The Impact of Ultra-Rich Foreign Investors on London’s Housing Market: A Deepening Crisis

Foreign investors with significant wealth are reportedly exacerbating London’s housing crisis by leaving numerous properties unoccupied, thereby forcing local residents to relocate to the outskirts of the city. Recent figures indicate that there were 105,138 empty homes in London as of 2025, as per the Ministry of Housing, Communities and Local Government. This figure accounts for 2.7 per cent of the total housing stock in the capital and shows an alarming increase of 81 per cent since 2016.

While the number of empty homes owned by local authorities has climbed in recent years, a staggering 88 per cent of these unoccupied properties are under private ownership. During a recent meeting of the London Assembly Housing Committee, experts highlighted that overseas investors have become the primary purchasers of the most expensive properties in London, many of which remain empty. This situation has prompted concerns that, in the face of a housing crisis, these properties are being treated as “leisure-related” investments or are simply left vacant in anticipation of future financial gain.

The Impact of Wealth Disparity on Housing

Dr Jonathan Bourne from the Centre for Advanced Spatial Analysis at University College London articulated that the typical professionals who would ordinarily inhabit luxury homes—such as stockbrokers and partners—are now priced out of the market. This has led to a ripple effect, pushing these individuals into adjacent areas, which in turn fuels demand and escalates prices in those regions. He explained that the international elite possess a purchasing power that surpasses even that of London’s own affluent residents.

Although the overall number of empty homes may seem modest, their concentration in specific areas significantly influences the housing market. High concentrations of vacant properties can create intense demand and pricing bubbles that spread throughout the city. Dr Bourne asserted that while every part of London remains desirable, there are no empty homes in the most affordable neighbourhoods, whereas the least affordable areas see a higher prevalence of unoccupied properties.

Reassessing Housing Strategies

Dr Bourne suggested that the current focus on housing supply is misplaced and urged City Hall to collaborate with developers to make new properties less appealing to foreign investors. He warned that if London is not careful, it risks becoming a “doughnut” city, where individuals are compelled to move to the outskirts because they can no longer afford homes in their childhood neighbourhoods, leading to more central properties being left empty.

He emphasised the importance of viewing London as a global prime city, where housing is not only a safe investment but also provides substantial lifestyle benefits. This attractiveness is likely to draw external investment, resulting in an increased number of empty homes. In response to this crisis, the Mayor has initiated measures outlined in the 2021 London Plan, which advocates for the efficient use of existing housing stock to mitigate the number of vacant and under-occupied dwellings. Furthermore, it supports boroughs in addressing the issue of new homes being left unoccupied, often referred to as “buy to leave” properties.

Calls for Radical Interventions

However, Dr Bourne contended that more radical measures are necessary to prevent the gradual hollowing out of the city centre. He critiqued the existing empty homes surcharge, which imposes additional council tax on unoccupied and unfurnished properties, arguing that it merely extracts funds that are inconsequential to the overall wealth of many investors. He pointed to Vancouver’s approach of charging a percentage of a property’s value annually while it remains empty, although he acknowledged that developing a detailed housing register might pose challenges for its implementation in London.

Instead, Dr Bourne proposed that the most feasible approach for City Hall would be to influence the type of housing constructed, ensuring they are affordable for residents while remaining unattractive to investors. In response to these concerns, Deputy Mayor for Housing Tom Copley defended the Mayor’s record, suggesting that a portion of the so-called “luxury” flats being built are, in fact, ordinary flats priced at a luxury level.