Bringing empty homes back into use: audit of privately owned empty homes

8. Conclusions and recommendations

Conclusions

The original research questions posed for the empty homes audit were:

• What is the current picture in Scotland with regards to empty homes, taking into account, the scale, characteristics and impact of empty homes?
• What are some of the key barriers to, and opportunities for, bringing empty homes back into use in this context?
• How successful have the approaches and interventions been in achieving their aims in relation to empty homes in Scotland?
• How could these approaches and interventions be improved going forward and are there further actions we could be taking?

The current picture of empty homes in Scotland

The detailed analysis provided in this report sets out the position in relation to empty homes in Scotland and how that has changed over time, as estimated through council tax records. Over the last decade there has been a slight increase over all categories of empty homes (2%), a small increase in the number of unoccupied exemptions (3.6%), significant increase in the number of long-term empty homes that have been empty for over 6 months (68.4%), and significant decrease in the number of second homes recorded through council tax (30.1%). Since 2013, there has been an increase in the number of long-term empty homes and the decrease in second homes, which could be explained by local authorities gaining discretionary power to remove the empty properties discount or set a council tax increase of 100% in 2013. These changes have led to the reclassification of a number of properties and has had a significant bearing on the year-on-year changes in the figures.

There are considerable limitations in using the CTR as a means of quantifying and monitoring the level of empty homes as evidenced through this research:

• The inaccuracy of some properties recorded on the CTR – where some long-term empty homes are not recorded, or some properties are recorded on the register as empty when they are not. The extent of this inaccuracy is unknown, although qualitative interviews suggested inaccuracies were not unusual.
• Linked to this, the disincentive to self-declare your empty property and lack of resource to monitor and enforce whether a property is empty or not.
• Tax incentives for local authorities to shift homes from long-term empty to second homes, although there is little quantitative evidence of this shift happening as noted above.
• The lack of transparency around unoccupied exemptions - while some of these properties may technically be ‘exempt’, they are in practice long-term empty homes, and from the perspective of getting homes back into use should be considered as such.
• The definition of long-term empty homes (over 6 months) is not considered useful as it does not reflect reality and is impractical. EHOs point to the fact that properties may be naturally empty in the housing system for over 6 months, arguing the priority for action is empty homes over 12 months. Homeowners talked about the difficulty in arranging various permissions, works, contractors etc which for them means in practice 6 months is not long-term empty.
• There are differences in approach to data collection and monitoring long-term empty homes, which may not be directly comparable to the official reporting. This is partly driven by EHOs opinion on which properties were ‘really’ long-term empty, rather than the official categorisation of long-term empty. EHOs rarely have the time to gather more data on the condition, type and size of empty homes, or to analyse the data that exists for strategic purposes.

It is concluded that council tax data is not a robust reflection of the current position of empty homes in Scotland, based on the definitions of empty homes required for the purpose of bringing empty homes back into use. Given the different approaches, and high probability of errors in recording over 32 different local authorities it is not possible to be certain on the actual empty homes position from this source. Further, the council tax definitions of long-term empty homes over 6 months, and the unoccupied exemptions do not fit the policy aims of bringing more empty homes back into use – on the one hand many empty homes are not ready to be brought back into use at 6 months and therefore should not be prioritised for action using scarce public sector resources, and on the other, many opportunities may be being missed for bringing properties back into use that are defined exempt, but may not be prioritised.

This means the scope to put additional demands on how empty homes data is collected and reported from the CTR is very limited. More work could be undertaken nationally with local authorities to assess what is feasible to add to, or report differently from the CTR, or whether an entirely different system is required, drawing on direct referrals and reports from neighbours and others on empty homes. SEHP has been developing its support role to local authorities in relation to data analysis and it may be that the Partnership could be a co-ordinating and commissioning body for a substantial review of the way in which empty homes are defined and quantified for the purpose of bringing them back into use, rather than for council tax purposes. However, the course of action in relation to data collection will depend on the importance placed by all stakeholders on obtaining an accurate position on empty homes, or whether resources should be focused on promoting and taking action in relation to getting empty homes back into use. On balance, given the level of housing need in many housing markets across Scotland, the focus of scarce resources should be on getting homes back into use. Furthermore, the significant limitations associated with the CTR for quantifying and monitoring empty homes should be fully understood across all stakeholders.

Key barriers and opportunities to bringing empty properties back into use

The key barriers in bringing empty properties back to use are commonly identified across all stakeholders around practical matters and costs associated with arranging repair and refurbishment work, which is inextricably linked to personal financial barriers. Financial barriers relate to access to finance, but also owners’ viability considerations when comparing investment requirements relative to potential property value or rental yield in lower demand/lower value markets. The lack of capacity in the construction industry was clear, and resultant increasing costs can exacerbate the viability in bringing properties back into use. The regulatory environment was also commonly mentioned as a disincentive for investment in private rented properties, as was lack of access to funding for energy efficiency improvements for unoccupied properties. The overall judgement, and motivation from owners about getting a home back into use was the balance between investment and practical consideration. This links to the potential effectiveness of financial sanctions, and the importance of discretion in application of these to ensure the right balance is struck to motivate, but also enable a property to be brought back into use.

Lack of engagement from owners was a key theme from EHOs, and there were a wide range of complex personal circumstances and intractable problems that could drive this lack of engagement. The most difficult circumstances often involved a deceased former owner, typically around grant of confirmation and lengthy legal processes, but also where beneficiaries inherit liabilities, or where their personal circumstances mean they are unable or unwilling to deal with the property. The range of examples evidenced where the skills of the EHOs focused as much on the needs of the owner (or beneficiary) and building trust with them, as it did on using their knowledge and experience in complex problem solving to get the property back into use. This linked to the frustrations from local authority stakeholders around lack of resource as a barrier, and the call for more staff to tackle more empty homes.

There are also external factors that are relevant which present both barriers and opportunities to different areas including the local housing market, demolition schemes, the local economy including the prevalence of tourism and holiday homes, and strategic economic development initiatives including new investment.

The effectiveness of current approaches and interventions and areas for improvement

The local EHO resource is a critical resouce in bringing empty homes back into use, and there is a direct correlation between the amount of EHO resource and the amount of empty homes brought back into use. A successful EHO acts as a trusted advisor, co-ordinator and sign posts owners to other interventions. Their success in facilitating empty homes back into use is mainly due to provision of information, advice and influencing empty home owners, although this influnce may also be partially dependent on the leverage from other interventions, in particular applying discretion for council tax premiums, and to a much lesser extent advising on loans or grant availability (but these are not available or promoted uniformly across Scotland). Many EHOs work part time and their roles include different functions, and it is clear that most EHO resources are stretched, and if more of this resource was available and targeted to the areas with highest incidence of empty homes, then more could be achieved. There is also likely to be higher satisfaction from owners with support received when an EHO is involved, but owners noted the variability of services across areas, and general lack of awareness of empty homes services. The EHO resource, combined with the enabling role of SEHP provides the lowest cost and best value for money of all interventions, taking into account total costs including indirect costs of the SEHP used to encourage local authority empty homes responses. The leverage achieved from local Authorities (mainly) and other Scottish Government contributions (more limited) is significant. As such, both Scottish Government and local government should consider further investment in this resource. This includes the Scottish Government grant funding of local authorities for EHOs (through SEHP) which could be extended, and local authorities’ ability to use council tax resources raised through empty and second homes (reduced discounts or premiums) to focus more activity on housing functions. If Scottish Government and local authority combined funds served to increase the EHOs resource, this would enable more empty homes being brought back into use and enable a move to more strategic approaches to tackling homes which are currently limited due to operational pressure relative to the available resource.

SEHP plays an important role in influencing and supporting local authorities to develop their empty homes response. This relates to persuading local authorities to have EHOs in the first place, training, supporting and maintaining these roles in the long term, but also providing ongoing networking support to EHOs which is valued by the EHOs. Looking at the numbers of EHOs since SEHP’s inception in 2010, and understanding its ongoing influencing and advisory role, it is concluded that the level of EHOs currently in place and the outcomes achieved by them would not have happened if SEHP did not exist. SEHP is also providing a crucial role in data analysis and strategic planning advisory work, which most EHOs do not have the time for as they are focused on critical frontline work with homeowners. Increasingly, SEHP is also providing support to wider organisations to focus on empty homes, and again it is clear SEHP provides an important enabling role beyond the local authority support role. Further information is required on the direct outcomes achieved through the SEHP advice line to assess its effectiveness. The overall value for money of SEHP is included within the EHO roles as concluded above.

The Scottish Government Empty Homes Loan had variable success, with differing approaches to promotion and implementation across different areas, often due to the fact that this was left to individual EHOs who are stretched and focused on operational activity, and therefore resulted in differing take up. Take-up may also have been muted due to alternatives in the loan market at that point. However, repayable grants or loan interventions provide good value for money to the public purse over the long term (other things remaining equal) as they enable the recycling of an initial outlay to achieve multiple outputs.

There are widespread calls for increased financial support for empty homeowners from across all stakeholders (although often for non-repayable grant), and any future scheme should learn the lessons from the previous empty homes loan scheme i.e. effective marketing and promotion, ensuring the offer is attractive for homeowners, ensuring consistency and expertise in loan administration to enable the full benefits of this approach to be harnessed.

Local authority grants, often provided through strategic housing funds can make the difference for some homeowners to enable them to bring their property back into use. However, limited resources and poorer value for money means it is unlikely that non-repayable grants will be scaleable across Scotland in the current financial environment while there are competing funds for other affordable housing priorities. As outlined above, the lowest cost and highest value achieved for strategic housing funds are the deployment of EHOs. In relation to other grant funding streams for private ownership (whether central or local government funded) there is potential leakage of value from the public purse and local communities from grant, particularly if the intervention fails and/or the property becomes empty again. Where grant is provided for social housing, the value would still be retained in the public/quasi public sector and presents good value for money.

In relation to council tax premiums and discretion, unsurprisingly the over-riding view was of homeowners being very dissatisfied with council tax premiums, and increased satisfaction when owners had benefited from discretion with these premiums being removed as an incentive to get the property back into use (for example to speed up works). EHOs demonstrated how the ability to use the discretion as an effective tool, particularly in relation to building trust with homeowners to start the dialogue to get the property back into use. However, there were examples which provided evidence of unintended consequences of increased taxation for empty homes:

• Owners experiencing hardship through increased levels of debt when subjected to the premium, which added to the financial difficulties in getting the property back into use. Not all owners experienced supportive discretion from their local councils.
• In high value markets there was evidence of the cost associated with the long-term empty home council tax premium being accepted, and not necessarily making a difference to their intentions for the property lying empty (which could be for a wide range of reasons).
• EHOs pointed to evidence of long-term empty homes not being declared and it was argued the disincentive would increase if the premium was to increase, which ultimately would make their job more difficult in finding and tackling empty homes.

In relation to enforcement and in particular Compulsory Purchase Orders (CPOs), it is clear from the survey and interviews with local authorities, and from learning from across the UK that it is very unlikely that CPOs would be scaleable, at least under the conventional use of CPOs. This is driven by lack of capacity in local authorities - skills, experience and resources, and as recommended by wider research documented in this report, a centralised approach of resource and specialist skills (including legal) would be required to scale this approach. This would likely also be true for alternatives involving enforced sales or enforced rental orders although there would possibly be more appetite to implement these in some local authorities compared to the current resistance to CPOs due to the perceived capital commitments involved. However, there is potential to use this legal power more creatively as shown by Glasgow City Council’s back-to-back CPO approach, but as evidenced, this still requires matching the right empty properties with potential housing association purchasers, a clear policy commitment, and associated resources for effective implementation.

There are a range of innovative approaches illustrated that can be used to bring empty homes back into use, including those led by the community organisations and social enterprise companies. Key lessons from these approaches show the importance of knowledge and skills of empty homes problem solving, co-ordination of complex funding packages which these organisations can help navigate, and the use of initiatives, which include the additional benefits of training and skills development.

Recommendations

The following recommendations are provided for the Scottish Government, Scottish local authorities and partners which, based on the evidence provided in this report, should improve the scale and pace of empty homes being brought back into use.

1. The definition of long-term empty homes should be revised to over 12 months for the purposes of public policy and resource allocation, to reflect the reality of housing market and housing improvement systems, which should enable better targeting of empty homes intervention resources.

2. Scottish local authorities should ensure that their council tax systems enable the clear definition and reporting of long-term empty homes, clearly distinguishing between those that are 6-12 months empty and those that are over 12 months empty so that action can be prioritised according to as accurate data as possible.

3. The Scottish Government should review their council tax legislation to ensure the council tax premium works as an incentive to bring homes back into use and does not act as a barrier, in particular considering potential financial hardship caused, and the creation of additional financial barriers to bring homes back into use. In addition, Council tax premiums should only be applied to long-term empty homeowners from the point at which they own the property (not carried over from designations of the property when there were previous owners). This will give new owners more time necessary to organise permissions and works etc. The council tax guidance for local authorities should also be refreshed.

4. All stakeholders should be made aware of the considerable limitations of the Council Tax Register in quantifying and monitoring the scale of empty homes in Scotland. A revised system for monitoring the number of empty homes will take considerable time and resource to develop, and it is recommended the focus should be on getting empty homes back into use rather than creating a new empty homes monitoring system. Instead, the SEHP support role in bespoke data analysis will be increasingly important and should be resourced accordingly by the Scottish Government.

5. SEHP should support local authorities in a Scotland-wide, refreshed, proactive awareness raising campaign about the availability of EHOs and their role, so that empty homeowners know where to go to access information and advice and what help is available. This could coincide with a national relaunch of an empty homes loan scheme (see below), with the awareness campaign and loan scheme being funded by Scottish Government.

6. The Scottish Government should revise the Local Housing Strategy guidance to emphasise the value of bringing empty homes back into use, and to reflect the fact that the most effective means of bringing properties back into use is through an EHO being employed to prioritise empty homes action.

7. The Scottish Government and local authorities should commit more resources to empty homes work, and specifically EHO resource which represents the best value for money intervention. For Scottish Government the best value intervention is by providing more funds for local authorities for more EHO resource through SEHP. For local authorities they should commit more funds generated through council tax, specifically for empty homes work. The Scottish Government/SEHP and local authorities should jointly consider where the priority for action should be placed in Scotland, according to the prevalence of empty homes and wider housing needs. Where the needs are greatest, then funding should be used to fund at least one full time equivalent EHO in the relevant local authority areas and for a suitable timescale to ensure an agreed amount of empty homes are brought back into use.

8. The Scottish Government has committed to reform and modernise compulsory purchase legislation in Scotland to make the system fairer, clearer and faster for all parties. As a first step it will appoint an expert advisory panel in 2023-24 to help inform the development of options for reform. The Scottish Government should also consider the merits of enforced sales and rental orders. Implementation of any revised or new powers could include the provision of a centralised and specialised resource (including legal advice) to assist local authorities to use these powers effectively.

9. The Scottish Government should introduce a revised empty homes loan scheme. This should incorporate the lessons from the previous scheme and ensure consistent promotion and implementation across Scotland. There should be a centralised implementation team with expertise in loan administration, and knowledge of the empty homes and the local authority landscape.

10. The Scottish Government should review all energy efficiency funding schemes to include eligibility of empty homes where they are currently they are excluded as uninhabited.

11. The use of innovative and community-based solutions, including those that encourage learning and skills through the process of bringing empty homes back into use should continue to be supported, where these encompass the value for money conclusions outlined in this report. These are the provision of information, advice and navigation of systems, and the use of recyclable loans over grant for individual ownership/private rent, but with grant provided for social rent providing good value in the long term for the public purse.