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


Memorandum by the Urban Regeneration Officers Group (EMP 66)

EMPTY HOMES: STRATEGIC CONTEXT AND MECHANISMS FOR CHANGE

CONTEXT

  Local Government Housing Strategists have a complex context within which to work.

  This includes:

    —  Regional Planning Guidance

    —  Regional Housing Overview

    —  Sub-regional or Conurbation level factors

    —  Unitary Development Plans

    —  Local Housing Strategies and Housing Revenue Account Business Plans

    —  Local Regeneration Plans and Strategies

    —  Local Strategic Partnerships and Community Plans

    —  Local Community Priorities and requests for action

  Local Housing Strategists need pragmatic and flexible mechanisms with which they can combat the problems of empty homes in all tenures. This submission aims to draw the Select Committee's attention to potential mechanisms for change and current barriers to achieving this. An Empty Homes Strategy which sets the parameters for the local authority concerned, but is consistent with both the Regional Housing Overview and Regional Planning Guidance, should be a fundamental part of the strategies listed above.

CATEGORIES OF EMPTY HOMES

  Regardless of tenure homes can be empty for a number of reasons:

    —  Simple transactional voids as a previous occupier moves out and the new occupier moves in

    —  The need to carry out extensive remedial works which would be a health and safety risk if the occupiers remained in situ

    —  The dwelling is unfit to live in

    —  The dwelling by nature of its age, location, local social circumstances or built form is obsolescent ie there is no appreciable demand for anyone to occupy the property

  This paper concentrates on the latter two of these categories.

REGULATORY REFORM—OPPORTUNITIES AND GAPS

  DTLR are developing detailed guidance in anticipation of the proposed Regulatory Reform Order on Private Sector Housing Renewal. There is concern that the guidance may consider the renewal of homes rather than the removal of obsolescent and unfit dwellings. The key issue is that the two processes must be considered together.

  Housing Revenue Account Business Plans are a key factor in determining future investment and strategy with regard to Council Owned dwellings and the opportunities to reach the Decent Homes Standard.

  A parallel mechanism for Private Sector Stock would aid both financial and regeneration planning. Local Authorities as part of the development local policies for Private Sector Renewal might therefore be required to develop say a 30-year "Business Plan" or "Investment Plan" for the Private Sector Stock in their Borough. A specific but affordable target to renovate stock and reduce obsolescence could be set in the context of the current spending targets and the options for funding private housing could be reviewed and enumerated. This could aid the process for re-using viable empty dwellings and clearing obsolescent dwellings. Coupled with local Private Sector Stock Condition Surveys and the English House Condition Survey this could give Central and Local Government the opportunity to measure the cost of regeneration of stock and plan future spending in light of this.

RECOGNISING OBSOLESCENCE AND HELPING PEOPLE TO MOVETHE CONSEQUENCE OF EMPTY HOMES DOOR

  An example based on a real situation:

  Mrs Smith lives in Brown Street. Over the last five years all her neighbours have moved out because of a combination of crime, poor private landlord management, economic collapse and other social factors. Hers is the only occupied house in a street of 30 properties. She bought her house for £30,000 10 years ago and has paid £20,000 off her mortgage. Because the local housing market has collapsed even if she wanted to sell her home no-one wants to buy properties in her street and no-one is particularly interested in her old two up-two down terraced house. Her house could be bought by the Council for Clearance for around £7,000, leaving her with nowhere to live and a debt of £10,000 which her Home Loss and Disturbance Allowance will only help to reduce a little. A relocation grant will help her buy a new home but she would still have a massive mortgage debt—so she can reject that as an option. She likes being an owner-occupier, her house is a "little palace" but the Council wants to clear her street because after a most satisfactory course of action study it can see no other option than demolition. How can we help her to move? She is 58 and thinking of retiring soon and does not want any more debt.

  Local Authorities have general powers under the 1985 Housing Act and subsequent Secretary of State consent to acquire dwellings and then sell, with a discount of up to 30 per cent, to people who have been subject to Slum Clearance. So the Council can buy a house for Mrs Brown, renovate it if it needs it, and then sell it to her in part exchange for her old house. The trouble is she will still be in negative equity on her old house and the council is "out of pocket" on the transaction and will have to place a land charge on her new home. Her lender has to agree to move her mortgage over. The value of her new home is slightly higher but nowhere near the values when she bought it so she is still in negative equity but not as bad. The cost of moving Mrs Brown, clearing her obsolescent home, and buying the new one to sell to her will have to be met from somewhere. There is a mechanism to help but the sums do not add up. If we help her is this effective use of public money? Is this the cost of regeneration and reduction of empty homes? How can we help people who are simply trapped because of circumstances beyond their control?

  A key aid to this process would be to work with the Mortgage Lending industry to establish how we might:-

    (a)  Prevent repossession and abandonment leading to empty homes.

    (b)  Introduce flexible mortgage packages that allow a mortgage to be transferred to an empty viable home from an obsolescent one.

  I would suggest that Local Strategic Partnerships or Regional Housing Bodies could work with the lending industry to set up local intelligence sharing networks. At the moment the only productive way to engage the industry is nationally through the Council of Mortgage Lenders. Once that first contact is made it is easier to meet with senior officers from the companies and introduce new concepts and mechanisms. Approaching the local branch manager of your high street store usually results in frustration as he/she is operating to a tight set of rules set by Head Office and has not got the authority to be flexible with products.

  Another approach would be to establish more robust mechanisms for Local Financial Institutions/Community Based Financial Institutions so allow them powers to assist local people in clearing debt and regularising their housing situation.

CLEARANCE LEGISLATION

  Although on paper there are a range of powers to allow Local Authorities to acquire properties for the purpose of clearance detailed reading of the legislation reveals a number of impassable hurdles that prevent the purchase of a dwelling if the owner does not want to sell. In areas of high numbers of empty homes, where for example a speculator has acquired a portfolio of dwellings and has failed to develop them, Compulsory Purchase is usually the only remedy to allow acquisition for clearance. If you do not have the ability to go to the CPO process the only other alternative is to pay the asking price to facilitate clearance. This is likely to be a huge call on the public purse.

  Despite a review of Clearance Powers and the promise of a detailed guidance manual the position remains that there is not a modern process in law that addresses the need to acquire obsolescent dwellings from unwilling sellers. Authorities therefore have no alternative but to try to use available powers in imaginative ways that can lead to a high risk of CPO's failing for procedural and technical reasons if challenged.

  The proposed solution is to modernise the clearance process so that those residents/owners who need to be legitimately compensated for the loss of their property would continue to be covered by current rules. However a new power specifically aimed at dealing with obsolescent and empty housing needs to be introduced and current compensation arrangements need to be reviewed to ensure that they are flexible enough to ensure appropriate payments based on the performance of the owner in managing and maintaining the dwelling.

  Although all owners affected by a CPO would still be covered by the existing provisions based on Open Market Value, new powers should be introduced to allow Local Authorities to deal flexibly with residents and home owners in order to meet their housing needs in a way that is equitable, reflects the full circumstances of each case and recognises the fundamental difference between a home owner (resident or absentee) and an investor.

PRIVATE LANDLORDS

  Many empty homes are owned by private landlords who due to the current housing market in their area, for reasons of their own, or through sheer bad management fail to let their empty dwellings.

  A combination of supportive and punitive powers is required to assist, or enforce against Landlords with empty homes.

  Landlord Accreditation by nature is a voluntary process with those landlords who are generally good at managing their stock being more likely to participate than amateur, bad or criminal landlords. Local Housing Regeneration Policies should aim to develop Landlord Accreditation processes that contain a Code of Conduct for the management of dwellings. Councils should have general policies that aim to support and develop professionalism in private landlords.

  However there are a range of amateur, bad and criminal landlords who will not have either the time or the inclination to take on board a professional approach to managing their dwellings. Licensing of these landlords would be a useful tool to oblige them to do something practical with their empty dwellings. A license would require a landlord to arrange for the active and professional management of their properties or face a range of punitive measures up to and including the compulsory purchase of that dwelling. A professional landlord/registered social landlord could take over ownership of that dwelling and facilitate re-letting, or the Local Authority could re-market the dwelling for Home Ownership.

  In addition, if Local Authorities do want to be able to CPO these properties, they should be able to demolish if appropriate and not be obliged to bring them back into use as with existing powers.

EMPTY HOUSING ASSOCIATION/REGISTERED SOCIAL LANDLORD PROPERTIES IN RENOVATION AREAS

  In areas where HAs/RSLs own empty properties which are part of a wider regeneration scheme, guidance and a funding mechanism is required on how the cost of renovation or demolition can be funded. Current Indicators that determine the allocation of resources to Local Authority regions from the Housing Corporation recognise empty homes as a supply and assume that the property can be let. This results in those areas with high levels of obsolescent HA/RSL void properties receiving a comparatively smaller allocation of resources. General government guidance on the use of resources indicates that Housing Capital intended for Private Sector Renewal should not generally be used for demolition of HA/RSL property. Conversely Housing Corporation guidance indicates that resources should be used for renovation or new build. There is therefore a funding gap in the strategic approach to removing obsolescent empty homes. A fund that allows the purchase of redundant HA/RSL stock is vital to achieve action against empty homes.

  This is also problematic in that these types of properties are generally scattered throughout areas and do not form a coherent mass. In trying to develop an area of empty homes one often finds a range of different ownership's in any one street. Mechanisms that facilitate the easy acquisition of stock owned by different tenures are required. A simple acquisition process through Clearance powers would address this.

PLANNING AND DEVELOPMENT CONTROL

  Development Control Officers are not currently required to take account of the Housing Market within their borough when considering a planning application for additional residential accommodation.

  If as part of a robust Housing Strategy it could be proved that the provision of additional accommodation could be detrimental to the overall balance of the Housing Market then Development Control officers ought to be able to use this as a material reason for refusing a Planning Application.

  For example a speculative developer wishes to construct purpose built accommodation for rent for elderly people in a borough where a detailed Housing Market Study has demonstrated there is also a significant over-supply of such accommodation and demographic trends indicate the problem will worsen. In this case both advice to the developer and the refusal of the Planning Permission should be a key part of the process.

  In addition guidance (through a PPG) making it a requirement for planners to show that they have taken full account of Housing and Regeneration strategies, and the Housing Market in their borough in the preparation of UDP's and supplementary planning guidance would assist this process. This would in turn influence planning decisions.

Bob Osborne

8 October 2001


 
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