Memorandum by the House Builders Federation
1.1 The House Builders' Federation recognises
that unnecessarily vacant homes are a wasted resource. However,
what has been missing from the debate is that vacancies are an
essential part of the effective operation of the housing market.
This allows for the mobility of labour and need to renovate obsolete
property. The various figures for the absolute numbers of vacancies
need to be treated with some caution. The national figure of about
750,000 whilst making a good headline, is a poor basis for policy
Therefore vacancies are needed for the efficient
working of the housing market. In this respect, the 3 per cent
rate suggested by the Government has never been properly tested
as to whether it is a reasonable figure. It is significant that
the DETR Local Housing Needs Assessment, A Guide to Good Practice
states, "The general principles is that there should be a
target vacancy rate to allow normal movement in the housing stock.
Typical recommended allowances would be 4 per cent for the private
sector, with 2 per cent being more appropriate for the social
sector". Given that the approximate split of the housing
is 75 per cent private and 25 per cent social this would imply
a vacancy rate of 3.5 per cent in the total stock.
What is significant is that areas with low vacancy
rates tend to experience housing pressure and problems of affordability.
This suggests a trade off between vacancy rates and ensuring the
delivery of the government's objective of "a decent home
Set out below are answers to some of the specific
2. The consequences of so many homes being
empty including the link between empty homes and urban degeneration,
social and racial tension
2.1 As set out in the Introduction, vacancies
are essential for the efficient working of the market. Even a
3 per cent figure results in what appears to be a high absolute
figure. The key here is the pockets of high vacancy in many of
our inner urban areas. However, the high vacancy rate is not a
cause of urban malaise, but rather one of the many symptoms. They
are part of the wider breakdown, which includes poor economic
performance linked to high unemployment, high crime rates, poor
education and a decaying physical fabric. A strategy simply focusing
on empty homes will not work. This was recognised in the National
Strategy for Neighbourhood Renewal: a framework for consultation
report by the Social Exclusion Unit, "In particular, for
too long, deprivation was seen principally as a housing problem
to be fixed with bricks and mortar". Only a comprehensive
approach will succeed in making areas of high vacancy rates popular.
3. Why so many empty homes are empty
3.1 In 1996 the then Department of the Environment
published a research paper "Vacant Dwellings in the Private
Sector". This divided vacancies in the private sector into:
(a) Transactional vacancies which in an active
market were those "which might be expected to be re-occupied
relatively quickly". These are necessary for mobility in
the housing market.
(b) Problematic vacancies which are houses
often in poor condition where vacancy might be prolonged. At any
one time there might be about 250,000 problematic vacancies. Policy
must be targeted at these to have effect.
3.2 Problematic vacancies are concentrated
in pre 1919 housing stock many of which are unfit for human habitation.
The most important reason for these problematic vacancies was
either the death of the previous owner or their move into institutional
care. In the former case, if the owner died, intestate, this prolongs
the potential vacancy. In the latter example, many elderly people
in moving into care are reluctant to acknowledge they may not
be able to return to independent living and therefore keep their
home empty for prolonged periods in the hope or expectation they
can return at any time.
4. What additional measures should be taken
by the Government, the Housing Corporation, local authorities
and others, and in particular whether local authorities should
be permitted to change the full Council Tax on empty homes
4.1 As set out above in Section 3, the reasons
why properties are vacant tend not to be economic. Where the owner
intends to return, imposing an extra cost may be perceived to
be an additional burden on the elderly. Similarly, where a property
is being renovated, full Council Tax would be an additional cost.
4.2 Should there be further changes to VAT?
The reduction in VAT for the cost of converting
residential properties will have an impact as it reduces the overall
cost of such schemes. Further reductions would provide a greater
4.3 Revision of compulsory purchase
In 1998 the then Minister of the Regions, Regeneration
and Planning instituted a fundamental review of the laws and procedures
relating to compulsory purchase. The report in June 2000 confirmed
that the current compulsory purchase arrangements are basically
sound. A particular recommendation of relevance to areas of market
collapse was the concept of "equivalent reinstatement".
Compensation on compulsory purchase is based on open market value.
Where a market has collapsed, this valuation would not enable
remaining owner-occupiers to purchase alternative properties,
which could contribute to opposition to a clearance scheme. Equivalent
reinstatement would provide sufficient value for the owner to
purchase alternative appropriate accommodation. Clearly there
would need to be tight safeguards to prevent abuse of such a system.
5. What specific steps should be taken in
areas of Low Demand?
5.1 Are too many homes being built and proposed
by Regional Planning Conferences on greenfield sites?
The simple answer to this question is no. The
house building rate has fallen to its lowest level since 1924
and is set to fall again this year. Alan Holman's, an academic
demographer based at Cambridge, has estimated a need for 210,000
homes per annum to 2016. Last year some 167,500 houses were completed.
Research clearly demonstrates those who are able to exercise choice
do so by moving to suburban developments. If the only policy response
is to prevent such development all this will do is to reduce the
number of people who can exercise choice. The objective as set
out earlier must be to make those areas with poor market demand
destinations of choice. This will not only require supply from
properties currently vacant but increased building rates.
It should also be noted that regional guidance
assumes a 3 per cent vacancy rate even where there is no evidence
that rates are falling.
5.2 Should homes be demolished?
As outlined in paragraph 4.2, much of the long
term problematic vacancies are in pre 1919 properties. These tend
to be smaller, less attractive and in areas of low demand. One
response is to try and encourage a greater amount of renovation
and repair. There are a number of indications that suggest this
is not an appropriate response. The report to the Housing Research
Foundation on "The Economic Role of New Housing" stated,
"The figure shows clearly that, over time, the negative trend
in new building (-0.75 per cent per annum between 1960 and 2000)
has occurred at the same time as a rise in Repair, Maintenance
and Improvement, which has risen by an annual average 2.5 per
cent since 1960; this is faster than GDP as a whole. In fact the
ratio of RMI relative to new construction is now the highest in
Europe amongst the major economies". Clearly there is no
correct ratio between new construction and repair but the fact
that Britain has the highest ratio suggests a maximum is being
To support this argument is the fact that at
current demolition rates, houses will have to last well over 1,000
years. This is clearly untenable and suggests a major problem
of renewal is being created. The purpose of planning is to anticipate
such issues and ensure policies are in place to respond to changing
On this issue of repair versus replacement,
is the question of sustainability. There comes a point where continuing
expenditure on poor quality housing stock is unsustainable. New
build will have to meet existing building regulations with much
more rigorous standards of insulation, efficient heating and opportunities
for sustainable urban drainage systems.
As part of an overall programme for neighbourhood
renewal, it will be necessary to carry out demolitions on a wider
scale so that a new start can be created. There is still underlying
uncertainty on this due to problems created in the 60's and 70's.
However, quality as well as quantity based on mixed uses rather
than soulless estates should be the basis of success rather than
the repetition of failure.
The national figure for empty houses hides significant
regional and sub-regional variations.
In areas of low demand for both market and social
housing, where vacancy rates are high, stopping house building
is an over simplistic response. It will merely condemn a greater
number of people to live in poor quality housing. In such areas
a comprehensive approach, which includes economic opportunities,
transport links, education, crime and the quality of the environment,
is essential. This may require substantial clearance to achieve
the desired result.
As with many housing related issues there is
no one-policy response that is applicable nationwide. In areas
of housing pressure, vacancy rates are low and no extra housing
supply can be expected.
19 September 2001