Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 240 - 260)



Christine Russell

  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 huge over-supply?
  (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.

Chris Grayling

  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.

Mr Betts

  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 routes—and we are not looking here at a property which has only been empty for a couple of months—a 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 CPOs?
  (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.

Mr Betts

  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 positive one.


  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.

Helen Jackson

  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 or not.
  (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.

Helen Jackson

  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.

Christine Russell

  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 terminal decline.
  (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 the abandonment.


  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.

Chris Grayling

  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 above shops.

Mr Wiggin

  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.

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