Examination of Witnesses (Questions 240
WEDNESDAY 21 NOVEMBER 2001
240. May I ask you why suburban local authorities
are still allowing new homes to be built when their urban neighbours
face the problem of over-supply? I shall use a North West example
because I represent the City of Chester. Eighteen miles down the
road is the City of Liverpool where there are 18,000 empty properties,
many of those pre-1919 terraced properties which in Chester, 18
miles down the road, are highly desirable. I use that as an example,
but could you just speak in general terms of why some authorities
are still building the properties when their neighbours have this
(Councillor Bettison) Eighteen miles does not sound
very much but in terms of desirability, I am sure it is not news
to anybody that there are available properties just 18 miles away.
It is a fact that people would not wish to live there because
presumably they could move there at a lower price than the new
build in Chester. If there were any desire, then they would follow
the price reduction and move to Liverpool, but if their job is
in Chester and their background is in Chester . . . Another very
important thing these days is that families appear to be less
mobile than historically because many families now require two
incomes. To move to chase one income jeopardises the second. Equal
pay, which we would all applaud, exacerbates that particular problem.
241. To what degree do you think the places
in which decisions are taken about housing targets and housing
strategies work against or in favour of this problem. Christine
was making the point that Chester is developing, Liverpool is
not, but to some degree local authorities are working within regionally
imposed planning targets. Do you think that the absence of the
ability to take decisions on a local basis or within a region,
to say we do not have to build here because we have those there,
is an issue?
(Councillor Bettison) Wherever you set boundaries,
there will always be a case for needing to talk to somebody just
beyond the boundary. There is here a case for more discretion
in partnering and with whom one works. It really is a question
of allowing authorities therefore to work in a way that benefits
the need they have. Once again, one simply cannot social engineer
these things and quite frankly, even if Liverpool and Chester
were sat around the same table and even if it were decided not
to build any more houses in Chester, the likelihood of people
flooding to Liverpool would be remote.
(Councillor Jenks) Certainly both in the North East
and the North West we have examples of local authorities starting
to work together very effectively on developing regional housing
strategies, perhaps more so than other parts of England which
have some catching up to do on that, something which the LGA would
very much encourage local authorities to catch up on. There is
one other issue to be addressed which is the position of the Government
who have fairly recently reduced VAT on some types of refurbishment
down to a minimum of five per cent, which is very welcome. We
should like to see VAT on greenfield and brownfield development
equalised so that there is no incentive to developers to develop
new housing on greenfield rather than either refurbish or new
build on inner city brownfield sites. Indeed we go further than
that and say there may be a case, given the objective of trying
to reduce greenfield development, to increase VAT on greenfield
in proportion to that applied to brownfield and refurbishment.
242. Coming back to the first question I asked
you, you indicated some of the things that some local authorities
were doing and first of all, that more of these initiatives could
be taken up by many more local authorities. What is the LGA doing
to try to encourage that? Secondly, do you also think that perhaps
CPO powers have rather gone out of fashion after the clearances
of the 1960s and 1970s and local authorities have to re-learn
how to use those more effectively in the current circumstances?
(Councillor Jenks) CPOs are cumbersome, take a long
time and you have no idea whether you are going to be successful
or not until the very last minute. This means that many authorities,
given the cost, are naturally reluctant to enter into those procedures.
They do remain a useful last resort tool if all other options
have failed. We would be interested in looking at compulsory leasing
as much as compulsory purchase, where, having exhausted other
routesand we are not looking here at a property which has
only been empty for a couple of monthsa property which
is persistently empty and where the owner does not seem to wish
to co-operate, repairs are carried out to make the property habitable,
the cost of those repairs is recovered through the rental stream
and that balance between the two equates to the period of time
for which the leasing would apply, at the end of which the property
is returned in habitable condition to the owner. That is certainly
something we would encourage you to look at and we would want
as the Local Government Association to look further at.
243. Do you think that is easier to work than
(Councillor Jenks) I struggle to see how it can be
anything other than easier to work than CPOs. CPOs involve a very
complex process for local authorities.
244. That does assume there is a demand for
the properties in some form. In some areas we have visited there
is simply no demand; it does not exist.
(Councillor Jenks) Once again I come back to the point
that several tools are available to a local authority and they
pick the appropriate one for that area. I accept that would not
work in all areas.
(Mr Ireland) In areas of high demand using compulsory
purchase orders can actually antagonise landlords and when we
are trying to build partnerships in fragile housing markets CPOs
being used extensively can have a negative effect as well as a
245. Do you think compulsory leasing would not
upset the landlords in the same way?
(Mr Ireland) Compulsory leasing would be a way in
which the owner would retain the freehold and in which he or she
would have the property returned to them after a period of time.
It is something we should like to explore and something we have
asked be given flexibility under the public service agreements
for us to use in Hammersmith.
(Councillor Bettison) Certainly the owners "hope"
value on their investment would remain in tact, so one would not
actually be threatening that.
246. During this inquiry into empty homes, one
of our problems has been that it is very difficult to establish
how many there are. Do you feel that your present method of collecting
the statistics and numbers on how many empty homes there are in
authorities is unsophisticated and rather unsatisfactory? That
is the evidence we have had from the chartered surveyors.
(Councillor Bettison) Yes, that is true; it is very
difficult to get an accurate figure on this.
247. How would you like to see it made easier?
If you do not know the numbers, how can you plan the strategy?
(Councillor Bettison) The Institute has calculated
that council tax receipts are reduced by some £75 million
because of this, but that is an inaccurate figure. Frankly a better
way should be sought of ascertaining the precise number of homes
which are empty.
248. What better way?
(Councillor Jenks) One way would be to share information
from the council tax information collected by local authorities.
Some authorities cross-reference that data. Other authorities
have legal advice that that would breach the Data Protection Act
to do so. We do not believe it is the case that it would breach
the Data Protection Act, but it is a very difficult thing for
an authority to go ahead with, if their chief solicitor is saying
he thinks there may be something a little iffy there. We think
there is a case for issuing some guidance on that so that all
local authorities could cross-reference information from their
council tax offices.
249. So there is disagreement between cities'
solicitors as to what extent it breaches the Data Protection Act
(Councillor Bettison) Yes.
250. How many are saying it is okay and how
many are saying it is not?
(Councillor Jenks) We do not have accurate figures
on that. We just know that in some areas there is a dispute and
feel that guidance would be useful to local authorities on it.
251. Are your Association making representations
to government to give you better guidance on this?
(Councillor Jenks) Yes.
252. There is the Data Protection Registrar,
is there not? Surely she should have been consulted about this
and a ruling obtained from her. Has no-one taken it up with her?
(Councillor Jenks) I have no information on that at
present, but it is certainly something I shall check out.
253. Do we have copies of the representations
you have made to government?
(Mr Ireland) A slightly different point. There is
an ambiguity and a lot of local authorities have taken a cautious
approach to it. That means that they have a limited access to
the database so that they are not able to identify ownership of
properties, they are only able to identify where those properties
are. That actually reduces local authorities' effectiveness in
dealing with the properties which are empty. The properties themselves
are just the symptom of the problem. The problem is the ownership
and if we were able to identify the owners who own a large number
of empty properties, we could target our resources on them rather
than picking one property at a time, finding out the ownership,
finding out the problem and dealing with that property in isolation.
254. May I ask you about the 50 per cent council
tax relief on empty properties? How much money do you think is
being lost to local authorities? What difference do you think
it would make if that 50 per cent became 100 per cent?
(Councillor Bettison) For the reasons that we mentioned
a few minutes ago, the LGA would not wish to put an absolute figure
on it, but it has been calculated that £75 million is lost
revenue to local authorities. However, work in Hammersmith and
Fulham has gone on to estimate that each empty house fails to
contribute £25,000 a year to the local economy. There are
knock-on effects of having empty properties. Whilst there is an
argument that an empty property has no refuse to collect and creates
no social services responsibility, of course the empty properties
themselves do attract graffiti and vandalism and rubbish which
in themselves cost the local authorities money if a local authority
is to try to maintain the area and prevent it from falling into
(Councillor Jenks) The main issue is the one of the
perverse incentive to keep a property empty, however small that
incentive may be, which we should like to see removed. There is
of course a financial issue beyond that but from the housing approach
and the regeneration approach we are taking it is simply a matter
of removing that incentive.
255. What do you do about those owners who have
abandoned their properties, probably through no fault of their
own, but through negative equity or whatever? Have you looked
at whether there would be anything different we could do to help
those people rather than the absentee landlords, the owner occupiers
who have had to walk away?
(Councillor Jenks) What we are dealing with is a wider
issue than one which the housing movement can solve. We are looking
there at the economic development issues of the area, apart from
anything else. I have visited authorities recently in the North
East of England who are good housing authorities, their local
government offices recognise them as good housing authorities,
with effective housing strategies who are simply tearing their
hair out because they are doing everything they can on the housing
side of things, it is the economic situation which is causing
256. Let us take this council tax problem. Supposing
an authority like Manchester decided that it was going to exercise
the right to put the council tax onto the empty properties. That
would have a good effect on bringing empty properties back on
the south side of Manchester, but on the north side it would be
very unfair on people who could not let their properties. Can
a local authority actually designate some parts of its area for
this or would it have to be the whole of the local authority area.
(Councillor Jenks) I would imagine that would have
to be a matter for consultation as the thing is put into law.
Clearly not knowing south or north Manchester, I would not know
the issues there.
257. Are you saying it would have to be a local-authority-wide
power or are you suggesting it could be neighbourhood by neighbourhood?
(Councillor Jenks) We are suggesting flexibility for
local authorities to designate it as they wish, therefore we would
be saying in effect neighbourhood by neighbourhood. It may be
that an authority would say they want to apply this ruling to
the whole authority.
258. Before the meeting started I was raising
the question of the situation in London. In a sense it is very
explicable if you go to Liverpool, to Manchester, or to Burnley
where we visited that the problem is much more comprehensible.
In the London housing market it is completely incomprehensible
in many ways. I wondered whether you could just tell us a little
bit about the nature of the problem in the London boroughs and
how it manifests itself.
(Mr Ireland) The point was the one I made earlier
that the property is the symptom of the problem and that the ownership
is the source of the problem. We find in Hammersmith and Fulham,
and I believe other local authorities in London find the same,
that the majority of empty properties are actually owned by what
we might call amateur landlords, people who have inherited the
property or bought it as part of a business. Many do not even
see themselves as landlords at all; they may not even perceive
that the empty space above their shop is a residential property.
Indeed that may not even be recorded under council tax as well.
What is actually missing is the information and the advice for
those landlords to be able to make proper business and investment
decisions in order to run those properties and manage those properties
effectively and enable them to bring them back into use and stop
them falling empty.
259. So a lot of them are above shops.
(Mr Ireland) Yes. We believe in Hammersmith that of
the 1,300 long-term empty properties over a year, 1,000 are flats
260. One of the things which struck me from
this discussion is that perhaps we should be looking not only
at the negative side of home ownership, for example increasing
council tax, but also incentives which make it worthwhile releasing
some of the 1,000 properties above shops. If you were perhaps
the shop owner, you might find that with all the rights and difficulties
which come with leasing or renting out that space, you were penalised
more than it was worthwhile and the risk:reward ratio is completely
out of kilter. What is your feeling about that?
(Mr Ireland) Yes, I agree with that. There is a lot
of equity tied up in those properties, there is a lot of earning
potential tied up in those properties in areas such as Hammersmith
and it is enabling the landlord to release that. Yes, we do offer
grants, but that would not be appropriate. We would not be able
to do that for every single property; it would not be the right
thing to do. All we have to do is educate those landlords to enable
them to make the right decisions and to invest and release the
money which is tied up in those properties.
Chairman: On that note, may I thank you very
much for your evidence.