A windfall tax on monster basements could solve London’s housing problem

The mega-rich are best housed behind high fences, on wooded estates patrolled by dogs; that way, they don’t have to annoy the rest of us. But I can see how irritating it must be, if you live in the crowded Ladbroke Grove area of west London, to have a neighbour like Reade Griffith, an American hedge-fund manager who has received planning permission for a vast basement extension to his house that will take many months to excavate. Fellow residents of Kensington and Chelsea, other than those wealthy enough to have similar schemes in mind, will probably think it serves him right that he has been charged an £825,000 ‘Section 106’ levy (a device usually applied to large commercial developments) to contribute to ‘affordable housing’ developments in the royal borough. Indeed — leaving any whiff of envy aside — his story may contain the germ of a solution to Britain’s growing shortage of cheaper homes for working people.

A report by the Centrepoint charity last month predicted a shortfall of more than 900,000 affordable homes in England by 2021, with 190,000 of them needed in London. Housebuilding of all kinds stalled during the financial crisis, falling far below levels needed to meet demand at the lower end of the price and rental range. Developers who are now back on site will do their utmost to wriggle out of obligations to provide a proportion of affordable units within each new scheme. Meanwhile, a proposal by the Future Homes Commission (sponsored by the Royal Institute of British Architects) for an ambitious programme of social housing funded by local authority pension funds seems to have fallen on stony ground.

So why not invite our new rich neighbours to do their bit for the community? I’m dead against the Lib Dems’ mansion tax proposal, which would confiscate savings from long-term homeowners or even force them to sell; but I wrote once before that ‘foreign owners of empty mansions deserve to be taxed till the bricks squeak’ and let me now elaborate.