison Phillips in the Daily Mirror. "Ouch! I wonder if he still thinks that bunga bunga was worth all that wonga wonga."

"Once you start dishing out benefits, it is impossible to reduce or withdraw them without screams of protest," says Trevor Kavanagh in The Sun. "Nobody on £60,000 a year should be on welfare in the first place. That includes well-off pensioners on free bus passes and other forms of political bribery. So a limit on child benefit is perfectly justified. But as David Cameron now knows, nobody will give it up without feeling robbed."

"Seven firemen in three fire engines stage a dramatic pond rescue to save a stranded' squirrel," says The Sun. The story may sound as if it's been invented but, sadly, "this ridiculous over-reaction was NON-fiction and cost real-life taxpayers £6,000. The real lunacy of it being that squirrels can swim if they have to."

"Having resigned as an MP, Sinn Fein/IRA's Martin McGuinness is now entitled to a winding up' allowance to shut down offices, amounting to £53,150," says Ephraim Hardcastle in the Mail. "Will he claim it? I don't see why not." He and Gerry Adams claimed MPs' expenses despite never taking their Commons seats.