An authority in London is poised to use planning powers to prevent rich foreigners buying newly built homes and then leaving them empty.

Islington Council said it believes this is the first attempt by a council to penalise “buy to leave” – the practice whereby investors buy premium residential property in central London, which is then left empty as a liquid asset rather than rented out.

Islington says that up to half of new homes in London EC1 have no one living in them.

The council is now considering plans to impose a Section 106 planning condition on property developers that new homes must be occupied. If not, the developer will have to pay a lump sum.

The proposal is in a consultation paper, ‘Preventing Wasted Housing Supply”.

Islington said there has been an increase in property investment, but that the problem was empty homes, not overseas ownership as such.

Islington’s consultation paper says that for up to half of all new homes adjacent to the City of London, there is no entry on the electoral role.

Cllr James Murray, executive member for housing and development, said: “It’s galling for Londoners to see homes being sold overseas before they’re even built – and it’s outrageous for new homes to then stand empty in the middle of a housing crisis.

“We cannot stand by as new homes sit there empty, purely as investments, and so we are setting out our plans to end this.”

The consultation runs until April 14.