Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by Rochdale Housing Initiative (EMP 30)

EMPTY HOMES

1.  BACKGROUND INFORMATION

  1.1  Rochdale Housing Initiative welcomes the select committee inquiry into empty homes. RHI represents the interests of housing organisations in both the private and public sectors and all our members are affected in differing ways by the causes and consequences of empty homes.

  1.2  Based in the North West, Rochdale in common with many neighbouring Authorities has a significant problem of poor quality housing stock, some of which is obsolete. For many homes, investment is required either in the property or the environment to stop it becoming unpopular and possibly empty, otherwise they may have little future value or use

  1.3  The problems faced in Rochdale are very different from areas such as southern England where there is a chronic housing need, where the older stock has under gone gentrification (eg the South East) and where obsolete housing doesn't exist. Although empty homes are not a significant problem yet, Rochdale does not always find it easy to attract end uses for its empty stock in the private sector. For instance, Registered Social Landlords are reluctant to invest in older stock because there is a risk of property values decreasing and the possibility of the property being difficult to find tenants because it doesn't meet modern aspirations.

  1.4  RHI is also concerned at the way the information on empty homes is collected and what is meant in the private sector by the term "empty home" The number of empty homes are usually collated from the HIP1 returns that Local Authorities complete for the DTLR each year. Authorities are required to remove the numbers of second homes from the total. This is an impossible task as most local Authorities use their council tax data to produce these figures, unfortunately the data does not differentiate the second homes from other types of homes. Another issue to consider is that the rent officer can remove properties disrepair from the council tax banding system. This means that they are hidden from any list on empty homes and make the LA returns inaccurate and possibly hide the true extent of problem.

  1.5  Therefore clarification is required as to what is meant to by an empty home for the purposes of the inquiry. Do homes used on an occasional basis count as an empty home or do they count as a second home? For those Authorities where they have a number of genuine second homes, it can distort the local housing market by removing previously affordable homes for those that wish to make it their main and principal home and therefore it is clearly an issue.

  1.6  For our response, we will use the interpretation that an empty home is one that is not used at all and it will concentrate on those homes that are empty in the private sector (ie not public or social housing). The author of this response has extensive experience of working as an Empty Property Practitioner in both North and South Local Authorities.

2.  CONSEQUENCES OF HOMES BEING EMPTY

  2.1  Empty homes can and usually do attract vandalism and a range of other anti social behaviour, however it is wrong to assume this is always the case, location is all important. Whether or not a property will attract vandals depends on a large number of factors, such as location, whether it's obviously empty and the surrounding social conditions. In areas of high housing demand, clearly empty homes are a wasted asset to those seeking a home need and urgent action is needed to bring them back into use or into the market place.

  2.2  Where a number of homes in an area become empty, or there is a very high level of occupant turnover it is a clear indication that the housing market in the area is in crisis. At this point immediate intervention is needed by the Local Authority. One of the challenges for Local Authorities as a strategic body is to be able devise mechanisms that can monitor the changes in property ownership and occupation to inform their Housing and regeneration Strategies.

  2.3  Homes that are left empty and then deteriorate, with or without the help of vandals, clearly have an effect on the well being of an area. A property that deteriorates through lack of maintenance, even to the extent of an overgrown garden will affect the property values on surrounding homes and well as reducing the desirability of the street. When two, three or four homes in this condition are visible in a street, the conditions are right for rapid decline to take place, leading to a breakdown of the neighbourhood.

  2.4  The next consequence, especially in many northern towns are that land values tumble, in Rochdale in some areas have seen prices reduced by 32 per cent in a year, private landlords then buy homes for very little (£1K—£10K) and make over 50 per cent plus gross profit per year. These landlords usually do not vet the tenant and have little if any stake in the area. They are also not concerned how the tenancy is conducted so long as the rent is received. Literally overnight areas become emptied of people, with the houses left empty subjected to vandalism and a spiral of decline commences.

3.  WHY HOMES ARE EMPTY

  3.1  Much documentation is available to the attitudes of owners with empty properties, especially through Government reports.

  3.2  As many of the empties will be in the hands of people who own less than 10 properties, and usually in my experience less than five, they are often very unaware of what the options are available to maximise the use of the property. Many owners may have had a previous experience of letting the property and it has gone badly wrong, either because:

    —  unable to manage the property adequately;

    —  poor performance of Letting Agents;

    —  poor tenants;

    —  perceived knowledge about "sitting tenants".

  3.3  Those Local Authorities that have employed dedicated Empty Homes Officers will testify to the immense difference it makes by having a dedicated officer with time and unique skills to discuss the options with owners. Owners will also agree that the service is invaluable. However, this is still the exception than the rule. Giving owners information that they understand is vital as is having time to talk to them and understand their position.

Financial

  3.4  Many properties are empty because they require repairs carrying out. Owners can be divided into the following two categories

    —  unable to raise finance or who do not understand the products available;

    —  unwilling to take the risk in borrowing on a property, either because of the low capital value or the because they have had a bad experience of being a landlord.

  3.5  In areas of low demand where the capital value has significantly reduced, many landlords are loath to plough more money into it as they see it as wasted investment. Many cling onto to the hope or belief that either the market will pick up and therefore the property value will increase or the Local Authority will compulsory purchase the property, thus realising more than they would have previously sold it for.

  3.6  The recent VAT changes introduced on the last budget are welcomed, however, in many parts of the country we believe they will make only a minimal impact. This is because of the land values, desirability and the market dynamics are unlikely to tempt investors to bring properties back into use. But the measures are welcomed. Note that new build is still easier and cheaper to achieve over rehab of empty homes.

  3.7  For many properties in the Rochdale, the amount of investment needed to bring some homes to standard is likely to make it uneconomical for owners or buyers. The proposals outlined in the recent consultation paper reviewing Housing Grants and proposing effectively deregulation is welcomed. However Authorities are unlikely to see an increase in the funding available to them, thus hampering the effectiveness of the changes.

Emotional Attachment

  3.8  An area not often highlighted, but in my experience can have a significant impact, is homes that are empty due to some emotional attachment. For instance, a large number of homes are empty or underused because they are a former relatives home. The inheritor can find it very difficult to move the situation on (ie selling or renting it) due to this emotional attachment. This is where an Empty Homes Officer is of tremendous value.

Lack of Knowledge by Corporate owners

  3.9  As highlighted by the work carried out by Ann Petherick (Living over the Shops) and the British Property Federation, commercial property owners have little interest or knowledge in the field of residential letting. Clearly this is changing as town centre living gains more acceptance, as the loft style/market has shown. But many empty homes exist above shops but for reasons best known to some of the commercial owners they resist approaches by Councils and Registered Social Landlords trying to bring the property back into use. Many are still wary of letting property out above commercial premises because of the negative impact they perceive it will have on the business element of the building. For many owners and commercial leaseholders the residential element of composite properties are rarely considered as assets, rather a place to store goods or have a staffroom.

Council Tax

  3.10  Council Tax regulations where changed some three years ago to ensure that all empty home owners not claiming an exemption would have to pay 50 per cent council tax when the property had been empty for over 12 months. This has had some impact in kick starting owners into dealing with their empty home, but it has been the success Government would have wanted. Clearly the financial penalty is currently not great enough to encourage the majority of owners to take action. There are also continuing issues over the use of council tax data by Authorities. Many Departments are unable to access the data due to lack of clarity on Data Protection. This is a major stumbling block for Authorities in tackling empty homes.

4.  BENEFITS OF BRINGING HOMES INTO USE

  4.1  Where empty homes have an end use then clearly the benefits of bringing it back into use cannot be over stated. Put simply the benefits are

    —  Providing housing for someone in need

    —  Removing an potential eyesore property, thus improving the neighbourhood

    —  Reducing the need for new build housing on greenfield sites

    —  Contributing to possible property price stabilisation or increase

    —  Aid to the well being of a neighbourhood

  4.2  In all Authorities there will be a range of empty housing that can be bought back into use to meet a range of housing needs. It is important Local Authorities realise the potential that all housing has and don't just link empty homes to providing social housing. This doesn't recognise the other types of housing need that may benefit from releasing an empty home may contribute to (eg homes for sale).

  4.3  Bringing empty homes back into use can be used to create a chain of housing change, for instance releasing a larger empty house for sale may in turn release a family social rented house, which in turn may release a smaller home. It is important the issue of empty homes is seen in this context to maximise benefit. Therefore by bringing even a single empty home back into use, it can have wider ranging impact than just the individual property.

5.  SPECIFIC STEPS FOR AREAS OF LOW DEMAND

Problems

  5.1  Empty homes can and do contribute to the destruction of neighbourhoods. But the empty house is just the symptom of other problems, such as quality of accommodation, housing need in the area, location, relative price to buying, poverty, reputation of area and available choice of housing. The role of poor private landlords in declining areas shouldn't be underestimated.

  5.2  Each Borough will have a different problem in relation to empty homes, in many seaside resorts it may be more about HMO's and the problems they present. In Rochdale the issues are more likely to be about high density small terraced or back to back housing, with little or no defensible outside space and poorly maintained rear alleys, essentially obsolete. This is also compounded by the availability of more modern housing at a purchasable price.

  5.3  Site assembly is another major problem with the length of time Compulsory Purchase Orders can take. Although a review of the CPO process was under way we are concerned that this seems to have stalled of late. This needs to be concluded and changes made to make the process more effective.

Opportunities

  5.4  With such a high proportion of terrace housing that is at worst obsolete and best in need of significant improvement, there is scope to see clearance as means to regenerate areas and to ensure that the targets for building on brownfield land are met before the properties are all empty and targeted by vandals. As a New Tools Pilot for acquisition and demolition, Rochdale knows the value of such a tool.

  5.5  A market will always exist for good quality terraced housing in a safe environment, especially for first time buyers on modest incomes. The challenges are to identify those properties that have another 30 years life and those that do not and assemble sites that are developable for a range of housing needs and tenures.

6.  RECOMMENDED CHANGES

  The Government should explore the following issues if empty homes are to be tackled effectively:

    —  new forms of direct financing rather than tax incentives to encourage owners to bring the property back into use for selected areas, possibly either channelled through the Housing Corporation or Regional Development Agencies;

    —  mainstreaming acquisition and demolition grants from the Housing Corporation Approved Development Programme;

    —  introduce a category of Second Home for Council Tax clarification purposes;

    —  allow councils to levy up to 100 per cent council tax charges on empty homes;

    —  clarify and amend if possible how Authorities are able to use council tax data in tackling empty homes;

    —  investigate the numbers of unbanded residential homes to understand the extent of the problem;

    —  place a mandatory duty on Local Authorities to produce an Empty Homes Strategy and action plan, this should be backed with a wider range of best value indicators;

    —  introduce the proposals of limited Licensing of Private landlords as proposed in the Housing Green Paper "Quality and Choice, A decent home for everyone" as a preventative measure;

    —  investigate the possibility of a Private Finance Initiative to tackle empty homes;

    —  increase the rate of VAT for homes built on Greenfield sites.

Rochdale Housing Initiative

September 2001


 
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