Number of empty homes ‘scandalous’ says leading agent
Marc von Grundherr makes comments ahead of next week's changes to council tax on vacant properties.
Benham and Reeves Director Marc von Grundherr has called on the Government to do more with the nation’s empty homes as councils look set to pocket an extra £540 million after changes to empty homes tax come into force in April.
Since April 2013, billing authorities have had the power to charge council tax premiums of 50% on homes that have been unoccupied for two years or more. In April 2019, this was adjusted so that premiums of 100% could be applied to homes that have sat vacant for two years or more.
POWER TO CHARGE
But from April 1st this year, the power to charge a premium of 100% of a properties council tax bill will now apply to homes that have been empty for 12 months.
Von Grundherr says: “We’re yet to see the government attempt to resolve the housing crisis in a meaningful way and not only have they neglected the issue of supply for many years, but it’s quite frankly scandalous that so many homes are sitting vacant across the nation when we’re in desperate need of more housing stock.”
Research from Benham and Reeves reveals that across England there are some 261,189 homes that have been classed as vacant for six months or more. With the average cost of council tax coming in at £2,065 per property, this means that councils across England currently collect an estimated £540 million in council tax on empty homes each year.
Should these homes continue to sit unusued for up to 12 months or longer, this would see the council tax charged per property climb to an average of £4,130, netting councils a total of £1.1 billion in council tax on empty homes over the course of a year.
DETERRENT
Von Grundherr adds: “While new changes to the council tax premiums charged on empty homes shows that they are aware of the problem, it’s fair to say that it’s unlikely to act as the deterrent they expect when it comes to forcing these empty homes back into circulation.
“When you consider the money they stand to make, it does highlight the benefit of utilising these empty homes to at least address the issue of supply within the rental sector.
“Rather than pay a 100% council tax premium, these properties could be generating rental income, while also providing tenants with the homes they desperately need.”
Where is the source for this “research” please? There’s nothing recent on the Benham and Reeves website, so how is this von Grundherr chap getting this free publicity?
I note there’s no mention of the copious evidence of *why* so many properties are empty, although OECD data shows the UK has a very low number compared to other developed countries (see Figure HM1.1.2 at http://www.oecd.org/els/family/HM1-1-Housing-stock-and-construction.pdf). Yes, people have holiday homes, and yes, they go abroad to work or to travel for periods greater than six months, and don’t want to risk letting out their homes, with all their possessions, to strangers. But the data also show empty properties are skewed to the higher and lower council tax bands: 42% are in Band A. And the reasons for being empty are multiple: “There’s always a situation”. Tenants or owners may be in prison, sectioned or in a hospital or care home without anyone looking after their financial assets. A will may be in probate or under dispute. Someone could have inherited a property, or a renovator builder has taken on more than they can handle or even gone bankrupt; these are people stuck with a semi-refurbished property, or one with an EPC stuck at F or G, which they can’t rent, are unable to find a buyer, and they are struggling to obtain a development loan, but hope springs eternal – they hang on and on in the hope something will turn up.
Or a developer may be holding the property as working stock while they put together a land package or achieve planning permission, and again, don’t want the risk of a nutty tenant or other problems. For example, I used to work for a provider of adult social care and accommodation services that owned a 10-bedroom former children’s home in Hillingdon. They left it empty, boarded up and the services turned off for three years while we struggled to get planning permission: we were looking to get it extended and converted into a 14-bed HMO facility for people with mental health and physical challenges, which the council’s own Adult Social Services department was desperate for us to provide for their clients. When I asked senior management why we didn’t let it out in the meantime to, say, those same clients or immigrants seeking leave to remain or even private renters, they said a) it was too risky, b) to expensive to insure etc compared with the paltry 3% gross returns they anticipated; c) there’d be too much work and cost to upgrade the property to the required standards and recruit the staff for care services, property management etc. I couldn’t see it myself, but business is business.
Perhaps if the councils charging all this extra money, often to people who are in financial difficulties anyway, put this money into actually *helping*, for example by pump-priming a redevelopment or renovation or even becoming a co-investor, we might get more progress?
And as regards social housing, maybe – you never know, pigs might fly – councils or housing associations that own old council housing estates might *redevelop* them, working on joint ventures with the private professionals to demolish the ratty old council houses on huge plots and replace them with modern new-builds at contemporary densities and insulation levels? The developments’ new properties for private sale would change the social mix of the estate, as so beloved by advocates of S106 social housing, and help to cross-subsidise the provision of larger amounts of social housing on the same site.
How do they know if the property is empty? If someone goes to their property once a year? Say, a holiday home. Would that be still considered a empty home?