Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by The Chartered Institute of Housing (EMP 42)

EMPTY HOMES

  Dealing with the problem of empty homes is part of a local authority's strategic role, as prescribed in the Housing Green Paper (April 2000). The CIH supports the broad thrust of the proposals for the strategic role in the Housing Green Paper, but believes that they do not go far enough. CIH calls for:

    —  a clearer legal basis for the strategic housing role;

    —  support for local authorities to enable them to influence and shape local housing markets.

1.  WHAT ARE THE CONSEQUENCES OF SO MANY EMPTY HOMES LYING EMPTY, INCLUDING THE LINK BETWEEN EMPTY HOMES AND URBAN DEGENERATION, SOCIAL AND RACIAL TENSIONS?

  1.1  An empty home can contribute to the deterioration of an area's environment. Its condition can decline, creating a statutory nuisance and attracting crime to the area. Empty homes become the equivalent of "bad teeth" in a neighbourhood, particularly when they are large properties or in prominent locations such as corner sites.

  1.2  Large numbers of empty properties within an area can attract a wide range of crime eg storage of stolen goods, drug dealing and usage, arson.

  1.3  Local services eg retail and transport, can close down due to lack of support and custom.

  1.4  In areas with a widespread empty homes problem, turnover in schools influences education and school quality, often exacerbating problems of truancy and exclusion. Children and young people alienated from school form a major factor in neighbourhood crime, vandalism and anti-social behaviour.

2.  WHAT BENEFITS ARISE FROM BRINGING EMPTY HOMES BACK INTO USE?

  2.1  In addition to the converse of the effects stated in Part 1, an effective empty property strategy in a high demand area can lead to the acquisition of vacant properties to increase the supply of affordable housing.

3.  WHY ARE SO MANY HOMES EMPTY?

  3.1  During the past 30 years there has been very little demolition of residential property, and the emphasis has been on renovation and refurbishment. Economic and social structures have changed greatly since the 1960s; housing stock in many parts of the U.K. no longer meets modern-day needs in terms of property type and location.

3.2  Low Demand Areas

  The Chartered Institute of Housing supports the findings of the Centre for Urban and Regional Studies (Changing Housing Markets and Urban Regeneration in the M62 Corridor) that the causes of empty homes are as follows:

    —  Changes in the private house buying sector. The liberalisation of housing finance in the mid 1980s has led to the proliferation of inexpensive home ownership schemes, making owner-occupation accessible to those on comparatively low incomes;

    —  Changing aspirations for housing, together with the obsolescence of certain types of dwelling eg pre-1919 terraced housing. Buyers often no longer want terraced housing, preferring new -build peripheral site developments. Research by CURS has discovered that inner city housing markets are often supported by ethnic minority communities who wish to live close to their cultural facilities. However, the research has also found that younger members of these communities often aspire to leave these areas;

    —  Economic restructuring and labour market change. The loss of jobs in the Midlands and North of England has been accompanied by decentralisation of employment. Planning regimes in the 1980s favoured economic development in peripheral areas;

    —  Demographic changes, with falling birthrates and outward migration;

    —  Lack of collaboration on planning between local authorities, and a lack of understanding of cross-boundary housing markets. The result is that new housing can be constructed on greenfield sites close to areas of sound but unoccupied housing;

    —  Decline in the use of Compulsory Purchase Orders, which are a crucial part of an empty property strategy. Widespread use of CPOs for area clearance was made in the 1960s and 1970s. Their use has declined for a number of reasons:

      —  lack of money and expertise;

      —  registered social landlords have been much less willing to buy/rehabilitate empty properties since 1988 because of lower grant rates (linked to the introduction of private finance);

      —  poor image of CPOs, linked to the housing policies of 1960s and 1970s;

      —  time-consuming—not usually able to fit within the Housing Corporation's annual funding cycle.

3.3  Individual Empty Properties

  Individual empty properties may be located within an otherwise fully occupied neighbourhood. They are empty because of the circumstances of the individual or household who owns them; they are not empty because of any area-based economic or environmental reason. Examples of reasons:

    —  an owner has moved into a residential home and does not wish to sell;

    —  an owner bought a property as an investment to renovate and refurbish, but no longer has the funds to do this;

    —  a property has progressively declined and is in extremely poor condition with outdated facilities;

    —  a property has been purchased as an investment and held for future use by members of the owners' family;

    —  the title to the property is disputed eg after death or divorce.

  Bringing empty homes back into use can involve an intense amount of work in return for acquiring a comparatively small number of properties. Problems include:

    —  there is no economy of scale;

    —  there can be complex legal problems, with specialist knowledge required;

    —  there are particular problems in high demand areas, where even properties in poor condition can be very expensive for registered social landlords to purchase;

    —  it can be difficult to gain accurate information about empty homes, with Data Protection used as a reasons for obstructing the flow of information eg Council Tax data.

3.4  Unpopular Social Housing

  Unpopular social housing is difficult to let either because of its property type or location. Examples of unpopular property types, to be found in both high demand and low demand areas, are:

    —  accommodation reserved solely for elderly people, consisting mainly of bedsit and one bedroom flats and bungalows, plus the older style sheltered housing schemes. Preferences have changed since the 1960s when a considerable amount of this accommodation was built. Today, Care and Repair schemes and Home Improvement Agencies ensure that elderly people are able to continue living in their existing homes. Even if they wish to move, they frequently request at least two bedrooms for visitors and storage of possessions.

    —  a large amount of one bedroom accommodation which was built in the 1960s. Aspirations have changed, and smaller accommodation is often incompatible with modern lifestyles.

    —  poorly designed estates which can yield a large amount of unpopular housing, management and social problems, crime, lack of security and high turnover. Within areas which are generally prosperous, including the South of England, regeneration funding is often not available to re-model these estates, and HNI and GNI indices are not often structured to address these issues with central funding.

4.  WHAT HAS BEEN THE EFFECTIVENESS OF THE GOVERNMENT'S POLICY TO DATE, INCLUDING THE RESULTS OF THE 2001 BUDGET?

  The statistics collated by the Empty Homes Agency for April 2000 show that government policy has yet to stimulate a reduction in the number of empty properties, in both the public and the private sector.

  The Government's proposals for changes to VAT included in the March 2001 budget are very welcome, together with the 100 per cent capital allowances for the conversion or renovation of space over shops. However, further concessions are required:

    —  Greenfield development still incurs no VAT, which makes it a more favourable option than refurbishment of existing housing. This is incompatible with the principles of Planning Policy Guidance 3. CIH favours the harmonisation of VAT, with 5 per cent charged on both greenfield development and renovation and refurbishment schemes.

    —  The changes in VAT rates announced in the Budget 2001 may create a perverse incentive for owners of properties to leave them empty for up to three years; after this period the VAT rate will drop to 5 per cent and make renovation cheaper. The VAT rate on renovating empty properties should automatically be 5 per cent.

    —  The 2001 Budget proposed that the full amount of VAT payable on the costs of renovating accommodation which has been empty for at least 10 years should be reclaimable once the property has been sold on. CIH proposes that this VAT relief should be available for properties which have been empty for less than 10 years.

5.  WHAT ADDITIONAL MEASURES SHOULD BE TAKEN BY GOVERNMENT, THE HOUSING CORPORATION, LOCAL AUTHORITIES AND OTHERS?

  5.1  Council Tax—CIH welcomes the Government's proposals for abolishing the 50 per cent discount on second and empty homes; this is a measure which can be used to enforce the work of Empty Property Officers. An additional incentive to re-use empty property would be an ascending scale of Council Tax beyond the full rate, which could be progressively imposed for each 12 month period during which a property is left empty.

  5.2  Empty Property Strategies—Each local authority should have a statutory duty to assess the incidence of empty property (in all tenures) within their area, with a report included within their Housing Strategy Statement. The DTLR must provide guidance on the point at which a local authority can be said to have "an empty home problem" which requires a full empty property strategy, eg the number or percentage of the total stock within their area (this is especially useful to authorities which have lots of individual empty properties, as opposed to a higher-profile area-based problem).

  5.3  The Regional dimension—CIH agrees with the Recommendation 6 within Policy Action Team 7's report Unpopular Housing, that Regional Planning Bodies should formulate plans linking with Regional Development Agencies in respect of overall household numbers and the appropriate mix of dwellings, and support a sequential approach to priority area strategies. Reducing the problem of low demand housing should be made a requirement of Regional Development Agencies; this will help to ensure that RDAs take responsibility for both economic development and community sustainability.

  5.4  Compulsory Purchase Orders—Local authorities do not have sufficient powers to deal with areas where the housing market has collapsed or is very fragile. There is no power to compulsorily purchase properties which are obsolete/surplus to requirement but not unfit.

  The current system of CPOs is long, complicated and outdated. This process should be easier and shorter, and CPO powers need to be revamped to reflect current policies/needs. The CIH recommends the following:

    —  New CPO legislation should be drafted to consolidate and simplify the existing law, and use up-to-date language;

    —  The existing powers are too dispersed and should be covered by a more general Local Government Act power covering all the likely purposes of a CPO;

    —  The powers should be extended to include a category of "obsolescence" as a criterion for compulsory acquisition;

    —  Good practice on CPOs should be widely disseminated. Delays are caused by the legal and procedural complexity of the process. CPOs rely on too many other things falling into place, especially the granting of planning permission. Some local authorities have found ways of telescoping the process so that necessary steps overlap, rather than taken in sequence, thus helping to speed up the process;

    —  There is a case for assisting those who have negative equity and whose homes need to be acquired to deal with low demand and surplus housing.

6.  WHAT CAN GOVERNMENT DEPARTMENTS, THE NHS, LOCAL AUTHORITIES AND RSLS DO TO BRING MORE OF THEIR PROPERTIES BACK INTO USE?

  6.1  The Housing Corporation's funding systems need to be more sensitive to the principles of Planning Policy Guidance 3, whereby existing buildings should be used before greenfield development is undertaken. Total Cost Indicators need to be adjusted accordingly.

  6.2  RSLs need to take a more active role in adapting and renovating existing social housing. To encourage re-use of existing properties, this type of scheme could attract a higher proportion of Social Housing Grant than new build schemes.

  6.3  Local authorities should have a statutory duty to carry out an annual assessment of unpopular social housing within their area, detailing numbers, types and reasons for unpopularity. (Suggested definition of unpopular social housing: properties vacant for more than 12 weeks).

  6.4  Local authorities should have a duty to assess the current and future needs for special needs housing within their area, both overall and within client groups. This assessment should then be included within their Housing Strategy Statement. This is particularly relevant in areas where there is an oversupply of elderly person's accommodation and under-supply for other client groups. Local authorities should devise plans for addressing this imbalance.

  6.5  For RSLs—Enterprise Zones could be created by the Housing Corporation to support and encourage RSLs to develop new alliances and structures. Within these zones, there could be variations in rents and service packages offered, and greater flexibility in allocation of stock to widen the client group eg shorthold tenancies.

  6.6  RSLs should have effective asset management strategies to ensure that they are not contributing to an area's decline. This should be monitored by the Housing Corporation.

  6.7  RSLs which have a small amount of stock in a neighbourhood remote from other parts of the stock tend to have worse void levels and are less able to provide the necessary level of service. RSLs need to be encouraged to transfer or sell stock to other RSLs better placed to give them the management and attention required.

  6.8  Restrictions should be lifted on using Social Housing Grant to fund major repairs and improvements, and for the development of asset management strategies, including the cost of demolition.

  6.9  The objectives of the Approved Development Plan should be amended to emphasise the role of RSLs in supporting the sustainability of communities.

7.  WHAT SPECIFIC STEPS SHOULD BE TAKEN IN AREAS OF LOW DEMAND?

  7.1  A Housing Market Restructuring Fund should be introduced to finance the long-term strategies in the areas worst affected by change. The fund will facilitate:

    —  a programme of refurbishment, new build and selective demolition in areas where the housing market is failing;

    —  the land assembly necessary for redevelopment.

Recommendations:

  A separate fund is needed, since the long-term work of tackling low demand cannot be fitted into the annual funding cycles such as the Approved Development Plan and the Housing Investment Programme. Also, the areas affected may not be confined within the boundaries of one local authority.

  Local authorities should not have to compete in bidding for finance from the Housing Market Restructuring fund. Research should be carried out to identify the areas worst affected by low demand. The allocation mechanism for the funding should be similar to that used for the Neighbourhood Renewal Fund.

  The fund should be targeted at failing housing markets, rather than local authority areas. This should encourage inter-authority co-operation. A more accurate parameter for the targeting of the fund could be postcode areas; these tend to be more flexible and reflective of housing market areas than local authority boundaries.

  7.2  A more formal sub-regional working arrangement needs to be developed between housing and planning professionals, so that knowledge of local housing markets can inform the Plan, Monitor and Manage approach being adopted to monitor the implementation of Regional Planning Guidance. The CIH agrees with the report of Policy Action Team 7 (Unpopular Housing) that Regional Planning Bodies should monitor the implementation of the housing requirements set out in Regional Planning Guidance, in order to ensure that housing provision targets are not exceeded in regions where there is low demand for housing.

  7.3  Local partnerships involving local authorities, RSLs and developers should develop a collaborative strategy for their local housing market, which integrates investment decisions and ensures that the actions of individual organisations are consistent with the overall strategy.

  7.4  CIH agrees with the report of Policy Action Team 7 (Unpopular Housing) that advice on non-renewal of outstanding planning permissions in Planning Policy 3 should be amended to include evidence of changes in demand and supply as reason to review critically all applications to renew planning applications.

  7.5  Investigation of empty homes is included in the guidance for Urban Capacity Studies. Urban Capacity studies represent a proactive approach to Planning which can be at odds with the more reactive approach taken by a number of local authority Planning departments. Any future Planning legislation should aim to alter the culture of the profession and ensure that a proactive approach is part of its core business.

Helen George

Policy Officer

September 2001

REFERENCES

  Nevin B, Lee P, Goodson L, Muire A, Phillimore J (2001) Changing Housing Markets and Urban Regeneration in the M62 Corridor, Birmingham.

  DETR (1999), Unpopular Housing: Report by the Unpopular Housing Action Team, DETR: London.

  HACAS Consulting and the Chartered Institute of Housing (2000) Sustaining Success: Registered Social Landlords, Financial Risk and Low Demand, CIH: Coventry.

  Holmes A, Simpson M, (1999) Low Demand—separating Fact from Fiction, CIH: Coventry.

  CIH/LGA Briefing (2001), Modernising the Legal Basis for Local Authorities's Strategic Housing Role, CIH: Coventry.


 
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Prepared 24 October 2001