With a UK property market considered to be at one of its relative lowest points for decades, the hunger for investors to build their portfolios is ever-apparent. One potential acquisition strategy – that is often overlooked due to perceived misconceptions – is to look into properties that have been left empty by previous owners. Please see an interview below with chief executive David Ireland of the Empty Homes Agency with whom we discussed current levels of empty properties in the UK; the effects of the recession on the situation; the housing deficit; the government’s response; what steps can be taken to investigate an empty home; seeking legal advice; available grants for renovating empty properties; getting advice from local authorities; the organisations’ campaign for council tax relief as well as a very worthwhile conference worth attending on May 23rd:
1) Can you explain what the essential role of the Empty Homes Agency is? Empty Homes is an independent charity. We help people create homes from empty property and campaign for more empty homes to be brought into use, for the benefit of those in housing need.
2) How many empty properties are there in the UK at the moment? At the last count there were 650,000 empty homes in England, of which 287,000 were privately owned properties empty for longer than 6 months
3) How is this figure measured? The figures come from local councils’ yearly returns made to central government – the last figures relate to April 2010.
4) Are these figures likely to increase – bearing in mind the ongoing turbulence of the UK housing market? We do not expect to see a significant increase in the TOTAL figure as there is still underlying demand for housing, and government is doing something to tackle the problem. However we do expect that some individual areas will show increases. For example locations where Housing Market Renewal (“Pathfinder”) projects were operating: these have now been halted and many thousands of properties previously earmarked for refurbishment or demolition are now left empty and abandoned with few ideas of what to do about them. The effect of these abandoned areas may well spread beyond the immediate Pathfinder areas as local housing market confidence is hit.
5) Do you think there is a shortage of housing in the UK and, if so, how large to you see the deficit as being? This is always an interesting question. You could argue endlessly about how much housing really is needed for the country’s current and projected population, but that implies you can or should measure what each person actually “needs”. In reality, you cannot calculate housing shortages so easily. There is certainly a shortage of housing in some areas, but taking the country as a whole the shortage argument is questionable.
6) Has this figure worsened as a result of the recession? Figures for empty homes did go up for a few years then came down. Amongst the causes of this, we would not put the recession at the top of the list. What has had more of an impact on empty property was the surge in investment purchases during the “boom years” 2004-2007, where some developments took place in response to investment demand instead of occupiers’ demand. With the result that – especially flats – were sold to investors anticipating capital gain. In that period not enough attention was given to validating what the rental income flow would actually be – you could blame this on slack lending policies, speculators, or over optimism, but it is going to take a few more yearsr for the effect of that period to work its way through.
7) How do you feel the government is handling the issue? Obviously, the current “austerity” period will have an impact on the public sector’s ability to invest in housing. However the coalition government has introduced some welcome measures specifically to tackle empty homes. Notably, the “New Homes Bonus” – which is designed to encourage the provision of additional housing by giving councils a cash reward – this is being calculated to include bringing empty homes back into use. So, if an area sees a reduction in the number of its long-term empty dwellings this will count for the bonus just as much as building a new house will.
8)For property professionals and landlords that are reading this and come across a empty house that could be potentially renovated – what steps would you recommend? A common problem with empty property is the obvious one – that the owner may not be easily traceable or may not be interested. For this reason we have worked closely with local councils over the years – they have the information and, if necessary, the powers most likely to open the door to getting the property back into use. We provide a lot of information and guidance on the processes for tackling empty homes on our website www.emptyhomes.com, so that would be a good place to start before contacting the council or trying to make progress yourself. With the introduction of the New Homes Bonus, if you can go to the council with a proposition to bring a block of empty properties back into use they ought to be really supportive, as you could be earaning for them a cash bonus!
9) Are there any other obligations / risks that people looking into acquiring an empty property should look into? In dealing with an owner of an empty property, they should, like anybody else, have proper professional and legal advice. Once you can get round the table with an owner of an empty property who is interested in seeing their property sold or renovated, then it should not be much different from dealing with any other property project – there will be all sorts of different issues coming up to be resolved. You might be find an owner who is largely disinterested in the property and the details, and is just happy for someone else to sort it out for them.
10) What about grants for renovating empty properties – how easy are these to access in the current climate? The picture varies considerably around the country – each local council sets its own policy for how much – if any – support it can give to bringing empty property back into use. We have put links for grant information at most English councils on our website www.emptyhomes.com/usefulresources/grants.html. Where a grant is given, this will often be accompanied by a condition that the property is made available after the work to someone from the local housing waiting list. There is another significant benefit for owners who are refurbishing empty property – which is not so widely taken up as it should be. This is the VAT concession for building works on property empty for more than 2 years, where the rate is reduced to 5%, or if it has been empty for 10 years or more then the VAT rate is Zero. The details of this can be found in HMRC’s VAT Notice no 708. This ought to be a real incentive for property professionals to tackle empty property.
11) Is there advisory assistance available from local authorities? How pro-active are they, from a general perspective? Most local councils are keen to get empty property back into use – some come at it from the perspective of environmental health – where nuisance and damage is being caused to neighbouring property, and others see it as an element of their strategic housing work to improve the supply of affirdable housing in their area. Some councils like to act as a enabler or broker by putting owners of empty property in touch with local builders or developers who can do necessary refurbishment work. Many Councils provide advice and guidance for property owners either in booklet form or on the websites. The actual numbers of people in councils focussing on empty homes will be quite small – a group of district councils may some share one person between them – so don’t expect an unlimited ability to drop in to a council to discuss the general position.
12) Can you explain a bit about your campaign on the payment of council tax on empty properties? Relief from Council Tax on short term empty property is quite rightly allowed, but we do think that giving an ongoing discount for an empty house removes one of the few incentives which might encourage owners to do something about re-using the property. Empty homes can become an increasing burden on public sector expenditure through anti-socail behaviour, vandalism, damage to adjoining property, so there seems little justification for giiving relief from the council tax?
13) Can you please let us know about the up and coming event that the Empty Homes Agency are hosting? The National Empty Homes Conference takes place in central London on 23rd May 2011. The focus this year is on new initiatives to make use of empty housing – both short term and longterm solutions, there is a fantastic range of speakers bringing hands on and practical experience of working on empty homes projects, as well as experts who will explain the new government policies affecting this work. It will provide a good opportunity for private sector operators to network with practitioners in local councils and not-for-profit housing providers. Full details are on our website: Empty Homes Conference 2011.
