Empty Housing Standard Note: SN/SP/3012 Last updated: 4 June 2013 Author: Wendy Wilson Section Social Policy Section Council Tax Data published on 20 November 2012 put the number of empty homes in England at 710,000. Of these, 259,000 were defined as long-term empty properties (empty for longer than six months) – representing a net reduction of 20,000 (7%) on 2011 figures. The Coalition’s Programme for Government included a commitment to “explore a range of measures to bring empty homes into use”. Specific funding has been made available for this purpose and councils can also benefit from additional funding under the New Homes Bonus scheme when they bring empty homes back into use. Chapter 5 of the Government’s Housing Strategy, Laying the Foundations (November 2011) set out its strategy in relation to empty homes. The Homes and Communities Agency has produced an Empty Homes Toolkit and an interactive mapping toolkit to provide information and practical advice on tackling empty homes. In April 2012 the Government appointed George Clarke as its empty homes advisor. The Empty Homes Agency is an independent campaigning charity that has long campaigned for effective strategies to bring these ‘wasted resources’ back into use. The website of the Empty Homes Agency contains useful guidance for individuals who live near to, or own, an empty property and who want to know what to do about it. This note outlines local authorities’ powers to tackle empty housing; discusses Government action around this issue and sets out the further measures that campaigning organisations are requesting. This information is provided to Members of Parliament in support of their parliamentary duties and is not intended to address the specific circumstances of any particular individual. It should not be relied upon as being up to date; the law or policies may have changed since it was last updated; and it should not be relied upon as legal or professional advice or as a substitute for it. A suitably qualified professional should be consulted if specific advice or information is required. This information is provided subject to our general terms and conditions which are available online or may be provided on request in hard copy. Authors are available to discuss the content of this briefing with Members and their staff, but not with the general public. Contents 1 Introduction 3 2 Local authorities’ powers 3 2.1 Empty property strategies 3 2.2 Compulsory purchase 5 2.3 Enforced sale procedure 5 2.4 Council Tax exemptions 6 2.5 Achieving the improvement of empty properties 6 2.6 Identifying empty properties 7 2.7 Empty Dwelling Management Orders (EDMOs) 8 3 4 Other initiatives 11 3.1 VAT 11 3.2 Flats over shops 12 3.3 Private sector leasing schemes 12 3.4 Empty social housing 13 3.5 Government-owned housing 14 3.6 Planning policy 15 3.7 Buying empty stock for use as social housing 15 The current Government’s approach 16 4.1 HCA funding for empty homes 17 4.2 Empty homes advisor 18 4.3 New Homes Bonus 19 4.4 Mayor of London 19 4.5 Office conversions 20 5 Comment 20 6 Statistical appendix 21 2 1 Introduction High levels of empty properties are recognised as having a serious impact on the viability of communities. As the number of empty properties within an area increases, so does the incidence of vandalism, which acts as a further disincentive to occupation. This in turn can lead to falls in the levels of equity and the collapse of local businesses as households move out. This spiral of decline can continue as further households are deterred from moving into an area devoid of amenities, and where empty property and derelict shops add to a sense of neglect. The benefits of a local authority strategy to deal with empty properties have been identified as social, regenerative, financial and strategic: • it can assist in meeting housing need; • it can improve housing conditions; • it can regenerate blighted areas; • it can increase the Council Tax collection rate and produce savings on temporary accommodation expenditure; • it can assist in managing urban areas; and • it can produce better relations between local authorities and the private sector. A key consideration for authorities when working to bring empty properties back into use is the reason why a particular property has been left empty. Some owners may have invested in a property with a view to profiting from its capital value while the market improves and have no intention of renting it out, while others may have inherited a property and have no idea how to bring it back into use. Local authorities must respond appropriately to these different situations. 2 Local authorities’ powers The Office of the Deputy Prime Minister (ODPM) issued guidance on unlocking the potential of empty properties in 2003. This guidance is available on the website of the Department for Communities and Local Government (CLG) which took over responsibility for housing matters from the ODPM in 2006. 1 Local authorities may have systems in place for negotiating with owners to bring properties back into use and may provide grants to assist with the improvement of empty properties. The website of the Empty Homes Agency carries details of authorities’ policies on grants for refurbishing empty properties. The sections below outline local authorities’ powers in relation to empty properties. 2.1 Empty property strategies Local authorities in England are not required to publish a specific strategy for dealing with empty properties but they are required to publish housing strategies; reference to tackling empty properties within the local area may form part of these strategies. Amendments were 1 Empty property – unlocking the potential – an implementation handbook, May 2003 (now archived) 3 tabled to the Homelessness Act 2002 during its passage through Parliament to make reference to tackling empty homes a requirement in housing strategies and to require authorities to adopt targets for reducing the number of empty properties. These amendments were not accepted; Sally Keeble, the then Minister, said: …we should not be overly prescriptive with regard to instructing local authorities about the content of their strategies. That should be determined by them in the light of their circumstances, such as the number of homeless people in their areas and the type and nature of their housing stock. They should be allowed to exercise their best judgment about how to deal with the difficulties that they face. The most important elements of the strategy are covered by the legislation; further elements might be considered as guidance—and an instruction that relates to the number of empty properties will certainly be considered. Similar concerns are raised, and similar ground is more explicitly covered, in amendment No. 15, tabled by my hon. Friend the Member for Stafford [David Kidney]. I acknowledge my hon. Friend's lengthy and strong track record of action with regard to the issue, and I agree with him that local authorities should make every effort to bring empty homes back into fruitful use. We encourage them to do that through the housing investment programme, and we expect authorities to demonstrate their commitment to tackling the problem of empty properties by having a clear strategy that matches resources to the scale of the problems in their districts. Authorities are also required to report the number of homes in their area that have been empty for more than six months and that have been brought back into use as a consequence of their actions. 2 The Department introduced a Best Value Performance Indicator 3 to ensure that local authorities treat the re-use of empty properties as one of their priorities. This indicator was criticised in the report of the Transport, Local Government and the Regions Select Committee’s 2001-02 inquiry into the problem of empty homes: There is currently a Best Value Performance Indicator (number 64) which measures the number of private sector houses, vacant for more than 6 months, which have been brought back into use by the local authority. This is not an adequate measure of whether or not the total number of empty homes has reduced because other houses can become vacant as quickly as the local authority brings these properties back into use. Southampton City Council explained that despite many individual properties being successfully re-occupied, the vacancy rate in the city has remained constant at 5 per cent in recent years. Empty properties are indeed a wasted resource, particularly in areas where housing need is high. The current Best Value Performance Indicator is inadequate and we recommend that in such areas, local authorities should set Best Value targets to reduce the number of empty homes in all tenures. 4 Best Value Performance indicators were replaced with a single set of 198 National Indicators (the National Indicator Set – NIS) with effect from 1 April 2008. There was no NIS that related to empty properties. 5 Most local authorities now have dedicated empty property officers who work to broker the reuse or conversion of empty properties. The then Minister for Housing and Planning, 2 3 4 5 SC(A) 10 July 2001 c32 Best Value Performance Indicator 64. HC 240-I of Session 2001-02, para 31 See National Indicators for Local Authorities and Local Authority Partnerships: Handbook of Definitions, CLG, May 2008 4 Yvette Cooper, responded to a parliamentary question on funding provided to enable local authorities to bring empty properties back into use in May 2006: Local housing authorities receive Housing Revenue Account subsidy which is ringfenced for expenditure on their own housing stock and general funding (which constitutes revenue support grant, redistributed business rates and police grant) which is not ring-fenced. We do not hold centrally, information on the proportion of Housing Revenue Grant or general funding spent by individual local authorities on bringing empty homes back into use. It is a matter for local authorities to set their budgets in accordance with local priorities which may include bringing empty homes back into use. 6 In the Housing Green Paper (July 2007) the Labour Government made it clear that local authorities should do more to tackle empty homes. 7 On 5 February 2010 the then Government announced additional support for councils to step up efforts to get empty homes back in use and reduce anti-social behaviour, including cash for an intensive crackdown in 17 local authority areas with known problems. Additional funding was made available to train key staff on how best to get empty homes back in use. 8 2.2 Compulsory purchase Where agreement cannot be reached with the owner of an empty property a local authority may seek to acquire the property compulsorily. This is only possible where the authority has specific statutory powers to acquire land compulsorily for the proposed purpose, and should only be done where the authority can demonstrate that the acquisition would be in the public interest. The consultation paper, Empty Homes: Temporary Management, Lasting Solutions, outlined the circumstances in which compulsory purchase may assist in tackling empty properties: Compulsory Purchase Orders (CPOs) can be made by local authorities under their Housing Act powers e.g., acquisition of land or buildings for the provision of housing; clearance of unfit housing; or securing the aims of a housing renewal area. One potential use of CPOs is to acquire empty or under-occupied properties to bring them into housing use. Such CPOs should be considered on their merits as a last resort where owners have refused or failed to co-operate. Where the Secretary of State confirms such an Order, the acquiring Council would normally be expected to dispose of the properties acquired. 9 In July 2001 Lord Falconer, then Minister for Housing, Planning and Regeneration, indicated that compulsory purchase procedures would be fast-tracked in order to short-cut procedures Measures were included in the for buying up run-down abandoned buildings. 10 11 2004 Planning and Compulsory Purchase Act. 2.3 Enforced sale procedure Where a local authority has invoked enforcement measures using some of the powers listed above, if the owner expresses no interest in bringing the property back into use the authority may step in and undertake the works itself with a view to reclaiming the cost from the owner 6 7 8 9 10 11 HC Deb 25 May 2006 c2062-3W Homes for the Future: more affordable, more sustainable, Cm 7191, July 2007, chapter 4 pp40-41 CLG Press Release, 5 February 2010 May 2003, Annex 7 p63 'Falconer promises quicker compulsory purchase soon', Inside Housing, 12 July 2001 For more information see Library Standard Note SN/SC/1149 5 on their completion. Once the works are completed, a ‘charge’ may be attached to the property on the Local Land Charges Register. The objective is to ensure that the owner cannot dispose of the property with the benefit of the improvements. Under the enforced sale procedure the property is sold on the open market at auction. 2.4 Council Tax exemptions From 1 April 2013, under the Local Government Finance Act 2012, “unoccupied and substantially unfurnished” properties are subject to a Council Tax discount of anything between 0% and 100% at the discretion of the billing authority. Properties undergoing “major repair work” or “structural alteration”, which are vacant, are subject to a discount of any amount between 0% and 100%, for a maximum of 12 months. Also from 1 April 2013, local authorities have been able to set an ‘empty homes premium’ for long-term empty properties. Properties which have been unoccupied and substantially unfurnished for over two years may be charged up to 150% of the normal Council Tax. Guidance for local authorities was published in May 2013: Council Tax empty homes premium: guidance for properties for sale and letting. Further information on Council Tax charges in relation to empty properties is available in Library standard note 2857, Council tax : discount on second homes and long-term empty properties. 2.5 Achieving the improvement of empty properties The principal statutory enforcement powers available to local authorities are set out below: Problem Dangerous or dilapidated buildings or structures Legislation Building Act 1984 ss77 & 78 Housing Act 2004 Part I Unsecured properties (where it poses the risk that it may be entered or suffer vandalism, arson or similar). Building Act 1984, s78 Blocked or defective drainage or private sewers. Local Government (Miscellaneous Provisions) Act 1976, s35 Local Government (Miscellaneous Provisions) Act 1982, s29 Power granted To require the owner to make the property safe (Section 77) or enable the Local Authority to take emergency action to make the building safe (Section 78). Under the Housing Health and Safety Rating System local authorities can evaluate the potential risks to health and safety arising from deficiencies within properties and take appropriate enforcement action. To allow the Local Authority to fence off the property. To require the owner to take steps to secure a property or allow the Local Authority to board it up in an emergency. To require the owner to address obstructed private sewers. Building Act 1984, s59. To require the owner to address blocked or defective drainage. Public Health Act 1961, s17. To require the owner to address defective drainage or private sewers. 6 Vermin (where it is either present or there is a risk of attracting vermin that may detrimentally affect people’s health). Unsightly land and property affecting the amenity of an area. Public Health Act 1961, s34. Prevention of Damage by Pests Act, s4. To require the owner to remove waste so that vermin is not attracted to the site. Public Health Act 1936, s83. Environmental Protection Act 1990, s80. Building Act 1984, s76. Public Health Act 1961, s34 (see above). Town and Country Planning Act 1990, s215. Building Act 1984, s79 To require the owner to remove waste from the property. (see above). To require the owner to take steps to address a property adversely affecting the amenity of an area through its disrepair. To require the owner to address unsightly land or the external appearance of a property. See also section 2.7 of this note on Empty Dwelling Management Orders. 2.6 Identifying empty properties Section 85 of the 2003 Local Government Act allows the use of information gathered as part of the Council Tax billing process to identify empty properties within an authority’s area. The purpose of section 85 is set out in the Explanatory Notes to the Act: Section 85: Vacant dwellings: use of council tax information 202.Billing authorities will collect information about the numbers of empty (vacant) homes in their area which are exempt dwellings for council tax purposes. Many local authorities employ empty property officers whose role is to identify empty homes and develop policies and initiatives to bring them back into use. The presence of empty homes can lead to social, economic and environmental problems (e.g. reduce neighbouring property values, encourage vandalism and increase the pressure on housing stock and land for development). 203.The LGFA 1992 does not contain clear provision allowing information collected pursuant to council tax powers under that Act, to be used for other purposes. The Information Commissioner has issued guidance advising authorities that they cannot use council tax data for other purposes. 204.Section 85 inserts a new paragraph 18A into Schedule 2 to the LGFA 1992 to allow a billing authority to use information it has obtained for the purpose of carrying out its council tax functions for the purpose of identifying vacant dwellings or taking steps to bring vacant dwellings back into use. New subparagraph 18A(2) limits the extent of personal information which may be shared to an individual's name or an address or number (e.g. telephone number) for communicating with him. 205. The Government is conscious that it is arguable that allowing the use for other purposes of personal data collected for council tax purposes may in some circumstances constitute an interference with an individual's right to privacy protected by article 8 of the European Convention on Human Rights. It is considered that any data sharing permitted under section 86 does not interfere with an individual's right to privacy. The data will be used only by the billing authority which collected it and it will be used only for public functions in the public interest. Section 85 does not permit disclosure to third parties such as commercial organisations. 7 2.7 Empty Dwelling Management Orders (EDMOs) Chapter 2 of Part 4 of the 2004 Housing Act made provision for local authorities to take over management of certain residential premises that had been empty for at least six months. Regulations providing that EDMOs can only be sought where a property has been empty for two years (as opposed to six months) came into force on 15 November 2012. 12 The aim of Empty Dwelling Management Orders (EDMOs) is to bring empty private sector property back into use. 13 The law relating to the service of EDMOs is contained in sections 133-138 of the 2004 Act and associated Regulations. The Housing (Empty Dwelling Management Orders) (Prescribed Exceptions and Requirements) (England) Order 2006, which came into force on 6 April 2006, set out the procedures local authorities must comply with in seeking approval from a Residential Property Tribunal to make an interim EDMO. The power in section 134 of the 2004 Act allowing Residential Property Tribunals to authorise the making of interim EDMOs came into force on 6 July 2006. These procedures were amended by The Housing (Empty Dwelling Management Orders) (Prescribed Period of Time and Additional Prescribed Requirements) (England) (Amendment) Order 2012 (SI2012/2625) from 15 November 2012. EDMOs are a discretionary power of local authorities. Where a residential property has been vacant for a minimum two years one option at the disposal of an authority will be to seek an interim EDMO which will allow the authority to let out the dwelling with the proprietor’s consent. The guidance issued by the Department for Communities and Local Government to local authorities states: Local Housing Authorities should always attempt to secure the occupation of empty dwellings with the consent and co-operation of the owner and only resort to the exercise of their formal enforcement powers, including the use of EDMOs, where occupation cannot be achieved through voluntary means. 14 Under Section 134 of the 2004 Act a Residential Property Tribunal (RPT) may authorise an authority to make an interim EDMO in respect of a dwelling that is unoccupied (except where the relevant proprietor is a public body) if: • it is satisfied that the dwelling has been wholly unoccupied for at least 2 years (or such longer period as may be prescribed); • there is no reasonable prospect of it becoming occupied in the near future; • that, if an interim EDMO is made, there is a reasonable prospect that it will become occupied; • that the authority have complied with section 133(3) of the Act; • that any prescribed requirements have been complied with; and • that it is not satisfied that the case falls within a prescribed exception. EDMOs cannot be sought in respect of: 12 13 14 The Housing (Empty Dwelling Management Orders) (Prescribed Period of Time and Additional Prescribed Requirements) (England) (Amendment) Order 2012 (SI2012/2625) For more background information on EDMOs see Library Standard Note SN/SP/4129 DCLG, Guidance Note on Empty Dwelling Management Orders, July 2006, para 2.1 8 • a property that is a building or part of a building used for non-residential purposes; or • it is not wholly unoccupied e.g. only part of the house or flat is unoccupied or there are spare rooms not in use; or • it has been lived in at any time within the previous two years. Circumstances in which other properties are exempt from the service of an EDMO, despite being empty for two years or more, are: • The property is normally the owner’s only or main residence, but: – they are temporarily residing elsewhere; – they are absent so that they can be cared for elsewhere; – they are absent because they are caring for someone elsewhere; – they are in the armed forces and are away from home on service. • The property is occupied occasionally by the owner or their guests as a second home or a holiday home. • The property is genuinely on the market for sale or to be let. • The owner is expecting to inherit the property but has not yet obtained grant of representation (probate) following the death of the previous owner. In this case, the property will continue to be excepted for six months after a grant of representation is obtained. • It is comprised in an agricultural holding within the meaning of the Agricultural Holdings Act 1986 or a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995. • It is usually occupied by an employee of the relevant proprietor in connection with the performance of his duties under the terms of his contract of employment. • It is available for occupation by a minister of religion as a residence from which to perform the duties of his office. • It is subject to a court order freezing the property of the relevant proprietor; • it is prevented from being occupied as a result of a criminal investigation or criminal proceedings. • It is mortgaged, where the mortgagee, in right of the mortgage, has entered into and is in possession of the dwelling. • The proprietor has died and six months has not elapsed since the grant of representation was obtained in respect of this person. 15 Ultimately it is up to a RPT to decide whether or not a particular exemption applies and whether or not to grant an interim EDMO. Once an interim EDMO is granted it will normally last for twelve months. Where consent to letting the dwelling cannot be obtained from the 15 Regulation 3 of The Housing (Empty Dwelling Management Orders) (Prescribed Exceptions and Requirements) (England) Order 2006 (SI 2006/367) 9 proprietor, the interim order may be revoked and replaced with a final EDMO; this will not require the consent of a RPT. Final EDMOs remain in force for a fixed period of no longer than seven years. Where a final order is in place authorities do not need the proprietor’s consent to letting out the dwelling. Full information on the operation and implications of EDMOs can be found in the Department for Communities and Local Government’s guidance for local authorities which can be accessed on the Department’s website. The Department also issued guidance on EDMOs for residential property owners which can be accessed on the archived section of the CLG website. The Empty Homes Agency provides guidance on EDMOs on its website. In May 2009 the then Minister, Iain Wright, reported that 24 interim EDMOs had been approved by RPTs while 7 applications had been rejected. 16 The Labour Government did not view the relatively small number of applications for EDMOs as an issue: Empty dwelling management orders (EDMOs) are part of a wider range of powers available to local authorities to tackle empty homes in their area. We want to encourage voluntary reoccupation of empty homes but this can only work where there is realistic compulsion to back them up. EDMOs provide this compulsion and should therefore be a key component of a comprehensive empty property strategy. We are confident that the legislation is beginning to work well and local authorities claim that in many cases the threat of an EDMO has been sufficient to make owners take action to bring long-term empty homes back into use. 17 By June 2010 29 interim EDMOs had been approved by RPTs. 18 On 7 January 2011 the Secretary of State for Communities and Local Government, Eric Pickles, announced an intention to restrict the use of EDMOs: • they will be limited to empty properties that have become magnets for vandalism, squatters and other forms of anti-social behaviour - blighting the local neighbourhood • a property will have to stand empty for at least two years before an Empty Dwelling Management Order can be obtained, and property owners will have to be given at least three months' notice before the order can be issued. 19 The rationale for the changes was to “protect civil liberties”: There is a case for action to put boarded-up and blighted properties back into use. But these draconian and heavy-handed state powers have allowed councils to seize private homes in perfect condition, including their fixtures and fittings, just because the homes have been empty for a short while. The Coalition Government is standing up for the civil liberties of law-abiding citizens. Fundamental human rights include the right to property. People suffering the loss of a loved one should not have to endure the added indignity of having their home seized because of a delay in them deciding what to do with it. 16 17 18 19 HC Deb 7 May 2009 c388W HC Deb 25 March 2009 c472W HL Deb 23 June 2010 c190 WA CLG Press Notice, Pickles acts to protect the rights of home owners, 7 January 2011 10 That's why the new Government is introducing new safeguards that mean the rights of responsible homeowners will be protected, while allowing action to be taken against genuine derelict buildings which blight neighbourhoods. 20 As noted earlier, The Housing (Empty Dwelling Management Orders) (Prescribed Period of Time and Additional Prescribed Requirements) (England) (Amendment) Order 2012 (SI2012/2625 came into force on 15 November 2012. This Order increased the period for which the property needs to have been empty before an EDMO can be applied for from six months to two years. The Order also provides that an authority must give the owner at least three months’ notice of the intention to apply for an order. In terms of responses, the Empty Homes Agency welcomed the decision to retain EDMOs but questioned whether there was a need for the changes: We are pleased that the power has been retained. It has proved useful as a tool of last resort for councils. The amended regulations will not affect many cases as the power is generally only used in extreme cases which already meet the new amendments. He [David Ireland] expressed concern that ‘an effect of the changes would be to limit council’s ability to deal with certain cases such as new blocks of empty speculatively built flats’, but added that ‘the main purpose of the legislation has been retained and we welcome that’. 21 Respondents also pointed out that some of the cases cited by the Secretary of State on 7 January 2011 in support of case for reform would have been exempt from the existing EDMO process. 22 3 Other initiatives 3.1 VAT The Empty Homes Agency has actively lobbied for VAT on new and refurbished homes to be harmonised at 5 per cent in a bid to encourage the repair and conversion of empty properties. Renovation and refurbishment work on existing homes is generally subject to VAT while new-build housing is zero-rated. In the 2001 Budget, the then Chancellor introduced lower levels of VAT on works to bring empty homes back into use, with works on homes empty for more than ten years being zero rated, and five per cent being charged on homes empty for more than three years (but see below). The Empty Homes Agency welcomed this move but there was disappointment over the failure to harmonise VAT on new-build and refurbishment. 23 In October 2007 the then Government announced that the three year limit would be cut to two years: effective from 1 January 2008 (SI 2007/3448). The 2006 ODPM: Housing, Planning and the Regions Select Committee report, Affordability and the Supply of Housing, also called on the Government to reduce VAT on the refurbishment and renovation of all empty properties to 5%. 24 Inside Housing magazine’s Empty Promises Campaign also focused on the potential impact of cutting VAT on renovations and repairs. Assuming an average renovation cost of £25,000 to bring each empty dwelling into use, the Campaign estimated the cost to the Treasury of 20 21 22 23 24 ibid Inside Housing, Councils face tougher empty homes rules, 7 January 2011 http://www.insidehousing.co.uk/empty-promises/6513194.blog 'Empties boosted by VAT cuts', Inside Housing, 16 March 2001 HC 703-I, Third Report of 2005-06, para 113 11 around £625 million. However, the Federation of Master Builders said that cutting VAT would “diminish the financial incentive” for builders to employ “VAT dodging tradesmen to cut their costs.” 25 The Treasury has, in the past, cited prohibitive European rules governing VAT as a reason for not implementing a cut. However, in March 2009 European finance ministers agreed that member states should be free to reduce VAT on repairs and maintenance. 3.2 Flats over shops In the November 2000 Pre-budget Report the then Chancellor announced the introduction of 100% Capital Allowances for creating ‘flats over shops’ for letting as part of an £80 million package of measures: an immediate tax relief to property owners for the costs of converting redundant space over shops and other commercial premises into flats for letting. 26 A Housing Above Shops Task Force was established by the British Property Federation and Living Over the Shop Project at the instigation of the Office of the Deputy Prime Minister in December 2002. The Task Force was to advise on ways of overcoming perceived barriers to bringing unoccupied space above retail premises into housing use. A key recommendation was the creation of a new agency to advise on how empty commercial space could be converted into residential premises. The Task Force’s recommendations were taken forward in a feasibility study by the Housing Partnership. To date no new agency has emerged; in November 2005 the then Minister for Housing said “There are a number of barriers preventing this potential from being realised, including the complex ownership patterns in high street property.” She went on to say that the Government was considering how these barriers might be overcome. 27 Funding for the Living Over the Shop Project ended in June 2005 and the scheme has now closed. The Policy Exchange think tank published More Homes: Fewer Empty Buildings in March 2011 in which it called for changes to allow vacant or under used retail, industrial and office space to be converted into housing without having to obtain planning permission for change of use. 28 In September 2012 Eric Pickles announced a relaxation of permitted development rights (with effect from 1 October 2012) to allow two flats to be created in office or storage space above shops. Previously only one flat could be developed above a shop without planning permission. 29 3.3 Private sector leasing schemes Under these schemes a local authority or housing association takes a lease on an otherwise empty property and brings it back into use. They can be particularly appropriate when the barrier to the re-use of the property is an unwillingness by the owner to take on the role of 25 26 27 28 29 Inside Housing, “And…action” 20 March 2009 Cm 4917, para 6.80. Provision was made for this in section 67 and schedule 19 to the Finance Act 2001. It applies to expenditure incurred after 11 May 2001. HC Deb 14 November 2005 c1040W Policy Exchange, More Homes: Fewer Empty Buildings, 17 March 2011 CLG Press Release, 1 September 2012 12 landlord and the responsibilities that that entails. These schemes have been used extensively to provide accommodation for homeless families and individuals. Temporary Social Housing Grant (TSHG) is available from the Homes & Communities Agency (HCA) to provide funding for housing associations to bring back into use properties, in public or private ownership that would otherwise remain empty and unavailable for social housing. Examples are properties awaiting redevelopment or sale and accommodation over shops. 3.4 Empty social housing In Sustainable Communities: Building for the Future (February 2003) the Labour Government set out measures aimed at reducing the number of empty properties. The extract below summarises the previous Government’s approach to promoting better use of the social housing stock: To promote better use of the social stock, we will help tenants, where it is beneficial to them, to relocate from high demand areas through the new Housing and Employment Mobility Scheme and schemes such as that run by LAWN (London Authorities West and North). We will also continue to encourage choice-based lettings schemes that help tenants find a property suited to their needs. We are actively working across Government to ensure that older people have decent and appropriate housing. This includes creating partnerships between health, housing and the independent sector, expanding the housing choices available for older people and making best use of existing stock. To make best use of existing sheltered housing we will encourage partnerships with local health and social care agencies and the independent sector to meet the needs of an ageing population. The DTLR Select Committee inquiry into empty homes concluded that the number of public sector owned vacant properties “is small compared to those in the private sector” but stressed the importance of good housing management practices to minimise voids. The Committee found that one of the main causes of continuing high levels of voids in the public sector stock was regeneration activity: The Greater London Authority's memorandum observed, "Where vacancy rates are above 3 per cent in a Borough this is usually a feature of regeneration activity." In the Tarling Estate in Tower Hamlets, which we visited, we saw a 'decant process' which has now run for more than two years as the Council seeks to persuade residents of the benefits of moving to alternative accommodation until the whole block of flats is empty. 33. Where high public sector vacancy rates cannot be attributed to regeneration activity, management practices should be reviewed. We learned from the Housing Corporation that an appropriate vacancy rate in the registered social landlord sector would be a maximum of 2 per cent. Aggregate figures on empty homes should identify the local authority and registered social landlord empty homes which are being held for demolition / refurbishment, separate from those which are intended for re-letting. Local authorities in healthy housing markets holding more than 2 per cent of their stock vacant and not for regeneration should be required to undertake an immediate review of the housing management function. 30 30 HC 240-I of Session 2001-02 13 Inside Housing magazine’s Empty Promises Campaign called on the HCA to earmark some of the Affordable Housing Programme funding to bring empty housing association homes (of which there are around 42,000) back into use. This would involve associations being able to bid for reallocated grant for this purpose. As noted in section 3.3 (above) Temporary Social Housing Grant (TSHG) is available from the HCA to provide funding for housing associations to bring back into use properties, in public or private ownership that would otherwise remain empty and unavailable for social housing. In August 2012 the HCA reported a reduction in empty homes owned by registered providers of social housing. 31 In May 2012 the HCA amended guidance to allow housing associations to dispose of individual empty properties without first having to seek permission: This means the HCA can give permission for a landlord to sell properties of a particular type, size or other criteria without having to get permission for the sale of each one individually. The legislative power to alter the guidance, through the Housing and Regeneration Act 2008, has existed since April 2010, but until now has not been used. The HCA argued the change will increase flexibility and reduce administration costs for landlords. The change only applies to non-profit providers. 32 3.5 Government-owned housing The Labour Government’s consultation paper of May 2003, Empty Homes: Temporary Management, Lasting Solutions, noted that although Government-owned housing stock comprises only a small proportion of the total housing stock, the proportion vacant was “considerably higher” than the national average, running at about 10 per cent. The bulk of Government-owned housing belongs to agencies or trusts of four departments – Ministry of Defence, Department for Transport, Department of Health and the Home Office. The Labour Government’s policy was to encourage departments that could not dispose of vacant properties due to long-term operational requirements to find short term uses for them rather than leaving them empty. Annex 8 to Empty Homes: Temporary Management, Lasting Solutions summarised the range of actions being taken by these Departments to reduce the number of empty homes they own: 31 32 • The Highways Agency, part of Department for Transport, has a policy of selling any property which it has acquired that is not needed for road operation. Where properties are required for longer-term plans, the Agency has recently introduced a policy of making more of them available for temporary social housing or for public sector key workers in areas of housing need. • The Prison Service, part of the Home Office, operates a policy of offering vacant quarters for sale on the open market rather than trying to re-let them (except in London, where the high property prices have created problems in recruiting and retaining prison staff). In the last year, more than £12 million was raised for the expansion and improvement of the Prison Service estate by such sales. • The Defence Housing Executive, an Agency of the Ministry of Defence, is striving to reduce the amount of surplus accommodation on the Ministry of Defence estate, having disposed of approximately 10,000 properties since January 2000. It plans to Inside Housing, “Numbers of empty homes falls, says HCA research,” 20 August 2012 Inside Housing, “Landlords free to sell empty properties,” 30 May 2012 14 continue this practice, projecting the disposal of up to 3,500 properties in 2002/03; up to 2,500 in 2003/04; and up to 2,500 in 2004/05. In addition, it has identified some 2,000 properties that are available to lease on a temporary basis to public sector key workers. • 3.6 The National Health Service Estates produced a report ‘Sold on Health’ in 2000 which highlights opportunities to improve management of NHS healthcare estate and new ways of driving out surplus estate and getting best value from the whole asset lifecycle from procurement through operation to disposal. Planning policy The National Planning Policy Framework (March 2012) has replaced previous Planning Policy Guidance. With regard to empty homes, the Framework states: Local planning authorities should identify and bring back into residential use empty housing and buildings in line with local housing and empty homes strategies and, where appropriate, acquire properties under compulsory purchase powers. They should normally approve planning applications for change to residential use and any associated development from commercial buildings (currently in the B use classes) where there is an identified need for additional housing in that area, provided that there are not strong economic reasons why such development would be inappropriate. 33 The Empty Homes Agency has lobbied to encourage the use of the planning system, via section 106 agreements, to bring empty properties back into use. This would require developers to subsidise the purchase price of empty properties. 34 3.7 Buying empty stock for use as social housing In response to the downturn in the housing market the Labour Government made finance available (initially a tranche of £200 million) for housing associations to buy up newly built empty private sector properties (of a certain standard) for use as affordable housing: The National Clearing House process was launched by the Corporation as part of a set of initiatives to respond to the current market and to bring homes into the affordable housing sector. Since July, the Corporation has spent over £70 million to bring more than 2,000 homes into affordable housing. 35 In May 2009 the then Government reported that funding under this scheme was expected to deliver 9,600 affordable homes: The stock purchased has been above average in terms of unit layout and size. Over 30 per cent of the units purchased are family sized homes of 3 + bedrooms. The latest developer stock figure shows that we have now spent £350m as at the end of March 2009. This funding is expected to deliver 9,600 affordable homes of which majority is for social rent. 36 The CLG Select Committee’s 2008-09 inquiry into Housing and the Credit Crunch recommended that, in addition to newly developed empty housing, funding should be made available to buy empty family homes on the open market: 33 34 35 36 National Planning Policy Framework, para 51 ‘Planning solution for empty homes,’ Inside Housing, 16 January 2004 http://www.communities.gov.uk/news/housing/997340 - note that the Housing Corporation’s investment role has now been taken over by the Homes and Communities Agency (HCA). Cm 7619, para 11 15 We believe it should also be willing to buy unsold family homes, for which there is a particular need in the social rented sector, on the open market. We recommend that it direct some of the money from the national affordable housing programme to the purchase of suitable properties which have not sold on the open market for a period of a year or more. 37 The then Government responded thus: The Housing Corporation, and now the HCA, have always been able to purchase property on the open market. In 2007-08 almost 7,000 properties were purchased on the open market through the national affordable housing programme. As with the purchase of unsold stock from developers, where proposals to purchase suitable properties on the open market meet HCA criteria, and represent value-for-money, they could be funded through the national affordable housing programme. 38 Seventeen local authorities where large numbers of empty properties have attracted vandalism and anti-social behaviour were allocated additional funding to provide training for frontline staff in bringing empty properties back into use. Some of these properties were intended for use as social housing: Empty homes, particularly those in disrepair, can be a magnet for vandalism, drugtaking, gangs or other forms of anti-social behaviour. Councils already have tough legal powers to force private landlords to sort out their properties and can even take over properties if necessary, but tenants and landlords often don't know about these powers, reducing their effectiveness. That's why Mr Healey is today announcing a £1 million boost to council efforts to train key staff on how best to get empty homes back in use, with cash for 17 councils where anti-social behaviour focused around empty homes is a real concern and residents want to see more effective local action. The main response for councils will be through frontline workers and specialist teams with the expertise to lead the crackdown. This will include action to renovate derelict houses for letting out as social homes, and the use of private funding to turn empty homes into properties that allow local people the chance to take a more affordable step onto the housing ladder. 39 See section 4.1 (below) for information on the current Government’s approach to bringing empty housing into use as affordable housing. 40 4 The current Government’s approach The Coalition’s Programme for Government included a commitment to “explore a range of measures to bring empty homes into use”. The Government’s policy in relation to Council Tax measures is covered in section 2.4; changes to EDMOs in section 2.7; planning policy in sections 3.2 and 3.6; and on the disposal of empty social housing in section 3.4 (above). 37 38 39 40 HC 101, Third Report of 2008-09, para 45 Cm 7619, para 12 CLG Press Release, 5 February 2010 Affordable housing as defined in Planning Policy Statement 3 16 4.1 HCA funding for empty homes Following the Spending Review 2010 the Housing Minister, Grant Shapps, issued a letter to local authorities setting out the settlement for housing. This letter identified a specific sum for bringing empty homes back into use: I believe that we have secured a package that will help deliver the homes this country needs over the Spending Review period. Despite the fiscal constraints, the Government is still investing nearly £6.5 billion of taxpayers’ money in housing, with £4.5 billion to fund new affordable homes over the Spending Review period. As part of this investment we intend to provide £200m so that the Mortgage Rescue scheme can stay open to support vulnerable homeowners threatened with repossession and £100 million to bring empty homes back into use. 41 This £100m is aimed at bringing 3,000 empty homes back into use: The Spending Review announced that the Government is investing £100m - through the Homes and Communities Agency - to enable housing associations to support local authorities to bring over 3,000 empty homes back into use as low cost housing. The New Homes Bonus will complement this measure and provide a further mechanism to support returning empty homes to use. 42 Information on how to access this funding was provided on the HCA’s website: Empty homes is a key part of the HCA’s 2011–15 Affordable Homes Programme. The £100m funding is available from April 2012 and will be targeted at long term empty properties which would not come back into use without intervention. The HCA is keen to offer providers as much flexibility as possible to ensure funding goes towards the most effective approaches at a local level. We are seeking expressions of interest (EoI) from providers who are considering applying for funding to tackle empty homes. Details on the EoI process are set out in the HCA Investment Framework. The funding is available for local authorities, housebuilders and developers, affordable housing providers and local community groups. If providers have schemes that can be delivered before April 2012, details should be submitted using the HCA’s standard information template. The HCA’s website contains additional information on its empty homes work. A national intermediary for self-help, community and voluntary groups is administering funding for community groups. January 2012 saw the publication of specific guidance for local community and voluntary groups on how to apply for funding; Bringing Empty Homes back into use: Application guidance for Community and Voluntary Groups. This guidance stated that there was an aim of awarding at least £10m via the Empty Homes Community Grant Fund and as much as £30m, “if sufficient high quality bids come forward.” In July 2012 Andrew Stunell announced that £25m would be allocated to community groups to refurbish 1,600 homes. The largest sum was allocated to the Empty Homes Agency: The biggest single allocation goes to Empty Homes, which will use the money to set up a £3 million ‘bank’ to bring privately-owned properties back into use. The scheme, 41 42 http://www.communities.gov.uk/documents/housing/pdf/1746957.pdf CLG, New Homes Bonus: Final scheme design, February 2011 17 which was unveiled in Inside Housing earlier this month, will lend money to landlords at sub-market rates to allow them to fix up abandoned properties. 43 Additional information on this initiative can be found on the Empty Homes website: The National Empty Homes Loans Fund. In Laying the foundations: a housing strategy for England (November 2011) the Government said that over £2m of funding through the Affordable Homes Programme would be brought forward to enable local authorities and Private Registered Providers to bring back over 200 empty homes into use as affordable homes in the 2011-12 financial year. The strategy also announced the intention to allocate an additional £50m of funding to tackle concentrations of poor quality empty homes in areas of low housing demand. Match funding would be sought from local partners. The removal of specific funding for certain areas of low demand (Housing Market Renewal areas) in March 2011 led to the suggestion that whole communities in northern England “are being left high and dry”. 44 In May 2012 Andrew Stunell announced the allocation of £60m in empty homes funding to 20 councils “to tackle ‘clusters’ of empty homes in low housing demand areas.” This is in addition to £70m already allocated to 95 projects as part of the current spending round aimed at bringing 5,600 properties back into use. 45 On 26 November 2012 Don Foster announced that bidding would open for new funding of £300m (initially announced as part of the 6 September housing and growth package) to bring 5,000 empty/derelict houses back into use over 3 years. He said: A range of organisations including councils, housing associations, community and voluntary groups as well as high street regeneration groups - prioritising the 27 ‘Portas pilot’ towns and 326 town team partners - will be able to bid for a share of the funding. Bidding guidance will shortly be published on the Homes and Communities Agency’s website for registered providers and at Grants admin for community and voluntary groups. 46 4.2 Empty homes advisor In April 2012 the Government appointed George Clarke as its independent empty homes advisor his role involves: 43 44 45 46 • promoting bringing empty homes back into use • raising public awareness of the benefits of bringing empty homes back into use and encouraging people to report empty homes in their area • encouraging councils, housing associations and voluntary groups to identify innovative and good ideas and sharing this across communities • challenging Government and other public bodies to ensure publicly-owned homes are not left empty; and • exploring whether current plans for demolition in councils could be scaled back. 47 Inside Housing, “Empty homes schemes allocated £25m”, 10 July 2012 Guardian, “Housing schemes grind to a halt as funding dries up,” 22 September 2010 HCA confirms first empty homes funding to 2015, 5 March 2012 CLG Press Release, 26 November 2012 18 4.3 New Homes Bonus On 11 January 2011 the Government confirmed that bringing empty homes back into use would attract additional funding under the New Homes Bonus: The Government is offering powerful new incentives for councils to get empty homes lived in again, matching the council tax raised for every empty property brought back into use - which can be spent as they wish. Mr Stunell urged local communities to work with their council to identify where empty homes are blighting the neighbourhood, and start benefiting from extra cash that can be used to improve the local area. [...] Under plans recently consulted on, the Government will match through the New Homes Bonus any council tax raised from a property that previously stood empty. The extra funding can be spent to benefit the local community - whether on council tax discounts, boosting local services, renovating more empty properties or improving local facilities. The funding is part of a two pronged attack to get to grips with the issue of empty homes, and will supplement the £100 million already announced as part of the Spending Review for Housing Associations to bring empty properties back into use. 48 Information on this scheme can be found in Library note SN/SP/5724 and in a paper published by CLG, New Homes Bonus: Final scheme design. The Government reported some early successes in using the NHB to bring empty properties back into use: Under the New Homes Bonus local authorities can receive the same financial reward for bringing an empty home back into use as building a new one—so over £8,500 for a band D property. In year one of the New Homes Bonus just under 16,000 long term empty homes were brought back into use. This equates to a reward to local authorities of around £19 million. 49 Information on the empty homes element of the New Homes Bonus grant can be found on the Department’s website (now archived): Table: Empty homes element of New Homes Bonus grant - delivery and payments. On 10 May 2013 the Minister, Mark Prisk, said the bonus had resulted in 55,000 homes being brought back into use. 50 4.4 Mayor of London Laying the foundations: a housing strategy for England advised that the Mayor intended to use his additional housing and regeneration powers (contained in the Localism Act 2011) to: 47 48 49 50 • maintain his target that no more than 1 per cent of London’s homes should stand empty or unused for more than six months • maintain and update his empty homes audit, to help target action and investment to tackle abandoned and derelict homes CLG Press Release, 11 April 2012 CLG, New incentives to tackle the blight of empty homes, 10 January 2011 HC Deb 24 November 2011 c511-2W HC Deb 10 May 2013 c13WS 19 4.5 • target a share of London’s funding for empty homes to bring residential buildings on the English Heritage ‘At Risk’ register back into use and explore options to engage the public in this process • encourage boroughs to remove any financial incentives to leaving homes empty • encourage the involvement of the community in bringing empty homes back into use, for example self-help organisations • make investment decisions that prioritise bringing back into use homes for affordable housing. • The London share of the funding will be paid to the Greater London Authority when responsibility for housing in London transfers to the Mayor on 1 April 2012. Office conversions In January 2013 the Minister, Nick Boles, announced changes to new permitted development rights to allow a change of use from offices to homes without the need for full planning permission in order to provide new homes in existing buildings. Certain areas are exempt from these new permitted development rights. There are further plans to promote the conversion of redundant agricultural buildings into new homes. 51 5 Comment The Chartered Institute of Housing, Shelter and the National Housing Federation have joined forces to provide regular reports on Government progress in relation to key housing issues – one of these issues concerns action to tackle empty housing. The first progress report was published in October 2011 – the Government received a “green light” in relation to its policies in this area. 52 The second edition of the report (May 2012) also recorded a “green light” on empty homes: While 720,000 empty homes are clearly too many, given the desperate shortage across the country, the picture appears to be improving, particularly with regard to long-term empty homes, which are the greater problem and demand the most immediate action. If the momentum can be maintained this could be an area of real progress for the Government. The third progress report, published in November 2012, recorded a “green light” and solid progress on tackling empty homes. 51 52 HC Deb 10 May 2013 c13WS The Housing Report (chapter 7), October 2011 20 6 Statistical appendix 21 Vacant dwellings in England 2004- 2011, by sector and region England Local Authority Housing association Other public sector 2004 710,940 57,540 43,290 7,380 2005 723,510 48,590 35,050 5,670 2006 744,930 42,890 30,890 7,380 2007 763,320 40,960 32,080 6,550 2008 783,120 36,940 30,800 4,800 2009 770,500 34,560 33,450 5,740 2010 737,150 30,370 27,950 5,880 2011 720,000 27,910 27,270 5,260 Other (including private sector)2 602,740 634,200 663,770 683,730 710,570 696,760 672,950 659,550 North East Local Authority Housing association Other public sector 45,730 6,800 3,470 410 47,600 5,210 3,590 400 48,290 4,360 3,290 920 48,100 4,310 3,230 950 50,380 3,030 3,230 230 47,240 2,470 3,340 20 46,400 1,870 2,610 30 45,270 1,800 2,640 50 Other (including private sector)2 35,050 38,400 39,720 39,610 43,880 41,410 41,890 40,780 North West Local Authority Housing association Other public sector 128,840 10,620 11,810 1,450 132,540 7,740 9,500 880 137,250 6,300 8,070 920 141,190 6,440 8,030 580 144,910 4,920 7,370 240 142,460 3,710 8,080 420 136,460 3,330 6,870 390 130,980 2,360 6,950 360 Other (including private sector)2 104,960 114,430 121,970 126,140 132,380 130,240 125,870 121,320 Yorkshire & the Humber Local Authority Housing association Other public sector 86,300 9,810 4,310 220 85,690 7,320 4,240 260 90,950 6,140 2,900 410 101,090 5,780 3,700 330 102,580 5,920 3,220 440 98,600 5,720 3,390 430 92,820 4,160 3,220 400 91,480 3,570 3,010 380 Other (including private sector)2 71,960 73,870 81,490 91,290 93,000 89,070 85,040 84,520 East Midlands Local Authority Housing association Other public sector 59,090 4,970 2,470 1,050 63,230 4,990 1,540 950 65,460 4,290 1,260 610 70,080 3,960 1,110 600 71,490 3,320 1,470 580 70,490 3,330 1,620 590 67,480 3,390 1,480 580 66,410 3,440 1,560 420 Other (including private sector)2 50,600 55,750 59,290 64,420 66,130 64,940 62,030 60,980 West Midlands Local Authority Housing association Other public sector 80,940 6,880 5,970 170 77,440 5,050 5,110 140 79,210 3,920 4,580 170 80,400 3,210 4,600 170 83,320 4,120 3,410 230 77,810 3,460 3,210 180 74,880 3,130 2,130 190 73,540 3,290 2,130 370 Other (including private sector)2 67,920 67,130 70,540 72,420 75,550 70,970 69,430 67,750 East of England Local Authority Housing association Other public sector 65,670 4,210 2,090 1,040 66,800 3,430 1,530 830 68,510 3,110 1,900 1,050 69,110 2,500 1,840 1,040 72,770 2,110 1,890 610 73,150 2,300 2,140 810 69,650 2,550 1,740 740 68,840 2,150 1,720 660 Other (including private sector)2 58,330 61,010 62,460 63,740 68,160 67,910 64,620 64,310 London Local Authority Housing association Other public sector 86,730 8,950 6,810 920 85,570 9,620 5,140 960 86,700 10,110 4,630 1,180 84,630 9,850 5,010 790 84,130 9,500 5,360 920 85,060 9,280 5,830 950 79,970 8,270 5,250 1,040 74,550 7,600 4,970 780 Other (including private sector)2 70,050 69,850 70,790 68,990 68,340 69,010 65,410 61,220 South East Local Authority Housing association Other public sector 97,800 3,040 4,020 1,580 100,480 3,210 2,910 720 102,810 2,780 2,650 1,280 101,810 3,080 2,850 1,290 102,880 2,630 3,060 930 103,430 2,820 3,560 1,210 99,000 2,410 2,670 1,410 99,570 2,570 2,450 1,510 Other (including private sector)2 89,180 93,640 96,110 94,600 96,260 95,840 92,520 93,040 South West Local Authority Housing association Other public sector 59,840 2,260 2,350 540 64,170 2,040 1,490 520 65,760 1,890 1,620 840 66,920 1,850 1,720 820 70,660 1,400 1,810 610 72,260 1,470 2,300 1,130 70,500 1,270 1,970 1,120 69,370 1,140 1,850 740 Other (including private sector)2 54,690 60,130 61,410 62,540 66,850 67,360 66,140 65,640 Note: 1 Figures relate to the follow ing dates: 1 November 2004; 10 October 2005; 9 October 2006; 8 October 2007; 6 October 2008; 5 October 2009; 4 October 2010; and, 3 October 2011 2 This figure actually represents the residual betw een the total number of vacant dw ellings in the area and the total number of social and public sector vacants in the area. This difference, w hilst including private sector stock, w ill also contain a margin of error ow ing to the differences in the methodologies used for collecting the data presented for other categories. Detailed notes about the above data are contained in the DCLG Live Table 615 Figures are rounded to the nearest 10 and totals may not sum due to rounding. Sources: DCLG. Live table 615 22