Examination of Witnesses (Questions 360-379)|
WEDNESDAY 5 DECEMBER 2001
360. Do you think different rates should be
applied in the private rented and owner-occupied sectors?
(Mr Williams) There are different levels. In policy
terms there ought to be some national average which the Government
should be seeking to sustain or even get under. I suppose in the
private rented sector there ought to be a lower vacancy rate in
a sense, certainly from the position of landlords there ought
to be. In the owner-occupied sector some of the complexities of
transactions will mean that there will be a slightly higher rate
andthe point we raise in the papernot least in the
private sector with the large-scale use of equity release where
people are in care but drawing down on the value of their homes
and they will be "empty", so yes.
361. Lastly, how do you think the accuracy of
data on vacancy rates could be improved?
(Mr Williams) There is no doubt it is problematic
and we do not get any clear guidance on vacancy rates discriminating
between the different sectors, ie, between private rented and
owner-occupied and indeed within owner-occupied, between owner-occupied
owned outright or with a mortgage. There is no doubt that clearer
data on those issues would be helpful.
362. When you say "clearer data" do
you think that local authorities when they are doing the HIP returns
just guess what the vacancy rate is?
(Mr Williams) Chairman, you said it; I suspect in
some cases that is entirely correct.
363. What should they do if they do not guess?
(Mr Williams) There is no doubt we should have better
local authority level information. It is an important part of
their strategic duty to have a proper grasp of what is happening
in their local housing market.
364. What is a vacant property then?
(Mr Williams) Good question. It is the point I was
just making to Ms King about the issue of
365. I am asking you to tell me what it is.
(Mr Williams) There is this point over whether a property
currently not being occupied because the owner is in care is "empty?"
In some senses it is, in other senses it is not, if you are defining
"empty" as absence of an occupant.
366. If you are saying "absence of an occupant"
then some second homes would count at certain times. Is that a
(Mr Williams) It could be deemed as such.
367. Might it not be a better measure if you
simply said those on which no council tax was being paid?
(Mr Williams) That is another suggestion.
368. I am just trying to get some answers.
(Mr Williams) We do not have a defined position on
the definition of "empty property". I accept the problem
that you face but I do not think it is something that we actually
369. You are saying there is a problem with
the figures but surely you should be suggesting to us that something
would be a better measure of it?
(Mr Williams) I go back to something I said, I think
local authorities should certainly do more to understand the nature
of empty property in their areas and that means more systematic
collection of data and being clearer on the definition of what
(Ms Bennett) In terms of what the Committee here is
looking at, it is whether the home can be occupied by somebody
who is in housing need. Some of the things we have been talking
about in terms of whether it is a second home may not fall within
that definition. If somebody is in long-term care possibly there
would be an opportunity for housing associations to lease that
property for a period of time. Perhaps it is around whether the
home could be occupied by someone else.
370. How would you measure that definition?
Surely that is quite subjective?
(Ms Bennett) That would be quite difficult to do.
371. Obviously the exchange that you have just
had with the Chairman signifies the importance of the subject
of assessing empty homes. What more should the mortgage lenders
do to address the issue of empty homes?
(Mr Williams) There is a dilemma for us as mortgage
lenders in that if somebody is paying their mortgage on an empty
home, really we have no remit at all. Under your terms, in terms
of public policy, you may be concerned about property being empty.
As mortgage lenders we are entirely satisfied that we are having
our debt serviced and that person has every entitlement to keep
372. That comes back to the point which was
made earlier, what constitutes an empty home?
(Mr Williams) Indeed.
373. What response should the local authority
have then to this question?
(Mr Williams) There are questions here about choice.
In a sense it is ultimately for the owner of a property to have
some control over the use of that property. It seems to me that
is part of the rights of ownership. That may conflict with public
policy, that may conflict with housing need, but some people will
decide they simply wish to keep their property empty. As mortgage
lenders we would have no view on that.
374. What type of market intelligence do market
lenders use to assess risk in areas?
(Mr Williams) We look at both borrowing risk and property
risk. Valuers are the ears and eyes of lenders in terms of risk
in local markets so they would be advising on the activity in
that market, the issues of low demand in that market, or indeed
the issues of high demand in that market. They would be offering
lenders a view on the potential onward price of that property
375. Is there redlining of some areas?
(Mr Williams) I think the interesting thing on low
demand is that what they are getting from the Government and indeed
other bodies is, if you like, demarcated maps telling them these
are areas of low demand where they probably should not lend.
376. Are you saying that there is no example
of where mortgages would not be offered to people in high risk
(Mr Williams) There are no examples of areas where
the historic view of redlining applies. There are clearly going
to be properties where lenders will not lend; that is their judgment
based upon professional advice.
377. Is there a common thread with the mortgage
lenders as to the kind of property or the areas where they will
not offer any mortgage, that only cash sales are allowed?
(Mr Williams) About 20 per cent of the market is cash
sales. That may be a product of constraint or choice. We simply
do not know. There are markets where lending has proved problematic
because of the greater volatility of the properties in that market.
An example would be historically there has always been a difficulty
around flats in high-rise blocks, ex-local authority blocks or
current local authority blocks where the price of that property
seems to rocket up and down on the economic cycle very sharply.
I think for lenders although the first sale has been from right
to buy and it has been relatively easy because it is a discounted
price, subsequent sales and the funding of those sales has been
more problematic and we have acknowledged that before a select
378. Is there any means of appeal or challenge
against mortgage lenders if they refuse in a particular area to
offer a loan?
(Mr Williams) The process which a buyer would undertake
is to go to an alternative lender.
379. If there is a cartel in an area of risk
it would apply to all mortgage lenders.
(Mr Williams) One of the striking things about the
mortgage market in recent years is how competitive it has become.
The notion of a cartel which may have existed in the 1960s and
1970s is very clearly not in place any longer. If you look at
the range of lenders across the range of product types, the types
of lending, the types of risk and if you look at the entry for
example into what is called the sub-prime market, the variety
of competition between lenders is so intense I struggle to believe
there is any cartel approach on an area basis. I think Britain
should pride itself on having probably the most competitive mortgage
market in the world.