Select Committee on Transport, Local Government and the Regions Sixth Report



Local authorities and other public agencies

51. As neighbourhoods decline, those who can afford to leave do, leaving only "people who have no other choice," who have high levels of benefit dependency.[131] A Burnley resident wrote, "The eventual result as we see all too often, is an area of dereliction that only the brave or the desperate are prepared to tolerate."[132] Frequently these residents have high levels of need for local authority support or the presence creates an additional requirement for police activity. "There is frequently a close relationship between a high incidence of empty properties and indicators of social deprivation and this in itself leads to a long term increase in costs to local authorities and the health and police services."[133] As well as services to residents, local authorities face additional environmental management costs when dealing with concentrations of empty homes. In Glasgow, "A lot of the money goes into securing vacant properties, areas are patrolled and cleansed."[134]

Registered social landlords

52. When housing associations have a large number of empty homes, the cost to them can be significant. They face a direct financial cost from holding properties vacant which has to be met by reallocating funding from another purpose or increasing rent. Riverside Housing Association's high level of voids means that funds are not available for repairs.[135] The Housing Corporation confirmed that unless housing associations have alternative (for example regeneration) funding streams, any additional costs resulting from the high level of voids will be met from reserves or paid for by other tenants.[136]

53. On top of the financial costs, significant holdings of properties in low demand areas are a growing risk to registered social landlords' business plans.[137] The Housing Corporation said, "We are aware that a number of associations who have large holdings in low demand areas need to develop strategies for coping with that."[138] The National Housing Federation explained that restructuring was required to ensure that, "organisations on the ground whose property portfolios may not be large enough to manage those risks have a more consolidated portfolio."[139] Mohammad Athar, of Harvest Housing Group, thought that smaller registered social landlords whose properties were concentrated in these areas, might find it hard to survive.[140] Riverside Housing Association told us that if a housing association was to go bust, this would send a negative signal to private lenders and undermine confidence in the registered social landlord sector as a whole.[141] Even if a registered social landlord does not go out of business, a persistent financial deficit will damage that landlord's ability to attract private finance.

54. The Chief Executive of the National Housing Federation warned against an individual housing association withdrawing from an area, on the basis of the risks facing it, without consideration of the wider effects of its action,

    "The difficulty of unco-ordinated action is that you may resolve the business problem for one organisation but you will not necessarily resolve the fundamental area problem, so there is a need for a strategic approach and joint activity and action... I would certainly, as the Chief Executive of the trade body, discourage our membership from taking individual decisions because they may solve their own problem but simply ripple out the problems to other organisations."[142]

55. A number of local authorities with significant low demand are consulting on large scale stock transfer, for example Birmingham,[143] Liverpool[144] and Manchester.[145] If successful, this will create new, large, locationally concentrated associations. The business plans of these new associations will be vulnerable to changes in demand. The Housing Corporation described their requirements for "stringent requirements on risk management"[146] when stock transfer occurs,

    "For a stock transfer association in an area of low demand, a sudden falling off in demand and potential abandonment must be one of the risks which figure highly in their thinking and for which they must have a contingency plan."[147]

However, the Housing Corporation itself does not have a "Plan B up our sleeve for what happens at the moment if a big stock transfer association suddenly faces a collapse in demand."[148]

56. If the problem of empty homes worsens, registered social landlords might go out of business or face persistent operating deficits and new larger stock transfer organisations could find themselves at risk. This would have a devastating effect on lender confidence in the registered social landlord sector. The Housing Corporation needs to ensure effective co-ordination of investment and management of disinvestment and promote collaboration by registered social landlords in areas of housing market decline. We also recommend that the Housing Corporation should develop contingency plans, in case a stock transfer association is affected by its exposure to high levels of low demand.

The causes of empty homes in failing markets

57. The popularity of neighbourhoods is determined, in the main, by the choices made by individuals.[149]

    "Clearly the issue turns on the relative attractiveness of the area relative to other places. People's own aspirations will drive those choices. Home ownership at the end of the day is primarily a market driven by choice."[150]

A number of factors combine to make inner urban areas less attractive places to live. These include:

  • economic change;
  • poor quality housing;
  • too many houses of the same type; and
  • neighbourhood factors, such as crime and anti-social behaviour.

It is difficult to disentangle cause and effect as crime can be a consequence of neighbourhood decline but can also rapidly trigger neighbourhood abandonment.

58. As the attractiveness of these inner urban areas has declined, greater opportunities to move to the suburbs have developed, including:

  • an increased supply of new housing;
  • the increasing affordability of such housing; and
  • the increasing ease in commuting.


59. In some areas, the original economic rationale for the development of the housing has disappeared and the housing stock changes much more slowly than the economy. For example, in Bolton,

60. Economic decline is not the only problem. During our visit to the North West we visited a number of areas, all showing signs of low demand-Liverpool, Bootle, Burnley and Manchester.[152] It was clear that the reasons for the low demand vary from place to place. In Burnley, for example, the problem was caused, at least in part, by economic decline. In others, like Manchester, the problem had occurred in spite of, or even because of, economic growth; as the city centre economy has grown certain sections of the population become more affluent, can afford to exercise housing choice and move out to the suburbs.[153] In Kensington in Liverpool, we heard how this outward migration has resulted in a significant loss of population in the 25-45 age group.[154]

61. The type of housing available can also be a problem. Councils have been struggling to let poorly designed 1960s and 1970s properties for many years. Some of that stock has now been demolished, for example the deck-access flats cleared in Hulme. Other types of property are now becoming increasingly unpopular, such as the 1930s council housing our predecessor Committee saw in Halton Moor in Leeds during its inquiry into the Urban White Paper, and the pre-1919, back-pavement terraced housing we saw in our visit to the North West. We went into several empty houses in Lightbowne in Manchester. All were in good internal condition but were small; none had a front garden.

62. Wirral Metropolitan Borough Council's memorandum described this pre-1919, back pavement terraced housing stock:

    "Many of these dwellings were never built to be in continued use for this long. Targeted refurbishment programmes have been successful in extending the useful life of these properties but, inevitably growing obsolescence and market change challenges their continued sustainability. Generally speaking, the older a dwelling is then the higher the maintenance costs and the greater the need to return more often to improve it. It is these 'high maintenance' terraced houses which prove to be most vulnerable to becoming empty for long periods."[155]

However, the Local Government Association's memorandum observed,

    "Terraced housing that in one part of the country may be empty, no longer popular, even as a starter home and for sale for less than £5,000 will be considered highly desirable elsewhere in the country and will sell for over £250,000."[156]

The generally lower house prices and low demand in the north and midlands mean that it is not viable for private investors to invest large sums of money in the refurbishment of a house. The House Builders' Federation's memorandum stated, "There comes a point where continuing expenditure on poor quality housing stock is unsustainable."[157]

63. The sheer volume of identical houses, whether pre-1919 terraced or 1930s council properties, can also make an area less attractive than if there were diversity and choice of size, design and tenure. The M62 Study found that the significant factors in areas at risk of a fall in demand for housing include:

  • "a predominance of one tenure;
  • monolithic provision (for example, thousands of two or three bedroomed houses in one locality); and
  • concentrations of a particular dwelling type (for example high rise flats or back of pavement terraces."[158]

64. Manchester City Council's memorandum described empty homes as being "focussed very much in areas characterised by monolithic housing supply,"[159] which as we saw, gives no opportunity for people to move within the local area as their families and lifestyles change.[160] This is in contrast with "thriving neighbourhoods" such as those in "South Manchester, where the property portfolio is more diverse."[161] Liverpool City Council's memorandum added:

    "The City's housing stock is currently significantly unbalanced with over 80 per cent of homes in council tax bands A and B, resulting in substantial over-supply at the bottom end of the rented and owner occupied market and real shortages of better quality homes... This restricted choice at the higher end of the market is encouraging outward migration of households from the city."[162]

However, we saw in Bootle and Liverpool some more substantial, larger houses amongst the unpopular stock.

65. Tameside's memorandum also points to problems caused by a "predominance of one tenure"[163] constraining choice. Burnley's problems,[164] for example, are found in inner urban concentrations of private sector owned properties. In the social sector, the M62 Study observed that, "The increasing concentration of lower income households and the changing profile of tenants has affected the reputation and attractiveness of many estates."[165]

66. Alongside long-term factors in the economy and housing stock are neighbourhood factors that can trigger rapid neighbourhood decline. In Manchester, we visited Lower Beswick, an area of 257 back-pavement terraced houses only 1 mile from the city centre. The Council described how, in the mid-1990s, crime (including drugs), prostitution and the concentration of certain private sector landlords had led to a high turnover of residents and neighbourhood abandonment.[166] More generally, a study undertaken for the then DETR by Heriot-Watt University into low demand and unpopular neighbourhoods, interviewed residents, asking them both about their homes and their local neighbourhood. It found:

    "Three-quarters of residents recently leaving the case study neighbourhood gave neighbourhood-related reasons for their move, particularly relating to anti-social residents, dirty/run down area and crime/inadequate policing."[167]


67. As some inner urban areas have become less attractive, opportunities to move to the suburbs have increased, often as a result of planning policy. Huge dormitory villages largely consisting of recently built homes surround many of our northern cities. Alan Wenban-Smith argued that in some areas, building on greenfield sites had caused the problem of empty homes.[168] South Yorkshire Housing Association's memorandum also noted,

    "One of the unintended consequences of this private sector house building has been the loss of vitality of housing in some older neighbourhoods as many purchasers have been able to leapfrog the older housing-which has been the initial destination of first time buyers-and buy the newer housing, often on the periphery of existing communities."[169]

68. Neighbourhood facilities are "seen to be superior" on the "urban fringe" compared to declining inner urban areas.[170] The memorandum from the University of Birmingham's Centre for Urban and Regional Studies, described how this has happened, in the post-war period:

    "The major new developments around Britain's towns and cities have been on the urban periphery, initially in new towns and subsequently in private sector developments beyond the boundaries of the major cities. Investment in transport, schools and a range of other facilities has tended to follow the growth in population associated with new housing investment, Consequently the quality and range of facilities in those areas has become strikingly different to that in the older urban centres."[171]

69. Increased commuting has reduced the need to live close to an individual's place of work. Alan Wenban-Smith noted, "One of the interesting things which has come out of some of the recent research is that places in the North West which are suffering high levels of migration also have high levels of in-commuting."[172] As the supply of housing in the suburbs has increased, home ownership has become easier for many of those on relatively modest incomes. The M62 Study described how "The growth of two income households and the development of cashback deals for new build means that the accessibility of newly built home ownership is much greater than it has been — even when households have relatively low incomes."[173] A Leeds resident wrote, "There is a mentality amongst people that they need to be on the mortgage ladder straight away."[174]

131   EMP23 Back

132   Letter from the public, 12 Back

133   Manchester City Council, EMP23 Back

134   EMP89(A) Back

135   Q 165 Back

136   Qq 536 and 537 Back

137   The Public Accounts Committee's Report into Regulating Housing Associations and the Management of Financial Risk (January 2001) concluded that low and falling demand was a growing problem for registered social landlord's financial risk management, HC 470 Back

138   Q 534 Back

139   Q 416 Back

140   Q 162 Back

141   Q 166 Back

142   Q 414 Back

143   EMP64 Back

144   EMP78 Back

145   EMP23 Back

146   Q 530 Back

147   Q 530 Back

148   Q 532 Back

149   This is particularly apparent in the owner occupied sector however within social housing low demand can be identified by a small or non-existent waiting list, tenancy offers being frequently refused, high rates of voids available for lettings and high rates of turnover (source: Guidance Notes on the Completion of the 2001 Housing Investment Programme: Housing Strategy Statistical Appendix). Decisions within the social sector, for example in relation to anti-social tenants (see paragraph 73) can effect choices in the owner occupier sector. Back

150   Council of Mortgage Lenders, Q 386 Back

151   EMP48 Back

152   Note of visit to the North West Back

153   See for example Lightbowne, in note of visit to the North West Back

154   See note of visit to the North West Back

155   EMP68 Back

156   EMP33 Back

157   EMP59 Back

158   Op cit, Paragraph 1.4 Back

159   EMP23 Back

160   Note of visit to the North West Back

161   EMP23 Back

162   EMP78 Back

163   EMP65 Back

164   See EMP28 Back

165   Op cit, Paragraph 1.9 Back

166   Note of visit to the North West Back

167   DETR Housing Research Summary, Low Demand and Unpopular Neighbourhoods, No 114, 2000 Back

168   Q 264 Back

169   EMP67 Back

170   EMP47 Back

171   EMP47 Back

172   Q 284 Back

173   Paragraph 1.9 Back

174   Letter from the public, 5 Back

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