Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by The Housing Foundation (EMP 18)


  The Housing Foundation is a private company committed to the provision of affordable housing. Since 1996 we have invested over £50 million to this end.

  We have specialised in the purchase, refurbishment and lease back to Housing Associations. Of particular note were the purchase and refurbishment of 50 ex MOD homes from Annington Homes who purchased the MOD estate in 1997 and the purchase of over 50 empty, boarded up homes in Keyham, Plymouth. These were entirely renovated and leased back to Sovereign Housing Association using entirely private finance. PFI without the heartache.

  Despite the enormous publicity which our efforts engendered, we have been unable to undertake any further schemes. I enclose an article from "Inside Housing", which was prepared by myself and Ashley Horsey who is Chief Executive of The Empty Homes Agency, which perhaps best illustrates the problems we have experienced[1].

  Keyham, at Plymouth undoubtedly demonstrated how empty homes have a marked deleterious effect on an area. Our efforts turned an area which had become vermin infected and impossible to let, into one which has rekindled its community and has become a desirable location in which to live, becoming first choice for many prospective tenants on Plymouth City's housing register. The benefits to the community are obvious for all to see.

  There are some interesting lessons to be learnt from our experiences.

  1.  Housing Associations must be prepared to accept the intervention of private sector companies who can provide the necessary financial package without the implications of so called partnerships, which are, in reality, simply construction companies offering a construction service backed by H.A.G. funding. There is a marked reticence from most Housing Associations to be sufficiently innovative where schemes can be funded from outside resources. The Housing Association movement can fulfil its role of providing homes and providing the management and care without the necessity of ownership, which seems difficult to convince them of. The conception appears to be that if private sector funding is encouraged, it will mean that less H.A.G. will be made available by central Government.

  The full details of the transactions can be available to the inquiry if it is required.

  2.  The success of our initiative was very much assisted by the willingness of Plymouth City Council to use the existing legislation in regard to compulsory purchase and by them employing a member of staff, paid for by us, to identify properties and to identify the owners. Without this member of staff, problems regarding confidential Council records would have ensued.

  3.  Funding sources were willing to acquire individual houses and to provide finance for renovation on a house by house basis, which is normally very difficult to achieve.

  There is no doubt that many more of these schemes could be undertaken with willing Housing Association partners or, if permitted, by Local Authorities taking responsibility for leases—particularly that at the end of the 25 year lease period the houses revert to the Housing Association at nil cost to the Housing Association or the Exchequer.

  There is no doubt in my mind that Councils should be able to charge full Council Tax on properties left empty for longer than 12 months. We endeavoured to assess a pattern of reasons for properties being left empty and this has only served to confuse us, but clearly with little financial penalty, owners seem content to await market trends before taking action on their property. The problem is then exacerbated because homes next to seemingly abandoned property are unsaleable—and so on. Existing compulsory purchase powers are probably sufficient, although they could be strengthened. Many Councils are unwilling to take the necessary action and it takes very few empty and uncared for properties for an area to rapidly deteriorate.

  An empty homes register is imperative and the numbers of such properties should be reflected in the local plan in assessing the release of land for new homes. It seems illogical to build new homes when there are properties empty and abandoned nearby.

  The Housing Foundation is becoming recognised as a leading provider of affordable homes, which are offered on a joint ownership basis. We sell homes at about 60 per cent of realistic market value and charge just 2.5 per cent of the value of our share of the home as rent. The net result of this is that homes can be purchased by key workers and local youngsters in good local employment at about 70 per cent of the cost of renting in the private sector. We also ensure the following:

    (1)  The unpurchased share is secured within the lease and held in perpetuity in order to ensure that the homes remain affordable for all time.

    (2)  Rental levels can only be increased by the rate of inflation.

    (3)  Buildings insurance is provided by the Foundation.

    (4)  The lease contains restrictions to protect the environment of the purchasers and covers such items as unruly dogs, unlicensed vehicles, unneighbourly behaviour, cyclical decoration etc.

    (5)  The Housing Foundation also provides a guarantee against negative equity through insurance, which enables us to ensure that mortgage companies do not need access to the retained share which could erode the housing stock.

  There is of course no reason why empty properties could not be treated in the same way.

  Having had three children go through University, living in rented student accommodation, almost invariably of a totally unacceptable standard, I would welcome a register of approved landlords if it were properly policed on a regular basis and a system of addressing complaints provided.

  I firmly believe that there has been a too readily accepted proliferation of Housing Associations involving themselves in market rented schemes which rarely address empty property. The enormous bureaucratic costs of their operations make it impossible to achieve affordability in most cases. We are intending to provide 1,000 homes in the South and South West with no more than six members of staff—therein lies the difference I believe.

  I would welcome Housing Associations restricting their activities to those for which they were originally instituted, namely the provision of good quality homes for rent for those who have no alternative. I was a founder Chairman of an LSVT and as such have seen at first hand plenty of evidence to support my, I suspect, unpopular views.

  I get the distinct impression that there is sufficient legislation to cure most of the ills, but many Councils, particularly with regard to the provisions of PPG3, just do not seek to enforce them.

September 2001

1   Not printed. Back

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