Examination of Witnesses (Questions 220
TUESDAY 6 NOVEMBER 2001
220. Do we really need a new Housing Renewal
Programme in order to undertake the sort of programmes we have
seen and the ones you have been talking about today?
(Mr Boylan) I believe we do. Whether it is a separate
fund or an additional resource available through a mainstream
channel we are less exercised by. Our preference would be for
a hypothecated fund to support renewal. The level of the problems
you find is such that they simply outstrip by a quantum the resources
available through mainstream programmes either from government
funds or the housing corporation or initiatives such as the Neighbourhood
Renewal Fund. In central Liverpool and central Manchester, the
problem is of the order of gap funding required of about £400
million for these two cities.
221. Presumably that goes for every other city
in the country?
(Mr Boylan) The problems of many other cities interface
at different times in different ways. The housing market in Sheffield
has characteristics which are very dissimilar to Liverpool and
Manchester. The housing market dynamics are not the same.
222. Would that £400 million include taking
away the terraced houses and replacing them?
(Mr Boylan) Yes. It would also support a range of
initiatives such as value indemnification to help promote the
reprovision of new housing.
223. Explain the value indemnification system.
(Mr Boylan) It is something that we are exploring
and are keen to try to develop. If we have a problem about lack
of individual investment in areas and therefore maybe value decline
in some areas, we want to create options, that may be dependent
upon public funding in the first instance, but would get private
insurers and other agencies to help create insurance policies
for owner occupiers to take out to guarantee people against problems
with property values. This has been used successfully in the United
States and evidence from insurers at the moment is that they are
keen to work in areas of new housing and less keen to work in
areas of traditional housing.
224. Is it just a bid for more resources or
are you now saying there is something that needs special attention
in the areas that we have been looking at?
(Mr Boylan) It is a bid for more resources but it
is also about understanding points of critical importance in the
regions and sub-regionally, in the national economy. The dead
weight that the declining residential areas place on the economic
performance of major cities such as Manchester and Liverpool is
something we have to take on board at a national level and in
a national, strategic context. It is about helping to give some
real meaning to the whole issue of the urban renaissance and the
future of our cities.
225. The Empty Homes Agency argues that every
local authority should prepare an empty homes strategy. We have
been told over the last two days that different local authorities
have different views on this. How do you see the advantages and
limitations of your authority preparing an empty homes strategy?
(Mr Bailey) I was involved in the Manchester original
Empty Homes Strategy. One of the things that becomes apparent
in areas like Manchester where there is a fall in demand is that
an empty homes strategy is only a very small part of a much bigger
picture, trying to develop techniques to bring individual empty
properties back into use. The problem with a lot of empty homes
strategies is that they have been developed within the Empty Homes
Agency and they do not work in the North because they do not have
any experience of dealing with the breadth of the problems that
the north is facing.
(Mr Boylan) We believe that local authorities should
be producing local strategic plans and community plans that are
comprehensive and far reaching and set out clearly how we will
deal with the problem and how we will seek to manage the Empty
226. Earlier, Mrs Newing gave us a graphic example
of negative equity. What measures do you feel should be introduced
to tackle this problem in unpopular areas?
(Mr Boylan) We would not make the case that negative
equity should become a problem for the public purse. In most instances,
it arises as a result of a cyclical market. In 1991, negative
equity was a monumental problem. We need to put together a package
of measures that can effectively make an offer to local people
as quickly as possible. There are a number of ways in which we
can do that. We can explore equity stakeholding so that people
can move into new property at no cost.
227. There are two separate problems. There
are those who are suffering from negative equity and those who
fear to move into some of these areas because there is no guarantee
that the property will hold its price.
(Mr Boylan) Absolutely. We need to be in a position
where we can go to somebody in one of these areas and have a better
offer on the table than saying, "We have come to regenerate
228. What about the private landlords moving
into some of these areas? How much are they to blame for almost
destroying some of these neighbourhoods?
(Mr Bailey) It is a little too easy to always blame
the private landlords. They are moving in because the capital
values of the properties can easily be paid. That situation will
allow landlords who want to exploit the housing benefit system
to do so. That is not discussed often enough, the relationship
between the housing benefit level and the capital values of properties
within those areas.
229. The rent officer is not doing his or her
(Mr Bailey) It is difficult to assess
the market levels when there is no market.
230. If someone has bought a house for £4,000
and they are able to get social security to pay £80 a week
for rent, is not something going wrong?
(Mr Bailey) Yes, because the rent officer is unable
to make an assessment of the true market rent.
231. The market is four per cent, is it not?
(Mr Bailey) The capital value of the property is but
the rental value is not capable of being worked out. The rent
officer is in the position of having to try to determine a market
which is not there.
(Mr Boylan) The impact of private landlords in areas
like northern Manchester has been extremely serious. The issue
about people making a reasonable return on their investment has
been a very complex one but we have seen people make 140 or 150
per cent return in a single year on capital deployed by exploiting
social security. There is a difficult challenge for the rent officer
in this context. A more reasonable review of the rate of return
could help in the longer term as part of the regional strategy.
232. The danger is if there is total dependency
on rent benefits, you are not encouraging people to get back into
work in those areas, are you?
(Mr Boylan) There is that danger but the reality is
that people are accessing stable employment and their first action
is to move. Where we artificially prop up capital values and levels,
it does act as a disincentive.
233. If we get economic regeneration in East
Manchester, more people will move out of the area?
(Mr Boylan) There is evidence to suggest and work
done by CURS on the M62 corridor study suggesting that economic
revitalisation within the urban centres has served to undermine
the housing market in the areas surrounding those urban centres.
The evidence of that in North and East Manchester is abundant.
As people are accessing jobs many are moving out.
234. Have you made any representations to the
rent officer and the rent tribunals over this because it seems
common sense that the retail value of property should be parallel
to its capital value.
(Mr Boylan) We tried; we failed; we gave in.
Chairman: On that note, can I thank you very
much for your evidence.
4 Note by witness: A strategy for empty homes
in isolation is not helpful. Back
Note by witness: The immediate effect on the individual
is the crystallisation of a significant debt. Back