This Regent’s Park terraced housing is typical of that built around London during the Georgian period.
By Michael Geller, Special to The Sun November 21, 2014 3:49 PM
As Vancouver debates measures to deal with the negative impacts of foreign real estate investment and vacant accommodation, it is instructive to see how London has been dealing with similar issues.
The price of housing in London has always been high relative to the rest of England and the world. However, during a recent trip, I learned that over the past decade, costs have increased dramatically as buyers from Asia, the Middle East, Russia and other European countries have priced many Britons out of the market.
One of the most extreme examples is One Hyde Park, which began marketing in 2007 as the most exclusive address in the world. At the time, it was priced at the Canadian equivalent of about $4,500 a square foot. However, over the past seven years, the price has risen to about $12,400 a square foot.
While some buyers are the end users, other properties are being bought purely as investments and not used at all.
Another example is The Shard, Europe’s tallest building. Three two-storey duplexes and seven single-storey apartments on floors 53 to 65 have been priced between $53 million and $88 million each. They are currently on the market and expected to be purchased almost exclusively by offshore buyers.
To address what many consider the negative impacts of foreign buyers, earlier this year a leading right-wing think-tank called on government officials to adopt a scheme similar to one operating in Australia, which restricts sales to overseas buyers unless they add to the existing housing stock.
Such a system would mean that no existing home could be sold to a foreign buyer. Furthermore, new units could only be bought by non-residents if their investment would result in one or more additional properties being built.
It is interesting to compare foreign-owned vacant properties in London and Vancouver.
A U.K. property firm estimated that in 2013, 70 per cent of “new-build” properties in Central London went to foreign investors, while 30 per cent of London’s luxury homes worth more than $1.8 million were bought by non-U.K. residents.
Last year, the U.K. chancellor announced he was closing a loophole that allowed foreign investors to make huge profits on sales of U.K. homes by avoiding any capital gains tax. A 28-per-cent capital gains tax will begin in April 2015. In Canada, foreign investors pay tax on any real estate gains.
The U.K. has also imposed a 15-per-cent “stamp duty rate” or purchase tax for foreign investors who buy through corporate shell companies.
During my recent trip, the newspapers were full of stories about a proposed ‘mansion tax’ being put forward by the opposition Labour Party. It would apply to homes costing $3.6 million or more and add an additional tax payment of $442 per month. However, those earning less than about $74,000 would be allowed to defer payment until they sold or died.
Echoing the position of Vancouver COPE mayoral candidate Meena Wong, the U.K. government and others are advocating that local councils impose higher property taxes on foreign investors who leave homes empty. Last June, London Mayor Boris Johnson added his voice by urging local authorities to “whack up the council tax” on houses that remain empty for more than a year.
However, local authorities can already impose a 50-per-cent tax increase if a property remains vacant after two years, but are not doing so because of the administrative difficulties in determining which properties should be penalized. Some absentee owners are avoiding the council tax surcharge by moving in a table and chair.
As Liam Bailey, global head of research at Knight Frank, eloquently put it: “The problem with measures to tackle empty homes or under-occupied homes, whether sensible or not, fundamentally comes down to practicalities. Namely, how government can actually define and then identify empty homes. The practical implications of the policy are likely to be limited.”
In the U.K., the federal government is very much a part of the conversation. In Vancouver, the federal government has been silent.
Another discussion taking place in Vancouver is how best to increase density in and around single-family neighbourhoods without resorting to highrises.Again, it may be instructive to look at London.
Throughout the city, one finds medium-density ‘zero lot-line’ terraced housing. By ‘zero lot-line,’ I mean each unit extends from one side property line to the other, not unlike most commercial buildings along arterial roads in Vancouver.
Terraced housing was built from the 1600s to the early 20th century throughout London. While some units were very modest, especially during the Victorian and Edwardian eras, others were quite the opposite. A glamorous Georgian end-terrace house in Cornwall Terrace Mews overlooking London’s Regent’s Park sold in 2013 for $145 million, probably the most expensive terrace home sale in history.
One of the defining features of terraced housing is the repetitive, uniform front facade and uniform height. This height can vary from two to five floors. In addition, many properties, especially during the Georgian era, had a lower level accessed from a gated front courtyard.
Today, many of the terraced units continue as single-family properties. However, others, especially larger properties, have become hotels or offices, or been divided into flats providing more modestly priced accommodation. In many instances, elevators have been added. However, other terraced housing still requires residents to climb the stairs.
As Vancouver and surrounding municipalities redevelop, I believe there are many opportunities for terraced housing, especially as a transition between higher density, mixed use arterial development and single-family neighbourhoods behind. It might also be built around parks and community centres.
Depending on the location, the front and rear yard setbacks could vary to fit in with the surrounding neighbourhood character. A lower level might be included as a separate suite for sale, or as a rental unit, not unlike the basement suite in a single-family house.
Vancouver can learn from London’s experience when it comes to both regulating foreign buyers and new forms of housing.
Michael Geller is a Vancouver architect, planner, real estate consultant and developer — and a frequent contributor to Westcoast Homes. He can be reached at firstname.lastname@example.org
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