London house prices have risen 18% in the first quarter of the year partly thanks to foreigners seeking investment opportunities. As Hayley Platt that means many homes are never lived in.
REPORTER: A pied-à-terre in London's Chelsea. But don't be fooled by the furnishings. This 2-million pound pad hasn't been lived in for months. It's an example of a worrying trend in central London - not buy-to-let but buy-to-leave. Property in London is so lucrative these days just owning a house is enough - no need to live there or even find tenants. Wealthy foreigners are often the owners. Patrick Bullick is from the National Association of Estate Agents.
PATRICK BULLICK: "I would guess it would be somewhere between 50-70 percent of the properties in some cases are non-resident owned and often empty. These are often second or third investments around the world. They're not their primary residence by any means and so they're just sitting idle."
REPORTER: Location is key. The super-rich like to buy in the so-called 'Platinum triangle'. Mayfair, Knightsbridge and Belgravia where properties are among the highest in the world. Further north, is what's become known as billionaires row (Bishop's Avenue). It's estimated a third of mansions there are empty, some have not been lived in for decades, and have been left to rot.
PATRICK BULLICK: "Frankly when the prices are going up so quickly and there's never any real intention to live in those houses, it's purely for an investment, there's no point in crystalising the cost of doing a newly built property to then hold on it for 10 years empty, or even if you rented it out. It just doesn't make sense to spend the money when the asset's going up at such a pace anyway."
REPORTER: The latest index from the Nationwide shows London house prices are on average 18 percent higher than they were last year. They're now 20 percent higher than their 2007 peak. Low interest rates have helped fuel the property boom - as has the U.S. crackdown on tax evaders.
PATRIC BULLICK: "The Swiss banks have had to clean up their act considerably since the Americans became over excited about all the hidden money in Swiss bank accounts and so London has become an even more attractive place for people to put their money."
REPORTER: It's hard to quantify the impact of buy-to-leave properties on the local economy. But empty homes don't do anything to boost consumer spending - something Britain's recent recovery has been built on. And the problem's not unique to London. Property hot spots - like Hong Kong, New York and Dubai are also seen as places to invest in a home without actually living in it.
A pied à terre (literally 'foot on the ground' in French) is a small flat/apartment, usually in a town, that you do not live in as your main home but keep for use when necessary. • They live in Scotland but have a pied-à-terre in London.