bedroom tax | The Knowledge Exchange Blog

In April, the Labour Party launched its strategy for tackling the housing crisis in England. Housing for the Many presents a 50-point plan, with proposals that include:

investing £4bn a year to build one million ‘genuinely’ affordable homes over 10 years
lifting of council borrowing caps
removing the ‘viability loophole’, making it impossible for developers to dodge their affordable housing obligations
zero tolerance of developments without any affordable housing provision
a stricter definition of affordable housing
scrapping the ‘bedroom tax’
suspension of ‘right to buy’
cut-price government loans for housing associations
protected housing benefit for under 21s
consideration of mandatory space requirements
a new generation of garden cities and new towns

Following its publication, analysts in the housing and property sectors gave their thoughts on the strategy.

More affordable homes

The most ambitious proposal is the plan to build 100,000 homes each year.

For Emily Williams, associate director at Savills, this proposal was the most eyecatching:

“The emphasis on investing to deliver more homes to solve the housing crisis, rather than relying on housing benefit to support people who can’t access market housing, is something we have been talking about for a long time.”

However, Savills estimates that the £4bn figure is insufficient for Labour to hit its one million homes target, suggesting that a further £3bn would be needed.

Elsewhere, Carl Dyer, partner in Irwin Mitchell solicitors expressed concern about where the money would come from:

“After Labour’s last 13 years in power from 1997 to 2010, their out-going Chief Secretary to the Treasury famously left a note for his successor: “Sorry, there’s no money”. There is still no magic money tree, and no indication here how these homes are to be funded.”

Developers

Labour’s policy of no development without affordable housing has raised concerns in the property industry. Justin Gaze, head of residential development at Knight Frank told Property Week that the proposals risked deterring developers from undertaking new projects:

“There will be instances where affordable housing cannot be provided, for example on conversions of some buildings where it’s difficult to deliver both open-market and affordable housing side by side.”

The land market

One of the less reported proposals caught the eye of Luke Murphy, IPPR’s associate director for the environment, housing and infrastructure. Writing in CityMetric, Murphy highlighted the proposal to create an English Sovereign Land Trust that would allow local authorities to buy land at cheaper prices to build affordable homes.

“It is here, through intervention in the land market, that the state could have the biggest impact – not to just build more affordable homes, but to make all new homes built more affordable.”

But he argued there was still room for improvement:

“… on land reform, there is scope to be bolder and go further to ensure that affordable housing really is available ‘for the many’, rather than the preserve of the few.

Redefining affordability

The Royal Institution of Chartered Surveyors (RICS) commented on Labour’s proposal to redefine affordable housing to relate it to average incomes rather than housing as a percentage of market rates:

“This makes sense as a measure of affordability, however, this will likely lead to a trade-off between affordability and the numbers of affordable homes delivered, unless capital grants are available at the outset, geared to the income segment to be accommodated.”

RICS also welcomed the plan to lift council housing borrowing caps.

“This is certainly something RICS has been calling for, however appropriate measures must be taken to ensure that local authorities do not expose themselves to too much risk.”

Benefits reforms

The Chartered Institute of Housing wondered whether Labour would reform the benefit system to bring it closer into alignment with housing policy:

“Of course, abolishing the bedroom tax will help, but tenants’ ability to pay their rent if they are on low incomes is now under assault from the whole range of welfare reforms, of which bedroom tax is only one.”

Final thoughts

The housing crisis has been decades in the making, and there is no quick fix for tackling the problems of housing shortages, affordability and homelessness. Just last month, research by Heriot-Watt University found the chronic shortage of housing in the UK was greater than first thought, amounting to four million homes. To meet the backlog, the researchers estimated that the country needs to build 340,000 homes a year until 2031. This is significantly higher than the targets set both by the Conservative government and the Labour Party.

The new green paper from Labour has presented clear alternatives to the government’s housing policies, and later this year the government is set to publish its own green paper on social housing. The debate will continue, and housing will remain high on the political agenda.

The Knowledge Exchange keeps a close watch on developments in housing. Some of our recent blog posts on the issue include:

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Boarded up homes in Kensington, Liverpool. Image by Mikey via Creative Commons.

By Heather Cameron

Government statistics indicate that there are just over 635,000 empty properties in England, with a third lying empty for six months or more. In Scotland, there are around 23,000 ‘long-term’ empty homes (unoccupied for six months or more) that are liable for Council Tax.

With increasing house prices and a continuing rise in homelessness, the demand for affordable homes in the UK is unlikely to subside. And with new housebuilding unable to keep up with demand, bringing empty properties back into use would seem an obvious solution that could go some way to easing the housing crisis as well as addressing the blight caused to local communities by empty properties.

Unsightliness, loss of amenity, anti-social behaviour, pest infestations, the devaluing of neighbouring properties and a negative impact on people’s health have all been cited as potential outcomes of empty homes.

However, while the government claims to be committed to reducing the number of empty homes, recent welfare reforms appear to contradict such intentions.

A recent Inside Housing article on empty homes in County Durham, suggested that the bedroom tax has had a direct impact on the increasing number of vacant properties in the area, with many landlords seeing an increase in the number of voids following its introduction. Single people used to be housed in two-bedroom properties (which make up the majority of the empty properties in the area), but this is no longer an option as the bedroom tax cuts the housing benefit of people under-occupying by up to 25%.

This has also had a knock-on effect on the costs to social landlords due to maintaining vacant properties. Local housing association, Accent, estimates that its vacant homes are costing it £600,000 per year due to costs like council tax and security.

Tackling the issue

Despite recognition of the problem, powers to help bring empty homes back into use have seemingly been underused by English councils. Empty Dwelling Management Orders (EDMOs) were only used 17 times in 2014, with councils preferring to use other powers such as council tax charging and compulsory purchase orders, despite EDMOs being specifically designed for the purpose.

A spokesperson from the Local Government Association (LGA) suggests that “the existing powers open to councils are complex and difficult to use. The government should simplify existing powers to support local authorities to bring empty properties back into use.”

In a report at the end of December 2014, the Institute for Public Policy Research (IPPR) has similarly argued that local authorities should be offered an enhanced set of powers to address the problem of empty homes. It recommends two changes to the current rules:

The existing cap on the ’empty homes council tax premium’ should be removed, effectively allowing local authorities to determine their own banded premiums charged on long-term empty dwellings.
Local authorities should be allowed greater discretion to tax long-term empty dwellings appropriately, and to ensure that those holding on to an empty property contribute more to the economic costs of providing housing for those in need.

Indeed, councils have previously called for the compulsory purchase order system to be simplified to bring empty homes back into use so perhaps such changes would make a difference.

Good practice

There are recent examples of good practice in reinstating empty homes through various approaches, such as homesteading, refurbishing and leasing, and repairing and selling.

Stoke-on-Trent City Council, for example, bid for funding from the Clusters of Empty Homes Fund so that it could renovate 124 long-term empty properties and bring them back into use. The redeveloped properties were offered for £1 each to carefully selected buyers who had shown they would be actively engaged in the area’s regeneration.

According to the council’s Director of People, this initiative has resulted in the restoration of local pride and a new-found sense of community ownership that will drive lasting improvements.

Further reading

Some resources may only be available to Idox Information Service members.

Playing ‘house’ (redevelopment of empty homes), IN MJ, 15 Jan 2015, p21

Tackling the housing crisis: alternatives to declining standards, displacement and dispossession (2014) Centre for Labour and Social Studies

Re-imagining regeneration: empty and difficult to let homes (2014) National Housing Federation

Landlords revise threat of universal credit after delays, IN Inside Housing, 5 Dec 2014, pp10-11

Broken market, broken dreams: let’s end the housing crisis within a generation (2014) National Housing Federation

Ideas for change: community-led self-help housing, IN New Start, No 526 Nov 2014, pp1-7

Filling the void (Helena Partnerships and the private rental market), IN Inside Housing, 24 Oct 2014, pp28-30

Cutting back on waste (bringing empty homes back into use), IN Property Journal, May/Jun 2014, pp44-45

Evaluation of the Empty Homes Community Grants Programme (EHCGP): Midlands region (2014) University of Birmingham