Liberal Democrat Communities Minister Andrew Stunell has been laying out details of how the Coalition Government is intending to get more empty homes put to use housing people. As the press release says:
Councils will receive powerful new incentives, with the coalition matching the council tax raised for every empty property brought back into use. Local authorities will be given the freedom to spend this money as they see fit. The government is also investing £100m in a fund for Housing Associations to bring empty homes back into use.
There are around 300,000 empty homes across the UK, and local residents are being encouraged to work with the council to identify where these homes are, so that their local community can start benefitting from the extra cash that can be used to improve their local area.
Andrew Stunell himself said,
It is a scandal that thousands of homes have been left to stand empty.
Long-term empty properties easily fall into disrepair, and attract squatters, vandalism and anti-social behaviour, bringing down the local neighbourhood.
To start tackling this problem, we are giving councils powerful new incentives to bring homes back into use. We are pledging to match the council tax raised for every empty property brought back into use to help these properties become homes for thousands of families in need.
Local communities hold the keys to bringing these empty homes back into use. I want to encourage them, councils and landlords to work together to end the scandal of empty homes.
The story has got some major, and positive, news coverage – including a very positive piece in The Sun – though the story also exemplifies one of the party’s challenges in opposition, for nowhere does it say “Liberal Democrat”.
(Electoral pop fact: the number of Sun readers who voted Lib Dem in May 2010 was more than the number of Lib Dem voting Guardian and Independent readers put together. That’s because although a far smaller proportion of Sun readers voted Lib Dem than Guardian or Independent readers, there are many more Sun readers than readers of either of those two papers.).
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24 Comments
But where is the incentive for owners to cooperate and the penalties if they do not. This is just flannel!
@Peter – I suspect the idea is that local authorities will best know how to get cooperation from owners in their own areas, and this proposal gives local authorities more incentive (and conditional funding) to get to work on it. It’s a little bit more than flannel; and a bit odd for Lib Dems to insist that only central government-imposed measures are meaningful.
More public money for private landlords as a reward for leaving their assets unused! This kind of economic illiteracy would be funny if it weren’t so bloody tragic.
How much more sane and sustainable to incentivise idle landlords by levying a tax on the value of their unused sites – along with all commercial sites (since that’s what letting premises are) – as per existing Lib Dem policy for business rates. Such an approach would achieve the same ends, raise revenue for the exchequer instead of depleting it and reduce rents to make housing more affordable as an automatic consequence.
But hey – why go for an economic no-brainer that that, when you can line landlords’ pockets from the public purse?
How is this money for private landlords Andrew?
Agree about land tax though.
Andrew Duffield is entirely correct. The crackpot scheme announced by Andrew Stunell will be yet another drain on public money, which could be used more effectively elsewhere, when the same (worthwhile) goal could be accomplished by incentivising property owners to invest THEIR money in THEIR properties.
It is one of the more interesting things about recent politics that whilst both Labour and the Conservatives have at least engaged with the arguments about the preferencing of what have been called the boomer generation, whilst there has been a curious silence on the part of the Lib Dems. For nowhere in this article is the wild generational inequality in housing mentioned.
That 300,000 figure might sound very impressive, but how many of those are empty because they are in areas where no one in their right mind would live? Andrew Duffield is right to a point that measures via the tax system to actively disincentivise unused housing is a good measure, but would that really help people get housed? I also can’t see that sorting out the real problems in BTL either, but still such measures would be a start.
Sooner or later someone is going to have to stop fiddling and take on the BANANAS and, wait for it, build some houses that people might want to live in and structure the sales to prevent the BTL crowd taking over. But I doubt Sun readers would like that very much.
@ Andrew Duffield
You make an interesting suggestion but I’m not convinced that it’s any less ‘economically illiterate’ than the government’s suggestion. Surely chasing tax revenue, often from overseas residents, is harder than simply using their house for scial housing?
My main concern about the emprtyy homes policy is that empty homes will tend to be in areas where there is less demand for housing. By contrast, hgh demand areas like london have the lowest number of empty homes since the 1970s, so i’m not sure how much scope there is to actually alleviate housing pressure in any noticeable way.
I know this will not be printed as there is an embargo on any dissent in the coalition camp, however there is an article in the guardian that accuses lib dems of breaking the rules, as they put it a ‘delicious irony’ given that the oldham by election has been re run for the same reason. Remember lib dem candidates, you will have to face the voters at some time. The announcement is pure electioneering and if labour had done it imagine the outcry.
For what it’s worth, I live in a part of the country with a lot of empty houses. The main reason why these are empty is because there are not enough people to live in them. Job opportunities are falling, people are migrating. The way to increase occupancy would be to invest in regional development to attract new people. The government of course have scrapped regional development funds. It is also quite possible that a large local employer, the MoD, is to close a large base with a subsequent knock on effect on the local economy.
For historical reasons this part of the country will never vote Tory, I think they will also think twice about voting Lib Dem now.
My main concern about the emprtyy homes policy is that empty homes will tend to be in areas where there is less demand for housing
Not necessarily. Try walking round the posh residential parts of central London and look at how much housing there is left empty. These hit the headlines when there’s a big squatters case, but apart from that., no. You might imagine from THE Sun et al that the only people who left houses empty were councils. You are never going to find the papers of the rich (whether aimed at the rich or aimed at pushing the propaganda of the rich at the poor – THE Sun’s raison d’être) crticising the economic system whereby the rich make huge anounts of money by sitting on their arses and doing nothing but owning property deeds. And that money is made in the end, since money does have to be made, out of the misery of the poor, out of people living in squalid overcrowded conditions, people depressed and miserable because they cannot develop because they cannot afford housing of their own, people living on the streets, people pushing themselves to pay impossible mortgages and familes breaking up and more misery because of the toll that takes.
There are a lot of houses left empty for most of the year in many other highly desirable places to live as well. I.e. second homes. Or things like homes left empty because they’ve been inherited and the people who inherited them have no great pressure to deal with them.
We are told we must all suffer for the social good in the current economic climate, but there is no call for those making money out of property ownership to suffer. The papers of the rich will make sure of that – they will give out the “we must all suffer together” lines when difficult spending cuts are made, but they will never give out that line should there be any suggestion of a policy which shook up the complacent assumptions those who own property have about it and how they can use it to enrich themselves and their children at the expense of the poor.
I think you ought to mention that this announcement is being reviewed by the Cabinet Secretary to see if it broke purdah: http://www.guardian.co.uk/politics/2011/jan/10/liberal-democrats-byelection-row-rules
@ Matthew Huntbach
“Not necessarily. Try walking round the posh residential parts of central London and look at how much housing there is left empty. ”
Actually, while there are thousands of homes in those posh parts of London left technically empty, as I said in my post, the number and propotion of EH in London is at its lowest point for 30 years. There are some very interesting stats on the empty homes agency site: http://www.emptyhomes.com/usefulresources/stats/statistics.html
The top five boroughs with the highest proportion of their housing stock empty in 2009 were: Tower hamlets (5.52%); Greenwich (4.02%); Wandsworth (3.36%); Sutton (3.04%) and Richmond (3.01%). Cumulatively, these five worst performers had about 19,000 EH, of a London EH total of 75,000.
That’s a big number, although it is only 2.28% of the housing stock. However, take away the usual churn of empty properties that may be between tenants or owners or the subject of family disputes about inheritance, and then take away the london homes of wealthy foreigners who fly in every couple of months for a weekend , or who only spend summer here(good luck taking away their property rights!), and then throw in how hard it would be for boroughs to track down and then co-erce all the remaining landlords into making a property available for social rent, and then take into account how inefficient a process of housing it would be for boroughs or housing associations having random odd properties dotted about in buildings with different legal ownership rights, different contracts, and different states of repair, and you see that of the 2.28%, very few will actually be available for social rent. And they will be in insufficient numbers to make barely even a dent in addressing housing need.
as a liberal i believe in the rights of an individual to own property, even if it is a second one and surplus to requirements. if there is a shortage, then we should build more. However, whilst i don’t think that bashing the rich will necessarily make the lives of the poor any better, we should certainly tax second homes in a way that recognises the shortage issue. but the issue is findametally one of a lack of supply of social housing, not of rich people sitting on empty properties and thus punishing the poor.
Malcolm, I am not proposing a central government-imposed solution. In Wales we are advocating a two-prongeed approach: 1. Allowing Councils to increase the Council Tax on long term empty homes so as to penalise the owner for the blight s/he is bringing to the local community; 2. offering a grant to bring the home into use on condition that it is made available as a social-let for a set period of time under the management of the Council or an RSL before reverting to its owner.
In addition we would want to review Empty Dwelling Management Orders and look at other compulsory powers available to Councils. Discretion remains with the Council as to how they use these powers but I suspect that none of them would require an incentive to act, just the tools.
Dominic, I’m not denying that if we really wish to tackle the poor housing many people in this country have (which has a very serious impact on their liberty and the liberty of their children, liberalism-of-the-rich doesn’t acknowledge things like that) it will be dificult and negatively impact on others. Indeed, I’m acknowledging that. But haven’t we heard a lot of this sort of thing recently “it’s going to be hard, some people are going to suffer, but it’s for the long-term good”? It seems the rich and the papers of the rich don’t like the idea that THEY may be the ones to suffer rather than the poor suffering. And the poor can’t just up sticks and move to Zug or the Cayman Islands or wherever like the rich threaten to do if we ask them to share in the hard times.
I’m putting this to be realistic, just as those who support big spending cuts claim to do so just to be realistic. If we can’t stomach what really needs to be done to solve the prolem, let us at least acknowledge that. Don’t moan about the homeless you have to step over on the way to the theatre, or social breakdown caused by so many families in disgustingly overcrowdd conditions or lives brought to a miserable cionclusion by mortgage payment stress. Just say “serves them right for not being rich like us, stuff them”.
As for the usual line of building housing to meet the need, well yes. But “Not In My Back Yard”. So for anyone who says “NIMBY” see the paragraph above. Actually, it is impossible to build to meet demand. People will always demand more and bigger housing. I may demand a country mansion and a City penthouse, but there isn’t enough country and City to meet the “demand” of me and everyone else who wants the same. Add onto this housing held not because it’s needed or in some cases even used, but because it’s a better “investment” than investing in industry or something that is really wealth-creating, and one may very well find that any new building just ends up in those aready housed snapping up more of it and the homeless and badly housed problem is as bad as ever.
As I’ve already said, if we don’t care about that, or feel it’s impossible to do anything about it, I’d like us just to be honest and admit that. See paragraph two above again.
As for “i don’t think that bashing the rich will necessarily make the lives of the poor any better”, well they would say that, wouldn’t they? Personally I think making it more expensive to hold onto more housing than you need, and using the tax raised to make it easier for those in need to get housing will help the poor, however much you classify it as “bashing the rich”. But I’m being honest and acknowledging the screams and howls that would arise if we e.g. proposed serious LVT balanced by a needs-related LV-tax allowance. See how even Guardian readers screamed and howled when George Monbiot raised the subject recently.
Anyone know what the conditions are to qualify for the money? Where are they posted?
> Dara: That 300,000 figure might sound very impressive, but how many of those are empty because they are in areas where no one in their right mind would live?
…and others in similar vein:
If you mean the daft situation of all the jobs/money/demand being in the south east of England… hard to see that being achieved.
If you mean no one wants to live in places cos of social problems (sink estates), that’s a different issue and again, not going to be achieved anytime soon.
However, there’s another instance of empty houses that councils/housing associations COULD do something about, with the legal powers/cash, which is where the gvt plan could help.
I can think of four long-boarded-up houses locally. Each in the middle of popular residential terraces. Five minutes’ walk from the station and town centre.
Total waste at the moment. Four families on waiting lists could be living in them.
And not a case of private landlords leaving investments unused: they’ve been left to rot for years. Possibly after the owner died with no family??
Better socially and environmentally to regenerate existing town/city centres as residential areas than swallow more greenfield sites round the edges with new estates and no public transport to serve them.
..oops, I meant hard to see it being RESOLVED.
@ Matthew
“As for the usual line of building housing to meet the need, well yes. But “Not In My Back Yard”. So for anyone who says “NIMBY” see the paragraph above. Actually, it is impossible to build to meet demand. People will always demand more and bigger housing. I may demand a country mansion and a City penthouse, but there isn’t enough country and City to meet the “demand” of me and everyone else who wants the same. ”
There’s an interesting debate about ‘demand’ to be had here. We have a shortage of supply, or to put it another way, too much demand, for housing. But what we mean is that more people want to live in london and the south than there are homes that many can afford to buy, especially first-time buyers. Sure, we’ll never satisfy the demand for a city penthouse and a country pile for everyone. But we can satisfy demand for housing in the south to a much, much greater extent than we currently do. And that is where i disagree with you – i don’t think it’s impossible to meet ‘reasonable’ demand (by which i mean a home suitable for each household, rather than two homes each). Terry Farrell estimated that we could meet the Thames Gateway Housing targets on brownfield sites next to exisiting settlements alone in the TG. In fact, we could meet the whole of the south-east’s housing demand with relative ease, if we wanted to. Remember, only 11% of the land of the UK is built on, and that includes gardens and parks. Indeed, actual homes i think only take up about 2% of the land. If we built on only another 1% of the land we could satisfy all pent-up housing demand, as we would be increasing housing supply by 10%. Even built-up London can accommodate new homes. It has the lowest density of any western european capital except berlin. It is half the density of paris, amsterdam or barcelona, all of which are arguably more pleasant cities to live in. Of course, people won’t all have a big house or garden, and we brits will have to get used to living in apartments in city centres (which the scots already do, to be fair). And we need space standards so that those apartments aren’t the ‘hobbit homes’ Boris Johnson describes. But ultimately, it’s a fallacy that we can’t build our way out of this crisis. The fact is that there is no political will to do so, and that may well be partly if not largely due to the NIMBYism you describe. That has to be overcome. But this is a political question, not a resource question.
Dominic
In fact, we could meet the whole of the south-east’s housing demand with relative ease, if we wanted to.
I was brought up living next to the South Downs in Sussex. At least our house was next to the South Downs until they built more, and then more, and then more. I have seen land snatched and built on, land I used to love for its wildlife when I was a boy. That is why I am not nearly so sure it can easily be done as you are.
If we built on only another 1% of the land we could satisfy all pent-up housing demand
Or would this be issuing more land and concrete investment instruments to those who don’t need more housing, while leaving those who do need it still without?
Even built-up London can accommodate new homes. It has the lowest density of any western european capital except berlin. It is half the density of paris,
These figures are much less meaningful than you suppose. A lot depends where you decide to draw the boundaries of the city. Berlin is very widely drawn, its boundaries accommodate a lot of the surrounding countryside. Paris is very narrowly drawn, its boundaries are the Périphérique, so obviously it has a higher density if, unlike London, you don’t count the suburbs as being part of the city.
@ Matthew
Don’t take my word for it, take terry farrell’s. he has said that the (old) targets for south-east can be met on the thames gateway alone. as i say, this presupposes that the homes are not all large country pads, but then they have only ever been a small proportion of homes built at any given time.
As to your comment about ‘instruments’, which i take to mean housing policies that benefit the wealthy (sorry if that’s wrong, your comment was slightly oblique), that’s not what i was suggesting. More housing, public and private, needs to be built. The state needs to step up and start building the sort of numbers we saw in the 50s and 60s, although without the poor planning and design/construction standards. Various tools for doing this are at our disposal – new town development corporations are good practice in this regard. public housing would be available to those who need it, and private to those who can afford it – twas ever thus. but an increase in supply at both ends of the market would ease pressure on prices (and waiting lists) for everyone else.
As for the comment about where you draw the boundaries, of course that is true, but even taking that into account london has a very low density. the only parts of the city that match paris’s density are chelsea to earls court, and around bayswater. most of the centre is still low density by european standards (not that i am suggesting a mass programme of housing in mayfair, ths is just by way of example). the centre of berlin is still not very densely populated (for historical reasons it must be said) even taking into account the suburbs issue (the comparison of london with berlin stands, though, as greater london has huge areas of suburbia – half of one of the outer boroughs, for example, is green belt!).
i say again, the issue is one of political will. if we wished to, we could accommodate housing need by building more homes, many of them on brownfield land, some on green belt, some new settlements, and a lot of urban infill. taking away the rights of someone to have a second home (as opposed to taxing them at, say, 150% of council tax) would not, in my view, address the fundamental issue of a shortfall in necessary homes of as much as 100,000 per year.
As to your comment about ‘instruments’, which i take to mean housing policies that benefit the wealthy (sorry if that’s wrong, your comment was slightly oblique), that’s not what i was suggesting.
No, that’s not at all what I meant. I meant someone has some money they want to save. So they could buy bonds, they could buy shares, they could buy antiques. Or they could buy houses. They are using these things as “investment instruments”, they are owning them primarily or only because they can sell them some time later and make a lot of money by doing so.
So, you build a lot of houses to “meet demand”, as you say, but what if those houses are bought not by those who need somewhere to live but by those who have a spare few hundred thousand and buying a house looks to be a better investment than putting it in a savings account? What makes you think those houses are going to go to those who need somewhere to live and can’t afford it? Aren’t they much more likely to go to those who have the money to buy them even though they don’t need them? Isn’t it obvious this is going to happen until we make owning more housing than you need a financial liability?
That is why I am saying “build to meet demand” won’t work to solve the housing crisis, unless it is accompanied by firm, but as I said, very unpopular amongst the rich who dominate public commentary, measures against using houses as money-machines.
@ Matthew
Thanks for clearing that up for me. I see now what you mean. You are right in that if the (let’s say) million extra houses that are needed to bring long-term house price inflation down to the european average were all bought by wealthy, multiple property-owners who didn’t need them and just sat on them as investments then yes, the policy wouldn’t be a great success.
However, this didn’t happen in the housing boom in the inter-war period and nor did it happen in the post-war boom. Why would it happen now if not then?
Most people who buy a second home as an investment also tend to rent it out as they need to cover the mortgage. So even if every new house was bought as an investment (something without historical precedent), i daresay the vast bulk would be rented out, which would at least bring average rents down. And with huge numbers of homes coming onto the market, their value wouldn’t rise in a way that would make them great investments, as supply would finally be matching demand, so there would be less incentive to purchase them for the reasons you suggest.
Further, there is a huge, huge need for social housing in this country, and i think the state needs to build these -and those homes would by definition not be for sale on the private market, thus also avoiding the risk you mention.
Finally, the problem is not going to be solved by restricting demand, although that would probably help in some rural areas with second home-owners, and would probably make a dent overall. It has to be by increasing supply, and on a scale that would pretty much negate the problem you suggest.
Your worry about the rich buying homes i don’t think would apply if we built the numbers needed, and of the type necessary to alleviate the greatest need.
However, this didn’t happen in the housing boom in the inter-war period and nor did it happen in the post-war boom. Why would it happen now if not then?
One reason is that much of it was built as council housing. But another is that Schedule A income tax on imputed rent (abolished some time in the 1960s, I think), along with the local government rates which were a more effective tax on property than the current council tax served to make home ownership less lucrative than now. The existence of council housing put less upwards pressure on the price of private housing, because it was a cheap safety net, open to most people in a way it certainly is not now. There was more readily available land to build housing on then. Rent control made it less profitable to own housing and rent it out privately than now.
These off the top of my head, it wasn’t hard to think of quite a few fairly obvious reasons.
Most people who buy a second home as an investment also tend to rent it out as they need to cover the mortgage. So even if every new house was bought as an investment (something without historical precedent), i daresay the vast bulk would be rented out
Ah yes, so more money from the taxpayer to line the pockets of those who have enough money to buy up houses as an investment and put the prices up so squeezing out the poor, who are then housed in those same houses, pay more for them, get the rent paid by housing benefit are caught in a huge poverty trap.
As for “historical precedent”, there are parts of London where the buy-to-let boom HAS resulted in almost every new development being snapped up and then sold for rent. Try looking at any development of a block of flats in the poorer parts of inner London – watch the “For Sale” signs go up one month, and the “To Let” signs the next. The removal of rent controls and the destruction of council housing has played a big part in this – renting out to housing benefit people is big money, easily made, these days. The people who are tenants in these flats pay something like three times the rent of the same sort of flat when it’s a council flat, and they are people who would have got council flats had council flats still been as available as they were up until right-to-buy and the block on council house building kicked in during the 1980s.
Further, there is a huge, huge need for social housing in this country, and i think the state needs to build these -and those homes would by definition not be for sale on the private market,
Here’s how the sharks deal with that – you make a deal with the tenants to split the profits from right-to-buy, and lend them the money to do it. Then, when they’ve bought it, sold it onto you, you rent it out – at three times the council rent – to the same sort of people who would have got the council housing had there been any left.
I feel even if private rents crash, property ownership is still seen as a firm investment, if just for the capital growth, so, as I said, we would still see people buying it up as a “land and concrete investment instrument”, because they get more that way in the long-term than putting it in a savings account. I don’t think you’ve really argued away my point that what you suggest, without other stuff that wouldn’t be popular, would end up with large amounts of property essentially bought to be used as very cumbersome savings account pass books.
Matthew, I think we’re arguing for the same thing here – a huge increase in council/social housing construction. as part of that there also need to be restrictions on and reform of right to buy, not least how receipts from sales are used.
I’m interested to hear about the tax changes that you mention in your first para. What was the Schedule A tax change? And how were rates a more ‘effective’ tax on property than council tax? Do you mean they were higher?
your point about the buy to let market is a bit chicken and egg – it’s more desirable to do that when prices are rising, supply is short and social housing is non-existent. Big increases in housebuilding (both public and private) will reduce the desirability by dealing with all those factors. We’re probably agreed on this – i guess we’ll have to disagree that what is also needed are restrictions on the right to own more than one home, or to own a home that is ‘too big’ for your needs (however those needs are defined).