St George Wharf: London’s empty tower

Huge areas of London's tallest residential tower stand empty because their wealthy owners live elsewhere, according to an investigation by The Guardian. At present, more than 130 of the 214 apartments sold in the 50-storey St George Wharf Tower in Vauxhall are believed to be owned by overseas investors. Many appear to be used for only a few weeks a year.

The five-storey penthouse, worth £51m, is ultimately thought to be owned by the family of former Russian senator Andrei Guriev, a business owner in partnership with President Putin's campaign manager Vladimir Litvinenko. Other owners of apartments in the tower are thought to include former Nigerian government minister Ebitimi Banigo, Kyrgysz politician and vodka tycoon Sharshenbek Abdykerimov, and Singaporean businessman Chong Meng Lai, reports The Guardian.

Roughly a quarter of these 130 flats are held through offshore companies based in tax havens. Although there is nothing illegal about this, the use of offshore companies to hold property in Britain has become increasingly controversial, especially in the wake of the Panama Papers leak in April.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

Hence the government has expressed a desire to crack down on this trend: last month, the prime minister announced plans to create a register for offshore companies seeking to buy property in the capital. This would require them to reveal the identity of the individuals involved in purchases, ending the buyers' ability to remain anonymous.

Whether this will make any difference to demand for UK property by the international super-rich remains to be seen. But there's no question that the tower offers a stark example of the problems in London's housing market, where rich investors are contributing to soaring prices for luxury flats at a time when local buyers, especially younger ones, are squeezed out of the market.

Recently elected London Mayor Sadiq Khan has proposed giving London's residents the first option on new houses. Developers of new properties might be required to market them for the first six months in London. That might not make much difference in the tower the cheapest apartment for sale costs £675,000 but it's clear the trend is towards more populist gestures.

News in brief

Registrations were down 46% across the UK last month. This is partly due to buy-to-let investors pulling out of the market after the stamp duty surcharge came into effect on 1 April. Fears about the impact of Brexit have also contributed. So sellers will need to be more realistic with asking prices, said Smith. Overvalued properties are likely to struggle to attract buyers and lenders may refuse to grant high loan-to-value mortgage applications. However, Smith added that he believes this will be a "slight blip" in the UK's property market in the long term.

Since March, many British buyers seeking holiday homes in the EU have reportedly been asking for a "Brexit clause" to be written into the purchases, allowing them to withdraw if the referendum leads to market jitters. Now, nervous homebuyers worried about the impact of Brexit on UK property prices are also being offered the special clauses.

Those buying a flat at the Two Fifty One development on Southwark Bridge Road where prices start at £655,000 will have the right to pull out of the transaction and have their £2,000 reservation fee refunded if they're not happy with the result on 23 June.