Many property auction newcomers wonder where the stocks of houses that fall under the hammer come from. The reasons they appear are many and various: bank repossessions, council and public sector disposals, private sector surpluses, company cashraising purposes, divorce settlements, unmortgagable properties that would stick in an estate agent’s window, intestate sales, the division of wills, people wishing to cash in quickly and move abroad, those in a chain desperate not to have it break, and then there are numerous reasons for empty homes coming onto the market that haven’t been used for years.
Indeed, according to the charity Empty Homes, there are 737,491 vacant properties in England. Of these, 279,000 are classified as ‘long term’, meaning the property has been left empty for more than six months. These numbers come mostly from council-tax data. Councils usually offer exemptions for empty houses, giving owners an obvious incentive to declare that their property is empty.
Across the United Kingdom as a whole it is harder to put an accurate figure on empty properties as equivalent statistics are not published in Wales and Northern Ireland. But the charity’s best estimate of the total number of empty properties across Britain is 930,000, of which 350,000 are long term.
Any house counts as ‘empty’ that is habitable but not lived in, with some exceptions. The figures do not include ‘second homes’ that are occupied periodically by their owners or holiday let tenants. More controversially, they don’t include flats above shops. That’s because many unused flats above shops have no residential planning status, even though they are laid out as dwellings and have been used as such. These flats are charged business rates rather than council tax, so do not show up in empty house statistics. A government report from put the number of potential houses in this category at 300,000 in England alone.
The figures also specifically exclude uninhabitable houses and those that are due for demolition. Empty Homes argues that houses due for demolition, where regeneration schemes have been scrapped and demolition is now in doubt or cancelled, should count as empty. This would add a further 40,000 to the long-term empty figure, bringing it close to 400,000 (still excluding flats above shops).
There are lots of reasons why houses are empty. Sometimes they belong to elderly people who have moved into residential care. They may be empty because the people who have inherited them don’t know whether to keep, sell, or let them. Surveys show that most empty houses are privately owned,
by people who own just one or two properties. Most typically, they are rented dwellings that have fallen into disrepair and are owned by people who lack the skills or money to refurbish and let them out, or offer them to housing associations. The other main category is houses and flats owned by businesses, and often located close by. In the past, these dwellings would have been used by employees (including agricultural workers), but changing employment patterns have left them unused. Other categories include unsold or unoccupied flats left over from housing boom developments and large-scale regeneration projects that have stalled. These often leave houses emptied of residents but not yet redeveloped.
George Clarke, the architect who fronted some of Channel 4’s housing programmes that investigated the issue discovered exactly what many have been saying for some time: that the Pathfinder scheme introduced under Labour has not worked. The idea was to get rid of cramped flats or small terraced houses with doors opening directly on to the street (councils believe people do not wish to live in such houses) and replace them with a new house with a front garden. The result was billions of pounds (of your money) spent emptying and demolishing houses, but as the recession bit few new ones were ever built.
Clarke argues that instead of exempting uninhabitable houses from local property taxes, councils should quadruple them. It is also agrued that councils must be forced to sell off (probably through auction – to be seen to be fair), or give away, empty houses that the private sector could more cheaply bring into use. Selling off property at a low price to people who undertake to do it up has worked in Rotterdam. There, such a scheme has so successfully helped alleviate related social problems that it’s now over-subscribed.
So, is the government actually doing anything? Well, as part of its overall housing strategy revealed in November, the government announced £150m in funding to bring empty houses back into use.
Measures include encouraging private landlords and housing associations to use Green Deal funding to renovate empty dwellings; changes to empty dwelling management orders to target long-term empty houses; and a New Homes Bonus, a cash incentive to be awarded to empty houses brought back into use. In addition, the government has started a consultation period on an ‘empty homes premium’ addition to council tax, payable if a house is empty for more than two years.
But will all this work, we ask ourselves? I am doubtful that the whole of the £150m pledged by the government to tackle the issue is going to be productively use by councils and housing associations. It is unclear how many empty dwelling management orders – which require owners to co-operate with the council on restoring a property – have actually been issued or will be issued, for example. Some of those funds should be used to give discounts to first-time buyers who are happy to carry out the refurbishment. Publicly funded private gentrification must be preferable to the public sector’s dismal record in the endeavour.
The answer is, as always: the market, and certainly not the state. Carrots often work for the motivated or semi-motivated, but sticks are effective for all. Charles Clarke is on to something; impose serious and easily enforceable penalties, by significantly increasing council tax, on landlords who are too lazy or incompetent to take action, thus forcing this redundant stock onto the market and let ‘us’ deal with them: buy, refurb, let, since it’s what we do day-in day-out anyway.
Britain has a housing shortage, but a housing surplus of ‘dead’ accommodation, yet benefits from a richness of acquisitive landlords hungry to increase their portfolios, who know very well how to renovate properties (we should do, after all those TV shows on the subject). It’s not if there’s a paucity of know-how. And whilst they’re at it, the government should zero-rate the VAT on restorations and furnishings and we’d solve this problem of ghost houses ourselves, in less time than it takes to hold a ‘consultation’.