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Empty Housing

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									                   Empty Housing
                   Standard Note:    SN/SP/3012
                   Last updated:     30 March 2011
                   Author:           Wendy Wilson
                   Section           Social Policy Section



Council Tax Data for the end of September 2010 put the number of empty homes in England
at 734,000. Of this number 301,000 were in the private sector (representing around 1.6% of
all private sector housing stock). In its Five Year Housing Plan published in January 2005,
the Labour Government set a target to reduce the number of long-term empty private
properties by 25,000 by 2010; in its response to the Barker review of housing supply the then
Government made a commitment to explore the scope to go further than this.

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.

In January 2009 Inside Housing magazine launched its Empty Promises Campaign with
three key demands for bringing properties back into use. This campaign attracted cross party
support.

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 to
bring empty homes back into use and councils can also benefit from additional funding
under the New Homes Bonus scheme when they bring empty homes back into use.

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    Other initiatives                                    12 
     3.1  VAT                                             12 
     3.2  Flats over shops                                12 
     3.3  Private sector leasing schemes                  13 
     3.4  Empty social housing                            13 
     3.5  Government-owned housing                        14 
     3.6  Planning policy                                 15 
     3.7  Housing and Planning Delivery Grant             15 
     3.8  Buying empty stock for use as social housing    16 

4    The Coalition Government’s approach                  18 
     4.1  HCA funding for empty homes                     18 
     4.2  New Homes Bonus                                 18 

5    Statistical appendix                                 20 




                                           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;

•     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. 2

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
2
    http://www.emptyhomes.com/usefulresources/grants.html



                                                      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. 3

The Department introduced a Best Value Performance Indicator 4 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. 5

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 is no NIS that relates to
empty properties. 6

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,

3
    SC(A) 10 July 2001 c32
4
    Best Value Performance Indicator 64.
5
    HC 240-I of Session 2001-02, para 31
6
    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 ring-
         fenced 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. 7

In the Housing Green Paper (July 2007) the Labour Government made it clear that local
authorities should do more to tackle empty homes. 8

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. 9

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. 10

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
for buying up run-down abandoned buildings. 11           Measures were included in the
                                               12
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

7
     HC Deb 25 May 2006 c2062-3W
8
     Homes for the Future: more affordable, more sustainable, Cm 7191, July 2007, chapter 4 pp40-41
9
     CLG Press Release 5 February 2010
10
     May 2003, Annex 7 p63
11
     'Falconer promises quicker compulsory purchase soon', Inside Housing, 12 July 2001
12
     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
Dwellings that are unoccupied and substantially unfurnished are exempt from Council Tax for
up to six months. Dwellings that are unoccupied, substantially unfurnished and either require
or are undergoing (or undergone) major repair work or structural alteration within the
previous six months to make them habitable, are exempt from Council Tax for up to
12 months. Up until 31 March 2004 a 50% Council Tax discount applied when these exempt
periods expired but now local billing authorities have discretion to reduce or remove this
discount. The effect of this, where applied, may be to reduce the incentive to keep properties
empty. CLG published a report on the impact of the discretionary Council Tax changes on
bringing empty property back into use in January 2009: Application of Discretionary Council
Tax Powers for Empty Homes: Executive summary.

The Empty Homes Agency has campaigned for councils to be given the discretionary power
to charge a punitive rate of Council Tax on owners of long term empty properties who
deliberately keep them empty and who do not make any efforts to bring them back in to
use. 13

The 2003 Local Government Act changed the rules in respect of Council Tax on second
homes to allow councils the discretion to reduce the discount on Council Tax from the
previously prescribed 50% to a minimum of 10%. 14

The Empty Homes Agency is campaigning for local authorities to be given the power to
retain the additional income raised by the abolition of the empty property discount, if
authorities so choose, to invest directly into empty property work.

2.5      Achieving the improvement of empty properties
The principal statutory enforcement powers available to local authorities are set out below:




13
     Empty Homes Agency Press Release, 9 June 1999
14
     For more information see Library Standard Note SN/PC/2857



                                                      6
           Problem                        Legislation                   Power granted
Dangerous or dilapidated         Building Act 1984 ss77 & 78     To require the owner to make
buildings or structures                                          the property safe (Section 77)
                                                                 or enable the Local Authority to
                                                                 take emergency action to make
                                                                 the building safe (Section 78).
                                 Housing Act 2004 Part I         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.
Unsecured properties (where it   Building Act 1984, s78          To allow the Local Authority to
poses the risk that it may be                                    fence off the property.
entered or suffer vandalism,     Local Government                To require the owner to take
arson or similar).               (Miscellaneous                  steps to secure a property or
                                 Provisions) Act 1982, s29       allow the Local Authority to
                                                                 board it up in an emergency.
Blocked or defective             Local Government                To require the owner to address
drainage or private              (Miscellaneous                  obstructed private sewers.
sewers.                          Provisions) Act 1976, s35

                                 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.
Vermin (where it is              Public Health Act 1961, s34.    To require the owner to remove
either present or there          Prevention of Damage by Pests   waste so that vermin is not
is a risk of attracting          Act, s4.                        attracted to the site.
vermin that may
detrimentally affect             Public Health Act 1936, s83.
people’s health).                Environmental Protection Act
                                 1990, s80.

                                 Building Act 1984, s76.
Unsightly land and               Public Health Act 1961, s34     To require the owner to remove
property affecting the           (see above).                    waste from the property.
amenity of an area.                                              (see above).
                                 Town and Country Planning Act   To require the owner to take
                                 1990, s215.                     steps to address a property
                                                                 adversely affecting the amenity
                                 Building Act 1984, s79          of an area through its disrepair.
                                                                 To require the owner to address
                                                                 unsightly land or the external
                                                                 appearance of a property.

See also section 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:




                                                7
         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.

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 have been empty for at least six months. 15
The aim of Empty Dwelling Management Orders (EDMOs) is to bring empty private sector
property back into use. 16

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, sets 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.

EDMOs are a discretionary power of local authorities. Where a residential property has been
vacant for a minimum of six months, 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:



15
     Note that the new Government intends to legislate to extend the period that a property can be empty before an
     EDMO can be sought.
16
     For more background information on EDMOs see Library Standard Note SN/SP/4129



                                                        8
         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. 17

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 6 months
                  (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:

         •   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 six months.

Circumstances in which other properties will be exempt from the service of an EDMO,
despite being empty for six months 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.

17
     DCLG, Guidance Note on Empty Dwelling Management Orders, July 2006, para 2.1



                                                       9
         •   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. 18

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
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 has also issued guidance on EDMOs for residential property owners which
can be accessed on the CLG website.

In March 2009 the Empty Homes Agency launched new guidance for local authorities on
EDMOs, the then Minister for Housing, Margaret Beckett provided a forward for the
guidance. Improved guidance on EDMOs was one of three demands included in Inside
Housing magazine’s Empty Promises Campaign (launched in January 2009). The Campaign
had argued that poorly drafted legislation made the EDMO process overly complex. The
Campaign welcomed the new guidance and supported work by the East London Renewal
Partnership to develop a framework agreement to provide a pool of contractors that all
London boroughs would be able to draw on to manage properties that have been
successfully filled using an EDMO. A further initiative was to develop an EDMO insurance
scheme to cover local authorities’ costs where they apply for an EDMO and fail. 19




18
     Regulation 3 of The Housing (Empty Dwelling Management Orders) (Prescribed Exceptions and
     Requirements) (England) Order 2006 (SI 2006/367)
19
     Inside Housing, “And…action” 20 March 2009



                                                      10
In May 2009 the then Minister, Iain Wright, reported that 24 interim EDMOs had been
approved by RPTs while 7 applications had been rejected. 20 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. 21

On 7 January 2011 the new 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. 22

The rationale for the restrictions is 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.

         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. 23

The amendments will be introduced through secondary legislation – the press notice stated
that the Government would “be engaging with interested parties on the extent of the
changes.” 24

In terms of responses, the Empty Homes Agency welcomed the decision to retain EDMOs
but questioned whether there is a need for the changes proposed:

         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.

20
     HC Deb 7 May 2009 c388W
21
     HC Deb 25 March 2009 c472W
22
     CLG Press Notice, Pickles acts to protect the rights of home owners, 7 January 2011
23
     ibid
24
     ibid



                                                       11
         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’. 25

Respondents have 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. 26

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. 27 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%. 28

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 has estimated the cost to the Treasury
of 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.” 29

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:




25
     Inside Housing, Councils face tougher empty homes rules, 7 January 2011
26
     http://www.insidehousing.co.uk/empty-promises/6513194.blog
27
     'Empties boosted by VAT cuts', Inside Housing, 16 March 2001
28
     HC 703-I, Third Report of 2005-06, para 113
29
     Inside Housing, “And…action” 20 March 2009



                                                      12
         an immediate tax relief to property owners for the costs of converting redundant space
         over shops and other commercial premises into flats for letting. 30

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. 31

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. 32

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
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.


30
     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.
31
     HC Deb 14 November 2005 c1040W
32
     Policy Exchange, More Homes: Fewer Empty Buildings, 17 March 2011



                                                        13
         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. 33

Inside Housing magazine’s Empty Promises Campaign called on the HCA to earmark some
of the National 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.

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 that is vacant is
“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

33
     HC 240-I of Session 2001-02



                                                    14
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:

         •   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
             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.

         •   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.


3.6      Planning policy
Planning Policy Statement (PPS) 3 replaced Planning Policy Guidance 3 in 2006. Planning
policy statements set out the Government’s national policies on aspects of planning in
England. PPS3 sets out the national planning policy framework for delivering housing
objectives, in relation to empty properties PPS3 states:

         Conversions of existing housing can provide an important source of new housing.
         Local Planning Authorities should develop positive policies to identify and bring into
         residential use empty housing and buildings in line with local housing and empty
         homes strategies and, where appropriate, acquire properties under compulsory
         purchase procedures.

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      Housing and Planning Delivery Grant
The Labour Government published a Housing Green Paper in July 2007 in which it set out an
intention to explore a range of measures with local authorities to bring more empty properties
back into use:



34
     ‘Planning solution for empty homes,’ Inside Housing, 16 January 2004



                                                       15
         Councils will also be expected to do more to bring long term empty homes back into
         use. We will explore a range of measures including the new Housing and Planning
         Delivery Grant to facilitate this. 35 Local authorities need to look at making best use of
         what already exists as well as securing new supply.

         We have strengthened the powers available to local authorities to tackle empty homes.
         Since 2006, they have been able to issue Empty Dwelling Management Orders
         (EDMOs) as part of their approach to bring homes into use. A council with housing
         responsibilities can use an EDMO to take over the management of some residential
         properties that have been empty for more than six months.

         For many owners, the threat of an EDMO is sufficient to prompt action. But too many
         potential homes remain empty – we estimate nearly 150,000 properties have been
         empty for 2 years or more. There is also evidence of homes being brought as a capital
         investment and then left empty on a ‘Buy to Leave’ rather than ‘Buy to Let’ basis. At a
         time when new supply is a priority, local authorities should be working to ensure new
         properties are being occupied as homes and not remaining empty.

         To have new developments where units are deliberately kept unoccupied cannot be
         acceptable at a time of growing demand pressures. Local authorities should make
         clear to owners and developers the powers EDMOs provide to ensure these properties
         are occupied.

         Next steps

         To explore how bringing empty homes back into use through measures including the
         new Housing and Planning Delivery Grant. 36

CLG allocated £500 million to the Housing and Planning Delivery Grant fund and issued a
consultation paper in October 2007 on the mechanism for allocating this money over the
following three years. The results of the consultation exercise, together with decisions on the
detailed allocation mechanism, were published on 16 July 2008. 37 The final grant allocations
for 2009-10 were announced on 16 March 2010. 38

The Coalition Government has abolished the Housing and Planning Delivery Grant – no
allocations of the grant were made in 2010-11.

3.8      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. 39




35
     For more information see Housing and Planning Delivery Grant: consultation paper, July 2006
36
     Homes for the Future: more affordable, more sustainable, Cm 7191, July 2007
37
     CLG, Housing and Planning Delivery Grant: allocation mechanism and summary of consultation responses,
     July 2008
38
     HC Deb 16 March 2010 c50WS
39
     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).



                                                      16
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. 40

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:

         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. 41

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. 42

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 will be
used for social housing:

         Empty homes, particularly those in disrepair, can be a magnet for vandalism, drug-
         taking, 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. 43




40
     Cm 7619, para 11
41
     HC 101, Third Report of 2008-09, para 45
42
     Cm 7619, para 12
43
     CLG Press Release 5 February 2010



                                                   17
4        The Coalition Government’s approach
The Coalition’s Programme for Government included a commitment to “explore a range of
measures to bring empty homes into use”.

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. 44

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. 45

Information on how to access this funding can be found 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. 46

The HCA’s website contains additional information on its empty homes work. 47

4.2      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

44
     http://www.communities.gov.uk/documents/housing/pdf/1746957.pdf
45
     CLG, New Homes Bonus: Final scheme design, February 2011
46
     http://www.homesandcommunities.co.uk/Empty-homes
47
     ibid



                                                    18
         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.




48
     CLG, New incentives to tackle the blight of empty homes, 10 January 2011



                                                      19
5            Statistical appendix
Vacant dwellings in England 2000 - 2009, by sector and region
                                       2000           2001           2002           2003           2004           2005       2006      2007      2008     2009 1
England                              757,813        753,188        729,770        718,720        689,675        680,412    676,220   672,924   697,055   651,993
Local Authority                       85,990         79,178         76,637         62,017         57,536         48,594     42,891    40,963    36,944    34,555
Registered Social Landlord            34,734         36,416         37,625         43,731         39,195         40,613     40,061    38,178    42,039         ...
Other public sector                   13,859         14,998         10,110          9,697          7,375          5,666      7,340     6,554     4,802     5,735
Private sector                       623,230        622,596        605,398        603,275        585,569        585,539    585,928   587,229   613,270         ...

North East                             49,567         45,636         46,669         44,349         39,597         39,148    41,930    43,686    43,968    40,685
Local Authority                        10,040          9,303          8,416          7,229          6,803          5,209     4,358     4,311     3,027     2,468
Registered Social Landlord              1,772          2,554          2,897          2,799          3,091          3,424     4,234     3,826     4,113         ...
Other public sector                       635            218            477            632            410            396       921       949       234        23
Private sector                         37,120         33,561         34,879         33,689         29,293         30,119    32,417    34,600    36,594         ...

North West                             99,185       100,045        136,069        135,106        127,473        128,733    127,449   128,993   129,073   122,632
Local Authority                        15,355        14,598         16,919         12,146         10,618          7,735      6,295     6,441     4,916     3,714
Registered Social Landlord              2,082         2,569         10,181         13,243         10,887         11,047     10,469     9,610    10,185         ...
Other public sector                     1,111           859          2,873          1,981          1,450            883        920       579       243       418
Private sector                         80,637        82,019        106,096        107,736        104,518        109,068    109,765   112,363   113,729         ...

Yorkshire & the Humber                67,671          65,648         94,324         87,855         84,224         79,505    76,154    78,850    92,409    90,768
Local Authority                        6,130           6,071         15,371         11,362          9,814          7,320     6,142     5,777     5,922     5,716
Registered Social Landlord             2,447           2,161          3,585          4,570          3,822          4,799     3,875     3,809     4,701         ...
Other public sector                    1,579           4,365            766            593            219            260       414       327       441       426
Private sector                        57,515          53,051         74,602         71,330         70,369         67,126    65,723    68,937    81,345         ...

East Midlands                          69,635         62,804         58,059         57,835         58,192         58,419    60,624    63,308    62,584    62,134
Local Authority                         3,998          3,848          6,225          5,374          4,966          4,985     4,294     3,962     3,316     3,332
Registered Social Landlord              1,577          1,459          2,223          2,055          2,125          1,792     1,943     2,216     2,359         ...
Other public sector                     1,371          1,141          1,199          1,387          1,053            953       609       601       576       591
Private sector                         62,689         56,356         48,412         49,019         50,048         50,689    53,778    56,529    56,333         ...

West Midlands                        105,283        104,771          76,324         74,312         75,829         77,544    74,440    72,135    72,329    69,002
Local Authority                       12,821         11,085          10,753          7,137          6,880          5,049     3,923     3,208     4,124     3,460
Registered Social Landlord             7,573          7,231           5,189          7,432          5,900          5,544     4,936     4,647     4,613         ...
Other public sector                    1,494          1,010             559            379            170            141       169       174       233       175
Private sector                        83,395         85,445          59,823         59,364         62,879         66,810    65,412    64,106    63,359         ...

East of England                        87,069         86,399         63,432         63,418         59,467         56,656    64,227    61,028    64,054    54,169
Local Authority                         3,523          2,965          3,513          3,536          4,209          3,427     3,105     2,496     2,108     2,295
Registered Social Landlord              3,622          3,507          1,676          2,203          1,898          2,150     2,612     2,648     3,013         ...
Other public sector                     2,160          2,134            861          1,185          1,036            832     1050      1035        614       806
Private sector                         77,764         77,793         57,382         56,494         52,324         50,247    57,460    54,849    58,319         ...

London                                 63,255         67,916         99,792         99,781         99,047         91,219    87,218    83,576    82,327    75,706
Local Authority                         2,787          2,229          9,971          9,918          8,952          9,619    10,107     9,846     9,503     9,277
Registered Social Landlord              2,198          2,014          6,149          5,547          5,960          5,826     6,481     5,506     6,355         ...
Other public sector                     1,960          1,740            619            881            924            963     1145        786       920       954
Private sector                         56,310         61,933         83,053         83,435         83,211         74,811    69,485    67,438    65,549         ...

South East                             79,122         79,266         84,106         80,690         83,371         91,232    85,407    83,745    91,074    84,205
Local Authority                        12,853         10,549          3,267          2,880          3,035          3,211     2,780     3,075     2,632     2,821
Registered Social Landlord              3,815          4,800          3,236          3,728          3,480          3,767     3,670     4,328     4,468         ...
Other public sector                       801            377          1,671          1,463          1,577            720     1275      1285        932     1,214
Private sector                         61,653         63,540         75,932         72,619         75,279         83,534    77,682    75,057    83,042         ...

South West                           137,026        140,703          70,995         75,374         62,475         57,956    58,771    57,603    59,237    52,692
Local Authority                       18,483         18,530           2,202          2,435          2,259          2,039     1,887     1,847     1,396     1,472
Registered Social Landlord             9,648         10,121           2,489          2,154          2,032          2,264     1,841     1,588     2,232         ...
Other public sector                    2,748          3,154           1,085          1,196            536            518       837       818       609     1,128
Private sector                       106,147        108,898          65,219         69,589         57,648         53,135    54,206    53,350    55,000         ...

Note: 1 In 2009 the HSSA and HIP did not include information relating to the number of vanant RSL or private dw ellings.
Source: DCLG, HSSA & HIP




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