Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by The Empty Homes Agency (EMP 49)

EMPTY HOMES, WASTED SPACE AND REDUNDANT BUILDINGS—THIS COUNTRY'S WASTED ASSET

1.  INTRODUCTION

  The Empty Homes Agency (EHA) welcomes this inquiry into empty homes by the Select Committee and the Committee's recognition that this is an important issue. The EHA is an independent national housing and campaign group established in 1992. Our objective is to bring about, on a national scale, the re-use of empty homes and other unused buildings, for re-housing those in need and to meet the housing needs of this country.

  The Agency has two main purposes that flow from this objective, firstly to highlight the waste of empty homes and wasted property in England and secondly to promote, devise and, with others, to deliver solutions for bringing empty and wasted homes and buildings back to use.

2.  THE SCALE OF THE WASTE

  According to the latest Government statistics, as at 1 April 2000 at any one time there are in excess of 762,000 existing homes standing empty across England. Of these, the figures show over 201,000 having been empty for a year or more, however the Empty Homes Agency estimate that a closer approximation would be nearer 250,000 for long term empties due to the under-reporting by many local authorities. These properties represent a wasted resource for the country, they blight local neighbourhoods attracting crime, anti-social behaviour and vandalism, they deny a home to those in need of accommodation and represent millions of pounds of lost investment in the economy.

  Add to this the potential for additional flats and maisonettes in empty, wasted and under-utilised space currently designated as retail, offices or other commercial uses in our town centres and the number of potential homes rises to well in excess of 500,000.

3.  THE CONSEQUENCES

    —  Blight and neighbourhood degeneration.

    —  Crime and antisocial behaviour.

    —  Pressure on existing housing stock: lack of accommodation, especially affordable accommodation, across significant areas of the country.

    —  Increasing use of bed & breakfast accommodation in many areas especially London.

    —  Devaluation of surrounding properties.

    —  Loss of over £75 million per annum in council tax revenue to local authorities in England from the discount given to long-term empty homes (calculated from HIP return for properties empty for one year or more and the average Council Tax for 2001-02).

    —  Pressure on further Greenfield housing development.

4.  WHY ARE SO MANY HOMES EMPTY?

    —  Lack of financial incentive for re-use/disincentive or penalty for inaction.

    —  Cost of refurbishment/repair.

    —  Ignorance of the options available on the part of many property owners—two thirds of all empty properties are owned by individuals not professional housing or property companies.

    —  Restrictive planning policies mitigating against conversion or temporary re-use of redundant commercial or other property.

    —  Complicated funding procedures via councils and/or RSLs.

    —  Difficulty in obtaining empty property grants due to lack of powers afforded to local authorities under the Housing Grant Construction and Regeneration Act 1996 (Chp. 53).

    —  Fears of delays in relation to regeneration schemes meaning that stock is decanted early and kept empty for longer than is absolutely necessary.

    —  Land banking/property speculation by private investors.

    —  Out of sight—out of mind: this is especially true when property may have been inherited from a deceased or hospitalised relative and may be located far from the remaining family.

5.  EFFECTIVENESS OF GOVERNMENT POLICY TO DATE

  Since 1997 the Labour Government has introduced a number of separate policy initiatives that have had a positive effect on tackling empty homes, these include:

    —  PPG3 and the sequential approach for planning future housing developments giving priority to the re-use of empty buildings.

    —  Time limiting the zero exemption of council tax on properties undergoing repair to 12 months.

    —  Greater consideration to tackling empty homes in the annual Housing Investment Programme (HIP) assessment.

    —  Revised guidance to Government departments and other public bodies on the use of their empty stock.

    —  Reduction of VAT charged on the cost of refurbishing long-term empty homes and tax allowances for the conversion of redundant space over shops.

  In addition specific reference to the problems and effects associated with empty homes have been made in recent years in important Government publications such as the Lord Rogers Urban task Force Report, the Housing Green Paper, the Urban and Rural White Papers.

  However, whilst the EHA has welcomed, indeed had campaigned and lobbied specifically for many of these initiatives, the Agency firmly believes that their overall effectiveness is not being maximised by the continuing failure to pull all these disparate policies together at local housing authority level under the auspices of a Corporate Empty Property Strategy. There is still too much fragmentation and policy failure at a local level due to a lack of joined up thinking. Each of the policy initiatives above are acted upon (or not) in most authorities by different departments, planning, council tax, housing, development—in many cases operating independently. Less than two thirds of English local authorities have what the EHA would describe as any sort of corporate empty property strategy in place. Without the rigour of a statutory duty to produce and maintain such a joined up strategy at a local level, where delivery needs to be targeted, too often these initiatives will fail to achieve their full potential.

6.  SOME OF THE BARRIERS TO THE REUSE OF EMPTY HOMES AND WASTED SPACE

    —  No financial disincentive/penalty for owners of long-term empty property who fail to bring them back into productive use.

    —  Lack of clear guidance from Government requiring local planning authorities to include nature and extent of empty homes in their area within any housing capacity study when developing or updating local or unitary development plans.

    —  No statutory requirement for local authorities to have an empty property strategy therefore significant range of activity/inactivity across the country.

    —  Lack of clarity on the ability or otherwise of councils to make use of council tax data for identifying owners of empty homes.

    —  Length of time taken to undertake a CPO under current procedures (section 17 Housing Act 1985). There is a need for a fast-track procedure for councils when pursuing a CPO as part of a published corporate empty property strategy. Complicated and often inappropriate Housing Corporation bidding rules for Temporary Social Housing Grant (TSHG). This grant is one of the key tools used to enable Registered Social Landlords (RSLs) to acquire private sector empty homes for refurbishment.

7.  SOLUTIONS AND FURTHER ACTION REQUIRED

  Empty Property Strategies—empty homes are a national problem where different manifestations require different solutions but they do exist across the whole country north and south in both urban and rural areas.

  The problem of empty homes exists across the whole country, in areas of high housing demand by their waste, they deny people a home and increase development pressure on edge of town and greenfield sites. In areas of low demand they create areas of dereliction and decay attracting crime and anti-social behaviour and devaluing surrounding properties. The pressures and the possible solutions will vary from region to region, indeed from neighbourhood to neighbourhood across England, however the need for action and co-ordinated corporate empty property strategies remains the same.

  We are concerned that some bodies believe that local authorities already have such a duty. However, this is not the case—there is a duty upon councils to assess the condition of the housing stock within their area, but not specifically to draw up and implement a specific strategy for bringing empty homes (across all tenures and sectors) back to use.

  The Agency feels that this duty is at the core of future sustainable development, and one that we would strongly urge the Government to require councils to undertake. It would, in our opinion, have widespread public and political support. It will focus the attention of councils and can then, as a statutory requirement, be tied in more closely with the general push towards "best value" in services and activities undertaken by local authorities.

    —  EHA request to Government—The Agency believes a statutory requirement is still needed to ensure every local authority addresses the issue in their own area.

    —  An alternative option would be to include consideration of empty homes within the requirements of the Homelessness Bill currently before Parliament. The Empty Homes Agency is supporting the amendment tabled by David Kidney MP that would require local authorities to consider the nature and extent of empty homes in their area and the potential role they could play in meeting the accommodation requirements identified in their statutorily required Homelessness Strategy.

  Constructive use of information—there is currently confusion as to whether information on empty homes and in particular the personal contact details of the owners can be used by the collecting local authority for any purpose other than the collection and administration of Council Tax under the1992 Local Government & Finance Act. The Data Protection Registrar has supplied opinion to suggest that any such use as part of an empty property strategy is not acceptable. However some local authorities have obtained counsel's opinion indicating that under the Local Government Act 2000 the general consent for councils to pursue any policy to further the economic, social or environmental well being of local residents takes precedent. The current confusion is unhelpful and counterproductive. It is clearly nonsense for such information not to be shared.

  Whilst one can clearly understand concerns over councils selling such information to double glazing firms or the like, this does smack of significant un-joined up thinking. The result is that even the best Empty Property Officer, dedicated to tackling England's wasted homes, is having to operate effectively with one hand tied behind their back when trying to deliver an empty property strategy. One of the most crucial parts of any strategy is actually identifying the owner of an empty property and starting a dialogue with them (positive eg grant aid etc, or negative eg CPO action as appropriate).

  The EHA believes the majority of the public believe that when information is supplied to one section of a council it is available across all that council's areas of operation, indeed the failure to share information is frequently cited as one of the key criticism of councils and other public bodies and agencies.

    —  EHA request to Government—Clear statement from DTLR that local authorities could and should use data collected for council tax to assist in pursuing an empty property strategy.

  100 per cent council tax campaign—there is currently no fiscal incentive to encourage owners to get homes occupied. To retain a maximum 50 per cent charge for empty homes sends out the message that it is cheaper to leave a home empty than to get it occupied: "Keep it empty, don't make any attempt to bring it back into use and society will give you a discount." Such a message runs counter to the whole principal of sustainable development.

    —  EHA request to Government—The Agency calls for a discretionary power for local authorities to charge 100 per cent council tax on long term empties in their area.

    —  Further discretion for each authority to be able to set it own definition of what is long-term empty in relation to their local housing market.

  VAT—the cost of repair remains a key issue as to why homes stand empty, a key factor being VAT charged at 17½ per cent on refurbishing properties empty less than three years.

  The Empty Homes Agency warmly welcomed the Government's announcement in this years Budget of the reduction of VAT from 17½ per cent to 5 per cent on the cost of refurbishing residential property that had been empty for three years or more. This extension of the original proposal in the Pre-Budget Report of a zero VAT rate for repairs to properties empty over 10 years came about following extensive discussions between the EHA and HM Customs & Excise. However these reductions do not provide the level playing field in VAT terms in housing as new house building (especially that taking place on Greenfield sites) remains zero-rated for VAT. The EHA continues to call for harmonisation of VAT at 5 per cent between new house building and refurbishment of existing property.

  It has been said that a modest increase of 5 per cent on new house-building costs would not be acceptable to the house-builders. It is important to note that we are talking about 5 per cent on the build costs not a simple 5 per cent tax on new house prices. A significant proportion of the cost of a new house is determined by the cost of the land. Opposition to tax is a reflex; it must be expected. Of more substance is the justification for continued exemption. This is becoming difficult to defend, especially when property and environmental interests such as RICS, the Civic Trust, the Chartered Institute of Housing, our Agency and the CPRE jointly agree that a modest increase of 5 per cent would not form a barrier to new-build provision. This would particularly be the case if Government were to take on board the fact that most house builders have a two-year land bank. Therefore if it were felt necessary to minimise the short term effects, VAT harmonisation could be introduced with a suitable lead in time to allow house builders time to take into account the tax in their new land appraisals.

  A 5 per cent increase in VAT (a green field levy) will not, however, save green fields when change of use can turn farmland at £2,500 an acre to £300,000 an acre in value. To tackle our wasted homes, and potential homes, the playing field must be levelled and refurbishment and conversion harmonised at 5 per cent. This would also engage the interests and talents of our house-builders in this activity. The lack of profit arising from the present regime encourages them to walk away from this activity.

  Pleased as we were with the Government's new VAT reductions announced in the Budget, the Agency estimates that these new provisions still only relate to 60 per cent of England's long term empty homes (those properties empty for a year or more).

Properties empty 1-3 years
approximately
100,000
(40%)
Properties empty 3-5 years
approximately
80,000
(32%)
Properties empty 5-10 years
approximately
60,000
(24%)
Properties empty over 10 years
approximately
10,000
(4%)
TOTAL
  
250,000
  


  These figures have been corroborated by information received from local authorities that have carried out specific analysis of council tax or other data sources:

  For example Birmingham City Council have recently undertaken a ward by ward analysis of their council tax data which reveals the following:

As at November 2000
  
  
  
Homes empty 1-2 years
2,823
45%
of those empty 1 year or more
Homes empty 2-10 years
3,849
55%
of those empty 1 year or more
Homes empty 10 years or more
6
0.09%
of those empty 1 year or more


  Across England there is approximately a further 500,000 homes that have been empty for up to one year many of which may require some refurbishment or repair before their re-use. The EHA believes that reducing the cost and therefore increasing the likelihood that such repairs will be carried out will help to avoid many of these "transitional" empty homes standing void for significant periods of time and therefore risk becoming the problem long-term empties of the future.

    —  EHA request to Government—The Agency continues to support the harmonisation between new build and refurbishment at 5 per cent. Indeed an additional proposal for a reduced rate of 5 per cent VAT on all repairs and maintenance work to all residential properties whether empty or occupied.

  The planning system and capacity building—Regional Planning Guidance (RPG), Structure Plans and Local Plans are often not taking into account the nature and extent of empty homes when establishing house-building targets. This is despite a clear instruction in Government guidance stating that existing empty homes should be considered along with the potential offered by flats over shops etc. when establishing new housing targets. The reality on the ground is that empty homes are not being seen as a potential housing resource which clearly runs counter to the Government's overall emphasis on sustainable development. For example the recently announced North West RPG they actually increased the housing requirement for the region by 5 per cent because they wanted to include a 5 per cent vacancy rate build into the overall figure! (As at April 2000 the void rate in this region was 4.6 per cent the joint highest in the country)

    —  EHA request to Government—Clear instructions to the Planning Inspectorate and Regional Planning bodies on the positive part to be played by empty homes in facilitating future housing need and further monitoring of future plans to ensure the existing guidance is being adhered to.

  Private Property Investment—Currently private investors will buy up empty properties only to sit on them in anticipation of a rise in the market. These frequently stand empty for more than a year and the owner has no intention of bringing them back into use ahead of their own schedule.

    —  EHA request to Government—A tax on the capital appreciation of any property other than the owner's main residence where that property has remained empty for more than six months.

    —  A positive tax incentive and relaxation of current taxation on rental income to encourage "buy to let" investors and potential landlords.

  Publicly owned empty property.

  The Empty Homes Agency supports the initiatives currently being taken by the MoD, Highways Agency and others to seek to tackle their empty homes. This is something that is certainly required as the Government regrettably retains the title of England's most wasteful landlord with a void rate some four times higher than that even in the private sector and up to six times worse than many local authorities.

    —  EHA request to Government—Revised and strengthened guidance to be issued to all Government departments and agencies, including the NHS, on making best use of their empty homes.

    —  This will need to be accompanied by a review of current Treasury regulations on securing market returns on the sale or lease of public property and assets which can mitigate against successful short-term reuse of properties especially for social housing purposes in partnerships with councils and RSLs.

8.  CONCLUSION

  The Empty Homes Agency welcomes the Transport, Local Government and the Regions Select Committee inquiry into empty homes. We are particularly pleased at the broad range and scope of the inquiry, in our opinion this highlights the far reaching effects of long term empty homes and wasted buildings on society today, as well as looking at the often diverse factors leading to the issue arising across the country.

  The EHA have set out in this memorandum of evidence a brief summary of some of the key points we believe the Committee could focus upon and where support from the Select Committee would, we believe, help to bring forward further positive policies and actions from the Government. We would welcome the opportunity to discuss these points further with the Committee.

The Empty Homes Agency

September 2001


 
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