Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by Anna Bowman (EMP 50)

EMPTY HOMES—MAKING BETTER USE OF EXISTING RESOURCES

  This memorandum focuses on action required to ensure that more empty homes are brought back into use for social purposes in London and other areas of high demand. It looks particularly at the potential use of empty property to provide accommodation for the following priority needs groups: homeless families and key workers.

CONTENTS

  1.  Introduction—scale of the problem.

  2.  Effectiveness of government's policy to date and areas of policy failure/neglect.

  3.  Need for empty property strategies at local authority and regional level.

  4.  Need for new funding arrangements for the social housing sector—revenue and capital.

  5.  Empty property and regeneration.

  6.  Summary of recommendations for action.

1.  THE SCALE OF THE PROBLEM

  The Empty Homes Agency estimates that there are around 762,000 empty homes in England (April 2000). 201,000 of them have been empty for over a year. They estimate that if under-utilised properties, such as former residential accommodation/storage above shops is included, this figure increases to 500,000 long-term empty homes. Although many are concentrated in areas of low demand, there are an estimated 100,000 empty homes in the capital where demand for housing is exceptionally high. Despite efforts to reduce the number of empty homes in London, including the use of an Empty Property Hotline and despite a very buoyant property market, there has not been a dramatic reduction in the number of empty homes. Over 25,000 empty homes in London have unused for over a year. There are also an estimated 40,000 additional homes that could be created from under utilised accommodation, such as space above shops.

  There is an urgent need on social and environmental grounds to take action in view of the growth of the population in the capital, the shortage of affordable homes and the government's desire to minimise unnecessary green field development. Action on empty homes can play an important role in meeting two government objectives:

    —  reducing the number of families in bed and breakfast;

    —  providing more homes for key workers.

  Reducing the number of empty homes and planning blight is also important in terms of urban regeneration.

  There is an excellent opportunity to link action on empty homes with the government's new Bed and Breakfast unit's role and to meet some of the need for housing for key workers, such as teachers and nurses. However this will depend on providing sufficient incentives and in some cases penalties for owners to ensure that they overcome the inertia, which has frequently led them to leave homes empty.

  There are numerous reasons for property being left empty. In London owners are likely to leave property empty for a variety of reasons including lack of capital to improve the property, apathy and ignorance or fear that using it could jeopardise or slow down a complex redevelopment scheme. As a result different strategies and tactics need to be developed, with appropriate incentives for both small landlords and large owners, which include government departments, RSLs and other large agencies.

2.  EFFECTIVENESS OF THE GOVERNMENT'S POLICY TO DATE AND AREAS WHERE NEW POLICIES ARE REQUIRED

  The government's policies have included a number of initiatives to encourage owners to bring properties into use. However, the use of separate initiatives without an over arching, clear policy outcome or set of outcomes leads to fragmentation and policy failure and inadequate results at a local level. The decision to hold an inquiry into empty homes, the changes to VAT for conversion of rehabilitated property and the establishment of the new Bed and Breakfast unit are encouraging signs that the government is determined to reduce the number of empty homes.

  Government recognises that using empty homes can fulfil social purposes but there a number of issues that make implementing this strategy so difficult. These include:

    —  The number of different owners (78 per cent of empty property is private sector owned), the majority of whom are not professional landlords. 66 per cent of empty property is owned by individuals.

    —  The cyclical nature of the property market and fluctuating levels of demand.

    —  Difficulties in anticipating and planning for increased/reduced demand and an understandable desire for the situation to be kept "under control", which has meant planning in relation to homeless families has been inadequate and often far too conservative. This is especially so, since the late 1990's when numbers began to rise again, after a period in which they decreased.

    —  Conflicting government priorities especially around Housing Benefit, which cover the rent for most temporary accommodation schemes and requirements for value for money returns on government agencies' properties eg Highways Agency empty property.

    —  The time lag between the identification of the growth of homelessness and the development of appropriate solutions to tackle it, especially when homelessness demands increased in the late 1990's.

    —  The limited number of Registered Social Landlords with both the expertise and the capacity to take on high levels of risk currently needed for homeless family schemes.

    —  The lack of routine integration of temporary uses into regeneration schemes, despite the many examples of good practice, which could become mainstream best practice.

  The following sections concentrate on those issues that have not yet been reviewed by this government, in relation to its objectives around empty property and homelessness, which in the author's view, urgently need to be addressed. This includes:

    —  Local authority Empty homes strategies—these are not a statutory requirement and would be more effective if they were. There is also a need for regional as well as local authority strategies.

    —  Funding arrangements for temporary accommodation schemes—both capital and revenue, which were either developed during the 1990's recession (capital funding) or have not taken into account objectives around reducing homelessness (revenue funding).

    —  Arrangements to use empty property in regeneration areas and properties owned by government agencies.

3.  NEED FOR EMPTY PROPERTY STRATEGIES AT A LOCAL AUTHORITY AND REGIONAL LEVEL

  Local authorities are encouraged to establish empty property strategies and many have them in place. The majority of London local authorities now have empty property strategies and officers, but they tend to be linked to other objectives, such as environmental health and Housing Aid. The lack of a statutory framework means that they do not have the "clout" within local authorities and other agencies, which a statutory requirement would provide. The benefits of this change, which the Empty Homes Agency is lobbying for, is that it would focus the attention of a wide range of partners in achieving results. There are many examples, of the effectiveness of statutory strategies in other fields, such as the Teenage Pregnancy Strategy. This raised the profile of the issue and brought health, social services and voluntary agencies into effective new partnerships. A similar approach is needed in relation to empty homes.

  Local authority empty property strategies will also be more effective if they feed into a regional empty property strategy, which provides a wider overview and will help focus attention on major owners of empty property, whose holdings may straddle several boroughs eg Highways Agency.

4.  FUNDING ARRANGEMENTS FOR TEMPORARY ACCOMMODATION, USING EMPTY PROPERTY

  Empty property has been effectively used for many years to provide temporary accommodation for homeless families and some housing for key workers. However the arrangements rely on there being a relatively stable and appropriate form of funding in place to cover the rent to the owner, cost of repairs and additional management costs, which are required for homeless families' schemes. In the 1970s and 1980's the majority of empty property used was local authority owned, let at peppercorn rents, with repairs covered through a mix of small capital grants from the Housing Corporation and local authorities and tenants' sweat equity. When this property was eventually renovated permanently, new sources of empty property were found in the private sector and in government agencies' estates. Funding for repairs was available through capital grants (Housing Corporation and local authorities) and landlords' own investment. These schemes are more expensive in revenue terms because of owners' expectations in relation to rents and their growth has faltered due to difficulties in covering all the costs through Housing Benefit.

Housing Corporation—Temporary Social Housing Capital Grants

  There has been a reduction in the amount of capital funding available for temporary accommodation schemes in London over the past few years and the number of homes produced with this form of investment has reduced. However the benefits are still significant, as leases are generally for six to 10 years, rather than shorter periods.

  Housing Corporation and local authority Temporary Social Housing Funding in London 1997-2001

Year
Investment
Estimated number of homes
1997-98
£8.28 million
649
1998-99
£10.59 million
820
1999-2000
£9.61 million
580
2000-01
£7.34 million
376


  Source, The Housing Corporation

  A number of reports produced by the London Housing Federation (The Long and the Short of it) (2000); Bridging the Gap, homelessness and temporary accommodation (1998), New Lives, New Homes (1997) have stressed the need for a simple, flexible form of capital funding that is targeted to bringing back into use empty privately owned property, for homeless families use. These reports have highlighted the complexity of current funding arrangements, which have seen a reduction in the number of associations bidding for that form of funding.

  At a local authority level, empty property officers value the contribution that capital grant funding makes to bringing problematic and often long-term empty property into use. It is recommended that the Housing Corporation and London Housing Federation undertake further research and modelling, with a view to improving the current funding arrangements.

Rents and Housing Benefit

  The majority of properties managed by associations as temporary accommodation for homeless families in London are ready-to-let homes that have been leased from landlords. They are often in property that was previously empty, through this is not always the case. The success of these schemes, which keep families out of bed and breakfast have been comprised by the difficulties in obtaining Housing Benefit from local authorities and benefit contractors. As a result, the number of RSLs engaged in this form of work has decreased.

  Rents for privately owned property are inevitably higher than for social housing, resulting in pressure on national Housing Benefit expenditure. Government efforts to limit expenditure have impacted on the ability of RSLs to procure temporary accommodation from the private sector. For instance the use of local reference rents as ceilings for leased property rents, has meant that in some areas it is difficult to lease empty homes, as landlords expect the "going rate" for their property. Following the establishment of the Benefits Fraud Inspectorate in 1998, there has been increased emphasis on creating a secure gateway to the benefits system, which has increased the bureaucracy and created further delays in payment. However, increased use of empty property for homeless families will require changes to the way in which Housing Benefit is paid. It is recommended that the new Bed and Breakfast unit explores these problems and negotiates necessary changes.

5.  ARRANGEMENTS TO USE EMPTY PROPERTY ON A TEMPORARY BASIS IN REGENERATION AREAS AND ALSO USE OF GOVERNMENT AGENCY EMPTY PROPERTIES

Regeneration Schemes

  Registered Social Landlords (RSLs) and other agencies are prioritising estate regeneration, in order to tackle social exclusion. However there are substantial risks that in doing so, more property may be empty in the short to medium term and there may also be a longer term loss of social housing, as densities are reduced Estate regeneration is complex, especially where property is being demolished and rebuilt over a period of years and tenants need to be decanted, sometimes twice, during the process.

  There is evidence (Closing Doors, LHF 2000) of loss of social housing through regeneration schemes. However there is also evidence of good practice in using temporarily empty homes both for homeless families and for key workers. An example of this is Stonebridge HAT, in Brent where demolition and new building will result in a loss of 375 homes at the end of ten years. This is necessary, in order to create a better environment, integrated with the surrounding neighbourhood. However Stonebridge HAT are making very effective use of temporarily empty homes, by letting 84 to Notting Hill Housing Trust for homeless families and 63 to Brent Community Housing for single people, including many key workers. The HAT benefits from these arrangements by keeping the homes occupied and from collecting rental and service charges. It is recommended that regional estimates be made of the potential number of empty homes that could be used on a temporary basis in regeneration schemes. Best practice needs to be promoted by the Government Office for London and the new Bed and Breakfast Unit. In addition consideration should also be given to making the effective temporary use of homes a requirement for public funding for regeneration schemes in London.

Empty homes owned by public agencies

  The Treasury requirements for public agencies to obtain a good return from their empty properties militates against their use for social purposes, as it results in high rents being charged, which are outside Housing Benefit rent ceilings. In the case of the Highways Agency it led to properties being transferred to private sector managing agents in 1998. However there is the potential to use these properties for homeless families, if either rent yields are reduced or more flexibility is introduced into Housing Benefit arrangements for homeless families. These properties could also be used as housing for key workers, if market related rents were required.

6.  SUMMARY OF RECOMMENDATIONS FOR ACTION

  The DLTR's Select Committee's inquiry into Empty Homes is most welcome. This memorandum focuses on action that can be taken to ameliorate some of the problems in London and other high cost areas. There is still considerable potential to improve the use of empty and underused property. Despite high levels of demand, there are still over 100,000 empty homes in the capital, with a significant number empty for over a year and a similar number of under used properties in areas such as shopping high streets. However a number of strategies need to be in place in order to create the administrative and funding environment in which this can occur.

  The recommendations in this memorandum focus on some specific actions, which could be taken. These are:

    —  The introduction of a statutory requirement for local authorities and regional government to develop empty property strategies.

    —  A review of the capital funding arrangements for empty property so that it can be used for social purposes, especially temporary accommodation for homeless families and key workers.

    —  A review of the Housing Benefit arrangements for RSLs managing temporary accommodation schemes.

    —  A review of the number of empty homes in publicly funded regeneration schemes in the capital and consideration of whether a requirement could be introduced to use these homes during the development process.

Anna Bowman

Senior Visiting Research Fellow

University of Westminster

September 2001


 
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