Everyone now knows that there is a big problem with housing – particularly in London.
It is almost impossible, unless you are Mossack Fonseca client, to afford to buy, even a shoebox cupboard, anywhere in London, and rent payments often work out as even more expensive than mortgage payments.
But housing is desperately needed. With the government determined to dismantle social housing in the capital – where are the workers needed to do all the ‘ordinary’ jobs going to live? The city cannot function without them.
Building new homes is only part of the answer. It takes time to build houses and builders cannot afford to build houses at prices that people on ‘normal’ salaries can afford to pay anyway – hence the blocks of posh apartments being sold to Asian businessmen for ‘investments’.
Why properties are empty
There are large numbers of properties just lying empty. If they could all be used to for affordable housing, we probably wouldn’t have a housing problem – or at least it would be very considerably reduced.
Reasons they are left empty could be
- Because the owner is living elsewhere and does not want to rent it out
- Because it has been inherited under a will and the beneficiaries do not what it to live in
- Because the owner cannot afford to put it in proper repair
- Because the owner lives abroad, has only bought the property as an investment, and is not interested in renal, just in the increase in its capital value
In a city where some people are forced to sleep in holes under the floor because there is nowhere else for them, it is a scandal that so many properties are lying empty.
Here are three possible solutions:
1 Empty Dwelling Management Orders
These were created by the Housing Act 2004 and came into force in 2006 (when I wrote about them here). They allow a Local Authority to take over the management of a property which has been lying empty for two or more years and which are not on the market for rent or sale.
The rules allow the Local Authority to bring them back into use but the ownership does not change.
So far as I am aware, apart from a few innovative schemes such as those I discussed in 2011 here.
Probably the main reason these rules are not being used is the cost of bringing the properties back into use which Local Authorities cannot afford.
It would be helpful if some finance could be released for this – and if work is needed on the properties, this can be used as an opportunity to train people without jobs and give the new skills – which would help with our shortage of skilled construction workers.
Surely there must be grants that could help with this sort of thing?
2. Compulsory purchase orders
This is where the Local Authority actually buys the property – however before getting the authority to do this they must show that they have tried to get the owner to bring the property back into use and also show that there is a good reason for the CPO being made.
Although I would have thought the acute housing shortage locally should suffice.
Again though, there is the problem of lack of funding available to Councils to allow them to do this. It can be expensive compulsorily purchasing a property as there are expensive legal costs and compensation must be paid to the owner.
I am not a tax expert – however this could be one way to raise some funding to allow points 1 and 2 to be carried out.
There should be a premium Council tax paid by owners of property which is left empty for more than, say, one year. This could then be ‘ringfenced’ for other housing initiatives such as 1 and 2 above.
No doubt there are other tax measures that could be taken to discourage people leaving properties in areas where they are needed, just lying empty.
As usual the main problem is not the law – we already have laws to deal with empty properties – but the political will (and the financial ability of Local Authorities) to use them.
What suggestions do YOU have?