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This Regent’s Park terraced housing is typical of
that built around London during the Georgian period.
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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 geller@sfu.ca
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