Review of the Private Rented Sector: Volume 4: Bringing Private Sector empty houses into use

3 SETTING THE CONTEXT

Introduction

3.1 This chapter briefly reviews knowledge of the nature and extent of the empty private homes problem in Scotland and how Scottish local authorities are dealing with the issues it raises. The findings are derived from the literature review, analysis of Council Tax ( CT) data, the results of the on-line survey of Scottish local authorities, key stakeholder interviews and feedback from the stakeholder workshop.

The scale of empty private homes in Scotland

3.2 The 2001 Census suggested about 22,500 dwellings across all tenures were vacant in Scotland for over 6 months, of which many were likely to be in the private sector. However, difficulties in establishing precisely what were empty, second or holiday homes require the figures for these tenures to be treated with some caution. Scottish Government statistics ⁶ derived from CT returns do not distinguish between social rent and privately owned properties, between properties which are transitional voids and long term empty or between properties which are empty and those which are exempt for other reasons, perhaps because they are under repair, awaiting demolition or conversion or let to specific classes of person.

3.3 It is possible to subtract housing association and local authority vacant dwellings from the figure, but the data sets are different, and cover different time periods, so this is not a direct comparison. It is also the case that empty homes in areas of low demand may not be suitable for re-use. It is thus extremely difficult to estimate accurately the number of useable empty private homes in Scotland.

3.4 At the Scottish local authority level, the on-line survey indicated that only about half of Scottish authorities collected data at structured intervals or on an ad hoc basis, implying that half of authorities did not collect data on empty private homes. Notwithstanding this limited evidence-base, nearly half (14) of the authorities, reported only a "minor problem" with empty private homes, three had "no problem" and only four indicated the problem was "significant".

Reasons why private homes lie empty

3.5 There is no single reason that leads to homes becoming empty and remaining empty for long periods. Evidence is limited but from the information gleaned from the on-line survey, from surveys by English local authorities of owners of empty homes and from an in-depth study of private sector empty properties carried out by the Department of the Environment (1996), a number of key factors can be discerned.

3.6 The majority of private homes are most likely to become vacant when the previous occupant died, moved to hospital or institutional care or was evicted or repossessed. In these cases, owners are often difficult to trace or the property is lying in probate. Where owners are known, an unwillingness to let is a major barrier which can partly be related to finding the prospect of becoming a landlord too onerous a responsibility. The poor state of an empty property and the cost of repairs to upgrade or convert it, are less of a reason for homes becoming empty but a significant cause for them remaining empty. There are also urban and rural factors that can come into play. In urban areas, empty private homes can be linked with areas of low demand and unpopularity that are under-going regeneration while in rural areas, empty homes can relate to remote location with attendant problems of low demand and high repair and improvement costs.

The ownership of empty private homes in Scotland

3.7 Information obtained on the ownership of empty private homes in Scotland is drawn from key stakeholders with considerable land ownership and government organisations. The information is impressionistic but offers an outline of a probable ownership classification.

3.8 The Scottish Association of Landlords representing professional landlords in urban areas, considered it unlikely their members' properties would be left empty as it would be unprofitable. However, it is possible that "amateur" landlords operating without a professional background could be empty homes owners. In the rural context, due to concerns about disrepair, upgrading costs and grant constraints, estate owners, as represented by the Scottish Rural Property and Business Association were likely to own empty estate cottages and farm dwellings - although like other professional landlords, estates would not leave homes unoccupied unless there were clear reasons of lack of demand or cost. However, rural estates would only be part of the rural private empty property problem as individual owners would also be likely to be contributors.

3.9 While government agencies with large land ownership might be considered a source of empty properties, the Ministry of Defence and Forestry Commission stated they had policies of rapidly transferring surplus stock to other landlords, including RSLs and private individuals. A final category, indicated by some case studies, was the possibility of institutional owners, for instance, large chain stores that owned or leased premises above their shops but had no wish to use them for residential purposes.

3.10 Taken together with the earlier point that most empty property ownership could be linked to owners dying, moving into care or repossession, overall it may be concluded that a large proportion of owners of empty homes are likely to be private individuals.

Empty private homes work in Scotland

3.11 Much of the experience of Scottish local authorities in dealing with empty private homes derives from the Empty Homes Initiative ( EHI), a challenge fund initiative that ran from 1998-99 to 2001-02. The aim was to address local empty homes issues across all tenures using funds set aside from the total national Housing Revenue Account. An evaluation of the EHI ⁷ and its major delivery mechanisms, the Lead Tenancy Scheme ( LTS) and Rural Empty Property Grant ( REPG), found that local initiatives had encouraged the development of empty homes strategies, had acted as catalysts to develop local partnerships, provided increased affordable housing and contributed to wider regeneration initiatives. However they were administratively complex and had only " scratched the surface"' of the problem (p. vii). Their overall impact was limited and their most positive effect was on tackling one important source of market failure - repair costs - but they had side-stepped the problem of overcoming owner resistance to letting.

3.12 The results of the on-line Scottish local authority survey provided a smaller snapshot of activity in 2008. It indicated that since 2001-02, activity to bring empty private homes in Scotland back in to use had declined significantly (see Annex 3). Overall, only seven of the 27 local authorities that replied recorded any empty homes brought back into use. Between them, approximately 200 empty homes were stated to have been brought back into use - but subsequent telephone interviews suggested that many had been reoccupied under the earlier EHI, indicating little recent empty homes activity.

3.13 While it may be argued that the EHI had dealt with much of the historic problem of long-term empty homes, with a few exceptions, many local authorities had not carried out any analysis of the extent of the issue. Where data-collection had been attempted in some authorities by officers responsible for housing strategy, data protection barriers sometimes prevented access to CT information on empty homes' locations. Consequently, the evidence-base for the view that empty private homes were only a minor issue is lacking.

3.14 The survey found that a strategic or policy framework for evaluating the empty private homes issue was largely absent. Although almost three quarters of local authorities had addressed the issue of empty homes in the Local Housing Strategy ( LHS), this was brief and more aspirational than focused on statistical data, analysis or resource implications. Only four local authorities had, or were planning, an Empty Homes Strategy statement in one of their policy documents and of these, only three authorities - Highland Council, East Ayrshire and Angus ⁸ - had developed the issue of empty properties in any detail.

3.15 In addition, the City of Edinburgh Council was preparing an Empty Homes Strategy. East Ayrshire had addressed empty private homes as part of its Private Sector Housing Strategy. Actions included establishing a database of empty homes; publicity through the landlord forum and newsletter; writing to owners; assessing options for owners of empty properties and linking with the Town Centre Initiative to deal with empty properties, often flats above shops.

3.16 The authorities echoed the findings of the EHI evaluation, commenting on the difficulties of using the Lead Tenancy Scheme ( LTS) with a preference for mechanisms such as private sector leasing schemes and rent deposit guarantee schemes that provided support to owners of empty homes who wished to use them for private rent. A positive aspect stated for all these mechanisms was their success in bringing empty homes into use for rent at both market and below market rent. (These mechanisms are discussed further in Chapter 9).

3.17 If empty private homes work was to be taken forward, local authorities favoured the establishment of officer support groups or regional local authority groupings to provide specialist support but they were more sceptical about the establishment of a specialist agency (discussed further in Chapter 7). Schemes listing and publicising empty homes for those who wished to obtain them and bring them back into use were considered more useful than other support mechanisms to deal with empty homes. Council Tax penalties or new compulsory powers were thought least useful. (The stakeholder workshop also supported employment of housing enablers to carry out one-to-one work with owners).

Empty private homes work in England

3.18 In England there has been markedly greater empty private homes activity in recent years than in Scotland. While it may be that, relative to Scotland, empty private homes in England have posed a greater problem and driven the need for action, several structural factors have also contributed to the focus on empty homes work: a greater scale of problem, central government guidance on Empty Homes Strategy production; local authority empty homes performance reporting obligations; national support agencies, and dedicated enforcement powers.

3.19 Importantly, English authorities had, until recently, a Best Value Performance Indicator ( BVPI 64) that was credited as a major driver of work on empty private homes as it was used to determine funding allocations for the development of affordable housing. It ( BVPI 64) has, however, now been discontinued and this has given some concern by some local authorities about the future priority that empty homes work may have.

3.20 In 2003, the UK Government published guidance ⁹ for English authorities on how to bring empty properties into use and, although not a statutory duty, many authorities have developed an Empty Homes Strategy or incorporated an analytical section on empty homes in their Housing Strategies.

3.21 The Empty Homes Agency ( EHA) has been a relatively well-funded, national, charitable organisation, based in London, providing support to local authorities and campaigning on empty homes issues nationally (in an English context) (See 7.15. and Annex 2). The National Association of Empty Property Practitioners ( NAEPP) (see 7.16 and Annex 2), working on a far smaller membership budget, has supported empty homes officers across England. These two bodies were strong advocates for the establishment of EDMOs. (See 8.11)

Conclusion

3.22 Most Scottish local authorities consider they do not have a significant problem with empty private homes. It may be that the challenge-funded initiatives of the late 1990s to early 2000s have dealt with the majority of the problems. An alternative proposition is that, as the financial support for empty homes initiatives and empty homes officers ceased, possibly so did their work and, also, their posts which were largely fixed-term. Subsequently, with the arrival of the 2006 Act, the issue of empty private homes may have dropped down the policy agenda as more pressing issues took higher priority.

3.23 A striking feature of the situation in Scotland compared to England is the difference in approach to information-gathering and strategic thinking about empty private homes. In Scotland, the strength and reliability of the evidence-base on empty private homes is unclear but appears to be the basis for the majority local authority view that empty homes are not an issue. As a consequence, only a few Scottish local authorities have incorporated anything more than a limited acknowledgement of empty private homes as an issue within their LHS or Private Housing Strategy.

3.24 In England, there has been a more explicit commitment to empty private homes work by local authorities and this has been reinforced by central government funding, guidance and, until recently, performance monitoring. As a result, data-collection and strategic development by many English local authorities, metropolitan and rural, has been more systematic, leading to initiatives imbedded in a strategic framework - the Housing Strategy or Empty Homes Strategy.

3.25 For those Scottish authorities that decide that some form of intervention is appropriate to address a range of housing needs, the experience from English local authorities is pertinent - interventions ( i.e. initiatives) should be pursued not as "one-off" or discrete activities but as part of a strategic approach. The next chapter discusses the importance of a strategic approach to bringing empty private homes back into use.