Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by the National Housing Federation (EMP 20)


  The National Housing Federation represents over 1,400 independent, not for profit social housing providers in England. The Federation's members include housing associations, co-ops, trusts and stock transfer organisations, and they own and/or manage more than 1.7 million homes provided for affordable rent, supported housing and low cost home ownership, and deliver an increasingly diverse range of community and regeneration services. The large majority of the Federation's members are registered with the Housing Corporation. The Federation welcomes the opportunity to give evidence to the Select Committee's Empty Homes Inquiry.


  Addressing the issue of empty homes is key to delivering the Government's objectives for housing, neighbourhood renewal and sustainable regeneration. In this evidence, the Federation sets out why the incidence of empty homes has become more commonplace, and why it is vital that adequately resourced, effective action is taken to address the issue. It is evident that there are regional, sub-regional and local economic, social and environmental inequalities that contribute to unhealthy housing markets, of which empty homes are a symptom. These unhealthy markets in turn, undermine investment in Government policy priorities, such as health and education. Therefore tackling the issue of empty homes and the broader challenge of non-decent homes is core to delivering the Government's neighbourhood and urban renewal objectives. To achieve this, the Federation make the following recommendations:

  At the national level:

    —  Greater recognition is given to the major economic, social and environmental disparities that exist between and within regions in England, a major cause of empty homes.

    —  A well resourced "housing market renewal fund" is created to resource local housing market restructuring, where markets are failing or are in danger of failing, to supply or help rationalise the type and tenure of housing that is in demand.

    —  Value Added Tax is harmonised at 5 per cent on costs for new build housing and major repair and improvement work to residential properties.

    —  The upward curve of resources allocated in the Spending Review 2000 must be continued for housing and neighbourhood renewal purposes in the forthcoming Spending Review 2002.

  At the regional level:

    —  Guidance should be issued to Government Offices for the Regions, Local Authorities and Local Strategic Partnerships on how low and changing housing demand links with the neighbourhood and urban renewal agenda, and it links with the Department of Transport, Local Government and Regions' (DTLR) Decent Home targets.

  At the local and neighbourhood level:

    —  Local Authorities and/or Local Strategic Partnerships should be given the power to establish a mandatory accreditation scheme for private landlords operating in deprived neighbourhoods;

    —  Greater recognition is given to the neighbourhood renewal work currently being undertaken by registered social landlords in deprived neighbourhoods.


  Concentrations of empty homes commonly characterise urban and neighbourhood deprivation. A combination of factors is often the cause of this. Economic decline, particularly that associated with the traditional industries is one. In other places, the reasons for empty homes are more closely related to a lack of resources available to address major repairs and improvements to poor quality housing. Some housing—public and private—is simply obsolete due to its size and type. A cross cutting theme of urban and neighbourhood deprivation is the issue of neighbourhood failure. Where mainstream services—education, health, police, and housing—are perceived to have failed, it is very difficult to persuade people that the place will get better. Empty homes—across all tenures—are often a symptom of neighbourhood decline, not a cause.

  The statistical evidence on empty homes can be accessed from the DTLR's Housing Statistics Postcard (July 2001). As of April 2000, registered social landlords had the best record on empty homes—2.8 per cent nationally. Local authorities had a slightly higher rate at 2.9 per cent, with the private sector (private rented and owner occupied) at 3.7 per cent and "other public sector" at 16 per cent. In numerical terms, the picture is different: some 623,000 private sector homes were empty; local authorities with 86,000; registered social landlords with 38,000; other public sector with 16,000.

  Empty homes in the public sector are divided into two general categories: long term and short term "voids". Long-term voids are those that require major works, eg, structural repairs to the floors, walls and roof; renewal of installations such as gas, electricity, water supplies, heating and ventilation, etc. Short-term voids are those properties that may require some minor repairs, but are considered available for letting to prospective tenants. For both the local authority and registered social landlords in April 2000, the number of short-term voids was just over half of the total number of voids: 47,000 for the local authority landlords and 20,000 for registered social landlords. Respectively, this represents a void rate of 1.6 per cent and 1.5 per cent that is a reasonable level required so that new and transferring tenants can be re-housed without undue delay. The average time taken to re-let short term voids during the year April 2000 was 6 weeks (local authorities) and 5.7 weeks (registered social landlords). The critical category, therefore of social housing voids are the long- term voids that require considerable capital investment to bring the homes up to a decent standard.

  The national picture does not highlight the major variations between the nine English regions. The North West (including Merseyside) had the highest number and percentage of empty social homes in April 2000: 10,435 (4.9 per cent). Regions such as the South West and East had 2,669 (2 per cent) and 1,900 (1.9 per cent) respectively.

  The issue of empty homes is not unique to one sector, and the record of registered social landlords is better than the others. Nonetheless, the statistics offer little comfort for registered social landlords and the public sector generally. The issue of low and changing demand for housing, together with the overlapping issue of unpopular housing, represents a challenge to the future prosperity of registered social landlords. Recently undertaken research by MORI, commissioned by the National Housing Federation, indicated that owner-occupation was the tenure of choice for 83 per cent of respondents. In the evidence that follows, some solutions to how empty homes, as a discrete issue, can be addressed are set out, whilst offering some answers to the wide-ranging questions set by the Select Committee.


  In this section, the Federation offers evidence on the following issues: The consequences of so many homes being empty, including the link between empty homes and urban degeneration, social and racial tension; the benefits which would arise from bringing empty homes back into use; why so many homes are empty; the effectiveness of Government policy to date, including the results of the 2001 Budget; 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 charge the full council tax on empty homes; there should be further changes to VAT; and should compulsory purchase powers should be revised; what measures should be taken to deal with the problem of negative equity; what Government Departments and their agencies, the NHS, local authorities and RSLs should do to bring more of the properties they own into use.

  The consequences of many homes being empty vary. There are personal costs to prospective tenants who are not being housed. There is a broader social, economic and environmental cost to people and places where empty homes that are not in demand characterise the neighbourhood. It is often the case that the very young and the very old and particularly people from black and minority ethnic communities live in the most deprived neighbourhoods living in run-down housing where empty homes is often an issue. Those who are able to leave—normally economically active households—often do. The recent DTLR report A Review of the Evidence Base for Regeneration Policy and Practice identified this trend. The Government recognised neighbourhood decline as an issue when it commissioned the Social Exclusion Unit to examine its causes. Many informative and incisive reports have followed, particularly the Policy Action Team 7 Report on Unpopular Housing.

  The Federation fully supports the Government's approach to Neighbourhood Renewal, set out in A New Commitment to Neighbourhood Renewal Action Plan, launched by the Prime Minister in January 2001. The Federation also fully supports the broader vision for urban regeneration set out in the Urban White Paper, and its rural counterpart. The resources allocated for regeneration, neighbourhood renewal and social housing purposes in the Spending Review 2000 represent a step in the right direction. The rising curve of public investment is shown on the table below. However, it must be recognised that the increase is built on significant long-term reductions in resources for housing over the 1980s, redressed in the mid 1990s, but again in decline in the later 1990s. Current forecasts for housing resources (as set out below) will only return gross investment to the 1991-92 position.

Spending Review 2000
Sure Start
Neighbourhood Renewal Fund
New Deal for Communities

  Source: HM Treasury Spending Review 2000; DTLR Press Release No 489—RDAs; DTLR Press Release No 492—Housing (* Figures exclude HRA subsidy and the housing private finance initiative).

  It is of critical importance that the investment identified under these headings are consolidated and built on in the forthcoming 2002 Spending Review. Ambitious Public Service Agreement targets, identified in the 2000 Spending Review, have been set for all social housing, which is to be of a "decent" standard by 2010, with a third achieving this by March 2004. Recent DTLR guidance on decent homes highlights an estimated 1.4 million non-decent local authority homes and 280,000 non-decent homes in the registered social landlord sector. Whilst these figures date back to 1996, the anticipated numbers in the forthcoming 2001 English House Condition Survey (EHCS) are unlikely to be substantially different.

  The Federation anticipates that much repair and improvement work will be commissioned as a result of the Government's large-scale voluntary transfer programme. In last year's Housing Green Paper, the Government expected 200,000 council homes to be transferred to existing or new registered social landlords during the next decade. The transfer process offers the opportunity of levering in significant private sector resources to undertake the major repairs and improvements that much council housing has required for many years. The Federation believes that this will be a major contributory factor to achieving the decent homes target.

  Previous initiatives have shown that such housing investment must be complemented by a commensurate increase in other resources, such as the Neighbourhood Renewal Fund, New Deal for Communities (NDC), Sure Start and the RDAs' Single Pot (as examples). Many of the resources allocated to the NDC programme and the RDAs will be taken up by existing spending commitments of the 39 NDC neighbourhood pathfinders and the Single Regeneration Budget Rounds 1-6. Therefore, the need to increase resources for neighbourhood renewal and regeneration are particularly great to ensure they are substantial enough to complement investment in social housing. It should be noted that guidance for RDA resources in the current transitional year made little reference to housing. Far greater co-ordination will be needed to ensure resources are used effectively in the future.

  The Chancellor in the 2001 Budget announced six tax cuts targeted on enterprise, designed to help facilitate urban regeneration, all of which have been legislated for in the 2001 Finance Act. An announcement is still awaited on which areas will be exempted from stamp duty. The Federation expects the tax cuts to make a marginal difference to people and organisations involved in urban regeneration, but it will be some years before the effects of the changes can be measured.

  The Federation has been seeking a reduced VAT rate for all works to existing social housing since 1998 and submitted a detailed case in support of its Budget Submission for 2001. There is a broader case for unifying the VAT rate at 5 per cent for new build and the refurbishment of existing buildings. The Federation welcomed one of the Chancellor's 2001 tax cuts that reduced VAT to 5 per cent for residential conversions, but believe more needs to be done. The Urban Renaissance vision set out in Lord Rogers' Urban Task Force Report will heavily rely on fiscal incentives and rectifying the imbalance in VAT should be a significant incentive to developers to develop on brownfield, as opposed to greenfield, sites.

  There must also be some recognition of the need for social housing investment in low demand areas to achieve neighbourhood renewal. This idea is developed in the section on the Housing Market Renewal Fund. The current methods of allocating resources is achieved by using the Housing Needs Index and the General Needs Index, involving complex formulae which can cause different needs—regeneration and new housing need—to be in competition, often to the detriment of areas suffering from low and changing demand. Consideration should be given to housing resources being split into two categories—regeneration, and new housing need—with different criteria, thereby delivering some housing resources to areas suffering from low and changing demand, and ensuring a political, rather than a formulaic decision on the allocation of resources. This does not address the issue of how the funding of repairs and improvements is to be managed, as it does not fit neatly into the regeneration/new housing need division and requires further consideration.

  On Compulsory Purchase Orders (CPO), the Government announced its intention to reform the CPO system in the Urban White Paper, published in November 2000. The consultation proposals are scheduled for publication in Summer 2001. The Federation hopes that the proposals will facilitate a speedier CPO process, particularly where absentee land and property owners are causing un-necessary delays to urban regeneration and neighbourhood renewal schemes. There must also be recognition of the needs of homeowners with a stake in the neighbourhood, and those who have bought homes as a short-term investment.


  In this section, the Federation offers evidence on the following key issues: Too many homes are being built and proposed by Regional Planning Conferences on greenfield sites in such areas; Government Offices for the Regions should be more vigorous in implementing Government policy laid down in planning policy guidance notes; regional planning guidance is taking proper account of the re-use of empty properties in making provision for housing.

  The challenge of low demand for housing is one of the primary causes of empty homes. This trend has been identified at a regional and sub-regional level. The recent report of the Social Exclusion Unit's Policy Action Team 7 on Unpopular Housing indicates that half of the unpopular social housing that exists nationally—466,500—can be found in the three northern regions. However, low demand housing is not the exclusive preserve of social landlords. In the same northern regions, 58 per cent of the unpopular private sector housing that exists—461,500—can be found. The Policy Action Team demarcated low demand housing from unpopular housing, and found the latter was a characteristic of social housing in London and the South East.

  To complicate matters further, there is strong evidence of a robust market for house building and owner occupation within major cities of the north and their environs. It is apparent that many neighbourhoods between the inner core and outer prosperous suburbs are failing to attract new households on relatively low incomes. The M62 Report highlighted an advertisement for new build 3 bedroom property in the north west available at £49,000. Social landlords are effectively competitors for customers considering such purchases. The report highlighted the following reasons why some neighbourhoods were suffering abandonment and/or declining demand: a predominance of a single tenure; monolithic provision (eg, thousands of two or three bedroom houses in one locality); concentrations of a particular dwelling type (eg, high rise flats or back of pavement terraces); economic inactivity and unemployment; concentrations of elderly people dependent on benefits.

  An over-arching factor that makes it difficult to arrest and reverse abandonment and/or declining demand is the perception of the social, economic, and environmental profile of a stigmatised neighbourhood and the public services that it receives. It is very difficult, but not impossible, to change this perception, but it invariably requires major area based interventions and significant resources to match.

  There is a clear need to create a more balanced housing market in such places, with a range of flexible tenure initiatives, bridging the gap between home-ownership and social renting. Such initiatives could include shared ownership, sub-market renting, the Starter Home Initiative and possibly the recently proposed Equity Stakes.

  A well-resourced Housing Market Renewal Fund, administered by the Government Regional Offices could offer the resources to deliver housing market renewal and neighbourhood renewal outcomes to specific Housing Market Renewal Areas. Such a fund would offer scope to address housing market failure issues, and add value to other neighbourhood management and renewal activities funded by the Government and put the right homes in the right places. The Housing Market Renewal Fund will be crucial to addressing regional and sub-regional economic, social and environmental imbalances and will help deliver the Neighbourhood Renewal and Urban White Paper implementation plan targets.

  The Fund would resource the following types of capital items: targeted renovation and environmental grants; remodelling of existing stock; land and property acquisition costs; professional and legal fees; a low cost loans fund; an improvement for sale fund; a home swops subsidy; gap funding for housing for sale; private sector housing improvement; demolition, site preparation and reclamation; targeted social housing and new build. Revenue items that would be resourced would include supporting the cost of producing an annual Housing Market Renewal Prospectus that sets the framework for investment; staffing for the development of the Housing Market Renewal Areas; revenue support from staffing the new housing regeneration vehicle; support for the community planning process; social support for elderly residents in clearance areas enhanced neighbourhood management services for localities in decline and awaiting clearance. The Areas would also incorporate relaxed planning and tax regimes in order to attract private investment. The Federation is working on the costing of market renewal in a range of settings for submission to the next Spending Review.

  Registered social landlords have a strong record on area-based approaches to dealing with the issue of empty homes and neighbourhood decline. Recent case studies of processes and/or work undertaken include the following:

  Case Study 1—In Birmingham, a consortium of housing associations including Prime Focus and Midland Area were successful in attracting Single Regeneration Budget 5 resources to help regenerate Handsworth, an area with a large black and minority ethnic population. The development of the following initiatives has begun to help this process: local lettings; tenancy support; neighbour participation; remodelling stock and "deconverting" small flats into large family homes; selective disposals to sitting tenants and local people; changing the use of some residential properties for community purposes.

  Case Study 2—Sunderland Housing Group, with assistance from the City of Sunderland Health and Housing Services, have developed a Neighbourhood Assessment Matrix. This can identify the level of stability in neighbourhoods; identify trends in neighbourhoods over time and identify whether stability is declining or improving and act as an early warning system; assist with the development of neighbourhood renewal options including value for money and investment factors; and, encourage housing professionals to think strategically about neighbourhoods and assist with the development of neighbourhood action plans.

  Case Study 3—Housing Regeneration Companies (HRCs) are Housing Corporation-sponsored bodies, designed to co-ordinate and deliver area regeneration projects, where housing is a core theme. Creating HRCs was one recommendation of the Lord Rogers' Urban Task Report. Their focus will vary according to the neighbourhood, but their core purpose is to adjust the supply of different housing types to better fit local demand; promote the use of existing methods and funds to regenerate properties and develop vacant sites; engage local communities in their activities; and build effective partnerships with the public, private and voluntary sectors to promote "joined-up" working—eg link housing renewal with urban regeneration policies. There are currently four pilot HRCs in Coventry, Liverpool, London and Rochdale, with a further possibly in Hartlepool. Registered social landlords in all four instances are key partners that will deliver each HRC's objectives.

  Case Study 4—Temporary social housing in London is a key source of accommodation for homeless households. In 1999, 26,400 homes were leased from the private sector for social housing purposes. This allowed homeless households to be accommodated in homes rather than bed & breakfast and hostel accommodation. London registered social landlords are the key partners in supplying this increasingly important type of accommodation, simultaneously reducing the number of private sector empty homes.

  On Regional Planning, the Federation believes that regional planning guidance documents published to date pay strong attention to the principles set out in the Government's Urban White Paper. They are generally supportive of the 60/40 brownfield/greenfield redevelopment target that is to be achieved by 2008. However, whether the principles translate into practice remains to be seen, and the Government Offices for the Regions will have a pivotal role to play to ensure targets become a reality. They will also have wider role to play in "joining up" regional activity that is becoming increasingly complicated by the creation of the Regional Development Agencies and the growing role of Regional Chambers (outside of London).


  In this section, the Federation offers evidence on the following key issues: Whether a statutory duty should be placed on local authorities to establish an Empty Homes Strategy; what specific steps should be taken in areas of low demand, including whether regeneration initiatives are adequately addressing the problem of empty homes; whether too many homes for rent continue to be built in such areas; and whether some homes should be demolished; whether local authorities should establish a register of approved landlords.

  The Federation is not convinced of the need for a statutory empty homes strategy. In the recent DTLR guidance note 2001 Housing Investment Programme to local authorities, the assessment criteria for housing strategies is set out. This includes a requirement to hold information on the housing market, using data on markets and stock condition. The guidance also requires a clear analysis of mismatches between the supply and demand for affordable housing for particular dwelling types/sizes. The Federation believes that this should be sufficient for local authorities to assess the number of empty homes in its district and trends that will determine future numbers that may or may not require action. The Federation would be concerned if the data collection and provision required from local authorities were relaxed, so as to undermine the validity of the supply and demand data.

  The New Commitment to Neighbourhood Renewal: National Strategy Action Plan, published in January 2001, was the culmination of over three years work on the causes of neighbourhood decline and social exclusion, and what could be done to reverse its effects. The 105 recommendations included: baseline assessment of numbers of dwellings and number and location of wards affected and at risk from low demand and unpopular housing, by March 2002 (commitment 67); monitoring low demand and abandonment with the aim of achieving a turn round in declining demand, by 2010 (commitment 68); and, a clearer and more flexible role for local authorities and registered social landlords in using lettings policies to create sustainable communities (commitment 74). Delivering these commitments will be crucial to delivering the broad and inter-related objectives of healthy housing markets and sustainable neighbourhoods, but they will require adequate resources.

  A key issue for people living in deprived neighbourhoods is that of anti-social behaviour generally and more specifically, the behaviour of "problem" tenants. Where housing is in low demand, some tenants and their families may feel greater latitude to behave in an anti-social manner. This will be exacerbated by poor services from other mainstream providers. Processes and schemes such as crime reduction partnerships; anti-social behaviour orders; and neighbourhood warden schemes can make a difference for the better. Registered social landlords with their local authority partners have been instrumental in making the policy work in practice.

  The Federation is concerned that no guidance has been issued to Local Strategic Partnerships (LSPs) on how the issue of low demand should be treated, even though it will be a core element of their work in many English regions. The LSP guidance features only a few passing references to the targets for decent social homes. This omission is reflected similarly in the recently published DTLR Decent Home guidance. A minor mention is made of the impact of demolition, right to buy and large-scale voluntary transfer, factors that will have a major impact on whether the decency targets are met.

  As mentioned above, there is a key role for government and the Government Offices for the Regions (GORs) in coordination of strategies. These omissions must be rectified in guidance to GORs, local authorities and local strategic partnerships on how low demand issues are to be addressed, and how the national decent homes targets are to be met regionally, locally and at the neighbourhood level. This should form a vital element of the Office for National Statistics work on better information on deprived neighbourhoods.

September 2001

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