Examination of Witnesses (Questions 40-59)|
WEDNESDAY 24 OCTOBER 2001
40. When you say funding, what do you mean?
(Ms May) At the moment, empty property grants are
given by a local authority to-owner-occupiers via the Housing
Grants, Construction and Regeneration Act. The only trouble is,
it is quite an onerous tool, it is quite a difficult one to work,
there are all sorts of conditions attached to it, but that is
being reviewed and wider discretionary powers are going to be
given to local authorities. So up until now empty property grants
have not been that forthcoming or very well publicised, and the
fact that a local authority does not have an empty property strategy
means that they are not necessarily going to publicise an empty
property grant regime.
41. Are there different reasons in different
parts of the country?
(Ms May) Yes, without a doubt. Obviously, the problem
in the north is the overriding issue of low demand. I think the
biggest indicator of the differences between the two is the fact
that for low demand £15 million has been targeted by the
Government for funding to tackle the issue, whereas they have
given, or have targeted, £250 million to address the issue
of key workers and the shortage of accommodation in the south;
and that is a gross imbalance.
42. What are the main problems in the private
(Ms May) The private rented sector is landlords land-banking,
taking properties on and leaving them empty for a couple of years
and not bringing them back into use, the lack of grant funding
to bring the properties back into use, and general suspicion,
as well, by owners of why a local authority would want them to
bring their property back into use. So it means educating people
at grass roots level that an empty property is not necessarily
an asset and it does depreciate if you leave it to rot.
43. What about owner-occupiers?
(Ms May) Owner-occupiers as well; if the local authority
were able to widen their grant policy to give grants to potential
owner-occupiers, so if somebody bought an empty property, at the
moment they are encouraged to rent it out, so grants are given
to landlords, whereas if they were given a grant, and the reason
for that, again, is the restrictions under the Housing, Construction
and Regeneration Act, Housing Grants, Construction and Regeneration
Act. Which means that if you give an empty property grant to an
owner, and potentially occupier, of an empty home the local authority
cannot set a limit on it, or it is understood that the local authority
cannot set a limit; so an owner-occupier could end up with, once
you take the roof off, an empty property grant of £60,000,
£70,000 per property, whereas they can set a limit for a
landlord grant, to, say, £15,000, £20,000. The only
trouble is, landlords are suspicious of working with local authorities
anyway, so therefore are not taking up the grants; owner-occupiers,
who could be buying empty properties to live in themselves, are
not able to do it because the local authority will not want to
give them the grant. So it really is freeing up that Act to make
it a more workable tool, having an effective corporate empty property
strategy that is going to work to bring empty properties back
into use, rather than just keep them at arm's length and to be
seen to be doing something that actually, in the end, is ineffective.
44. Would you say that the private landlords
are trying to exploit a situation?
(Ms May) I think private landlords are in the business
to make money from renting out properties, and good private landlords
are to be encouraged; a sustainable community is a mixed community.
So private investment is needed, and rather than a local authority
constantly viewing a private landlord with suspicion that they
are profiteering, it is better to encourage the good private landlords
form good landlord forums so they have got a network and support.
And I think it is possibly a misconceived problem that they are
taking advantage of the system, I think local authorities need
to appreciate their good landlords and encourage a greater supply
of rented accommodation in the private sector.
45. How do you discourage the bad? You are talking
about encouraging the good. I know a lot of my constituents end
up living in appalling conditions in privately rented accommodation.
(Ms May) Measures across the board. It is about setting
up working partnerships with the good landlords. In Eastbourne,
they instigated a private landlord forum with the Southern Private
Landlords Association, and said they would be happy to work with
them, provide Council offices for their meetings, put in all sorts
of measures that the landlords would want, but, in return, they
would like their Code of Conduct, which is actually quite a good
one, displayed in every property, with forms there for the tenant
to be able to complain if they want to, without fear of reprisal
from the landlord; and they were happy to do that, they understand
that a good relationship between landlord and tenant will therefore
carry it forward. But it really is a slow but sure process. Also,
Mansfield have worked up a deal with English Partnerships, whereby
they are funding them, or helping to part fund them, to buy out
a local bad landlord; unfortunately, it means that he is going
to get market prices for his property, and it is not really necessarily
the most satisfactory situation. But there are all sorts of schemes,
just lateral thinking and working with the good private landlords
rather than treating them with suspicion.
46. You have set out in your memorandum a list
of policies introduced since 1997, but, in reality, the figures
on empty homes have not really changed very much over the past
five years, or so. Have actually the policies introduced, in your
view, changed the fundamentals of the problem?
(Ms Mitchell) There are a couple of key changes in
the budgets, the Empty Homes Agency very much welcome that. My
colleague will outline one measure, which was the capital allowance
on the conversion of waste space above shops and flats; and the
second was, of course, the reduction in VAT on properties that
have been empty longer than three years to 5 per cent. The Agency
is clearly calling to extend this to all properties that have
been empty over a year, and obviously that will have a far greater
impact; clearly, we are now seeing some of the fallout of those
two measures, but it is quite early days.
47. Can you just elaborate on something you
were saying before, can you give us some examples of what you
(Ms Mitchell) Obviously, in terms of the reduction
in VAT, that has been welcomed across the sector, and we have
not got any research for findings as yet, but obviously we are
hoping to do that in the future. But we are clearly very keen
for that VAT reduction to be introduced and harmonised between
new-build and renovation of empty property. I am sure you will
be aware that at the moment you pay actually zero VAT for bricks
for building new houses on greenfield sites and pay 17 per cent
VAT for bricks to re-build in inner urban areas to house homeless
families; and we see that as an absolute anomaly and it really
must be addressed.
(Ms May) The other reason for the figures as well,
I think, to look at it with an overview, is that when the Agency
first started, in 1992, there were a million homes empty then,
so the figure has reduced overall. The last two or three years
is going to really see an increase, because there has been a greater
responsibility on local authorities to report the number of empties;
and, hopefully, with the existence and the findings of the Committee
and even greater pressures on local authorities, that number might
possibly go up or it might come down, but we need to see whatthe
new best value performance indicators are calling for a report
of the percentage of empty homes, so we need to see what happens
with that. So I would say that, although the figures seem to have
remained static, they have probably fallen, but also are being
48. Could I just go back to the point you were
making about your call for a level playing-field between brownfield
sites and greenfield sites. Have you actually done any research
that could quantify the likely numbers of additional homes on
brownfield sites, affordable homes, that would be built as a result
of an equalisation of the VAT?
(Ms Mitchell) We are aware that about 40 per cent
of England's long-term empty properties have been empty for up
to three years, so they are not going to be impacted at all by
the changes in VAT. We have not got any specific research that
shows in terms of social housing, but we have some figures I believe
in the submission which look at the impact, and I can provide
further details, if that is appropriate, in terms of our detailed
(Ms May) I think also it applies to the refurbishment
of empty properties more than new-build on brownfield sites; the
fact is, the biggest difference is the 17.5 per cent to refurbish
or convert an empty property on a brownfield site than to new-build,
when those properties are in existence on a greenfield site.
49. Can I go on and ask you about council tax.
Have you done any estimates of how many homes could be brought
back into use if there was a levy of full council tax on empty
(Ms Mitchell) Just to the first part, I do not know
if we have any particular research, but we are aware, anecdotally,
just the point that Louise Ellman made earlier about the private
rented sector, of problems of landlordism and rogue landlords
having a huge impact on communities, especially those communities
experiencing low demand and unpopular housing. And at the moment
those landlords pay a reduced council tax, and we really feel
it is one measure to help address those issues, obviously there
are others, the licensing of private sector landlords, and I know
there is a consultation paper out at the moment, but we see council
tax as one tool to address and encourage private sector landlords
to activate property.
50. Why are you confident that that would work,
have you got a basis for that assumption that you are making?
(Ms Mitchell) I suppose, one issue is if you look
at the potential revenue it would bring councils; so it is actually
a huge lost resource. An owner of an empty home pays only 50 per
cent council tax on an empty property, and if you think there
are 250,000 long-term empty homes, that is actually a huge loss
in revenue and resource for councils.
51. But, surely, if there is low demand it is
just going to penalise the landlord, is it not?
(Ms May) That is why we say to have a discretionary
power afforded to the local authority, so that way they can choose.
52. Yes, I understand that discretionary power,
but then this claim that you are going to actually bring this
extra money back to local authorities is not going to happen,
is it, if in those areas there is low demand, because they are
not going to be able to do it?
(Ms Mitchell) What we want is for councils to have
the discretion so they target it effectively. Obviously, you could
not penalise people who have empty properties they are unable
to sell or do anything with in areas of low demand or unpopular
housing; but it is one measure to target perhaps irresponsible
53. Can I just ask a question on the basis of
that. Is there actually an empty homes problem that relates to
people who are sitting, waiting for homes? In places like my constituency
in Surrey there is a homes problem but it is exactly the other
way round. In the North East there is a homes problem because
there is not the demand. What you are talking about is giving
local authorities the option of refining demand, but, surely,
actually the issue is that, supply and demand, there is a huge
mismatch in this country?
(Ms Mitchell) Absolutely, that is why we want it to
be absolutely discretionary, so the councils have that discretion,
because they know their housing market.
54. In your evidence, you state that there should
be a statutory requirement on every local authority to have an
empty homes strategy. Is it possible to give the Committee some
examples of a local authority where empty homes strategies are
(Ms May) Yes, there are a number. Westminster City
Council has a very effective empty property strategy; one of the
reasons for that is because they use, as a last resort, compulsory
purchase orders without fear of what people might think.
55. But is Westminster Council a typical council?
(Ms May) Yes, it is, in the south, of an effective
empty property strategy. In the north, the problems are different.
So just going back to campaigning for council tax on empty properties,
which would form part of an empty property strategy, the reason
is not necessarily that we have done research and we know that
would bring properties back into use, but it is just joined-up
thinking, it is joined-up thinking that empty properties are going
further up the political agenda, people are taking more notice,
so it is just a good measure to give a joined-up message to people
that, "We want you to bring your empty properties back into
use, and, no, we are not actually going to carry on giving you
a discount to keep them empty." So, although we have not
got research that would bring them back into use, it is Government
giving an effective, consistent message, in a local authority
empty property strategy. At the moment, the best empty property
strategies, and I can get a list for you, if that is okay, and
send you the most effective ones, and a copy of the
56. What would be the best ones?
(Ms Mitchell) Manchester is a good example of an authority
that is tackling low demand and unpopular housing, and that has
been mentioned by previous speakers.
(Ms May) But at the moment the thinking is not joined
up. An empty property within one area could have as many as five
different council departments working on it, to the complete ignorance
of each one of those. If it is attracting mice and rats and rubbish,
the planning enforcement officer could go round; the RSL could
have spotted it as an empty property and contacted the Housing
Corporation to ask for funding; the housing representative within
a local authority could have seen it and decided maybe they will
approach them. So at the end of the day one particularly bad example
could have five or six different letters ending up on the door
mat of that one empty property. So until an empty property strategy
is made a statutory duty local authorities will continue to work
with a lack of joined-up thinking.
57. About joined-up thinking, it is very important;
do you think, if the empty homes strategy has to be provided,
there should be a link into the unitary development plan of the
local authority, on a statutory basis? Because certainly the last
UDP inquiry I had, in Sheffield, where people were arguing against
building more homes on greenfield sites, the authority had no
plan at all and no information and very little evidence about
empty homes in the area and what they were going to do about it?
(Ms May) Exactly; that is exactly the point. Then
you can pull in all of the different resources for housing. Susan
Heinrich is our Planning Executive, it is probably better for
her to answer that question.
(Ms Heinrich) One example I can think of is in Hastings,
where they are trying to deal with the whole issue; and, in terms
of their local plan, they are trying to put in allowance for empty
properties, but they are being frustrated by the county council
and by the local government office, who say "you cannot do
that, that figure has been taken account of elsewhere". And
so they are trying to do something, and that is a good example
of the bit of joined-up thinking that is going on, but they are
being frustrated by external factors.
58. You put, in your evidence, that Government,
you put a whole list of things of Government policies that you
think should be operating; what do you think is the most important
thing that could change, what is the most important change that
you would like to see in Government policy, or at a local level,
to make an impact?
(Ms Heinrich) I think, one area, in terms of planning,
land use planning, is actually having targets in the land use
plans from regional guidance levels right down to a local level.
Because, at the moment, all the right words are in place, perhaps,
in terms of policy, but the actual guidance, in terms of perhaps
how it is monitored, it is very much seen as, vacancies are seen
as a secondary issue. And, as I say, I gave the example of Hastings,
when they were trying to do something, they were told, "Oh,
no, the whole vacancy issue needs to be dealt with at a more strategic
level and not a local level," so there is some frustration
there. So I think actually putting targets in, making very clear
that it is an issue that could be seen as a potential source of
housing, rather than just sort of something you make an allowance
59. But why are the 250,000 houses that have
been empty for over a year empty; what is the reason for that,
and what needs to be changed to relate to those reasons?
(Ms Mitchell) I think it very much does depend upon
where they are located, absolutely, so they are very different
issues, as you will be aware, in the south from areas of the north.
But, in terms of what we think would be most effective, it is
hard to choose from, obviously, the key issues that we are campaigning
for, but we really do feel that if housing is not seen, especially
in areas where there are large, large numbers of vacant properties,
say, in the North West there are over 138,000 empty homes, that
empty homes be seen as a housing resource and counted as a housing
resource at the planning level, rather than that not happening.
Because obviously it is key to urban regeneration, that if you
are continually building on the fringes and allowing your urban
centres to abandon and empty out it is undermining urban renewal.
And so we are really keen that actually empty property be seen
as a housing resource, so it be included in your housing requirements,
and unfortunately that is just not happening, it is not happening
at the regional level and it is not happening in UDPs and it is
not happening in the local plans. So that, we think, would make
a huge impact.
(Ms May) And also funding. Last year, Eastbourne Borough
Council had £100,000 in their budget for empty homes, to
bring their empty homes back into use, £100,000 really is
not enough, so it is Government commitment to empty properties.
As Clare says, seeing them as a housing resource, a serious housing
resource, and providing the funding and the commitment at national
level, so to have a national overview; and I think that is highlighted
by the fact that £15 million has been allocated to low demand,
£250 million to key workers. And, from that, I think the
biggest thing that will take into account all of the aspects is
the statutory empty property strategy; that way, every local authority
department will have to come on board.