The Empty Homes Agency’s Response to the

Government’s Housing Green Paper - Homes for

the Future More Affordable More Sustainable

The Empty Homes Agency is an independent housing organisation

with charitable status. We exist to highlight the waste of empty
homes in England and work with others to promote sustainable
solutions for returning empty homes to use.

The Empty Homes Agency welcomes the government’s housing

green paper “Homes for the Future More Affordable More
Sustainable” we believe that it is a positive statement that the
government intends to address the country’s most pressing housing
problems.

We concur with the main theme of the paper that England’s

underlying housing problem is undersupply. We welcome the
government’s passion and zeal to increase housing supply, and
support proposals in the green paper, including increases in
housebuilding, that will help achieve this.

We were particularly pleased to see that the government

acknowledges that better use of the existing housing stock including
bringing empty homes back into use contributes to increases in
housing supply.

We believe that empty homes provide a substantial and significant

source of new housing. We do not agree with the claims made by
some that more efficient use of our existing housing stock would
obviate the need for more housebuilding. But we do believe that if
the same degree of political priority were given to bringing empty
homes and other empty buildings back into residential use, as is
given to building new homes, it could make a significant
contribution.

In our view homes that have been out of use for more than 6
months cannot be considered as part of the exiting available
housing stock. They exist, but are unavailable for people to live in.
We have demonstrated over many years that with considerably less
expense and less environmental impact than building new they
could be turned into new homes. It appears inescapable to us that
reusing empty buildings is core to achieving greater sustainability
and greater affordability in housing. If this opportunity is missed we
are convinced that many people will fail to understand why, faced
with affordability and environmental pressures, the country failed to
properly exploit the potential for recycling it’s housing stock.

The Potential of Empty Homes

There are currently 663,000 empty homes (290,000 long-term) in

England. There has been a welcome but slow decline in these
numbers from a high of over 800,000 fifteen years ago. But we
believe that it is possible to reduce the current figure significantly.
In the Netherlands for example the housing vacancy rate stands at
2.2% in Sweden it is 1. 7%1. This compares to over 3% in England.
We don’t see a reason why England should have a higher vacancy
rate than these countries. On the contrary the levels of housing
need in England would suggest we need a lower rate.

In addition to empty homes there are many other existing empty

buildings that could become homes. The developer Greater London
Properties estimates that there are 40,000 empty flats above shops
in London alone. Most of these are not currently recorded as empty
homes. Using data from the National Land Use Database it is
estimated that, in England alone, empty commercial properties,
including space above shops, have the potential for over around
420,000 new homes.2 Together this represents over a million
potential homes sitting empty at any one time.

The government is right to distinguish between long term and short-

term empty homes. We agree that a small number of short-term
and available-to-occupy empty homes are needed to facilitate
mobility within the housing market. Long-term empty homes,
however, make no useful contribution to the housing market, quite
the reverse. Their presence reduces the saleability of neighbouring
properties and can act as a catalyst for decline. A survey by
independent property researchers Hometrack showed that homes
were devalued by 18% if they were next to an empty home.3

The Empty Homes Agency does not argue that every empty building
should be saved and reused. We acknowledge that many have
reached the end of their useful lives and need replacing. We support
the limited and selected use of demolition as tool for regeneration in
some failing housing markets. However we are concerned that all
too often unimaginative new housing developments and
regeneration schemes overlook the potential of existing buildings. It
appears obvious to us that throwing away objects is harmful to the
1
Housing Statistics in the European Union - Boverket 2005
National Board of Housing, Building and Planning, Sweden
2
Unlocking the Potential of Empty Homes a Case for Action 2002 ODPM
3
Hometrack 2003
environment and wastes energy and materials. Demolishing
housing that contains vast amounts of materials and embodied
energy should therefore only be considered if no viable use is
possible. If the government believes this we do not believe that the
message is getting across.

We strongly support the approach taken on empty homes by the

Mayor of London in his new draft housing strategy4. The Mayor has
set a hard target for reducing the numbers of empty homes, and
has explicitly included the targeted homes returned to use within
the overall targeted housing supply increases. We are convinced
that this approach will result in more homes being returned to use.
In our view if the thinking and commitment behind the Mayor’s
strategy were adopted nationally many more homes would be
returned to use boosting housing supply. We believe with the right
measures in place and the right level of priority given to the issue it
is possible to create at least 150,000 new homes from long-term
empty property

Stimulating the Market

In our experience most empty homes that are returned to use, are
returned because of decisions made by the owner, not the actions of
public sector bodies. We think that removing the obstacles and
offering the right incentives to owners can have the greatest impact
in reducing the numbers of empty homes.

We welcome the many changes the government has made in

removing the obstacles to empty homes being returned to use in
recent years. We particularly welcome the changes to VAT for long-
term empty homes that the government introduced in 2001, the
capital allowances scheme for converting flats above shops, and
changes to council tax discounts introduced in 2003. We believe all
of these changes have had an effect and partly explain the
reduction in the numbers of empty homes seen since these changes
were introduced.

The Case for Abolishing Council Tax Discounts

There are however several obstacles that remain and act as a

disincentive to owners to bring homes back into use. The most
important of these is in our view council tax discounts.

Whilst local authorities now have the freedom to reduce or remove

council tax discounts on empty homes only 55% of local authorities
have made use of this freedom. We estimate that owners of

4
The Mayor’s Draft Housing Strategy 2007 Mayor of London
130,000 empty homes in England continue to enjoy what amounts
to an unconditional open-ended public subsidy for them to keep
their property empty. We estimate that the annual cost of this
subsidy to be £68.6 million.

Whilst there is an argument that unoccupied properties make less

use of public services, our experience is the reverse. Empty homes
cause additional cost to the community. Local authorities incur
additional costs associated with removal of dumped rubbish,
boarding up of abandoned houses, and enforcement to return them
to use. Police incur additional costs responding to petty crime
frequently associated with empty homes. Fire services incur
additional costs attending to fires in empty homes. The London Fire
Brigade report that one in four domestic fires are associated with
empty homes.

We do not want council tax to penalise owners who are trying to

bring their homes into use or those who find it difficult to do so
because of low housing demand. We believe that the existing
exemption from council tax for the first 6 months the property is
empty adequately addresses this. It acts as an incentive for
refurbishments between lets to be expedient, and offers new
owners and developers sufficient time to renovate most empty
homes. It also helps encourage owners to market their property at a
realistic market rate rather than hold out for a higher one. We do
not see the necessity of giving local authorities the discretion to
extend this period for a further 6 months.

The Empty Homes Agency welcomes the recent changes made to

empty property relief for commercial buildings. We believe that
many of the persuasive arguments the government made for these
changes also apply to residential empty property.

We see no logical reason for local authorities continuing to offer

council tax discount for empty homes and we think it would be very
helpful if it were removed. The extra revenue generated by this
change should in our view be used to fund local authority empty
property work.

In addition we think that there is a compelling case to introduce

added incentives for owners to bring long-term empty homes back
into use. Increasing the costs of owning long term empty homes
both increase the owner’s accountability and impose a cost on the
continued ownership. Many local authorities have contacted us and
called for a new power to allow them to charge additional council
tax (i.e. above the standard rate) for long-term empty homes. A
similar system operates in many parts of the United States of
America. In Washington DC for example empty homes are charged
at $5 per $100 property tax compared to £0.85 for occupied
properties. 5

We think that local authorities with specific empty homes problems

could use a new power such as this strategically. It would help
tackle the “buy to leave” problems seen in many new build
apartment block developments in recent years. In our view it would
also help stimulate markets where housing demand is low by
encouraging owners to market their properties and realistic prices.

VAT

We note with regret that the issue of VAT reform on refurbishing

empty homes is absent from the green paper. We think that the fact
that VAT is still charged on the refurbishment of most empty homes
and not on the construction of new homes creates perverse
incentives. It creates additional costs that make refurbishments of
some empty homes artificially unviable. It also encourages
demolition of salvageable homes.

We appreciate that EU rules limit the government’s ability to make

changes to VAT and acknowledge that the government has made
welcome reforms to VAT on refurbishment in the past, but we feel
that further changes are needed. The Empty Homes Agency
amongst many other groups and organisations have called for
harmonisation of VAT for new build and refurbishment. We still
believe that this necessary. We can think of no other area where tax
discourages recycling and encourages new consumption so
conspicuously.

Encouraging Sales of Empty Homes

In our experience change of ownership is one of the most effective

ways of returning empty homes to use. Developers auctioneers and
estate agents report to us that there is still a huge demand across
the country for run-down empty homes for renovation. However
developers report to us difficulties in obtaining sufficient properties.
We think that this limits the amount of empty homes returned to
use by the market.

Some local authorities such as Nottingham City Council make lists of

empty homes available to developers on request. This approach is
very common in the United States but still relatively rare in England.
We support this approach. In our view it is one of the easiest and
most cost effective ways of getting more empty homes into use.

5
Washington DC Office of Tax and Revenue 2007
The Empty Homes Agency welcomes the recent decision by the
Information Tribunal to order local authorities to release addresses
of certain empty homes to developers on request. We are however
concerned that most local authorities appear (despite our advice) to
be ignoring it. We think it would be helpful if the government
provided local authorities with guidance on this issue.

Ensuring Local Authorities to Make Effective Use of Their

Powers

However easy and advantageous it is made for owners of empty

homes to return them to use we believe there will always be a need
for the public sector to intervene where the market has failed or
owners refuse to bring their properties back into use.

The Empty Homes Agency very much welcomes the government’s

introduction of Empty Dwelling Management Orders in the Housing
Act 2004. To date six interim orders have been made but we believe
that their impact has been much greater than this figure suggests.
Most local authorities that have used them have reported to us that
many owners have voluntarily returned their properties to use to
avoid an order being made. In Manchester for example the City
Council has reported to us that is has started using the power on 39
occasions, each time the owner has returned their property to use.

Nevertheless we see the potential for much greater use of these

powers. As the government stated in the green paper The Empty
Homes Agency will continue to support local authorities in bringing
empty homes back into use. We are currently working with LACORS
and Shelter on new guidance that will help local authorities make
better use of their existing powers.

We are particularly concerned about the poor performance of many

rural local authorities in returning empty homes to use. Whilst it is
true that the largest concentrations of empty homes are in urban
areas, the problem is far more than an urban one; 144,000 empty
homes are in rural areas6. There are some honourable exceptions
such as South Oxfordshire District Council who were the first to use
EDMO powers and the excellent work that continues in the joint
work between Kent County Council and the district councils in Kent.
In 2004 just 16426 homes were returned to use by rural local
authorities Compared to over 18,000 in urban local authorities). In
summary an empty home is three and a half times more likely to be
brought back into use if it’s in an urban local authority area than a
rural one. We believe that part of the problem is that small local
6
Empty Homes Agency (2006) Submission to Affordable Rural Housing
Commission
6
authorities with small budgets and broad areas of responsibility
simply don’t prioritise this area of work, some lack the skilled staff
needed to use the enforcement powers that are available to them.
In many cases the scale of the problem within each borough
boundary makes this understandable. But it doesn’t help. The
Empty Homes is working with DEFRA to gain a better understanding
of this issue and promote solutions.

Measuring Local Authority Performance

We greatly regret that with the end of the Best Value Performance
Indicator regime there appear to be no government plans to
continue to monitor local authority performance in returning empty
homes to use. We think this is a mistake. Whilst we have no wish
to see local authorities burdened with unnecessary bureaucracy we
are fearful that simply removing the duty to report performance
information to government will not in itself make local authorities
more responsive to local needs or better performing. Indeed some
local authorities have reported to us that they would give lower
priority to empty homes work if there were no requirement to report
performance to government. A large number of local authorities
have contacted us to say that they would like to see empty homes
work continue to be reported on a national basis. We agree.

Last year 61 local authorities reported bringing no empty homes

back into use, despite between them sitting on over 60,000 empty
homes. A number of other local authorities had performance levels
far below the levels that would make any impact. Last year the
Metropolitan Borough of Sefton for example, reported having 6777
empty homes, but returned only 4 to use. There are many other
local authorities that perform similarly poorly. Public scrutiny has
been instrumental in improving the performance of many local
authorities. Birmingham City Council were heavily criticised in the
local media for their poor performance in the past, but have
improved considerably. As a result of the council’s improved
performance the numbers of empty homes in Birmingham have
dropped from over 18,000 in 2001 to 12,500 in 2006. With no
requirement to report performance we think that the possibility of
local authorities improving their performance as a result of local
opinion will be much diminished.

In the absence of a national indicator we think that local authorities

should set their own targets for returning empty homes to use and
should publish their performance. The Empty Homes Agency and
The National Association of Empty Property Practitioners are willing
to produce guidance on reporting empty homes measurement and
performance.
In addition to measurable and reported performance we think that it
is vital that local authorities adopt a strategy with challenging
targets for returning empty homes to use and provide sufficient
resources to the issue for the strategy to be properly implemented.

Housing and Planning Delivery Grant

The Empty Homes Agency welcomes the government’s proposal to

explore including returned-to-use empty homes within the Housing
and Planning Delivery Grant. We recommended a similar approach
in our response to the government’s consultation on Housing and
Planning Delivery Grants last year. We think this is important not
just a means of funding local authority activity, but more
importantly as an incentive to local authorities to consider reused
empty homes as an equally important means of increasing housing
supply as encouraging new build homes.

We think that if Housing and Planning Delivery Grant were

introduced without local authorities being able to claim for empty
homes returned to use it would send a disastrous message that only
new build homes can increase housing supply. This would do
nothing for corporate support within local authorities for their empty
homes work.

We think that it is important that if local authorities are awarded

Housing and Planning Delivery Grant for returning empty homes to
use that a mechanism exists that enables them to demonstrate
their performance. We think the best way of achieving this is to
retain a national indicator based on the current best value
performance indicator. Whilst it is currently imperfect, with very
minor changes, we believe it would be robust and meaningful.

In the absence of a national indicator we think Housing and Planning

Delivery Grant should only be claimed for returning empty homes to
use by local authorities that have adopted an auditable local
performance indicator.

Empty Homes Agency

October 2007