Memorandum by Metropolitan Borough of
Wirral (EMP 68)
The Borough has serious private sector housing
problems. The cost of rectifying private sector repair is significant.
The local situation is:
As at April 2001 Wirral had 4,299
3,470 (around 81 per cent) are private
3 per cent of the overall dwelling
stock is empty, with over three-quarters of these void for more
than six months
2.76 per cent of all private stock
It is noticeable that the highest concentrations
of empty homes are found in areas of greatest socio-economic deprivation.
Many of these homes are now quite simply obsolete. The presence
of high numbers of void properties is both a symptom of urban
deprivation and a direct causative factor.
When a private sector housing area is beginning
to decline some of the first indicators are a rise in the number
of dwellings being put up for sale, a shift to privately-rented
properties and an increase in abandonments. These factors then
serve to accelerate the cycle of decline by providing a very visible
disincentive for people considering a move into the area. The
importance of tackling these "bad teeth" which sometimes
fall outside targeted regeneration areas should not be underestimated.
The proliferation of empty homes in a specific
location directly damages a neighbourhood's economic sustainability
by reducing the values and "marketability" of surrounding
property. This process of "residential devaluation"
can result in householders falling into negative equity and, in
extreme cases, in causing them to abandon their homes should these
fall into disrepair. The low valuation also discourages refurbishment.
The cost of carrying out improvements is higher than the "added
value" put into the property. For our Registered Social Landlord
partners, this makes improvement for sale or shared ownership
The psychological impact of empty homes on local
communities should not be overlooked. There is a direct correlation
between low aspiration, low morale and living in an area that
has poor physical conditions. The manifestation of physical neglect
in deprived areas (ie a high number of empty dwellings) can contribute
to and even create local residents' overall feelings of neglect
and social exclusion.
When the number of private sector empty properties
increase in an area private landlords can exploit the opportunity
to purchase dwellings at "knock-down" prices, often
20-25 per cent below market value. Problems arise when the numbers
of such properties reach a "critical density". It is
a common perception amongst owner/occupiers that an above-average
proportion of privately rented stock in their area means that
there will be an increase in anti-social behaviour and a continued
decline in local house prices. This is an understandable presumption,
as a landlord's "stake" in a community is primarily
economic rather than social. Property can remain empty for some
time because the landlord has expectations of some future grant
availability or the property "sits" dormant as an asset
which can be used as collateral for borrowing purposes as part
of an overall property portfolio. Council Tax exemptions on empty
properties provide no incentive for landlords (or absentee owners)
to bring their dwellings back into use. Further the restrictive
nature of the Compulsory Purchase Order process makes it very
difficult for Councils to intervene.
The Council recognises the key importance of
reducing the numbers of private sector empty properties in the
Borough. It also fully subscribes to the principle of taking a
sub-regional viewpoint on void properties, so we can better understand
the complex chains of cause and effect. The recent CURS Study
into dwellings at risk in the sub-region has begun a process to
construct a robust predictive model of housing supply and demand.
Further, we subscribe to the view that private sector renewal
programmes have been less than successful in the past because
they concentrated largely on physical improvement rather than
adopting a more holistic approach. Sustainable regeneration is
as much about building community capacity as it is about "bricks
and mortar". In Wirral we have attempted to progressively
achieve this approach. The Tranmere Housing Regeneration Partnership
(THRP) is an excellent example. A copy of the THRP Annual Report
for 2000-01 is enclosed.
Wirral's private sector housing challenges reflect
its industrial past. A high proportion of the stock was built
for purposes which are no longer relevant to modern day housing
expectations. Homes were created at minimal cost, at high densities
in terraces, close to the docks and mills that provided the main
source of employment. Many of these dwellings were never built
to be in continued use for this long. Targeted refurbishment programmes
have been successful in extending the useful life of these properties
but, inevitably, growing obsolescence and market change challenges
their continued sustainability. Generally speaking, the older
a dwelling is then the higher the maintenance costs and the greater
the need to return more often to improve it. It is these "high-maintenance"
terraced houses which prove to be most vulnerable to becoming
empty for long periods. The major improvement programmes introduced
during the 1970's through Housing Action Areas and General Improvement
Areas now need to be revisited; their 30-year life now nearly
The Government policy of reducing empty properties
as a national housing priority cannot be challenged. However,
the problem lies in the policy not going far enough in equipping
Councils and their partners with the level of resources and the
powers which would actually help them solve this very complex
National policy development seeks to arrive
at a particular strategic formula for private sector housing which
can be applied throughout the country. We would advocate that
this is neither possible nor is it desirable. There are as many
differences as there are similarities between, say, London's private
sector housing environment and Wirral's. Wirral believes there
needs to be an overall national strategic framework which is sensitive
to the local housing environment (set within a regional/sub-regional
context) and is area focused. This strategic perspective acknowledges
that a fundamentally different approach has to be adopted in areas
of high demand than in low demand and between regions, because
the prevailing local housing market "dynamic" differs
significantly across the country. For instance, the development
of a robust registration scheme might work in "rooting out"
bad landlords in support of a considered holistic approach to
regeneration in one locality. However, in another area where private
rented stock provides the main (scarce) source of affordable housing
in a high value local market with few empties, this action could
result in a collapse in a vital source of economic housing provision.
On Merseyside, Wirral, Sefton and Liverpool Councils have committed
to joint working at a sub-regional level to address the demise
of the "inner core".
Introducing planning restrictions on the development
of greenfield sites, through revisions to the Regional Planning
Guidance that, in turn, cascade down into individual Unitary Development
Plans, can help to reduce empty properties by checking the expansion
of new-build optionswhilst simultaneously achieving environmental
goals. Whilst this can be achieved medium term, the problem remains
that there are many outstanding agreed applications for greenfield
development already in the system. The Government needs to seriously
consider the possibility of producing legislation which would
give planning authorities retrospective restricting powers to
overcome this obstacle. For example, the draft Regional Planning
Guidance for the North West still fails to recognise the impact
over-provision of housing will have on existing unpopular stock.
Whilst preventative planning measures can help
to a degree, the key to encouraging private developers to move
from wanting to develop new housing on greenfield sites as opposed
to refurbishment is making the change worth their while. Until
the inequality between profit margins for new-build and refurbishment
are reduced then it will always be a struggle to engage the private
sector fully as main players in private sector housing regeneration.
One option worth considering is the removal of VAT on renovating
empty properties. This would mean extending the relaxation already
introduced on properties left standing over 10 years. This needs
a system which does not actually encourage owners to make their
property void so as to obtain VAT exemption (an issue identified
in the Urban Task Force Report). In order to prevent this occurring
the local authority could be given a key role in "policing"
or monitoring the validity of applications for exemption. It may
be that full exemptions are initially limited to specific target
areas such as within declared neighbourhood renewal areas (NRAs)
or, as part of a local community planning initiative and applicants
would have to meet certain criteria that complements the local
The introduction of Council Tax payable in full
on properties which had been vacant for, say, more than six months
should be considered. The present argument for not charging a
full amount is based upon the premise that the owners are not
using the area facilities and, therefore, it would be inequitable
to charge them for doing so. However, this could be turned on
its head. One could argue that the empty dwelling is having a
negative (not a neutral) effect on the locality in that it is
contributing to a lowering of market values and other factors
of decline. The onus would then be shifted on the owner to prove
to the Council that there are reasonable grounds for the property
to be left empty for any period of time should they wish to be
considered for exemption. Whilst such a system would allow for
legitimate cases of hardship, it would also serve to ensure that
less committed owners are given a disincentive to leave a property
empty for a lengthy period of time whilst it has a detrimental
effect on its surrounding locality.
The present rules and regulations surrounding
CPO are tortuous and overly expensive. This means, for most local
authorities, they are a blunt tool in regenerating areas of housing
decline and provide no real threat to most of those owners who
show little attempt to bring empty properties back into use.
As well as streamlining the CPO process the
Government needs to consider changes to legislation that make
it a more "affordable" option for local authorities.
Loosening the link between market value and compensation will
do this. Properties should be valued relative to the amount of
work necessary to make them fit (or by costs related to demolition
if this is an end option). More fundamentally CPO should no longer
be seen primarily as a form of financial compensation, rather
it should mainly impose a duty on a local authority to find the
dispossessed resident(s) a suitable alternative form of accommodation
and covering all their reasonable removal expenses.
Demolition is an important tool in regeneration
used selectively within the context of a considered strategy that
takes into account the changing housing needs of the housing market.
Decisions on whether to demolish should be made after a close
consideration of a cost-benefit analysis of the expected remaining
useful life of a dwelling and the likely "marketability"
or value of the property after refurbishment.
Wirral has recognised that it has a problem
with empty property within its own stock, though by no means to
the same degree as in the private sector. We also understand that
public and private sector voids should not be considered in isolation
and that the negative effects of low investment and poor housing
conditions can "leak" from and to public sector housing.
The introduction of business planning to public sector housing
has helped us look afresh at our stock and how we may best direct
investment over a long-term period. This is leading to a number
of key decisions on continued selective demolition or re-modelling
of some of our unpopular stock. Our extensive local community
planning network ensures that our customers can directly influence
the future re-development or regeneration of their areas.
Wirral agrees that it should become a duty on
all local authorities to establish an Empty Homes Strategy. At
the present time we are revising our approach:
in light of the CURS Study findings;
alongside the development of a predictive
model of housing need;
following feedback from our regional
debates on the subject; and
in the context of our own "at
risk" housing discussions that cover public and private sector
housing in the Borough.
The Government may wish to consider extending
this idea to place a duty on each region (and/or) sub-region to
produce an empty homes strategy. This would be very much in line
with the way in which our own region is beginning to tackle serious
housing problems. It is important to extend this to cover all
empty buildings rather than just homes. This would ensure that
a holistic approach is taken towards all the different aspects
of neglect and under-use. Some of the most popular housing options
have emerged recently through the re-development of under-utilised
or empty commercial units.
Wirral has already introduced a register of
landlords for houses in multiple occupation. The intention is
to link registration with accreditation so as to provide a "stick
and a carrot" approach. The key to this process is to work
with, not against, landlords involving them in drawing up the
criteria for assessment and providing them with incentives to
become accredited (such as giving training sessions, holding advice
forums, providing assistance with lettings and drawing them in
as key players in local strategies). Accredited landlord's continued
"performance" is monitored at regular periods so as
to ensure standards are maintained.
Whilst at this stage ours is very much a voluntary
scheme we would advocate that a similar system is made compulsory.
One way to encourage recalcitrant landlords to sign up would be
allowing a reduction in VAT for accredited landlords or in some
other way create a two-tier "benefits" process which
gives advantages to those who seek accreditation/registration.
One of the most difficult and time-consuming
tasks is trying to track down absentee landlords or owners of
long-term empty properties. A simple solution to this would be
the creation of a compulsory database of all landlords which could
be assessed by local authorities when they can prove that they
are making a serious investigation into identifying a potential
Properties which are in negative equity are
vulnerable to abandonment or at least to falling into disrepair.
This has been the case for a number of ex-Council properties in
the Borough. The Council is willing to buy back some of these
dwellings (especially when these properties are blighting an area)
or to work in partnership with an RSL partner to resolve the problem.
The difficulty here is that there are insufficient resources to
make these schemes viable options. The Council could not pay above
market value for the property and the inevitable improvement costs
in getting the property back to a sufficient standard has an inflatory
impact on rent levels.
Other than providing subsidies to local authorities
to help them bridge the resource gap, the Government could consider
expanding the role of lending institutions by encouraging them
to re-adjust loan repayments and by restricting lending in high
risk situations. Provision to allow people to scale their equity
down to some form of shared ownership could be encouraged, whilst
incentives could be given to encourage lenders to be more receptive
towards shared ownership as a general principle. A range of support
mechanisms needs to be available to people considering abandoning
their properties. Every effort should be made to intervene as
early as possible before the situation reaches crisis point. Housing
Advice Services, the Citizens' Advice Bureau and other inter-agency
forums have a key role to play in this but they need additional
support from Government and the lending institutions. A radical
approach would involve financial institutions creating an obligatory
sinking fund or bond on property transactions which would be set
aside to ensure lenders' (landlords or owner/occupiers) continued
maintenance of the property to an agreed standard.
Wirral is committed to using a multi-agency,
cross-departmental, regionally sensitive approach towards reducing
the numbers of empty homes in the Borough. Its private sector
housing regeneration strategy is based upon adopting a flexible
approach using a "tool-box" of different intervention
methods. The problems of urban private sector housing disrepair
in the Borough cannot be solved by Council intervention alone,
there is a need for a more proactive larger scale involvement
from lending institutions and from private sector developers.
It will be one of our main challenges in the future to increase
their role in the regeneration process. Wirral's discussions with
developers have indicated that they would be willing to take a
more active role in re-development schemes but need to reach sufficient
"mass" (scale) so as to make a sufficient impact on
the local market to make it worth their while. Small-scale intervention
is not perceived as an attractive option. The Government should
assist us in this objective, as a priority in their investigation
into the problem of empty homes. The recent CURS Study makes a
compelling case for the Government to introduce new funding to
establish a "Market Renewal Fund". Restructuring the
housing market will make significant impact on the number of empty
homes and their detrimental effects.
Department of Housing and Environmental Protection