loveMONEY election manifesto: give councils more power to reclaim empty homes
A simple solution to the housing crisis would be to fill every house that’s already standing, before we start spending billions of pounds on building more.
During election campaigning, politicians of all persuasions are pledging to bring an end to the housing crisis.
They all intend to employ slightly different mechanisms, but the underlying aspiration is the same: they want to build hundreds of thousands of new homes.
It’s a laudable aim, but it’s a flawed one: building new homes is harder than it sounds, takes longer than anyone would think – and overlooks a far simpler way to boost housing supply.
But a better solution would be to reclaim all the empty ones.
New homes vs empty properties
There’s a reason why housebuilding is in the doldrums: it’s expensive and difficult. The land is hard to come by, the planning and infrastructure takes years to organise, development is a minefield, and the whole endeavour costs billions of pounds.
Even when the houses are built, they are invariably in the wrong place: the available land is hardly handy for the busiest jobs markets, and lacks the necessary infrastructure for a flourishing community. It’s also often on the doorstep of a community that feels it cannot sustain more housing, and is prepared to fight tooth and nail to stop it.
Meanwhile, a major part of the solution to the housing crisis is staring us in the face: the hundreds of thousands of empty homes lining the UK’s streets.
Bringing these houses back into use requires no planning permission, and is far cheaper and more environmentally friendly than building new ones. The infrastructure is already in place, and in place of the kind of nimbyism engendered by new building, locals are delighted to see unsightly empty properties given a new lease of life.
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How many empty properties are there?
The number of empty properties varies according to how you measure it. Analysis of Government statistics by Oxford Economics in February this year included second homes, and calculated the total at one million.
In 2015, the Institute of Public Policy Research calculated there were 635,000 empty homes in England. Of those, 216,000 had been unoccupied for at least six months. The Department of Communities and Local Government, meanwhile, measures properties that have been empty for six months or longer – excluding second homes – and says the number of empty properties has fallen from 300,000 in 2010 to 200,000. Filling empty properties would therefore boost housing supply by somewhere between 200,000 and one million homes.
Why are they empty?
Bringing these properties back into use begins with an understanding of why they are empty in the first place.
In 2015, the IPPR considered solutions to the problem, and focused on those homes left empty deliberately – either bought purely as investments or as seldom-used second or third homes.
Their suggested solutions therefore entailed making owning these homes less attractive financially: giving councils the freedom to levy higher taxes – and allowing them to impose them more swiftly after a property is left empty.
Property expert and former Empty Homes Advisor to the Coalition Government, George Clarke, meanwhile, identified part of the problem as lying with owners who could not afford to bring the property up to a habitable standard.
He called on the Government at the time to make low cost loans available to these groups, so they could make the changes required, and get the homes habitable again. Some councils have adopted this approach. Cornwall Council, for example, will make cheap loans available for significant home improvements.
In other cases, owners are keen to let out the property, but either don’t know how, or are struggling to find the right tenants. Various councils have schemes in place to help these owners – including Wiltshire Council, which will help landlords find social tenants.
But while these solutions enable motivated owners to fill empty properties, they do nothing for thousands of others who are not in a position to act. There are plenty of buildings that require so much work to make them habitable, that the costs would never be recouped by a sale.
There are also properties where owners have been paralysed by inertia, indecision or family disagreements. They may, for example, have been left the property along with other family members, and disagree over what to do with it.
Alternatively, they may have moved into residential care and not want the bother of selling up.
How to bring empty homes back into use
Filling these homes requires more than incentives and assistance: it needs firm action. Where homeowners have been offered the support they need to solve their own property issues, and chosen not to, councils ought to be able to force a sale – for a fair price.
Technically they already have this right in certain circumstances, through the Housing Act of 1985. It gives them the power to take possession of homes in order to improve the supply of houses available, or improve the quality of the housing.
The problem is that in order to get to this stage, there are too many hoops to jump through. Compulsory purchase is seen as a last resort, after councils have tried to work with the owner to improve the property, then enforce those improvements by law. By the time councils reach the stage of compulsory purchase, the properties are often too dilapidated to bring back into use.
Some councils have taken a more proactive approach. In February this year, Harrogate Council began encouraging residents to report empty houses and flats. It has already taken the first steps in placing a compulsory purchase order on two houses in Knaresborough, which have been empty for over five years and have deteriorated during that time.
The council has been trying to work with the owners – and even made an offer to buy the properties, but with nothing forthcoming, they decided to take action. They will compulsorily acquire the property with a covenant that requires that they are repaired, refurbished and occupied within a period of 12 months.
Councillor Mike Chambers is Harrogate Borough Council's Cabinet Member for Housing. He said: "In this case we have made every effort to secure the return to use of these properties without success, and a compulsory purchase order is now the only realistic option. This compulsory purchase order means that these two houses will at long last be refurbished and sold, once again providing homes and enhancing the area.”
Legislative change would enable more proactive councils to take this approach – far faster, and more effectively, with compulsory purchase on the table from the outset.
They wouldn’t stop offering assistance, low cost loans and advice, but where an owner is unwilling to take action themselves, the processes need to be in place to make compulsory purchase simple and quick. Likewise, where there is no owner to be found, straightforward rules should enable them to take over the property, and compensate the owner at market rate if they later materialise.
Once the councils have bought the properties, what they do with them will depend on the politics at play. Arguably the councils could use them to house the 1.69 million people on local authority housing waiting lists. There are currently 300,000 fewer homes for social rent than 20 years ago – so even if they were all brought back into council hands, we would still have less social housing than in the 1990s.
Alternatively, where they are inappropriate for social housing they could be sold, and any profits could be used to bring more empty houses back into use. Where a council cannot effectively and efficiently do the work themselves, they could sell the property, on the condition it is repaired and returned to use within a fixed time period.
Clearly, like any solution to the housing problem, it’s not an overnight fix and it’s not flawless. Many of these homes, for example, are in areas where jobs are thin on the ground and there’s not an enormous demand for homes. Here compulsory purchase may not easily result in profitable tenancy or sale. Councils therefore need to incorporate these properties within a regeneration strategy, and consider alternative ways of returning them to use.
One option is a widening of council schemes selling properties for £1 and providing the financial support people need in order to improve them.
Clarke favours empowering individuals over relying on councils, and has called for “a law change to give communities and individuals the power to turn abandoned properties in their local area into homes for people who need them.” This does a great job of giving life to empty homes, but arguably does little to solve the issues of housing scarcity in areas with jobs growth.
Compulsory purchase is no silver bullet, but then again there’s no single, easy answer to the housing crisis. If there was, decades on from governments pledging a solution, we would have found one.
A more straightforward route to compulsory purchase, therefore, needs to be part of a more nuanced approach to empty houses, including everything from low cost loans for property regeneration, to council assistance in locating tenants, and £1 properties.
Schemes like Help to Buy, which helps first-time buyers and second-steppers buy new build homes just aren’t working as we explore in another piece in our series: loveMONEY election manifesto: scrap Help to Buy.
Politicians need to take a holistic view of the property supply, and engineer workable solutions to fill every house that’s already standing, before we start spending billions of pounds on building more.
Find out what other simple changes we think the next Government should do to improve our finances in: loveMONEY election manifesto: financial changes we want to see.
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