MP says The Bishops Avenue is 'stark example of empty homes problem' and wants councils to be given powers to treble rates

Labour has accused the Conservatives of being obsessed by taxing the poor for unoccupied bedrooms while refusing to act against the super-rich who keep mansions empty for years.

The allegations follow the Guardian's revelation at the weekend that a third of houses on the most expensive stretch of "Billionaires Row" in Hampstead, north London, are standing vacant.

The London mayor, Boris Johnson, called on more town halls to levy a punitive 50% extra council tax on owners of empty homes. But Labour immediately hit back saying it was not enough to end the "scandal".

At least £350m worth of property is sitting unused in The Bishops Avenue, the so-called Billionaires Row. The vacant and often ruined properties include 10 mansions previously owned on behalf of the Saudi royal family that have not been lived in for up to 25 years.

The situation prompted local anger at the weekend. Phoenix Rainbow, a housing activist and community organiser in the London borough of Barnet, which includes the avenue, said it showed "gross mismanagement of the space we have in this country".

Johnson said: "With unprecedented demand for housing it makes little sense for property which could easily be rented to be left empty for years on end. I would welcome more boroughs charging 150% extra council tax to owners of property that has been empty for over two years. These taxes should deliver a strong incentive to encourage owners to rent out or live in long-standing unoccupied homes."

Clive Betts MP, chair of the Commons communities and local government select committee, said the situation in the avenue was "an astounding and stark example of the empty homes problem". He called for councils to be given powers to treble rates on empty homes after a certain period.

A 50% empty homes premium on properties standing empty for two years has been available to councils since last April. But some authorities have complained that it has had no effect on multi-millionaire owners. On Bishops Avenue the fine would come to just £1,416.20 a year.

The swimming pool at 'Redcroft' on The Bishops Avenue. (Graeme Robertson)

Betts said: "People can claim to do what they want with the property they own, but how must those living in cramped and poor accommodation feel when they see some of the most palatial, beautiful, properties with incredible amounts of space going to waste?

"This is a government obsessed by under-occupation of two-bed council houses in London occupied by people with nowhere else to go. But in the same city you have mansions unoccupied with no action being taken."

Labour's policy is a 100% council tax levy on empty homes; it estimates there are 50,000 empty homes in London.

The shadow housing minister, Emma Reynolds, said: "With the country in the midst of the biggest housing crisis in a generation, at its worst in London, it is a scandal that overseas investors are buying London homes as piggybanks with no intention of living in them.

"Labour would crack down on empty home loopholes and give councils proper powers to tackle buy-to-leave where overseas investors buy up properties and then leave them empty."

Asked to comment on The Bishops Avenue revelations the communities minister, Liberal Democrat Stephen Williams, said the coalition had supported councils to "tackle the blight of empty homes".

He said government policies included "reforms on council tax flexibilities and the new empty homes premium,[which] allows councils to remove the special tax subsidies being given to empty homes".

The free-market thinktank Civitas is increasing pressure on the government by proposing a ban on buyers outside the EU acquiring existing homes; it would let them buy new property only if it led to more properties being built.

Civitas cites statistics showing that 85% of prime London property purchases in 2012 were completed with overseas money and says overseas investment distorts house-building priorities.

In central London only 27% of new homes went to UK buyers, according to the estate agency Knight Frank. More than half were sold to buyers from Singapore, Hong Kong, China, Malaysia and Russia.

Councils have powers under empty dwelling management orders to take over the running of empty homes and collect rent or force their sale, but these powers are not routinely used.

Conservative-controlled Barnet council, which oversees The Bishops Avenue, cited the legal costs of taking on and challenging absent owners.

Barnet council's leader, Richard Cornelius, said: "The Bishops Avenue is in its own little bubble and frankly has little connection with the rest of Barnet. I would rather spend public money bringing family houses back into use than get involved in battles with the lawyers of billionaires."

David Ireland, chief executive of the Homes from Empty Homes campaign, said the council's failure to bring the vacant mansions back into use sent out a bad message nationally.

He said: "There are countless people in inadequate housing and here are homes on The Bishops Avenue that could be used. I call on the local authority to use empty property management orders or enforced sale of these properties. If they showed they were willing to do that it would force other owners to take action."