Thursday, 30 September 2010

Britain's Abandoned Homes

An empty dwelling that is left unoccupied is a wasted asset for the owner and for someone in need of housing. If it is not maintained, it will, over time, begin to impact on its surroundings and is at risk from being broken into by vandals and squatters. The only effective way to reduce the negative impact of an empty dwelling is to occupy it. (Basingstoke Council Website)

Jolyon Jenkins investigates the scandal of the million houses standing empty. With five million people on housing waiting lists the government is keen to get them back into use. This is not about second homes, or holiday homes. This is about the empty houses to be found in almost every neighbourhood - the run-down or derelict house that sticks out like a sore thumb. These buildings blight communities, attract crime and devalue neighbouring property. Potential family homes are standing empty despite the chronic housing shortage, which has got dramatically worse since the recession. House building rates have virtually collapsed and unoccupied houses are becoming a political hot potato. We investigate the reasons for the empty homes crisis in this country, focusing on properties in Bristol. Jolyon Jenkins talks to the owners, both developers and private individuals, to ask why it is that so many have been standing empty for years, and what it would take to get them lived in again. (1)

This was a fascinating Radio 4 program which interviewed various people to show the very widely different reasons for why homes are left abandoned to rack and ruin. It began with the case of the widower who had moved in and out of his home and had been very happy there with his wife. Since she died and he had become ill, and was no longer living there, the place had had squatters and fallen into decay with electrics pulled out and the roof leaking. It was a heartbreaking story because it was clear both to the interviewer and to the widower himself that the reason he had clung on to the property for so long was because of all the happy years he had spent there with his wife and which only now could he think of letting go. He had put the property up for auction as he had insufficient funds to make it habitable and had taken the advice of the agents as to the reserved price. However of 10 properties including his that were up in this particular auction, only two were sold. He was loath to reduce the price as he felt that he had to take the professional opinion of the agent.

Another empty property had been bought by a small to middling developer, where the customary practice had been to invest 30% of the funding for buying the site and renovating the property and in this case putting extra flats in the large garden area. The remainder of the funding would come from loans from the bank. The developers explained that there was a two-year cycle between buying the site and starting work and having a finished property for sale. During that period, both themselves and the banks would be putting money in and it would not be repaid in full with profits to the developer until after the two or three years had elapsed. The credit crunch had hit the developer badly and finance from the bank was no longer forthcoming. So the property lay empty, half gutted, with just the foundation of the new building in the garden and the developer had over £1 million debt to the bank and simply could not afford to pay for any more work to be done. The developer didn't ask for sympathy but just a chance to explain what had happened to them and to thousands of other developers all across Britain.

Another property in Bristol had an overgrown garden and when the interviewer looked through the letterbox the hallway was choked with junk mail. It turned out that the owner had bought the property as an investment but had trouble with tenants and had decided to leave the property empty until they could decide what to do with it. Several years had passed, and they still had not come to a decision.

These properties are empty in a land which is facing a huge housing shortage but the matter is being addressed by the charity Empty Homes which highlights those properties which have been left empty for a long period of time and which are either privately owned or government-owned. For the government as well has been known to leave property empty:

Empty Homes was established in 1992 as "The Empty Homes Agency" a campaigning voice for those who needed homes, and for those who were dismayed at the thousands of homes left empty and abandoned. Those principles have remained with us ever since. In the past few years we have successfully challenged government over the thousands of publicly-owned empty properties. We successfully campaigned for tax-breaks for owners of empty homes who wish to bring them back into use. We have given a voice to individuals, enabling them to secure action on empty homes that affect them, and have helped many successful local campaigns to bring empty homes back into use. As a result of our campaigns, today every council has a named person who seeks to get empty homes back into use, with the powers and resources to do so. (2)

When I was helping distribute leaflets in St Helier, around six years ago, I came across a number of flats which were obviously left derelict, glass doors boarded up, grimy door handles, and where one could see through a letterbox, the tell-tale sign of masses of junk mail. Back in the 1980s, my friend Ken Webb was helping with the census, and he was quite angered at the number of properties, flats and houses, which had been left empty in Jersey. He reckoned that had they been in use could have reduced the housing demand for social housing by at least 20%. That might be optimistic, but how many houses or flats are just left empty because the owners want a particular rent and are not prepared to reduce their prices? The census doesn't give us that sort of information because it counts people, not the absence of people.

In England, the law was enacted to enable councils to bring empty homes back into use for a fixed period without the use of compulsory purchase. I was not aware of this and it came as quite a surprise when the programme mentioned that councils had statutory powers to do this. Whether this would help the housing situation in Jersey is another matter, because in the first instance we need a methodology for accurate counting of empty properties. It would probably be resisted as an infringement of the owner's right to do what they want with their own property. However, it should be noted that the legislation in England is only used for long-term abandoned properties where they had been left empty for some years and it is not applied lightly before persuasion has been used:

All councils in England and Wales have powers to bring empty homes back into use. Many are very good at it, some are not. Most councils seek to persuade and help the owner to bring their property back into use; they only use legal powers such as Empty Dwelling Management Orders when help and persuasion have failed. Most empty homes are brought back into use eventually by their owner. But in many cases this takes years. Empty homes often decline fast - they become overrun with weeds and attacked by the weather. They are often used by squatters, fly tippers, vandals and are sometimes subject to arson. The whole neighbourhood suffers waiting for the owner to deal with their property.(3)

Of course one aspect of leaving properties derelict, simply to fall apart, has to do with planning laws in Jersey. If the owner cannot get permission to demolish a property so that they may build something in its place, they may simply leave it to fall apart or until it is so unsafe that it has to be knocked down. Even in St Brelade's Bay, which one might consider a prosperous neighbourhood, I remember one property owner who was not able to develop his property to his liking and simply built another property further back from the road and left the original standing empty for a good 20 years until finally he obtained planning permission for a massive development of flats on the whole site and promptly sold it and moved out. The empty property, windows boarded up, which could have been used to house a family and had been a family home in the past was quite rightly highlighted in the mid-1980s by the Warden of Communicare, Captain John Le Page, himself no stranger to the need for social housing in the London district where he had been based before coming to Jersey.

How do the Empty Dwelling Management Orders work? Effectively as a programme explained, it is rather like the council stepping in like an individual who has leased the property and under the terms of the lease is able to make repairs and let it out for income. The difference of course, is that the individual pays the owner, whereas the Council does not. But the council uses the rental income to reimburse itself for the costs of any refurbishment of the property and at the end of the period which can be no longer than seven years, a habitable property in good condition reverts to the owner. So it is not quite as Draconian as may appear at first sight and is a good deal better than the only option which was available before and which is available in Jersey of compulsory purchase:

On 6 April 2006, The Housing Act 2004 introduced Empty Dwelling Management Orders (EDMOs). The intention of EDMOs is to bridge the gap between voluntary measures proposed by the property owners and the existing enforcement procedures, such as compulsory purchase.
There are two types of EDMO; an interim EDMO and a final EDMO. An interim EDMO lasts for a maximum period of 12 months. During this period the housing authority cannot arrange occupation of the property without seeking the consent of the owner. In effect, this means the owner has a final opportunity to reach an agreed solution. Where such agreements cannot be reached, an interim EDMO can be revoked and replaced with a final EDMO. A final EDMO lasts for a fixed period of no more than 7 years. The Council does not require the consent of the owner to grant occupation rights under a final EDMO.(4)

Councils must fund any works needed to make a property habitable and must normally recoup their costs from rental income.(5)

Once a final EDMO is made, the council has the right to possession of the property for a fixed period of time up to seven years. It must take whatever steps it considers appropriate to get the property occupied or to keep it occupied and ensure that it is properly managed. Importantly, it can put a tenant in the property without seeking your consent.(5)

When I walk through St Helier, the visible signs of commercial property that has been left empty often for a longish period is all too evident -- empty shop fronts or in attempts to conceal the fact that the shop has been empty for some time, a recent innovation, has been to place artwork in the windows or on any hoardings. But one can go round St Helier, or any other part of the island, and fairly easily count the number of empty commercial premises. Offices are more difficult although signs to let (like the one that has been there for the better part of a decade on the office development near Green Street car park) can provide some indication and they are usually on the market provided that the landlord can agree suitable terms so they will appear on the books of property agents. But it is considerably more difficult to quantify the number of empty dwellings in Jersey and even when that is done, to decide if the numbers are sufficiently large to warrant Empty Dwelling Management Orders.

When I was reflecting on the programme, and also researching the background of items like EDMOs, I try to find if there was anything online about Jersey and empty properties. There is, but the properties are not in Jersey, and yet there is a clear Jersey link. I don't think it does Jersey's image particularly good as an offshore centre and one has to remember that whatever glowing reports come in from outside scrutiny (and I think it is fair for Jersey to sing the praises of those reports) the average member of the public in the UK will read the report on empty housing and not unnaturally blame the vagaries of offshore companies which also, as the article points out, means they can avoid any capital gains tax when the properties were sold:

Take the Park Lane townhouses, which Palmer estimates are worth £10m apiece. The key leaseholds on each are held by Konzeo Ltd and Weleta Ltd, two companies incorporated in the British Virgin Islands (BVI), a tax haven in the Caribbean. Both firms ignored multiple letters from Palmer asking them to explain why the buildings were unoccupied and threatening to issue a compulsory purchase order - until a gang of squatters, plus their dogs, moved in and were pictured on the front page of the Sun in January. Within a five-minute walk of Park Lane are 21 of the grandest properties on Palmer's list, worth between £6m and £50m each by his estimation. Of these, seven are registered to BVI companies, with others owned by firms incorporated in Jersey, Guernsey and Switzerland.

John Samson, a property law expert at Taylor Wessing, says offshore-registered firms buy expensive London property as an investment, just like art or any other commodity. "One of the reasons that people buy property in London, and in particular Mayfair, is that there is almost always a demand for it," says Samson. "Investors believe the value will not only be maintained but will go up, regardless of whether it is lived in or not."

Upper Grosvenor Street in Mayfair ought to be one of the most desirable addresses in London. Yet four grand properties on the street have remained empty for up to eight years, abandoned and left to ruin by their offshore owners. No 21, registered to Boss Holdings in Jersey and worth around £15m, has been vacant for at least eight years. Down the street, the handsome twin townhouses at Nos 41 and 42 have both been empty for around five years. The leaseholds on both belong to BVI firms.


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