Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 360-379)



  360. Do you think different rates should be applied in the private rented and owner-occupied sectors?
  (Mr Williams) There are different levels. In policy terms there ought to be some national average which the Government should be seeking to sustain or even get under. I suppose in the private rented sector there ought to be a lower vacancy rate in a sense, certainly from the position of landlords there ought to be. In the owner-occupied sector some of the complexities of transactions will mean that there will be a slightly higher rate and—the point we raise in the paper—not least in the private sector with the large-scale use of equity release where people are in care but drawing down on the value of their homes and they will be "empty", so yes.

  361. Lastly, how do you think the accuracy of data on vacancy rates could be improved?
  (Mr Williams) There is no doubt it is problematic and we do not get any clear guidance on vacancy rates discriminating between the different sectors, ie, between private rented and owner-occupied and indeed within owner-occupied, between owner-occupied owned outright or with a mortgage. There is no doubt that clearer data on those issues would be helpful.


  362. When you say "clearer data" do you think that local authorities when they are doing the HIP returns just guess what the vacancy rate is?
  (Mr Williams) Chairman, you said it; I suspect in some cases that is entirely correct.

  363. What should they do if they do not guess?
  (Mr Williams) There is no doubt we should have better local authority level information. It is an important part of their strategic duty to have a proper grasp of what is happening in their local housing market.

  364. What is a vacant property then?
  (Mr Williams) Good question. It is the point I was just making to Ms King about the issue of —

  365. I am asking you to tell me what it is.
  (Mr Williams) There is this point over whether a property currently not being occupied because the owner is in care is "empty?" In some senses it is, in other senses it is not, if you are defining "empty" as absence of an occupant.

  366. If you are saying "absence of an occupant" then some second homes would count at certain times. Is that a sensible measure?
  (Mr Williams) It could be deemed as such.

  367. Might it not be a better measure if you simply said those on which no council tax was being paid?
  (Mr Williams) That is another suggestion.

  368. I am just trying to get some answers.
  (Mr Williams) We do not have a defined position on the definition of "empty property". I accept the problem that you face but I do not think it is something that we actually—

  369. You are saying there is a problem with the figures but surely you should be suggesting to us that something would be a better measure of it?
  (Mr Williams) I go back to something I said, I think local authorities should certainly do more to understand the nature of empty property in their areas and that means more systematic collection of data and being clearer on the definition of what is empty.
  (Ms Bennett) In terms of what the Committee here is looking at, it is whether the home can be occupied by somebody who is in housing need. Some of the things we have been talking about in terms of whether it is a second home may not fall within that definition. If somebody is in long-term care possibly there would be an opportunity for housing associations to lease that property for a period of time. Perhaps it is around whether the home could be occupied by someone else.

  370. How would you measure that definition? Surely that is quite subjective?
  (Ms Bennett) That would be quite difficult to do.

Mr O'Brien

  371. Obviously the exchange that you have just had with the Chairman signifies the importance of the subject of assessing empty homes. What more should the mortgage lenders do to address the issue of empty homes?
  (Mr Williams) There is a dilemma for us as mortgage lenders in that if somebody is paying their mortgage on an empty home, really we have no remit at all. Under your terms, in terms of public policy, you may be concerned about property being empty. As mortgage lenders we are entirely satisfied that we are having our debt serviced and that person has every entitlement to keep it empty.

  372. That comes back to the point which was made earlier, what constitutes an empty home?
  (Mr Williams) Indeed.

  373. What response should the local authority have then to this question?
  (Mr Williams) There are questions here about choice. In a sense it is ultimately for the owner of a property to have some control over the use of that property. It seems to me that is part of the rights of ownership. That may conflict with public policy, that may conflict with housing need, but some people will decide they simply wish to keep their property empty. As mortgage lenders we would have no view on that.

  374. What type of market intelligence do market lenders use to assess risk in areas?
  (Mr Williams) We look at both borrowing risk and property risk. Valuers are the ears and eyes of lenders in terms of risk in local markets so they would be advising on the activity in that market, the issues of low demand in that market, or indeed the issues of high demand in that market. They would be offering lenders a view on the potential onward price of that property going forward.

  375. Is there redlining of some areas?
  (Mr Williams) I think the interesting thing on low demand is that what they are getting from the Government and indeed other bodies is, if you like, demarcated maps telling them these are areas of low demand where they probably should not lend.

  376. Are you saying that there is no example of where mortgages would not be offered to people in high risk areas?
  (Mr Williams) There are no examples of areas where the historic view of redlining applies. There are clearly going to be properties where lenders will not lend; that is their judgment based upon professional advice.

  377. Is there a common thread with the mortgage lenders as to the kind of property or the areas where they will not offer any mortgage, that only cash sales are allowed?
  (Mr Williams) About 20 per cent of the market is cash sales. That may be a product of constraint or choice. We simply do not know. There are markets where lending has proved problematic because of the greater volatility of the properties in that market. An example would be historically there has always been a difficulty around flats in high-rise blocks, ex-local authority blocks or current local authority blocks where the price of that property seems to rocket up and down on the economic cycle very sharply. I think for lenders although the first sale has been from right to buy and it has been relatively easy because it is a discounted price, subsequent sales and the funding of those sales has been more problematic and we have acknowledged that before a select committee.

  378. Is there any means of appeal or challenge against mortgage lenders if they refuse in a particular area to offer a loan?
  (Mr Williams) The process which a buyer would undertake is to go to an alternative lender.

  379. If there is a cartel in an area of risk it would apply to all mortgage lenders.
  (Mr Williams) One of the striking things about the mortgage market in recent years is how competitive it has become. The notion of a cartel which may have existed in the 1960s and 1970s is very clearly not in place any longer. If you look at the range of lenders across the range of product types, the types of lending, the types of risk and if you look at the entry for example into what is called the sub-prime market, the variety of competition between lenders is so intense I struggle to believe there is any cartel approach on an area basis. I think Britain should pride itself on having probably the most competitive mortgage market in the world.

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