Thank You Darling

Amongst all the talk of falling house prices and a collapsing economy another threat to our housing is emerging, - rising vacancy. If trends continue numbers could well pass the million mark next year. Does it matter? You bet it does, in a country bursting at the seams with housing need, the prospect of homes for two million people sitting wasted is nothing less than a scandal. Or if you prefer, think of it this way; statistically speaking you now have a one in twelve chance of living next door to an empty home

So what help did the chancellor offer in yesterday's pre budget report? I'm afraid to say – virtually nothing. There was money for housing associations to build more homes and for them to buy up new flats, but this doesn’t address the problem. Instead this should be the perfect time for housing associations to be buying and renovating run down empty homes. Not only would this help provide the social homes we need, but it would boost employment for builders working on renovation and help regenerate the areas where ordinary people live creating healthy mixed communities.

It may be cheaper to buy up new flats from bankrupt builders, but if the government is spending money it is surely worthwhile investing it where we will reap long-term social benefits.

Bob Lawrence

I have just received the very sad news that Bob Lawrence died earlier today. For those of you didn't know him Bob was the first Chief Executive, and indeed the first employee of the Empty Homes Agency. He led us for seven years before going on to become the director of housing in Montserrat following the volcano disaster. In recent years he has been a homelessness advisor at CLG. He was a passionate larger than life character and without him I very much doubt there would have been an Empty Homes Agency. We will miss him greatly.

ReportEmptyHomes.com

It’s not officially launched until next week, but ReportEmptyHomes.com is being used successfully already so what the hell. The simple idea behind this new website is that councils respond their citizens. The cynical may question this, but I think it works and I hope this new website proves it.

Enter a postcode or road and the website takes you to a mini map, click on where the empty property is, fill in a few brief details and send. That’s it. The empty property is reported automatically to the council and it will keep bothering them until they do something about it. Councils have the powers to tackle empty homes and I believe that with this new tool they can direct them to where it is needed most.

Cynics also suggested that councils would ignore the website. But early evidence says not. So far today there are 17 new properties reported on the site and 21 responses from councils. As Victor Keagan pointed out in yesterday’s Guardian if councils embrace websites like this it will probably help everyone. So far at least, it looks as if they are.

Empty Shared Ownership Homes

The Telegraph on Saturday helpfully pointed out that the core of the empty homes problem remains a private sector one. 85% of empty homes are privately owned and that proportion has not changed much despite the overall number going up. That is not, however, the same as saying that it is solely a private sector problem as this shocking report from Inside Housing shows that, according to recent housing corporation figures, not far off 10,000 housing association homes built for shared ownership are standing empty. Given that these figures are from a sample of just 215 housing associations; less than a fifth of the total, I can only speculate what the true total is.

Bank Error?

Halifax bank cheerily announced last week that numbers of empty homes are dropping. Poor old Halifax, they’ve had a torrid time recently and I’m reluctant to pour cold water on one of the few apparently good news stories they’ve got.
But sadly they are wrong. Or at least they have drawn a pretty odd conclusion from the data. I predict that sometime over the next year the numbers of empty homes in the UK is set to pass the million mark. It sounds unbelievable - Just a couple of years ago several people were talking about empty homes as a problem that was close to being solved. After a decade of falling numbers it was easy to draw a straight-line projection down to a number so small that we could talk of the problem being solved. Unfortunately the line has turned out not to be straight but have a very sharp upward curve in it. What has happened?

The straight line started to bend two years ago with the explosion of city centre flat developments. Developers twigged on early that they were selling to a different market. No longer were buyers owner-occupiers, but most were investors, speculators and budding buy-to-let landlords. In 2006 a survey in London found that 70 % of house purchasers were within these groups. What this meant was demand was no longer coming from people who wanted to live in them, but people who wanted to invest in them. An inevitable consequence was that the link between new supply and housing demand was broken. Investors carried on buying past the saturation point of potential occupiers. That point was probably crossed in mid 2007. The result was a large surplus of vacant flats.

One of the main reasons numbers of empty homes reduced over the last decade has been through the activity of small-scale developers. Homes fall empty all the time, often from the bottom end of the private rented market, but if the same numbers are redeveloped the net effect is zero. In the early years of this century the net effect was very definitely positive.

But most developers saw the recession coming and after years of buying up and redeveloping empty homes, most have wound back their activity. Meaning that homes that fall empty are more likely to stay empty. Landlords unable to raise money to refurbish their homes have probably exacerbated the problem.

An acute and painful effect of the recession is the rise in repossessions. In the USA foreclosures rates have been enormous and lead to a huge increase in empty homes. Here the effect is thankfully less acute, but nevertheless RICS predict 45,000 by the end of the year, compared to 10,000 last year.

Call it bad timing, or bad luck, but to all the market driven vacancy we have to add regeneration driven vacancy. Thousands of homes have been vacated over the last few years to make way for future regeneration projects. Several social housing estates stand empty. In Wood End in Coventry hundreds of houses have been left empty for five years awaiting a stalled redevelopment project. The Ferrier Estate in Greenwich has over 1,000 flats empty for more than four years awaiting demolition, and in Hackney the Haggerston Estate the story is similar. Much housing market renewal activity has reached a similar stage. In Liverpool for example over 2,000 homes stand empty in Anfield awaiting the bulldozer. The real worry is that many of these regeneration projects were based on private investment and private developers building new homes when the old ones had been demolished. The viability of many of the projects is very much in the balance.

So how could Halifax interpret this as good news? Their story is based around a drop in empty homes between 20003 and 2007. Statistically they are correct, but their conclusion is I’m afraid two years out of date.

The shame of the Ferrier estate

Greenwich council are not very happy with me for being interviewed for tomorrow’s breakfast TV outside their notorious Ferrier estate.
In the piece to be broadcast on BBC1 tomorrow morning, we discuss the national scandal of empty homes and how councils need to respond faster in a recession, to prevent the problem getting worse. The Ferrier estate, which has over 1000 flats that have been empty for more than four years, to my mind, illustrates the consequences of getting it wrong.

I am all for the regeneration of this estate, and perhaps when it is replaced in ten years time it will all have been worth it. But for now delay upon delay and a poorly handled decanting and compensation scheme have left an appalling mess.

I could understand why Greenwich council would want to keep the cameras out . In a city with vast housing need, the sight of thousands of empty homes should be a matter of deep shame. But it seems they don’t really mind. One part of the estate has been completely decanted and fenced off to allow Nick Love to film his remake of the 1980s violent crime thriller “the Firm” I don’t know about you, but it doesn’t feel ethical to me for the council for to create a ghost town through a bungled preparation for a future estate regeneration scheme and then to profit with a no-doubt lucrative fee

Crash!

There’s always somebody who does well in a recession. This time 1980’s band the Primitives must be looking forward to the next royalty cheque. Their hit song “Crash” has been the backtrack to virtually every news report on the economy this week. Including this cruel but fair ode to TV presenter Kirsty Allsop who allegedly said that she would eat her hat if UK house prices dropped.

Grotty Little Town

Swindon never feels like a place that’s at ease with itself. Even its most famous son Andy Partridge described it as a grotty little town. Ok that was nearly 30 years ago and only a few old codgers like me (fondly) remember XTC anymore.

But today’s big story in the local rag seems to suggest not much has changed. A young family living in an overcrowded Swindon council flat point out, quite reasonably, that whilst they are denied a bigger council flat, thousands of homes lie empty across the town. Instead of debating this obvious injustice, the readers’ comments take a less than charitable view of the families motives.

Now don’t get me wrong, I’m very much in favour of linking social housing and employment in a positive way to encourage families back into work. But you can hardly blame this family for the failing social housing allocation system and a dysfunctional housing market. I can’t help feeling that a few CPOs aren’t really going to help much either. Who says the council will be a better landlord than the current private owners -that looks suspiciously like an empty council house in the photo.

Instead of getting all personal and blaming everybody let me suggest something more constructive. In Leeds a self-help housing cooperative called Canopy offers families like this one in Swindon the accommodation they need. But it’s no hand out. To earn a place to live, residents volunteer to renovate empty derelict buildings. The process allows residents to develop new building skills and also to develop their future house in the way they want it. Surely a much more positive solution than anything suggested by the people of Swindon.

What’s The Truth About The £200 million Empty Homes Fund?

Many people seem to be under the impression that the government has launched a fund to enable councils and housing associations to buy up empty homes. Nice idea, but unfortunately untrue. Housing Minister Iain Wright, explained earlier in the week that what had happened was that the Housing Corporation had granted an extra £200 million to help housing associations buy property from developers. Amazingly despite this, two days later we find here the deputy Prime Minister. Standing in for Gordon Brown on Friday coming out with the empty homes fund line again. Although as Vince Cable pointed out on Friday, £200 million wouldn’t make much difference anyway, and he rightly called for a larger fund that would allow housing associations to buy more empty homes. The Times summarised his point with this telling graphic.

Empty Homes Up Again

Last month we reported that numbers of empty homes had gone up for the first time in 9 years. My prediction then was that this was the start of a trend rather than a blip. Some people disagreed. Well sorry to say told you so. But here is the latest information from 6months later released today in a PQ
Number of empty homes in England October 2006: 748,159
Number of empty homes in England October 2007: 762,635The anoraks might spot that both these figures are greater than the 693,000 we reported last month. The reason is these figures are taken directly from council tax records, the 693,000 is a sum of every council’s own figures.

Copper theft from empty homes

Don’t get me wrong I’m all for recycling metals; especially copper. Smelting copper from its raw state requires a horrific amount of energy, more than any other metal. Copper ore it seems is only to be found in beautiful remote parts of Chile, Peru, and Zambia that I’d rather weren’t torn to pieces with open cast mining operations. If that weren’t enough it’s running out anyway This guy reckons there’s only 26 years worth left. So with China’s economic boom demanding huge supplies of the stuff it’s little surprise that it’s trading at record prices; $8,500 a tonne, earlier this month. I was not shocked to hear that the only person with enough money to pay £40 million for a Monet this week was a copper dealer. What’s this got to do with empty homes? Well it seems that, abandoned homes have become the easiest place for the less scrupulous dealers to source the metal. This story is just one of many reporting the problem in the United States, and I’ve heard of cases in the UK too. What this of course does is hugely bump up the costs of refurbishing the property and store up future demand for the metal when all the stolen pipes need to be replaced when the property market turns up again. The moral of the story for property owners is surely don’t allow your property to become empty. Accepting a lower rent may be hard to swallow, but the alternative could be a lot more expensive.

Empty Homes spread West Nile Virus

For years I have been talking about the harmful effects that empty homes have on communities, but I have never thought of this one before. Happily for us West Nile Virus has never been identified in the UK, and in any case I doubt that many empty homes here have swimming pools. If I’m wrong perhaps we will need to start breeding Pac-man fish!

Consequences

If I was going to choose a media outlet for the virtues of short life housing co-ops The John Gaunt show on Talk Sport radio probably wasn’t it. But that was what I tried to do this week. John Gaunt or “Gaunty” as I was invited to call to him, was, it turns out, not particularly interested in the merits of housing cooperatives. He was rather more exercised by this article in the Daily Mail. “You” he barked “know nothing. Why can’t I buy as many homes as I want and leave them empty without busy bodies like you telling me what to do?”
“You can do what ever you want “ I suggested “ but there are consequences to what you do, leaving a property empty has effects on neighboring property and frankly is a pretty poor business model for investment”
“Consequences!” He yelled “you said consequences, you’re threatening me!” “This is a free country I’ll do whatever I like without communists like you telling me what I can and can’t do!”

I must confess to not being a regular listener to Gaunty’s previous broadcasts. If I had I might have realsied that his particular style was not one for exploring subtleties and weighted arguments.

I checked out the Daily Mail story and found it to be true, at least in the case of Camden. There is a link to the Squatters Advisory Service on their website, and they have been brave enough not to cave in and take it down. I can’t say I feel quite as outraged by this as The Daily Mail, their readers or “Gaunty” It is after all an option open to people looking for housing, even if it is one with rather one-sided benefits.
What does worry me however, is that Camden, like most councils, offer a list of options which are heavy on social housing and very light on any form of self help for people in housing need.

Housing Coops and property guardian companies provide short-term housing out of property that is temporarily empty. They offer an alternative form of housing that does make use of empty property, provide benefits for the owner and provides homes for those in housing need without creating a dependency for social housing. I can’t understand why it is not more widely promoted by councils. Even “Guanty” as he cut me off muttered, “actually I agree with him”

Empty homes petition

My thanks to Charles Bazlinton for starting the empty homes petition on the No. 10 E-petition site. I’d urge and encourage you to sign up.

Why the Government must do something about Britain’s empty properties

My thanks again to Anne Ashworth for another excellent opinion piece in the Times: see here

Good news but is the government still missing the point on empty homes?

Government announcements on empty homes are like buses you wait ages for one then four turn up at once. So it was with last week’s comprehensive spending review. The chancellor announced four changes, three of which will undoubtedly help return more of England’s 670,000 empty dwellings into homes and one that highlights why the government is still missing the point.

Firstly the good news: anachronistic VAT rules that deem building a new house is zero rated but refurbishing empty homes is charged 17.5% have been amended. Now works to renovate homes empty for two years or more will be charged at 5% VAT (Down from three years). A small tweak perhaps, but it will make it more cost effective to bring about 100,000 empty homes back into use. In a property market governed by profit margins this is bound to have a positive effect.
Secondly the government is to review council tax discounts for empty homes. Currently homes are exempt from council tax for up to twelve months after they become empty. Many then enjoy a 50% discount for as long as they remain unoccupied. Councils can remove the discount but only about half have done so. We calculate that half a million empty homes receive a discount or are exempt from council tax. A public subsidy for keeping homes empty,

Thirdly the government is to include reused empty homes within the new housing and planning delivery grant. Reusing empty homes creates new housing just as well as building new homes but with reduced environmental impact and less land take. In our view rewarding council’s for bringing empty homes back into use will help increase housing supply.

So why is the government still missing the point? For that we need to look at the fourth and less welcome announcement. The government has removed the requirement for local authorities to report the number of empty homes they have returned to use. Their claim that the move reduces the bureaucracy and burdens on local authorities would be more plausible had they not introduced a whole raft of new indicators on building new homes at the same time. It rather begs the question how will the government reward councils for bringing empty homes back into use if it no longer wants to know what they are doing about it? On a wider level it also illustrates their thinking. They have listened and responded to ideas that will help, but on a political level they still don’t appear to accept that getting more homes back into use will increase the numbers of available homes. It’s a shame. The government is introducing measures that really could help but appears blind to their potential.

Conservative calls for extending EDMOs

Last year the Conservatives were calling for the abolition of EDMOs, today a prospective Conservative candidate, Lee Martin, is calling for them to be extended to housing associations. He makes the point that local Sunderland housing association gentoo (no capital letter) has 1253 empty homes.

No we don’t say gentoo. Only “640 are gearing up to be demolished to enable gentoo to continue to provide homes for the future". Not sure I understand the logic, but this is not the first time this blog has reported problems of empty homes hanging around waiting to be demolished in Sunderland see this from last year.

Interesting idea on the EDMOs though. What bothers me is how this could actually work. The local authority would take over management of the property. The problem is they got rid of their property management function when they transferred their housing stock. The logical solution is that they could get the new stock transfer housing association to do it on their behalf. Who are they? gentoo.

Gentoo in case you were wondering is the new name for Sunderland Housing Group. Of all the strange names rebranded housing associations have given themselves this must be the worst. According to this the word comes either from a derogatory term for Hindus or a species of penguin.

As Bad as Basra

The photo on the right of this column is of a pair of semis in Prescott Drive in Liverpool. It is one of three pairs of semis in a row all empty and in a similar state of neglect. They are the result of what, in my view, is one of the most depressing empty homes stories in the country. I’ve covered it before in this blog, see here and here. Louise Baldock is the local councillor and has published this update on her blog this morning. It does not fill me with hope. What would we be saying if these properties were privately owned? Compulsorily purchase them, take out an EDMO, I suspect. But these houses are already owned by the council and have been for at least seven years. It does nothing to further the cause of local authorities being the agents of managing housing markets. In fact in this case it says to me they are making a pig’s breakfast out of it. Talking about the empty homes Louise says “my residents are living in the sort of circumstances that be familiar in Basra.”

Good Local Story

This makes a good story for a local paper. The Lincolnshire Echo has obtained details of all the empty homes in Lincoln making use of the Freedom of Information Act. Using approximate valuations from their council tax banding they worked out that £13.5 million worth of property is standing empty in the city. Better than that the paper also prints the roads where the properties can be found.

Buy to Leave a Myth – Oh Really!

Instant Access Properties has described “Buy to Leave” as a red herring on the basis of a survey of about 500 of their members. See report here.

Who, you might wonder are Instant Access Properties and why do they care? Well on their website they describe themselves as “the largest UK organisation dedicated to the creation of wealth through residential property investment.”

Fair enough I suppose. It’s a free market.

They go on to explain: “we specialise in off-plan property. We challenge the traditional convention that property investment involves buying a finished building. We believe that the smarter thing is to buy one that’s not yet built.”

You get the general idea? It goes on:

“Buying off-plan is a unique way of getting the most out of property investment. Off-plan property is sold to investors before any actual structure exists, meaning that investors gain from the capital growth of the property during its development phase.”

In case you were still in any doubt about what this service is all for, it goes on to explain the concept of “ instant creation of wealth “. And that is the concept that is being sold here. Buy before the property is built, and provided the market continues to grow you will make a tidy sum out of the capital appreciation before it is even ready to live in. It’s a neat trick, and of course, if you are really clever you can sell before completion and avoid conveyancing fees, and stamp duty. If you are not so clever or a bit unlucky you end up saddled with a completed property that you didn’t really want, and can’t afford to sell or let without making a thumping loss; a prime candidate for a future empty home.

You can see why Instant Access Properties are so anxious to dispel the idea of “buy to leave” but I get the impression that the questions in the survey may have been carefully chosen. Of course only a minority will deliberately leave their properties empty for capital gain. Frankly I am surprised it’s as many as 3%. But many more will have ended up in the same position inadvertently.

The real problem is that the dominance of the buy off-plan industry is skewing the way properties are built and sold. London Development Research reported earlier this year that 70% of residential properties sold in London were sold to buy-to let investors. Much of the new build in off-plan sales.

In the past developers selling principally to owner occupiers had to build what the future occupier wanted otherwise they couldn’t sell them. Now developers aren’t building for occupiers but to a market of remote speculators interested primarily in “instant creation of wealth”. Inevitably developers cut costs and the properties that are built are less attractive to occupiers. The idea that we are building the slums of tomorrow may be a bit far fetched. But I can foresee long term problems with the homes that have been created to serve this industry.

Britain’s Bad Housing

If you missed it you can see it here Britain’s Bad Housing on Channel 4’s Dispatches programme last night painted a rather squalid picture of the state of the country’s housing market. Andrew Gilligan. Yes him! presented a picture of a market that was scrabbling around to wring the last few drops of profit out of the housing boom before it petered out.

“Buy-to-Leave” has become a metaphor for all that it is bad about the housing market at the moment. Greedy speculators apparently buying properties and leaving them empty to sell at a moment of their choosing. It has always seemed a little exaggerated to me. Surely a really greedy speculator would want the rental income as well?
Gilligan laid the blame not on the speculators but the builders. In Salford Quays a notorious “buy to leave” blackspot , flats were empty because too many high value flats had been built. The builders’ intention was to sell to the speculator market not to consider the housing needs of the area. Consequently the new flats were too small and too expensive for Salford’s population. Naive speculators who hadn’t researched the local rental market or had hoped to sell them on quickly found that they had been sold a pup. This sounds a more plausible explanation than deliberately leaving them empty. Whatever the reasons there can be little doubt that Gilligan is right, properties are being left empty because they are being built as tradable commodities and not liveable homes. No doubt many “buy-to –leave” landlords are sitting tight waiting for an upturn in the market to give them a painless way out. Unfortunately for them all the signs are the market is about to head in the opposite direction.