Memorandum by the Empty Homes Agency (UWP
24)
EMPTY HOMES, WASTED SPACE AND REDUNDANT BUILDINGS—A
SYMPTOM, SYMBOL AND CAUSE OF URBAN DERELICTION AND DECLINE
POSITIVE STEPS
THE GOVERNMENT
CAN TAKE
ON THE
ROAD TO
AN URBAN
RENAISSANCE
1. Introduction
The Empty Homes Agency is a national housing
and campaign group established in 1992. Our objective is to bring
about, on a national scale, the re-use of empty homes and other
unused buildings, for re-housing those in need and to meet the
housing needs of this country.
The Agency has two main purposes that flow from
this objective, firstly to highlight the waste of empty homes
and wasted property in England and secondly to promote, devise
and, with others, to deliver solutions for bringing empty and
wasted homes and buildings back to use.
2. The waste
Official Statistics published in March 1999
by Department of Environment Transport and Regions show that in
April 1998 there were 753,200 empty homes in England. Of these
approximately 250,000 had been empty a year or more. (230,000
privately owned; 20,000 publicly owned). Many of these are located
in our city, town and urban centres across the country.
Figures to April 1999 are due to be published
in the first quarter of 2000. On current trends the headline figure
of total empties may well fall, however the hard core of a quarter
of a million long term empties (empty one year or more) is likely
to remain stubbornly persistent. Add to this the potential for
additional flats and maisonettes in empty, wasted and under-utilised
space currently zoned as retail, offices or other commercial uses
in our town centres and the number of potential homes rises to
well in excess of half a million.
Bringing these homes and this space back in
to use is vital in maintaining life in our urban centres, supporting
local shops and businesses and meeting the housing needs of this
country. The opportunity exists with such a large stock of valuable/useable
space in our cities and towns—what is needed is more pro-active
action and imagination.
3. The Opportunity
The proposed Urban White Paper offers an excellent
opportunity to introduce pro-active, positive action and to take
on board some of the imaginative thinking expressed in the report
of the Urban Task Force entitled "Towards an Urban Renaissance".
4. Summary Response
The Empty Homes Agency broadly welcomes the
Urban Task Force report and, in particular, we support its key
message that we must seek the best use of existing resources within
society, including existing empty homes and buildings.
We are pleased that the report sets out the
vital need to recycle buildings and to make the best use of the
existing resources within our built environment. We urge Government
to take on Board the key recommendations that in our opinion will
help to increase the number of empty wasted and redundant homes
and buildings that are brought back into use to meet the housing
needs of the country.
We welcome the Task Forces' vision: "to
turn our cities, towns and urban neighbourhoods into places where
people actively want to live, work and play".
The Empty Homes Agency has set out below specific
comments on the 5 key recommendations from the Urban Task Force
that must be introduced if real progress is to be made in bringing
England's empty homes back into use
5. "Empty Property Strategies"
The Urban Task Force final recommendation on
this issues is:
"Give local authorities a statutory duty
to maintain an empty property strategy that sets clear targets
for reducing levels of vacant stock. There should be firm commitments
to take action against owners who refuse to sell their properties
or restore them to beneficial use." (Recommendation 79—page
250)
The Empty Homes Agency strongly supports this
recommendation.
The report notes that; "Although many authorities
currently have strategies, these often only relate to local authority
housing stock. The strategies need to be comprehensive, covering
all market sectors and prioritising the most important opportunities
and challenges".
The Empty Homes Agency agrees wholeheartedly
with the sentiment behind this comment, we have repeatedly called
for every council to have in place a comprehensive, corporate
strategy. That must address the issue across all sectors public,
voluntary and private.
We are concerned that some bodies believe that
local authorities already have such a duty. However, this is not
the case—there is a duty upon councils to assess the condition
of the housing stock within their area, but not specifically to
draw up and implement a specific strategy for bringing empty homes
(across all tenures and sectors) back to use.
The problem of empty homes exists across the
whole country, in areas of high housing demand by their waste,
they deny people a home and increase development pressure on edge
of town and greenfield sites. In areas of low demand they create
areas of dereliction and decay attracting crime and anti-social
behaviour and devaluing surrounding properties. The pressures
and the possible solutions will vary from region to region, indeed
from neighbourhood to neighbourhood across England, however the
need for action and co-ordinated corporate empty property strategies
remains the same.
The Agency feels that this duty is at the core
of urban regeneration, and one that we would strongly urge the
Government to require councils to undertake. It would, in our
opinion, have widespread public and political support. It will
focus the attention of councils and can then, as a statutory requirement,
be tied in more closely with the general push towards "best
value" in services and activities undertaken by local authorities.
6. Value Added Tax
The Urban Task Force final recommendation on
this issues is:
"Harmonise VAT rates at a zero rate in respect
of new building, and conversions and refurbishments. If harmonisation
can only be achieved at a 5 per cent rate, then a significant
part of the proceeds should be reinvested in urban regeneration."
(Recommendation 84—page 255)
The Empty Homes Agency is particularly pleased
that the Urban Task Force have taken on board fully our comments
regarding the absurd anomaly in the tax system where new house
building is VAT free while refurbishing empty and wasted homes
carries an additional charge of 17.5 per cent. However, the Agency
is concerned that the call for a zero rate for refurbishments
may be unrealistic. The Empty Homes Agency has always been and
remains committed to harmonisation at 5 per cent. While welcoming
the sentiments behind the call, we hope that the Government do
not use this as an excuse to delay harmonisation at 5 per cent.
It has been said that a modest increase of 5
per cent on new house-building costs would not be acceptable to
the house-builders. It is important to note that we are talking
about 5 per cent on the build costs not a simple 5 per cent tax
on new house prices. The overwhelming majority of the cost of
a new house is determined by the cost of the land. Opposition
to tax is a reflex; it must be expected. Of more substance is
the justification for continued exemption. This is becoming difficult
to defend, especially when property and environmental interests
such as RICS, the Civic Trust, the Chartered Institute of Housing,
our Agency and the CPRE jointly agree that a modest increase of
5 per cent would not form a barrier to new-build provision. This
would particularly be the case if Government were to take on board
the fact that most housebuilders have a two year land bank. Therefore
if it were felt necessary to minimise the short term effects,
VAT harmonisation could be introduced with a suitable lead in
time to allow housebuilders time to take into account the tax
in their new land appraisals.
A 5 per cent increase in VAT ( a green field
levy) will not, however, save green fields when change of use
can turn farmland at £2,500 an acre to £300,000 an acre
in value.
To tackle our wasted homes, and potential homes,
the playing field must be levelled and refurbishment and conversion
harmonised at 5 per cent. This would also engage the interests
and talents of our house-builders in this activity. The lack of
profit arising from the present regime encourages them to walk
away from this activity.
The restrictions of European Union regulations
on cutting VAT rates within Member States has been cited as a
reason for inaction. However, it is the belief of the Empty Homes
Agency that this has always been permissible if one is willing
to argue the social policy benefits of meeting housing need and
providing additional homes This is in addition to the other benefits
of tackling crime and anti-social behaviour and regenerating local
communities. However, rule changes agreed by the EU last year,
have made such cuts in VAT even easier, with France leading the
way by reducing VAT on refurbishments and repair from 20.6 per
cent to 5.5 per cent. If there is the will and the imagine to
achieve harmonisation, it is our belief that it is practicable,
possible and permissible.
7. Council Tax on empty homes
The Urban Task Force final recommendation on
this issues is:
"Extend liability for full payment of Council
Tax to all owners of empty homes. Where properties have been empty
for over a year, the authority should have discretion to impose
a higher charge." (Recommendation 85—page 256)
The Empty Homes Agency welcomes and supports
this recommendation, however we accept the principal of a period
of exemption/reduction when a property first becomes empty to
allow the owner to take appropriate steps for its re-use/re-occupation
(sale, letting, repair etc.)
The Urban Task Force have, in our opinion, correctly
acknowledged that in some instances a financial stick is also
needed to encourage some landlords to bring empty properties back
into use. The report highlights the absurdity whereby ".
. . with some targeted deconstruction or vandalism, owners can
make their properties technically uninhabitable, and they then
become exempt from council tax". In seeking to redress this
imbalance the task force has also proposed that where a property
is empty council tax should be charged at the normal rate not
the current 50 per cent which actually gives a saving to an owner
to keep it empty.
The previous regime of local taxation—the
Community Charge (Poll Tax)—contained a discretion for local
authorities to impose a Charge of 200 per cent (double poll tax)
for homes empty for more than six months. Although the Community
Charge was intended to be a personal, not a property tax, this
discretion diluted the distinction. Many local authorities introduced
this "penalty" which became a disincentive to leaving
homes empty. Unfortunately, however, the exemption for uninhabitable
property, based on what was known as nil rating, encouraged many
owners to render their properties uninhabitable so as to avoid
any liability at all.
When Council Tax replaced the Community Charge,
there was a fundamental reversal of policy so far as empty homes
were concerned. Now homes left empty for whatever reason (provided
these were not someone's main residence) attract no Council Tax
for six months and thereafter only 50 per cent indefinitely.
Additionally, there is a raft of exemptions
allowing nil tax in certain circumstances. No longer is there
any strong fiscal incentives to get homes reoccupied. The 50 per
cent reduction even implies official approval of homes being left
empty.
Although the Council tax is meant to be a property
tax, again the principle is diluted by the nature of occupation.
Single occupation attracts 25 per cent and second homes 50 per
cent reduction. These reductions, together with some exemptions,
are part of primary legislation—the Local Government Finance
Act, 1992—and can only be altered by an amended Act, the
Urban White Paper gives this opportunity.
Included within the Council Tax regime are provisions
for exemption for properties which are unfit or undergoing major
works, or are empty due to the long term hospitalisation or death
of the owner, or other categories. The local authority decides
in these cases whether the exemption applies. Yet they have no
discretion at all in relation to homes empty for other than the
specified reasons. So they have no power to impose any fiscal
disincentive or penalty on properties left empty, whether for
good or bad reasons.
Recently the Local Government Minister introduced
a 12 month limit on zero council tax applied to unfit properties
and those undergoing major works. She did this by regulation under
the Act; no new legislation was needed.
There appears to be a lack of logic here. The
rate and duration of the 50 per cent reduction for empty property
can only be altered by amending primary legislation, whereas the
application of total exemptions can be altered by regulation.
Empty homes cost local authorities money, for
rubbish clearance, police action on squatting and vandalism, and
dealing with various nuisances. These costs are incurred both
for "ordinary" and uninhabitable empty homes. For local
taxation purposes the fiscal distinction is irrelevant. More important,
as a matter of public policy empty homes in areas of housing need
are undesirable, so fiscal action—short of compulsory purchase—is
a high priority to help secure reoccupation.
The current six month exemption form Council
Tax for homes becoming empty is obviously fair, as are the provisions
allowing up to twelve months exemption for properties needing
major works. There are many reasons why an owner needs time to
get a property reoccupied. The issue of public policy is what
should happen after six or 12 months.
In that the Government has time-limited the
total exemption to 12 months, there is no logic at all in failing
to time-limit the reduction of 50 per cent. It sends out the message
that it is cheaper to leave a home empty than to get it occupied.
However there may be areas in which the demand for homes is low
and it is impractical to expect owners to find new occupiers within
a fixed time period; therefore local discretion is needed.
Mysteriously, local authorities in Wales do
have a discretionary power to charge 100 per cent Council Tax
on empty properties, in certain defined circumstances. A similar
power ought to be exercisable by local authorities in England.
The Empty Homes Agency therefore requests the
Government to implement a power for local authorities to levy
100 per cent Council Tax on homes which have been empty for more
than six months, with local discretion to retain the 50 per cent
reduction in appropriate circumstances. The existing 12 month
exemption for unfit properties etc—to be introduced with
effect from 1 April 2000—will remain in force, with properties
thereafter being charged at the standard 100 per cent rate.
8. Secondary Use of Council Tax Data
A vital part of any corporate empty property
strategy is the need for information on the number and ownership
of empty homes. Within local authorities comprehensive records
are compiled and kept by Council Tax Departments to administer
the current exemptions and discounts scheme. However, due to the
Data Protection legislation and the very tight original wording
of the Council Tax provisions in the Local Government and Finance
Act 1992, such information can not be used by councils to target
and/or advance an empty property strategy.
Whilst one can clearly understand concerns over
councils selling such information to double glazing firms or the
like, this does smack of significant un-joined up thinking. The
result is that even the best Empty Property Officer, dedicated
to tackling England's wasted homes, is having to operate effectively
with one hand tied behind their back when trying to deliver an
empty property strategy. One of the most crucial parts of any
strategy is actually identifying the owner of an empty property
and starting a dialogue with them (positive eg grant aid etc.,
or negative eg CPO action as appropriate).
We urge the Government to consider an amendment
to this legislation either through the Urban White Paper if appropriate
or alternatively other specific legislation. The Empty Homes Agency
would suggest that the aim of such an amendment being to make
it an "approved secondary use of council tax data for the
information to be released to another council department to aid
the delivery of a Councils published empty property strategy."
It is a ludicrous anomaly to retain the current system.
9. Publicly owned empty property
The Urban Task Force final recommendation on
this issues is:
"Introduce a statutory duty for public bodies
and utilities with significant urban and holdings to release redundant
land and buildings for regeneration. Regional Planning Bodies
could monitor compliance with the new duty and whether targets
for land release are met". (Recommendation 61—page
221)
The Empty Homes Agency agrees with this recommendation,
Government and the public utilities must tackle the issue of their
own empty properties. Void rates of 20 per cent plus are simply
not acceptable. The Agency has welcomed the document recently
published by DETR "Revised Guidance on Securing Better Use
of Empty Homes" (July 1999). We trust that all Government
Departments and Agencies will take this guidance on board.
The Empty Homes Agency
January 2000
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