Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by The Royal Institution of Chartered Surveyors (EMP 55)

EMPTY HOMES

1.  INTRODUCTION

  The Royal Institution of Chartered Surveyors (RICS) represents the views and interests of 120,000 chartered surveyors worldwide covering all aspects of land, property and construction. Under the terms of its Charter, RICS is required at all times to act in the public interest.

  We welcome this opportunity to submit evidence to the House of Commons Select Committee on Transport, Local Government and the Regions on the importance of empty homes particularly as housing is critical to the success of the UK economy. The nation requires good quality housing to be made available to encourage and facilitate normal economic activities. To meet this need the large number of empty homes needs to be reduced and brought back into use.

Key Recommendations

    (i)  Government needs to develop a formal strategy setting out targets to reduce the number of empty homes and establish a benchmark against which government agencies and local authorities can be required to act.

    (ii)  The role of the Empty Property Advisory Group needs to be extended and made accountable to a specific government minister.

    (iii)  Government funding needs to be prioritised to favour those local authorities who achieve the targets set out in their empty property strategies.

    (iv)  Government needs to clarify the position regarding local authority use of data protection legislation in relation to the promotion of the "well being" of their area under the Local Government Act 2000 and set this out in formal guidance notes to local authorities.

    (v)  The rate of VAT on refurbishment needs to be reduced to bring it more into line with the rate of VAT on new build.

    (vi)  Partnership Investment Programme (PIP) funding should be extended to include residential schemes.

    (vii)  Bidding mechanisms to support projects bringing empty local authority and Registered Social Landlords (RSLs) homes back into use need to be overhauled.

    (viii)  Council Tax should be applied at the same rate for both empty homes and those properties in use. Council tax receipts should be ringfenced and linked to the empty property strategy within that area.

    (ix)  Government should promote best practice on the most efficient ways of securing ownership of and procuring works in respect of composite groups of empty homes.

    (x)  Urban Capacity Studies guidance needs to be reviewed to promote the re-use of empty homes.

    (xi)  Financial incentives should operate to discourage empty homes.

2.  DEFINING THE PROBLEM

  The most recently available figures show that there are about 760,000 empty homes in England alone[39]. This is greater than the population of Leeds, England's third largest city. Importantly, this figure excludes empty homes in Scotland, Wales or Northern Ireland and vacant commercial property.

  Empty homes are an issue for three principal reasons:

    —  There is a strong body of evidence to suggest that areas which include significant pockets of empty homes suffer from higher levels of crime and associated problems.

    —  There is a need to accommodate 3.8 million households within the UK over the period 1991 to 2016. Empty homes have the potential to supply a significant percentage of this target. Along with brownfield land, empty homes present an important opportunity to avoid further pressures on greenfield sites.

    —  By allowing 50 per cent Council Tax relief to owners of empty homes, there is a lost annual income to HM Treasury in the order of £75 million per annum[40]. In addition, empty homes represent a considerable wasted resource to the UK in terms of the investment already made in constructing them, the ongoing maintenance and security costs of keeping them empty and the costs of bringing them back into use.

  At the local level, about 200 local authorities have now appointed dedicated empty property officers and/or framed empty property strategies, although disappointingly there are still a third of English local authorities which have made no such commitment. For those that have, there are a variety of tools available to them to encourage the re-use of empty homes, including planning, Compulsory Purchase Orders and grant funding arrangements. We welcome the DTLR's recent commitment to preparing a comprehensive guidance note for local authorities on the most effective use of these powers although these can only really be of use as part of a wider strategic framework.

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  At this stage it is difficult to predict how effective current and proposed measures at the national and local levels will be in addressing the current level of empty homes. Our experience would suggest, however, that they will not have a marked impact because of the sheer magnitude of the problem, combined with the lack of a clear integration of policies at both national and local levels.

2.  ADDRESSING THE PROBLEM

(a)  Setting a strategy

  Homes become empty for a range of reasons in a variety of locations at different times. As some homes are brought back into use, others join the supply of empty properties. This is a dynamic and not a static issue therefore no simple solution to addressing the problem of empty homes exists.

  However, the starting point must be for government to recognise problems arising from empty homes and make a clear and concerted commitment to address it. We recommend:

    (i)  A formal strategy should be devised by the Government that sets out key targets to reduce the number of empty homes and establishes a benchmark against which government agencies and local authorities can be required to act.

    (ii)  The role of the Empty Property Advisory Group should also be extended, and tasked with developing performance targets and measures for local authorities.

    (iii)  The Empty Property Advisory Group should be directly accountable to a government minister.

    (iv)  Empty property strategies should be mandatory for local authorities, government departments and agencies which own residential properties, including the NHS, MoD and Highways Agency, and for Registered Social Landlords (RSLs).

  These strategies should integrate with local and regional community strategies and recognise that the implementation of the objectives advocated by the Urban Task Force is critical in achieving a reduction in the number of empty homes. It will be important to monitor the implementation of effectiveness of empty homes strategies in order to inform decision makers of progress and to identify obstacles to returning vacant domestic properties to occupation in particular areas.

  To provide local authorities with an incentive to carry out their empty homes strategies funding should be prioritised to favour those who achieve their targets.

  Local authority asset management arrangements for commercial and non-residential operational property provide a useful framework for establishing a suitable mechanism in other authorities. The Housing Corporation has also piloted such an approach in the London region.

(b)  Delivering against the strategy

  The Government needs to consider reforming a number of existing policies if empty homes strategies are to be effective. These reforms need to be framed to support the process of bringing empty homes back into use, starting with identification of empty homes, the reason they are empty, securing ownership where appropriate, establishing project viability, obtaining appropriate approvals (including planning consent), procuring works, identifying purchasers or tenants and property management.

(c)  Identifying empty homes

  The principal mechanism through which local authorities record and monitor the number of empty homes in their area is through the knowledge of their officers and phone calls from the public. Once they have identified the location of an empty property, their ability to identify the owner depends upon whether the property is registered and then on the quality of information held by the Land Registry. This is clearly an unsophisticated approach with the possibility many empty homes are unreported.

  However, data to identify the number, location and owners of empty homes already rests with local authorities through their Council Tax collection function but releasing this information has been hampered by the need to comply with data protection legislation. Recent Counsel opinion has highlighted that local authorities' duties to promote the "well being" of their area under the Local Government Act 2000 overrides data protection legislation allowing them to make use of this important information source[41]. This position is, however, far from clear. The Government should formally clarify this position, seeking appropriate legal advice, and set this out within formal guidance notes to local authorities. Overcoming this procedural barrier could be very helpful in identifying the true quantum of empty homes and bringing them back into use.

(d)  Securing ownership

  In some cases, property owners will be reluctant to bring their empty home back into use, either because they perceive that the right market conditions do not exist or because they lack sufficient funding. CPO powers enable local authorities to take a proactive role in securing the re-use of privately owned empty homes, although they can be cumbersome and take so long to activate that the property deteriorates further in the meantime. The RICS has previously made a number of recommendations supporting earlier Urban Task Force recommendations on how to streamline the CPO process. In particular the American experience of quick take, essentially fast track CPO following non-payment of property taxes, combined with the application of property taxes to the owners of empty homes would seem to be a sensible approach.

(e)  Establishing project viability

  The Government has a potential influence in several pivotal areas that could assist in making projects viable identifying taxation and grant assistance. For example, proposals regarding stamp duty relief in deprived areas may have an important implication on empty homes. We recommend that the Government continues to work to resolve current issues preventing the implementation of this policy.

  We welcome the Government's recent introduction of changed VAT arrangements for long-term empty homes. However, VAT policy continues to favour development on greenfield sites over bringing empty homes back into use. This is at odds with the Government's objective that 60 per cent of new residential units should be on brownfield land or within empty property by 2008. We recommend that the rate of VAT on residential refurbishment be reduced to bring it more into line with the rate of VAT on new build.

  Following more than 18 months of delays, the introduction of Partnership Investment Programme (PIP) replacement schemes represents an important watershed to regeneration grant funding in England. However, the schemes currently only allow the Regional Development Agencies to support schemes predominantly for business use. In these terms it is generally going to be difficult for private sector developers and property owners to secure PIP funding for bringing empty homes back into use. We understand that the Government is continuing to lobby the European Commission to introduce a scheme to support residential schemes and we recommend that it continues to pursue this route.

  With respect to local authority and RSL owned accommodation, a variety of grants exist in both cases to support projects bringing empty homes back into use. However, increasing budgetary pressures combined with complicated bidding requirements make realising these difficult for local authorities, discouraging their use for anything other than comprehensive regeneration projects. We recommend that a review of the bidding mechanisms for these projects is undertaken, overhauling them where appropriate to facilitate a greater take up of the grants.

  When making the decision as to whether to bring an empty property back into use, an owner's view is generally not only based on the viability of the re-use, but also the cost of retaining the property empty. Removing any financial incentives to keep property vacant would therefore impact on this decision. In particular, the 50 per cent Council Tax relief applying to empty properties is relevant. We recommend that as a minimum a standard 100 per cent level is applied across the board to both empty properties and properties in use.

  Furthermore, in order to support local authorities' empty property work we recommend that the additional Council Tax receipts are ringfenced and linked to the empty property strategy within that area. The emerging proposals for congestion charging hypothecation provide a precedent for this approach.

(f)  Obtaining approvals

  It is important for plans at local and regional level to drive through PPG3 policies in particular by ensuring that sequential testing is happening at both a local and sub-regional level to ensure that for example, authorities in Cheshire are not developing greenfield sites before the regeneration of East Manchester and Merseyside is substantially complete.

(g)  Procuring works

  Whilst many empty homes exist individually or in small pockets, this does not mean that they cannot be addressed in larger groupings. A number of examples of good practice highlight how local authorities have secured ownership and procured works on a composite group of empty homes within their areas, so making the most efficient use of people and financial resources. Government should promote good practice to local authorities within its emerging good practice guidelines.

(h)  Identifying purchasers or tenants

  The ability to secure a purchase or tenant for a refurbished empty home is largely dependent upon the market forces prevalent in the area. The supply of and demand for accommodation will be key in forming a price level which in turn will affect the viability of bringing empty homes back into use. Although the Government's influence over demand-side characteristics is very limited other than at the macroeconomic level it does have the potential to influence the supply side. In particular, current Regional Planning Guidance (RPG) is failing to take a sufficiently robust approach whereby individual local authorities are able to apply a sequential test within their areas leading to prosperous suburban authorities continuing to build on greenfield sites when other areas of the region have ample brownfield supplies. We recommend that the Government reviews RPG arrangements—see above.

  In addition under the existing Urban Capacity Study arrangements local authorities are not formally required to consider empty homes when allocating the supply of land for residential development within the plan period. The caution raised above over the accuracy of empty homes figures also highlights that for those that do there may be weaknesses in their methodology. In essence therefore there may be too many allocated sites which are easier to bring forward for development than empty homes, discouraging developers to take unnecessary risks. We recommend that the Government reviews and clarifies its guidance on Urban Capacity Studies, coupled with the recommendations above regarding access to Council Tax data to facilitate more accurate forecasts of the level of empty homes.

(i)  Property management

  Alongside bringing empty homes back into use, a key priority has to be to prevent re-occupied homes rejoining the supply of empty homes and forestalling properties becoming long term vacant at all. Current property management arrangements would benefit from being overhauled to meet these objectives. The creation of financial disincentives to leaving homes empty, as addressed above, has to be at the heart of changes to government policy. This needs to be coupled in the case of private rented accommodation with better guidance and legislation where necessary to allow local authorities, Registered Social Landlords (RSLs) and private sector landlords to enforce strict notice periods and requirements that tenants should allow viewings from prospective tenants to avoid homes laying empty for any more than a minimum transitional period. The Delft system in the Netherlands demonstrates that this practice can work and regularly avoids vacancy periods of more than four weeks.

4.  CONCLUSION

  The current level of empty homes represents a considerable wasted resource to the UK. Addressing this problem is not merely necessary, it is essential if the Government is to deliver on its objectives of achieving social inclusion and meeting the household projections without resource to major urban sprawl. Current policy at the national level is fragmented and fails to fundamentally address the gravity of the problem faced. This perpetuates a fragmented approach at the local level.

  Recent Government policy commitments on neighbourhood renewal and regeneration are welcome, but the Government needs to co-ordinate these policies with a drive to make use of the existing stock of empty properties.

Brian Berry

Assistant Head of RICS Policy Unit

September 2001


39   Local Authority Housing Investment Programme (HIP) returns, April 2000. Back

40   Calculated based on properties empty for one year or more from HIP returns and the average Council Tax for 2001-02 (available at www.press.dtlr.gov.uk/0103/0162.htm Back

41   Obtained by Poole Borough Council. Back


 
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Prepared 24 October 2001