COMMENT
Empty homes – they’re no good for anyone, says Sarah Lines, director in the social housing team at national law firm, Cobbetts LLP
E
mpty properties are no good for anyone. The owners receive little or no financial benefit and those living in overcrowded conditions or are
homeless are not helped. Instead owners have a deteriorating liability on their hands and people living nearby worry about the effect on their home and neighbourhood. A property that becomes an eyesore or a
magnet for antisocial behaviour and criminal activities will trigger the local authority into taking action under its many statutory powers, for example, compulsory purchase, Building Act and Town and Country Planning Act to name but a few. Incidentally, the recent announcement by Eric Pickles, Secretary of State for Communities and Local Government, has not abolished Empty Dwelling Management Orders (EDMOs), they are still available as a tool of last resort, Social enterprises and charities could be
potential partners for private landlords and empty property owners, working with them to deal with problematic properties. One way to do this is via a short-term arrangement that makes the use of the future rental income stream of a refurbished property to pay for the work. An idea currently being worked on by a
social enterprise envisages a lease being granted to the social enterprise from the owner for a limited number of years. During this time the social enterprise will pay for and carry out the works to a lettable standard. For the remainder of the term the property will be sublet and managed under an AST. It will keep the rental income as payment until all the costs of the refurbishment works are repaid. At the end of the lease the property reverts back to the owner. If the costs of the works are not fully recovered then there may be an additional amount to pay by the social
32 MARCH 2011 PROPERTYdrum
Above: Empty properties Right: Eric Pickles
enterprise at that point. The social enterprise may use
apprenticeships as part of their community objectives to create training on the job and increase access to the employment market. This achieves a triple benefit, an empty property back in use, the end of an eyesore and training opportunities for the unemployed. There are wider benefits too, which can help improve an area depending on the number of potential properties within a small area. Not all social enterprises will have the
capacity to manage the letting of the AST. The owners’ own lettings agency could carry out this function with their fees being factored into the calculations. There is no reason why this model could not also involve a charity or housing association partner to link into work experience and training to help people into work. The model could also be used as a
longer-term investment project. For empty homeowners who want to realise a capital gain this may be a good way ahead. Properties requiring substantial investment are unlikely to be financially viable using solely the rental income stream model. However a combination of a period of letting once refurbished and eventual sale could lend to a significant uplift in value at the right time.
Private landlords could also consider
working together to set up their own jointly owned entity. The benefits here are the ability to share in economies of scale, sharing of any uplift in value of properties sold (or higher rents achieved) as a result of refurbishment. In this model the landlords would be leasing their empty properties to a joint enterprise for a set period of time. This model would require upfront investment from private owners to set it up So, what is the impact of Eric Pickles
recent announcement? The answer is very little in real terms. EDMOs have always been seen as a last resort by local
authorities.They were designed to bridge the gap between voluntary measures and compulsory purchase powers. What appears to have been omitted from Eric Pickles’ statement is the recognition of the two types of EDMO, interim and final. Most local authorities have signed up to the Enforcement Concordat since 1998 which sets out the principles of good enforcement that “helps businesses to comply with regulations, and helps enforcers to achieve higher levels of voluntary compliance”. Empty properties help no one. Finding
ways of bringing them back into use is what is needed rather than curious statements, which seem to assert that keeping a property empty for no good reason is a civil right that must be protected.
Sarah Lines, Cobbetts
sarah.lines@
cobbetts.com
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