|Caroline Jones AM|
|Dawn Bowden AM||Cadeirydd Dros Dro y Pwyllgor|
|Temporary Committee Chair|
|Huw Irranca-Davies AM|
|Leanne Wood AM|
|Mark Isherwood AM|
|Andrew Lavender||Ymgynghorydd Prosiect, Cynllun No Use Empty|
|Project Consultant, No Use Empty Scheme|
|Brighid Carey||Rheolwr Prosiect: Dulliau Cymunedol, Action on Empty Homes|
|Project Manager: Community-based Approaches, Action on Empty Homes|
|Douglas Haig||Is-gadeirydd, Cymdeithas Landlordiaid Preswyl|
|Vice-chairman, Residential Landlords Association|
|Gavin Dick||Swyddog Polisi Awdurdodau Lleol, Cymdeithas Genedlaethol y Landlordiaid|
|Local Authority Policy Officer, National Landlords Association|
|Ifan Glyn||Uwch-gyfarwyddwr Hyb, Ffederasiwn y Meistr Adeiladwyr|
|Senior Hub Director, Federation of Master Builders|
|Matthew Kennedy||Rheolwr Materion Cyhoeddus a Pholisi, Sefydliad Tai Siartredig Cymru|
|Policy and Public Affairs Manager, Chartered Institute of Housing Cymru|
|Michelle Collins||Rheolwr Tîm Arbenigol, United Welsh|
|Specialist Team Manager, United Welsh|
|Nigel Dewbery||Cyfarwyddwr Cyflawni Rhwymedigaethau a Gwasanaethau Gosod, E.ON|
|Director of Obligation Delivery and Installation Services, E.ON|
|Rebecca Jackson||Swyddog Polisi ac Ymchwil, Shelter Cymru|
|Policy and Research Officer, Shelter Cymru|
|Shaheena Din||Rheolwr Prosiectau Cenedlaethol, Partneriaeth Cartrefi Gwag yr Alban|
|National Projects Manager, Scottish Empty Homes Partnership|
|Catherine Hunt||Ail Glerc|
|Stephen Davies||Cynghorydd Cyfreithiol|
|Yan Thomas||Dirprwy Glerc|
|Ethol Cadeirydd Dros Dro||Election of Temporary Chair|
|1. Cyflwyniad, Ymddiheuriadau, Dirprwyon a Datgan Buddiannau||1. Introductions, Apologies, Substitutions and Declarations of Interest|
|2. Ymchwiliad i Eiddo Gwag: Sesiwn Dystiolaeth 3||2. Inquiry into Empty Properties: Evidence Session 3|
|3. Ymchwiliad i Eiddo Gwag: Sesiwn Dystiolaeth 4||3. Inquiry into Empty Properties: Evidence Session 4|
|4. Ymchwiliad i Eiddo Gwag: Sesiwn Dystiolaeth 5||4. Inquiry into Empty Properties: Evidence Session 5|
|5. Papurau i’w Nodi||5. Papers to Note|
|6. Cynnig o dan Reol Sefydlog 17.42 i Benderfynu Gwahardd y Cyhoedd o Weddill y Cyfarfod||6. Motion under Standing Order 17.42 to Resolve to Exclude the Public from the Remainder of the Meeting|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Dechreuodd y cyfarfod am 09:30.
The meeting began at 09:30.
Bore da a chroeso i'r Pwyllgor Cydraddoldeb, Llywodraeth Leol a Chymunedau.
Good morning and welcome to the Equality, Local Government and Communities Committee.
We've received apologies from the Chair, John Griffiths. Therefore, in accordance with Standing Order 17.22, I call for nominations for a temporary chair for today's meeting. Can I ask for nominations, please?
Thank you. Are there any other nominations? There aren't any other nominations. Therefore, I declare that Dawn Bowden has been appointed temporary Chair, and I invite her to take the Chair's seat.
Penodwyd Dawn Bowden yn Gadeirydd dros dro.
Dawn Bowden was appointed temporary Chair.
Thank you, everyone, and good morning. So, bear with me—this has been thrust on me at the very last minute, so I hope we'll get through it without too much of an incident. So, we move on to item 1, which is introductions, apologies and substitutions.
So, we have with us this morning Shaheena Din, the national projects manager of the Scottish Empty Homes Partnership. Good morning.
Welcome. Andrew Lavender, the project consultant of No Use Empty Scheme. Morning, Andrew.
Brighid Carey, project manager of community-based approaches, Action on Empty Homes. Good morning.
And Nigel Dewbery, who's the director of obligation delivery and installation services at E.ON.
Good morning to you too.
I just want to advise everybody that the National Assembly operates through the medium of Welsh and English and there are headsets for simultaneous translation on channel 1 and sound amplification on channel 2. As this is a formal public meeting, Members do not need to operate the microphones. They will operate automatically as you speak.
In the event of an emergency, an alarm will sound, and ushers will direct everyone to the nearest safe exit and assembly point.
So, this is the third formal session of the committee's inquiry into empty properties, and the purpose of this session is to learn more about the work done in Scotland and England on empty properties.
So, at the end of this session, we'll be giving everybody details of the transcripts and so on. I'll come back to that towards the end. So, if we can move straight into questions, and I will start, if I may, by just asking you how important it is for local authorities to take a strategic corporate approach to tackling empty properties—whoever wants to start. Shaheena.
I think it's really important for councils to take a strategic approach. A strategy will give consideration to councils to understand where their empty properties are, why they became empty and why they remain empty. If there's an empty homes officer on the ground, it'll give them a clear direction to work towards, and they will be able to establish priorities so they understand which parts will be more important and can identify policy solutions. Now, often, officers can identify policy solutions, but if there's no strategy, then there is no commitment at decision-maker level, and they then come across barriers. So, if you've got a strategy in place, then they have a clear direction and a clear commitment at that level.
I think that, from our point of view, one of the things we found is that, if you go back to the root cause of a lot of the empty homes, it is very often down to the homeowner not having the knowledge, the time, the resources financial or otherwise, the trust or the will to do something. So, having a local authority available with some strategy, as Shaheena says, and a direction that they can link into and, if you like, get alongside is really reassuring to them and starts helping them. So, it's important they're there to be the person to help the private homeowner to be able to do something to resolve the problem.
I think what I would add to that is that Action on Empty Homes believes—just picking up on the corporate nature of the question—that the empty homes strategy should sit within a broader corporate strategy, and ideally within something like community regeneration, economic development, so that it's seen not just as a housing issue or an empty homes issue but as a broader community development and economic regeneration issue, so that you truly have a corporate approach that has within it a clear empty homes strand, but not an isolated empty homes strand.
Just building on the comments and thoughts so far, for an authority to be effective in relation to empty homes, there has to be a corporate approach. So, it has to have the full range of enforcement options, where each department will actually engage within the process as well as having the softer options as well. When you're looking, particularly at the enforcement side, there's a sort of structure or using the legislation in an intelligent manner rather than just dealing with the symptoms of empty properties. Local authorities are very good at working, generally, in silos, dealing with their particular piece of legislation, but it needs an overall view, really, that, if you can bring the property back into use, then, generally, all the other problems associated with the departments will be resolved. But it's actually quite difficult to get a corporate approach and buy-in from all the departments to actually sing to the same hymn sheet.
And, on that final point, about it's difficult to maybe get a corporate approach, is there a danger that the reactive nature of dealing with this situation means it's more difficult to plan for long-term solutions?
What I would say is, if, for instance, when we—. Local authorities are very good at dealing with rubbish in the garden or boarding the properties up, but what we really should be looking at is what's the worst case scenario from an enforcement point of view: is it compulsory purchase? Is it enforced sale, an empty dwelling management order, or prosecution? And then actually work back from that. So, for instance, if we're going to end up doing a compulsory purchase order, we know we've got to pay market value for the property. We've also got to pay basic home loss payment, which is 7.5 per cent market value up to £75,000. But, if the authority serves a Housing Act notice or a town and country planning or listed building repair notice, and that's still in place at the point the property vests in the authority, then the owner loses the right to claim that compensation, plus the fact that you've served a statutory notice and it hasn't been complied with assists the authority in arguing for the compulsory purchase of the property. If the authority is going to do an enforced sale, for instance, certain legislation is better than others. So, the Building Act, prevention of damage Act, and Housing Act, if you did works in default on that property under those legislations, then you will recover your money in priority of the mortgage. But, if you use the Town and Country Planning Act 1990, your charge would not take priority. So, it's very risky to do works in default if there's a high loan to value on a property or it's in negative equity, if you're using the planning Act. So, it's using the legislation tactically, and good authorities have teams where they pull in members from the different departments and actually look at it strategically as to what's going to get the result, rather than just deal with the symptoms of the empty homes.
I think also, just to add to that, the strategic approach should have a delivery plan, and that delivery plan should include delivery protocols between the various bits of the council, because, as Andrew says, there can be a fragmented approach and there need to be agreed outcomes. For example, are we just looking at bringing empty properties into use or are we looking at increasing the supply of affordable housing, for example? Do we want to use bringing empty homes into use to provide accommodation for young people leaving the looked-after system, or for people with mental health issues or in recovery? So, what are the shared objectives and outcomes that can be met across the authority through bringing empty homes into use? And that, then, helps to guard against slipping back into a reactive approach, because there's some momentum towards delivery.
Okay. Thank you. Thank you, all, for those initial comments. I'd like to move on now to some questions about what might be done to bring empty properties back into use with Caroline Jones.
Diolch, Cadeirydd. I wonder if you could tell me, in terms of sharing best practice across the public, private and third sectors of the community, regarding empty homes—if we look at the empty homes project and the Scottish partnership on bringing empty homes back to life, can you tell me what lessons have been learned from there and how best practice may be shared from the lessons learned?
I think we've learned a number of key lessons and, of course, we look at our partners across the borders and see how they do things as well. I think the key lesson is that, without a dedicated focus at local level, homes are unlikely to be brought back into use. So, you do need that empty homes officer post—that's critical. I think that empty homes officer, as a person, is quite critical as well—the type of person that you get. They need to have a range of skills—lots of skills, actually—to be able to negotiate and facilitate and work with owners directly. We talked about the strategy being important, because, if that framework and that strategy's not there, then the officer is often left to go maverick and can have great ideas, but not that commitment there.
I also think that a communications plan—so, whether that be social media or whether that be digital, however that's marketed—so that owners know that there is a service, but also that professionals understand that there is a service and somewhere that they can refer on to. We need the buy-in at a senior management level for meaningful change. And also making sure that the officer is not working in silo. I think there were a couple of other points that I kind of thought—. One of the major points is a council tax policy that allows for discretion, with a carrot-and-stick approach. We know that some councils take a blanket approach and the officer is saying to council tax, 'Please allow us this discretion', but not all councils do that. Writing to owners early with a preventative approach, sending out surveys and doing the advice early on, early intervention. Geographic information system mapping to provide a strategic oversight so that they can actually map the empty homes and layer it with the other strategic objectives that are there. And, additionally, probably having some funding options from the council available, such as grants and loans.
Generally, I would say that an initiative to deal with empties is best done on a regional or a national basis, particularly with resources on a financial basis, and ask, actually, any consultancy, it's easier to pull resources into a scheme, but, actually, it's beneficial to the whole group, with sharing information, where the costs are shared, you know, having them—the media side. One of the issues we had in Kent originally was actually advertising the enforcement, the successes of the scheme itself, and, actually, the amount of enforcement we do now is significantly less than we did at the start. So, a partnership approach works effectively in the region that deals with it. There needs to be some financial incentive or some financial product available to empty property owners to bring them back into use, and there also needs to be buy-in within the local authorities themselves to provide the resources as far as staffing and also the corporate approach we had talked about, where local authorities are prepared to, basically, do things that perhaps they've never done before. It's a matter of building the confidence within the schemes themselves.
Okay. Thank you. And if I can direct my next question to Nigel, please: has the work of E.ON across the country with various local authorities highlighted areas of best practice or concern? And what approach works best when dealing with people on bringing empty properties back into use?
Thank you, Caroline. Yes, certainly it has. I should explain why E.ON are even in the empty homes arena. Basically, we've got about eight or nine years where we have built up an ability to do whole-house retrofit around energy through the energy company obligation scheme. And, under that—we've got the facility, got the abilities to do so, had the funding, because we control the funding, and it was possible to do empty homes, until last October, under the ECO scheme. But, very often, we were finding that we were renovating 500 to 600 houses in a community and, because we couldn't find one or two of the owners, we had to leave one or two of the properties and that was always a blight or a bad mark on that community, which was always seen as a negative, and we always felt that it was something we tried to stretch.
So, what we've done since ECO3 came in, which actually stops us from putting money into empty homes—we have to have a vulnerable occupant of a home before we can then help under ECO—we've now decided to carry on in the empty homes and start working with local authorities in partnership around the midlands. So, we're very new to the arena—only about six months in. What we've found, coming from that angle, is we work very hard on the prevention. So, we try and stop the properties becoming empty in the first place. By using the facilities we have, while it's occupied we can bring to power the powers of ECO and warm home discount to be able to help vulnerable customers and try and stop the inevitable of an empty home being inevitable. When it does come in, the importance of working with that local authority is absolutely key. They're central to making things happen. Having the resources is one of their big difficulties, and, again, that's where we can help; we do have resources and we're putting resources into into it. I've got a team of 13 working on empty homes already, and that will grow as the requirements grow across the UK.
There are also other facilities out there. One of the best practices that we've come across is one called 'Call before you serve', which is set up and our local authority partner uses it. The idea behind that, again, is that people have this helpline they can call, either the landlord or the tenant, to try and sort out, before they get into an eviction situation so the property becomes empty. So, we help out, we try and facilitate. We can do the work if necessary; we can bring funds in; we also have access to long-term low-interest investment grants and things of that nature. So, that's where we come in, and working in collaboration is the key element. So, that's where I'd say the best practice runs.
Thank you very much. And, for Action on Empty Homes, how do community-based approaches in dealing with empty properties differ from the standard sort of casework approach that is generally taken by local authorities, really?
We followed six community-based projects for a period of three years to learn from them, to learn what they achieved, what the barriers were, and we produced a report, which I sent through. Just in terms of the achievements, the six communities that we followed over that three-year period pulled in over £3 million of funding for the refurbishment of empty homes, and they created 65 homes in total for local people. Importantly, they also provided work experience and training for 644 people. And they had a significant impact on the community well-being in general, with over 1,000 people reporting that they felt safer and more involved with their community than they had done previously.
Now, I suppose there's a number of key things that we learned from that. The most striking, really, was to recognise that communities ask a very different set of questions from the ones that we ask. We ask, 'How can we bring this empty home into use?' What communities ask is, 'How can we make this a better place to live? How can we create somewhere where we can thrive?' When you ask that question, you look at things completely differently.
And, in fact, only six—sorry, only five—. Sorry, five of the projects that we looked at had no housing experience at all before they started to get involved with empty homes. Only one of them set up specifically as a housing organisation. The reason that they got into housing was because they recognised that, in order to deliver their wider objectives, which could be to do with either area improvement if they were geographically based, or to do with meeting housing needs if they were working with people who were vulnerable in some way or excluded, they needed safe, secure and affordable housing. What a lot of the people they worked with ended up in was insecure privately rented accommodation. So, they learned about empty homes and how to bring empty homes into use, and, in a sense, by doing that, they took housing back for the community, away from the housing industry, and they used empty homes and the whole process of bringing empty homes into use almost as a medium for creating the kind of communities that they wanted to live in, including setting up cafes, having food-sharing schemes, providing broadband access for people, because they were looking at life in the community; they weren't just looking at empty homes.
Okay. Thank you. The committee has heard that not all local authorities have a dedicated empty homes officer, so I wonder if you can tell me your thoughts on this, what you think are the benefits, really, of having such an officer in position.
If I start, I think the resources need to be commensurate to the problem, so, if an area has a small percentage of empty properties, then a part-time job or part-time role or responsibility will be sufficient to deal with it. What I would say is that, if you employ an empty property officer, then there's an actual focus on the problem itself. With a lot of the local authorities, they may say they don't need an officer, but that the actual service is dealt with across the different departments, so planners will deal with the visual amenity, street scene will deal with the rubbish and the issues for them. The problem is the local authorities where they provide that service in that way are dealing with the symptoms of empty properties, and generally they'll deal with that but won't actually bring the empty property back into use. If you employ an empty property officer, they should pay for themselves multiple times over in the regeneration value and the amount of investment in the area, job creation and also the visual amenity improvement of the property itself. So, for those authorities that actually have a dedicated officer and resource, then you will normally see a direct correlation in the number of properties that are brought back into use. Those authorities that don't put adequate resources into it—they tend to be a cinderella service. It's not a statutory function, therefore in austere times, particularly in England, it's one of those areas where it's easy to cut posts. The only reason, really, that empty properties are given any significant emphasis in England is because they've connected it to the new homes bonus where there's a reward element for every empty property that's brought back into use overall.
Just to say, before you move on, I've got a couple of supplementaries—on this particular point, Mark, was it?
Yes, on that point. I remember a few years ago Denbighshire, which had a dedicated, very proactive empty homes officer, won national awards for bringing properties back into use, but as you indicate, the scale of the local authority might mean resources should limit that, and you mentioned part-time, but what opportunities might there be, as has happened in the past, for, perhaps in more rural areas, sharing rural housing enabler and empty home officer roles, or approaching this more on the regional partnership model? So, if resource in a single authority is too stretched, two or three might share together to enable that dedicated role.
I know it happens in England, where multiple authorities will appoint an officer between them to share the cost and the resources, and I know my colleagues in Scotland have a similar emphasis in that way as well. It's a matter, really, of having a resource that is targeted towards it, and that needs to be commensurate with the amount of problems within the area. So, the more resources you put into it, the more results you get, but I don't see any particular problem with, if it's not such a big problem or there are limited resources, pooling expertise and knowledge, or even—certain authorities have certain skills, so there's no reason that if you've got a national scheme, and one local authority is good at a particular issue, then either you can buy in the services or perhaps exchange services between the parties so that you're spreading the knowledge, the experience et cetera by trying to keep the cost down to a minimum level as well.
Picking up on that point, our main partners are North East Derbyshire District Council, which is on the edge of the Peak district in the midlands, but they actually act on behalf of three other local authorities as well, in exactly the way that you outlined there, sharing the costs. What the officer there does is act very much as a facilitator and a signposter. He's come into partnership with us, but also other people, where he's looking at what services he can bring in for the four authorities, preferably without cost to them, if he gets his way, which is often the case. But it is that ability to be able to facilitate and be the central focal point that becomes essential. As soon as it starts getting divested into several different departments, you lose that focus point and concentration of effort, and we find that quite important, to be able to have that conduit and focal point in that.
If I can follow on, sorry, I want to ask this as well and incorporate it because it ties in with something you've just previously said—the role of housing associations or registered social landlords, where in the past they have often hosted the empty homes officer and/or the rural housing enabler in partnership with a local authority or local authorities, but also, 20 years ago, I was on the board of a housing association in Merseyside when Liverpool zoned the city and the successful bidding associations were responsible not just for bricks and mortar, but for sustainable community regeneration in the way you described it. How can RSLs help in that, being seen as equal partners with local authorities, rather than something to bring in just to fill in gaps?
I think that's an excellent example of how an area-based, holistic picture can actually achieve more than the sum of the parts, if you like. The housing associations, I think, do have a role to play, certainly. Many of them, though, unfortunately, in England, certainly, are moving away from city-centre areas and they're consolidating their stock. I would question the extent to which, in general, housing associations are as geared up as they may have been in the past to manage what is, effectively, private stock, in a city or urban area, because, as I said, they tend to be moving away.
But I think there's another question about the underlining of the corporate approach, and understanding that there are invest-to-save opportunities. This isn't just about housing. And certainly, in the authority that I used to work in, we used empty homes and bringing empty homes into use as a means of saving money on young people in residential care. So, by bringing empty properties into use, young people were able to move out of residential care, which saved the authority over £120,000 per child. Now, when you start to then say, 'Well, we haven't got enough money to look at working around empty homes', well, maybe there's another set of questions to ask, which is: how can we motivate ourselves as a local authority to recognise that this can work both ways? We can work with owners to bring empty homes into use, and we can rustle up the money that we need to fund that through the savings that we can make by cutting costs elsewhere.
Okay, thank you. Before I bring Caroline back, I've got Huw, who wanted to—.
It's only a very brief question. I'm very taken with this idea of a community-based, bottom-up approach to resolving some of these issues. But to me it feels, from my experience, quite radical, because the resource pressures that are on local authorities, the reactive nature of much of what they're trying to do—occasionally they burst out into a moment of strategic thinking and so on—and it's not their fault, it's simply the pressures and the day to day, and the firefighting and so on. So, what are the obstacles to getting to an approach where a community-based approach is normalised? Because it would seem to me that, if you can say to communities, 'We really want to engage with you; this is in your hands—help us to manage and take some control over your own environment', then that's a great way. So, what's standing in the way of doing that?
I think there are a number of key things from the local authority side of things, I would say. One is that local authorities tend to look for existing housing knowledge. We speak to local authorities who say, 'But there isn't a community group in our area who deals with housing', but five of the projects that we followed had never done housing before. What they had was a lot of community intelligence. And it's the difference between looking for community intelligence and working with that, and looking for existing housing knowledge, because you're not going to find it, really, in many areas.
The other thing—which has just flitted out of my mind—was that local authorities, I think, particularly when under pressure, believe that they have to do stuff—that if they don't do it, nobody can. And something that we've been talking to local authorities about a lot is their enabling role. You can be a very, very successful enabler with very few resources, because, as I said earlier, the community-based groups have access to funding that local authorities simply don't have access to. And the ones that we followed have pulled in over £3 million, and that's just six projects. So, it's having that kind of change of thinking and a change of conversation that looks at what can be done by others, with support and a strategic lead from the local authority, but not necessarily the local authority doing everything.
I think you might have just answered my question, but I was going to ask: you mentioned, Andrew, that this isn't a statutory function for local authorities. I was going to ask whether you thought it should be, but given what you've just said I think I can guess what your answer is going to be. But do the others of you think it should be a statutory function of local authorities to deal with this?
I don't think it should be a statutory function. However, I think that local authorities should, if they're generating revenue from increased dwellings, on council tax, then they should use a portion of that money to fund an empty homes service. It just makes sense. The spirit of that legislation is to unlock properties, and if you're bringing in legislation to unlock properties but then not bringing in that advice and support to then work with owners, it doesn't work well.
It doesn't necessarily need to be a statutory duty in relation to a local authority. You've got the Houses into Homes scheme itself, which is an invest fund within Wales to deal with empty properties, and local authorities really should be putting the resources into exercising and using that money as best they can in bringing empty properties back into use. But there are also other levers. As I say, in England, for instance, they've had the new homes bonus, so they look at the net additions into a reward grant based on the number of new builds, and they've brought within that definition bringing long-term empty properties back into use. So, you could get up to six years' council tax income on a band D property. So, for every property you brought back in, you'd probably get about £7,000 a year for six years. It was worth £36,000, in rough terms, for bringing that property back into use.
Based on that emphasis, then, the local authority is going to put in resources to drive the empty homes down to get the amount of investment within the property, which would reduce the number of empties, but it should make the job self-financing. The difficulty often is that the money is not ring-fenced, so, generally, the money goes into the general coffers and is used for adult care services and other costs, and not actually ring-fenced. There are a number of cases in England where investment has been ring-fenced. So, Cornwall, for instance, implemented a compulsory purchase programme and employed more staff, based on that reward grant.
So, statutory duty is one element you could introduce to it, but there are other levers I think that you can provide to incentivise local authorities to invest the resources and the time to deal with empties.
Yes, I think we'd totally agree with my colleagues, but we'd also take a view that if it's a statutory duty, it would probably send the wrong message into the community. So, things that are seen as statutory means, 'Okay, we don't have to do them any more; it's down to the local authority to look after that.' And I think it would destroy the community-based approach, which is probably more effective because the community that you end up with is what the community actually wants and strives for. I think the local authority's role is very much about being able to provide the knowledge and be the go-to to enable and facilitate the activity, to act as a conduit to pull that community base together. I think doing it through the statutory route would be a step too far.
Thank you. My final question, probably for Shaheena and Brighid, really is that we, the committee, have heard that some local authorities struggle to get the legal in-house support that is required—you know, they struggle to get it on empty properties, so I wonder if you can comment on that, please, if you'd like to.
We've found that as well. We think that—well, we know that officers tell us that there is not that legal support for doing the statutory things like compulsory purchase. One of the things that Scottish Government have been doing, for compulsory purchase orders in particular, is quite complex legislation, but it is underpinned by quite a simple process, and what we're trying to do is educate empty homes officers to actually get it to a process so that when it goes to legal services, it's much easier and they don't have to then do a lot of legwork. But we're still finding barriers in terms of legal having so many conflicting priorities, and empty homes often aren't top of that list.
Which brings us back to the corporate strategic approach, because there are conflicting priorities. It's only reasonable, I think, for a local authority to give clear guidance to legal departments, empty homes staff, enforcement teams, and so on, about what their priorities are. So, if you're in the legal team and something around empty properties lands on your desk, it's okay to prioritise it. That's what the local authority wants you to prioritise. So, it's clarity, I think, because there are huge delays and barriers.
As part of the No Use Empty scheme partnership approach, there's myself that provides a floating resource to the 12 local authorities, so my job really is to pick up the real hardcore long-term properties that nobody wants to deal with, because they're resource intensive and take a lot of time and effort. So, my job is to go into each authority to do training, get a corporate approach within the authority itself, and to actually do all the enforcement. So, we'll do the compulsory purchase, the enforced sales, and what we try to do is take the officers in each of the authorities through all the enforcement options—where there's works in default, compulsory purchase—so that when I drop out of the equation, they've got the necessary skills, the knowledge, the confidence and the paperwork to do it. Normally, as part of that, we can try and get their legal services and other departments to buy into the project and challenge them—if they're not doing their job, then, again, challenge them in appropriate cases.
Thank you very much, Caroline. Huw, you want to ask some questions on the local authorities' powers.
Yes. Can I just begin by asking: the existing suite of powers that are available in England and Scotland particularly, what's your take on the level of awareness with local authority officers of what tools are at their disposal, before we move on to what else might change?
I think from our experience, there's a fairly good awareness but there's quite a reluctance to use the powers that they have available to them, because of the legal constraints they have and time constraints. We were talking to one authority recently and the officer there said, 'It took me basically nearly 400 man days to get one across the line.' Because he had to do it pretty much himself, so he almost had to study law to understand what was going on. He just didn't have that support in there. So, very much they try and avoid using the legal powers they've got, is our experience, and kind of that's where they've asked us to come along and try to get it back into an affordable house/home that they could use, rather than having to—or trying to persuade the private owner to do that work, rather than having to take it on themselves to do.
I think one of the barriers is the lack of funding to do works in default, because obviously when you serve a statutory notice, then there's an obligation to follow that through, and in my experience some authorities won't even start the process because they know they're not resourced to finish it.
I'd generally say there's a good understanding of what the powers are and what's available to deal with it. The issue is the implementation. It might be that planners don't have the resources for them to deal with their legislation, it might be a lack of experience or knowledge with legal doing compulsory purchase, et cetera. So, I think the legislation is there, it's adequate to do the job, but the issue is to get the corporate approach, the lack of silo working, and to prioritise the action necessary. Because local authorities will always try and avoid doing enforcement action if we can, because it takes so much time and effort to deal with it, so we will always try and deal with the softer options and work with the owner. Empty property enforcement is very much a measure of last resort. But it is a very necessary resort for those particularly very long-term problem properties within the area. All the softer options aren't going to help in those circumstances, and it does need the statutory framework to deal with it.
So, what would your advice be to this committee in looking at how we deal with these issues in Wales—because they seem very familiar to me—about the essential building blocks we need to put in place to enable, if the awareness is fine—? And I get the point that you don't want to escalate this to the nth degree, what you want to do is work with the owner et cetera, work with the local community, develop a solution before you get to using more stringent powers. But how do you enable them to avoid that natural antipathy towards using these powers? When a councillor walks in and says, 'We need to sort this stuff out', or a local community says, 'We're sick and tired of this', and they sense from a local authority, 'Oh, we don't want to go down the using-the-powers route'—if the powers are needed, what do we need to put in place?
I think what we would say is the big problem is the infrequency that individuals have to deal with these sorts of things. So, a centralised service whereby, if you look at Wales, there is one or two people in Wales for the 22 authorities who you can actually utilise, who will be familiar with it—. So, if you're familiar, you can do it quicker, you can do it cheaper, you can make things happen more accurately. So, by pulling it together into some sort of centralised facility—how you'd go about that I can't start to suggest, but I think it's that familiarisation of the individual that causes fear, problem, cost, delay, and that makes them step backwards. Whereas if they knew that somebody was there, and they could contact them, and they would sort of say, 'Right, okay. We need to press the button on this one. Over to you', I think that that would be a shared resource that would help.
Can I add to that? One of the things that we're looking at is, obviously, compulsory sale orders. I think that we've been looking at that from the lessons that we've learned from the compulsory purchase order, and looking to say, 'Okay. How can we make sure that this is part of a process that is working with the owner?' I think that the message we are trying to get across from day one is that it is taking a casework approach. So, there's an empty homes officer, and the empty homes officer is, at all points, looking to bring that property back into use with the existing owner rather than the threat of enforcement—but having the case built at the same time. So, they are evidencing everything as they ago along. So, they are saying, 'We've had this conversation with you. We've had this complaint from this neighbour. Here are some photographs.' They are building the case as they're going along so they don't have to go back and start that process all over again. They are working in a way that—. They are telling the owner, 'If you don't do this, these are the consequences.'
I think that some of the things that we would say is that it's having really easy flowcharts for officers to look at to say, 'Right, okay, so these are the things that should be necessary before we would even consider a compulsory sale.' So, for example, on owners' property rights, when are they taken—. It's causing a blight on a community. What is blight? So, you're laying it out really clearly as a framework for an officer to follow, but also then again having that strategic corporate approach where we've got the buy-in at the other level, where people are making those decisions and saying, 'Yes, as an authority, we are going to go ahead and take this.' So, these sorts of decisions have to be part of a local housing strategy or an empty homes stand-alone strategy that sits there to say that, in these cases, this is where we'll go and this is the route that we'll take.
Could I just ask you—? You've introduced that interesting concept, the compulsory sales order. If I was an individual property owner and I'd had endless problems, for whatever reason, accessing the money to do a property up—the local rental values are low, this that and the other, I've had problems in the family, I've had problems with probate and it's gone on and on and on—and you get to this point where somebody says, 'We're going to do a compulsory sales order,' which in effect makes it easier than the compulsory purchase orders in some ways, what are my human rights in that? What are my private property rights?
This is where we've put a lot of emphasis on the conscious effort to engage with the owner throughout the process. Obviously, use discretion and don't just go in. If the owner is genuinely making attempts to bring that property back into use, then we wouldn't recommend a compulsory sale order. But, it is where you have come to a point where you have worked with the owner and they are not willing to bring that property back into use. You then say, 'Well, the blight on the community is significantly greater than what your actual property rights are at this point.'
And the reason that you've seen this as a potential additional model to introduce into the armoury is because it would be, based on the evidence that you've gained, the file that you've put together—it would, in effect, make it a slightly simpler process, slightly lower the threshold in terms of issues like market value and so on.
Yes, absolutely. Also, when you're doing the compulsory sale, you're forcing it to auction, it's going for a district valuation. So, somebody's going to come in, do the valuation and force it to auction. So, the local authority does not have to then have a stake in that property or manage a back-to-back agreement with somebody else to take that property, or even hold the risk for the financials of that property. The property just goes to auction, and so the local authorities don't take so much risk on as well. They are some of the barriers that they are saying about compulsory purchase that we've looked at before we've considered a compulsory sale.
Can I just perhaps come back in relation to that as well? One of the issues with compulsory purchase is the additional costs in relation to it. So, you have to pay market value. You could potentially pay basic home loss payments. Between the adverts and legal costs, it's about £4,000. If it's a planning inquiry, there's another £6,000 to £9,000 in relation to the cost. You may also be liable for stamp duty on the property. In addition, if you CPO an investment property, and the previous owner buys another investment property within 12 months, you could be liable for the stamp duty in relation to that.
So, there's quite a lot of abortive costs to the local authority in pursuing a compulsory purchase order. The sales order being proposed really takes—. Most local authorities when they do a CPO, they don't really want to do it. They're not taking the property, usually, into their stock. The reason that they're doing the CPO is to cause a change in ownership, and then they usually provide a partner to try and regenerate the property in the longer term. So, the sales order approach actually brings it to market without the additional cost to the local authority, and that perhaps is the attraction to it.
There also has to be a balance between the rights of the owners. There obviously has to be a right of appeal in the circumstances. There's a difference between people who are trying to bring the property back into use and those people who really are just disengaged, and the difficulty you have with very long-term empty properties over two years is usually it's been in the family for a very long time, there's either no mortgage or a very low mortgage on it, and they live remotely from the property. So, in effect, the property is not causing them any problems, it's not costing them any money, and then really that's the sort of angle that we would be using it in local authorities. But there obviously has to be a balance in relation to the owner's rights.
Can I just ask two supplementaries on that? I'm extrapolating from what you're saying that that would, in effect, replace the approach to compulsory purchase orders. You would go for this compulsory sales order, rather than compulsory purchase order.
I think that compulsory purchase still will have its place. So, it might have a place where the local authority has a regeneration interest or has an interest in that particular local authority area. So, it's still a tool that's still available for that local authority, but it is something else that's there. But I definitely would emphasise that there is that conscious effort to engage with the owner from start to finish of the process.
And I would see it as a complementary power, not to replace the CPO.
I would just add that I think people believe what they see. If they see local authorities taking enforcement action and doing works in default, putting a charge on the property, enforcing a sale if it isn't then resolved, then they start to get the message that you do need to do something about your property, because the local authority will act. In order for local authorities to be able to do that, they need enough in the way of a capital resource with associated revenue funding to take enough action to convey that message, because once people start to get the message—when you serve your notice, they act.
Can you keep it quite brief now, Huw, please? Because I'm conscious of time.
Sorry. Yes. Thank you, Chair. I want to turn to the empty dwelling management orders, and we've heard evidence that there hasn't been a great use of these made in Wales. I'm just wondering what the experience elsewhere is in England, and so on.
There have been about 220 applications since the Act has come in in England, probably about 190 to 200 have gone for interims, and there's probably—. It's difficult to find the final EDMOs, but there's probably 90 to 100. Local authorities see them as very bureaucratic. They take a long lead-in time to deal with them. So, they're seen as a measure of last resort. One of the big issues is the lack of resources. Even in Wales, I know you've got the Houses into Homes scheme where they can use the money for works in default, but it's a very short time period and it's a maximum of £25,000. When you're dealing with empty dwelling management orders, they're generally reasonable condition but your costs are usually more—£30,000, £40,000—and it's actually getting the ability for the authority to take over management of the property for at least seven years and find the funding for that level. Certainly, I know, in Wales, we've probably done four or five, but certainly in Carmarthenshire the two final EDMOs that we've done we've had to roll them on for an additional seven years just to make sure that we could recover the money. So, they can be simplified and there are a lot of issues with them so they can be made effective. I think they provide a valuable role for particular properties and are part of the tool mix. So, I wouldn't want to see them gone. But they could certainly be simplified to make them more effective on the ground.
I know we're short of time, but can I just very quickly say—? Rochdale Borough Council have streamlined the whole process with standard letters. They go for EDMOs as a matter of course, and they have turned it into something like dealing with rent arrears, where you get the standard letters that go out, and it's only when you reach a certain point that you start to do the casework around them. So, that's in terms of 'Can they be simplified?'—yes, they can. And there are some examples out there. In terms of the management of the property, what Hull City Council do is work with Giroscope, a community-based organisation, and a number of other community-based organisations, to manage the properties for them once they're brought into use, as do Middlesbrough—they work with the community base. So, you're quite right—you need to sort out the process, which can be done, and then sort out the management. And, again, there are some examples of good practice.
Directly related to that, EDMOs are refunded, theoretically, for the local authority via the rental stream during that seven-year period. But the local authority still has to find the money upfront. Would there be a role or has anybody looked at the opportunities for recyclable loan funds that local authorities could use to cover that capital cost, and then reimburse from the rental stream?
That's what we do in Kent where we've done empty dwelling management orders. The money comes from Kent. As part of the management scheme, we charge the owner interest for the benefit of the loan, and then they repay the loan as the rental income comes into the property. But there are certain risks with empty dwelling management orders, and one of the big risks is that the way that the legislation is drafted, the Government expect you to recover the money from the rental income. Your difficulty is that you can't put a direct financial charge registered against the property that would take priority over the mortgage. So, there's been quite a number of instances, particularly up in the north-east, where the local authorities haven't understood the risk—they've gone for an empty dwelling management order and done the renovation works. The mortgage company then repossess the property and sell it. They get their money first, and then the local authorities. So, the legislation could be altered slightly to give priority to the charge. And the other way—I think you've had evidence from Carmarthenshire—is where we use the housing Act improvement notices to create a debt that would take priority over the mortgage, and then follow it up with an empty dwelling management order. So, there are mechanisms, but it is dependent on the tribunal being supportive of the approach taken by the authority.
I was also thinking about the Government playing a role, perhaps having a recyclable load fund linked to Houses into Homes that local authorities could access to avoid that upfront capital cost themselves.
Yes, I think that, where they've done the empty dwelling management orders in Wales, they have used the Houses into Homes scheme, but I think there's a threshold of £25,000, and it has to be paid back within two to three years to the fund itself. The difficulty with empty dwelling management orders is that, with the best will in the world, the costs tend to be—. It's to put in a lettable fit kitchen. So it's kitchens, bathrooms, decorating, carpets et cetera, some renovation works to the property. So, the costs are going to be more than the £25,000, and the difficulty for the authority is, yes, the Houses into Homes scheme funding is there, but they need a longer term fund, over a longer period, to make it stack up financially for them.
Thank you. We're going to move on now to Leanne, who's got some questions on affordable homes.
Thank you very much. To what extent do these empty property projects and local authorities—. How able are they to encourage the owners of empty homes to provide social housing or affordable housing?
To share of the numbers of properties brought back into use, our officers, across our 32 local authorities, reported back 1,200 properties back into use, and 18 per cent of them were brought back into affordable housing supply.
Eighteen per cent. So, one of the things that's being used at the moment is council buy-back policies. So, quite a few councils have got buy-back policies where they're using the affordable housing supply grant programme to buy back properties. A quite good example was there was a one-bedroom, ground-floor, town-centre property that was causing problems to a neighbour. The officer went out and had a look at it and it matched their strategic housing need—it was ground floor, it had good access to the town centre, it was regenerating that particular community. They bought that property, I think, for around about £40,000. They spent about £18,000 renovating that property, and, for £58,000, they then had a property that was brought up to a good standard, as opposed to the £140,000 that's in their business plan for a new-build, one-bedroom property. So, it just makes financial sense, and quite a lot of local authorities are looking at doing that sort of wider commercialisation of empty properties, in terms of buy-backs, but also leasing and trying to fit it in with the rent-deposit guarantee schemes and things.
So, buying up these homes in rural areas can have much more of an impact we've been told by other evidence givers. So, does turning empty properties in rural areas into affordable homes present any specific challenges that you're aware of? And if there are specific challenges in rural areas, how can they be overcome?
So, I'll just very quickly add it and then I'll move on. One of the things that's coming up in rural areas is there are properties they wanted to, originally—. There was a community that wanted to bring empty properties back into use, but by the time they were negotiating with the landowner and having all the stumbling blocks with actually trying to buy that property back at that point, they just thought, 'You know what, we're just going to stop and we're just going to start building new build', which seems such a shame, because actually there were empty properties in that local area that could be brought back into use.
I think one of the difficulties with rural areas is getting the momentum, and the dispersed nature of the empty homes. One of the things that can be successful is to build the momentum through saying, 'Well, you know, we need affordable homes in rural areas for retained firefighters, NHS staff'—key workers, basically. So, I think when there's a clear reason and value that people can see to bringing empty homes into use, and for the owner as well—. I mean, it's a very different conversation to have with an owner to say 'We're going to take enforcement action against you,' or 'Your property could be a valuable resource for teaching assistants, to keep the local school open'. That's a very different flavour of conversation to have and can be a very successful one, and it can also get the community on side, to say, Well, you know, we need the infrastructure of affordable housing. We don't want new build; we've got them.' You know, they fit the rurality, they fit in with the countryside, so let's bring those into use.
Yes, I think, just building on that, a few of the things we found doing the retrofit side, both vulnerable homes and empty homes are really—. The planning constraints and things like that that often come with rural properties—. You know, you perhaps have a lot tighter constraints on what you're allowed to do in a certain area or vicinity. And then there are the two obvious ones, which are the supply chain in the locality—so, if you need a specialist trade, for some reason, there might be one 200 miles away but that's not a lot of use to you, and getting that supply chain is quite difficult—and then the cost, both of getting materials to the individual sites, as you haven't got a scaled site—. Getting even basic bricks and things to one house instead of a 200-house site is just a lot more expensive exercise. So, you add those three things together and it can be quite constraining.
I was just going to say, with things like the interest-free loan scheme, the benefit of the interest-free loan is of a certain value to the owner. So, if you're actually designing a scheme and you're looking at linking it to affordable housing or nomination rights, then, generally, the market rent will be higher than the rent that they're achieving. So, the financial product you've got to offer the client, whilst you need to maximise the amount of return for your investment, it also has to work from the client's point of view—that if they're going to lose or have nomination rights at a lower rent, then the amount of benefit of the financial incentive needs to be sufficient to offset that.
Okay, thank you very much for that. I'm conscious we're almost out of time, but there are a couple of questions from Mark Isherwood on the council tax premium, before we close.
How effective in England and Scotland has the power to vary council tax on empty properties been, in respect of bringing empty properties back into use?
If I start with England, the approach in England has been to increase the empty homes premium. It goes up to 150 per cent once it's been empty for two years. They've now introduced it that it's up to 200 per cent if it's been empty for less than five years, to 300 per cent if it's more than five years, and by 2021 it's up to 400 per cent if it's been empty for more than 10 years. I think it sends a message to owners not to keep the property empty. We have difficulties in England with classifications of holiday home versus second home, because empty homes premiums don't apply to holiday homes, so we have a lot of people moving their properties, if I can say, into 'holiday home use', even if it's not going to be done. From one side, it's very good, because local authorities have an option that, when the empty homes premium starts to apply, several months beforehand it allows them an opportunity to engage with the owner to try and get them to bring it back into use. On the flipside to that, you will also have people suggesting that if it's a husband and wife that own two properties, instead of one property being empty, it might be that the wife moves into the empty property, so actually they gain the single person's discount. So, overall there is an element of fraud, and it's the amount of effort local authorities put in to vet that and enforce the terms of it itself. So, it sends a clear message. It gives an opportunity for local authorities to engage with the owners themselves. Those owners who are likely to engage will engage at the point that it's doubled or 150 per cent. The effectiveness of increasing it any further—I don't know how effective that will be at bringing empty homes; what it will do is just accrue debt against the property. I think the Ministry of Justice, when they were looking at charging orders, said that the average time was about seven years to recover the debt from the property. So, I think it has a valuable role. It gives a clear message, but whether in the longer term it actually brings a significant amount of empty properties back into use is questionable.
That's the same question in Scotland, and also, if revenues have been raised, to what extent has that gone into bringing more empty homes back into use or has it been siphoned away into other uses?
Yes. We ask on our survey what tools they used, and a fifth of all the properties that were brought back into use across Scotland were brought back into use because they were saying that the council tax was the lever that allowed them to engage with that owner and bring that property back into use. So, I would say that it's quite a successful lever. I think that there are ways to make that more successful. One of the councils has a really proactive approach by actually making the owners aware before the 200 per cent charge comes in, because it comes in at 12 months in Scotland. And making the owners aware that it's coming, prior to it coming, the empty homes officer is using the carrot and saying, 'Come on, work with us and we can offer you something. We can offer you a six-month holiday.' Fourteen councils out of the 32 offer some sort of discretion if they can evidence that they're bringing the property back into use, and that's the best way to do it. They can say, 'Right, we can give you a discretionary holiday.' Often, there's that relationship with the council: 'The council's chasing me for money', but the empty homes officer at this point is the good person, if you know to mean, trying to—
And that discretionary role, how do you apply that in the case of probate and bereavement?
Probate and bereavement—so, they come under mandatory, so they don't actually come under the long-term empties. They actually get an exemption.
Okay. I'm afraid we are out of time. There were one or two areas that we didn't have time to cover, so we will write to you about that. So, those were areas around monitoring data in Wales and some questions around how you perhaps engage with owners to try to bring those properties back into use. So, we will write to you about that. Can I thank you very much for coming in this morning and giving us your evidence? There will be a transcript made available to you so you can just check on the accuracy. But, for now, thank you very much indeed.
Gohiriwyd y cyfarfod rhwng 10:32 a 10:41.
The meeting adjourned between 10:32 and 10:41.
Hello, and welcome back to this fourth formal evidence session for the committee's inquiry into empty properties, with representatives from the housing sector in Wales. Welcome to Rebecca Jackson, policy research officer from Shelter Cymru; Matthew Kennedy, policy and public affairs manager, Chartered Institute of Housing Cymru; and to Michelle Collins, specialist team manager, United Welsh. Good morning and welcome to all of you. We'll move straight into the questions, if we may, and can I just open by asking you how successful is the current approach across Wales to bringing empty properties back into use?
I think success is something that's quite hard to measure. We did a report back in 2009 that suggested around 26,000 empty homes in Wales—quite similar to the kind of figures being bandied around today. I think it's fair to say the effort's being put in by local authorities, housing associations and professionals across Wales—without that, there would have been a lot more. The problem would have been a lot more significant.
I know we'll get on to this, probably later on, but there are things around performance indicators, and it's how we deal with the most difficult-to-address empty homes as well. It should really be a real measure of our success as well as some of the things around addressing those owners willing and ready to engage. So, it feels like a bit of a mixed picture. We need to get a bit of a, I guess, more nuanced understanding of what success would look like going forward, not just around reducing, but actually around reducing some of the hardest-to-reach homes.
I think there has been success in certain projects that have been done through empty homes, but across Wales, I don't think everyone is working the same. But there's certainly been some success with it.
Okay. Sorry, I thought that was leading on to another comment then. That's okay. That's fine. Can I ask you: do you think there's a wider role there for some of the community-led organisations and co-operatives, possibly, in terms of bringing some of the properties back into use?
Yes, I think absolutely. Co-operative housing, by and large, is a really, really positive model of housing. It reduces antisocial behaviour, there's better community cohesion, ownership and accountability over local areas and the local communities. And I think, in terms of empty homes in that context, it's been shown to be able to revitalise maybe stagnant housing markets. There's a project up in Merthyr—Taf Fechan Housing Co-operative—as you will know, bringing 12 flats back into use, working with Merthyr Valleys Homes. Those flats have been empty since the 1990s, so they're a really good example of where housing co-operatives, and that model of working directly with people who can bring that local enthusiasm, as well as an organisation backing up with support and resources feels like a really commonsense approach to tackling, perhaps, some of the more difficult-to-reach areas.
Yes, thank you. I was going to ask you for some examples, and I'm glad you name-checked the ones in Merthyr, so thank you for that. I will move on—sorry, Mark, did you—? I beg your pardon.
On that very point—Valleys to Coast, for example, although a housing association is a co-operative, a mutual, as housing associations are. But about the role of housing associations in this more generally in driving sustainable community regeneration through interventions such as this, both as permanent potential landlords or driver stakeholders for the region or area, but also, as temporary—. In Rhyl, as you might recall, the housing trust model was initially managed by the North Wales Housing association, and was then transferred to Pennaf, I think—or one of the others—with the goal of eventually having a local residency board, as much as practicable. How effective has that model been? I know they struggled in the early years to get trust, I suppose, from the local population.
I guess, with all these things, the onus is on the evidence to show that these approaches work in practice, and Bron Afon have done something quite similar around working with younger people who have identified as housing need people—younger people, transitioning from hostel accommodation into permanent tenancies—and have recognised, actually, things like skills for day-to-day living might sometimes be lacking and require further support, and a co-operative model, even though, in that case, again, it's not traditionally and purely a co-operative—it's a tenant organisational board overseeing the management of that, but those kinds of approaches really have their part to play. But I think we're probably still in a situation where we need to continue to evidence why that works really well in practice and why it also increases consistency across Wales as well, because it feels at the moment that there are very much pockets of good practice rather than necessarily the commonplace approach.
All right. Thank you for that. If we can move on now to some questions from Caroline Jones.
Diolch, Cadeirydd. Sharing best practice is always music to our ears, isn't it? So, what evidence do you think there is that best practice, in tapping the empty homes issue in Wales, is being shared across Wales? Is there any evidence to support—?
Yes, so we've recently—. We actually were going to look at empty homes as our campaign for the year and then you find it pipped us to the post. [Laughter.] But we'd put out the FOI and we'd actually started speaking with empty homes officers across Wales and what was fed back quite strongly was, actually, they didn't feel that best practice was being shared and that they would be really keen to learn from other areas where it is working and is being successful and how they could replicate that. So, there's a feeling, I think, from the people actually doing it that there's not enough sharing of best practice.
So, the communication hasn't been as it should be, then, really, to—.
No. But I think that would just reflect the inconsistency in this as a priority for different local authorities, maybe. If it's under-resourced, then you're not going to be doing the work, so you haven't got the best practice to share and you haven't got the person there to pick up and learn that. So, I think it just sort of reflects the kind of—.
I think it'll take a lot of communicating and a lot of meetings, really, to work out the best practice with people from all across Wales.
Yes, and I think it definitely relies on if one local authority has x amount of resources, which is quite considerable, to put in this area compared to another that has less, it's hard then for that authority that has less to think, 'Well, there's the best practice. We could really achieve it if we had the resource of our neighboring authority or other authorities in the area.' So, it's that issue of comparability at the moment, I feel, that sometimes stands in the way of that best practice being realised in practice.
Yes, I agree. We obviously run an empty homes project through United Welsh and we work with several local authorities, but depending on what resource each local authority has will depend on what we can do with them. So, I do think there needs to be a platform for us to be able to share the best practice across Wales.
Going on to my next question, the committee has heard that not all local authorities have a dedicated empty properties officer. So, what do you think—? I know we have to look at resources and how many empty properties there are, indeed, so perhaps you can't have a full-time person dedicated to just that role. So, what do you think are the plus points in having a dedicated officer and what do you think could be the drawbacks of not having one, really?
I think in having a dedicated officer they can be proactive with trying to actually engage with people, because there's always a back story why these properties are empty. Most people don't want their property to be empty, but there's a reason why, and I think you need to drill down to that reason why in order to really address the problem. Whereas if you haven't got a dedicated officer, which lots of local authorities that we work with haven't, they end up reacting, basically, to somebody complaining about anti-social behaviour in a property. So, sometimes, you know, they'll send out leaflets, but obviously they're putting the onus on the person to make that telephone call to us, whereas when we've got dedicated officers, they're out there trying to speak to the people and they've got access to the information about where they live and try and really get to the bottom of it.
I'm not an empty properties expert and don't work in the area, but having spoken to a lot of professionals who do work in the area, it's really clear that when you do have that individual resource, people are well linked into the local community, they're committed, they work for the longer term, and the nature of the work obviously means it could be one, two or three-plus years before you see a tangible result. I think one concern we would have is around things like succession planning. Do we know we have professionals coming into these roles? What if someone leaves or retires whilst things are progressing, whilst those links are being made—could that undermine progress locally as well? So, I think it's really important that local authorities pay attention to that staff planning as well.
Thank you for that. Moving on, we've also heard that the current performance monitoring of data in Wales is not robust regarding focusing on the properties—the empty properties for the longest term that haven't been resolved—have you any issues regarding resolving that, really? And the most problematic properties that have been removed from the council tax valuation list—what is the strategy, then, really, to deal with gathering the data and with properties that have been removed from the list and so on? How is everyone going to work together to get the data, then, really in there?
I think the current performance indicators are two-dimensional, really. They give you an understanding of bringing homes back into use, but as we know already, there's—[Inaudible.]—that might be far more complicated, difficult and costly, and yet, it isn't doing that, and considering this work takes a long time, potentially, you might look at performance indicators annually and mistakenly think that nothing is happening, or that progress hasn't been as quick as you might think, but, actually, progress and what's happening in practice might be considerable. So, I think it's always dangerous just to look at anything in isolation, in that sense, and narrative or commentary is really important in the context of what resources the authorities are putting in place.
Yes, so you're saying, really, that the intelligence that's going on, which people can't see—they just see the empty home and they're wondering why, but the intelligence under the surface that's going on, perhaps to locate an owner, really, who may have moved abroad or something, is very difficult and is ongoing. Is that fair to say?
So, how important do you think is a robust evidence base to implementing the strategy that we just talked about and measuring success so that we learn? You know, again, it goes down to best practice, doesn't it, if you can learn how to do—? If you've implemented a quicker way of resolving a situation, then you share it. So, regarding the strategy of implementing the gathering of robust evidence, what do you think you can do to gather the evidence? How important do you think it is?
Yes, I think it's absolutely vital for local authorities, in the current climate, obviously, to be able to evidence new practice or current ongoing practice and the business case behind that really strongly. So, unless we have the evidence base, it probably does undermine the ability of some officers to be able to make that case really clearly against other corporate priorities.
Yes. So, how do you think the current performance indicator, then, could be improved, really?
I guess, not being a local authority officer myself, it's quite difficult to say, but I guess it will be through improved narrative and commentary. Like I say, it's dangerous to take it in isolation, and being able to get better nuanced evidence around the longer term, the harder to reach stuff, the things we want to really test our approaches against, not just the things where we think, 'Well, owners are engaging, we can use our financial resources and incentives'—that sort of thing—but, actually, how good are we when things are really, really difficult, and actually having a two-tiered approach that allows us to contextualise that return rate as well at a local level—.
Thank you, Caroline. We move on to local authority powers now and some questions from Huw Irranca-Davies.
Thank you, Chair. We've heard from other witnesses this morning that they didn't perceive that there was a problem with lack of awareness in local authorities about the powers that they had, but quite often there was a reluctance to use them for various reasons as well. What's your take on levels of awareness, consistency of awareness of the full range of powers that local authorities have, and reasons why they might or might not use those powers?
What I tend to find, in my experience working with local authorities, is they've got the knowledge, but, again, it's the resource. If you haven't got somebody dedicated dealing with that, they may have learnt it at university or they may have used it once or twice, but they know it's there, they know they can use it, but they're not using it. So, it's the same as with anything—if you don't use it very often and you don't do something very often, it takes longer, then, to do it when it comes around. But the main thing, I think, is the cost—the cost involved in doing that.
I think the other thing on—gosh, I've lost my—. [Laughter.] Sorry, can I—
It's the pressure of the committee. [Laughter.] Have you got any thoughts on it, from Shelter's point of view?
Yes. What we've heard is just that the process, the EDMO process, in itself, is lengthy, it's complicated, and it's one thing to have awareness of it—and it's very similar to what Michelle said about actually having the real knowledge and skills to be able to use that.
So, one of the things that we've heard from other people giving evidence today and also previously is this idea of some sort of central repository, a couple of go-to people or whatever on a national or regional basis that you could turn to and say, 'This is a tricky case, I need to refresh; I did it five years ago.' Does that make sense to you, that that could help supplement the knowledge that is there within local authorities?
I think—. I have remembered now. [Laughter.]
The Government's response before the housing review—one of the things within the detail of that was around that they provide training for local authority officers around CPOs and EDMOs. I think that's fine, that's great, but, as we're reflecting, that might not necessarily be an issue—so, around, actually, is the knowledge and understanding the real problem? It might be around more looking at complicated cases, case studies. I think the detail of that training is really, really important, but, if we're going to look at other measures, introducing other means, we need to look at timeliness, as well, because, obviously, there's a cost implication, a resource implication, to all of that—so, making sure we don't jump the gun and deliver one thing and then reflect and think, 'Well, actually, local authorities might need also x, y and z in their toolkit' and we'll also deliver more training on top of that. I think it's important to try and make sure there's some sort of connection between all that stuff.
Brilliant, thanks. Can I just turn to EDMOs? We've heard that very few of them are being used in Wales—a few more in England, but very few in Wales. Does this mean that they need reform? Do they need scrapping? Are they a useful tool?
We specifically asked about the use of EDMOs and also CPOs, and what we had back was that, in the last three years, there have been no EDMOs used and one CPO across Wales. So, I don't know if that means that we need to scrap them, but the qualitative stuff that we had back was very much around that the process needs to be streamlined. So, I don't know if it's about having different powers or more powers or just the right ones that can be used in the right way. So, there's something about just streamlining the process, I think.
Definitely, in conversation with local authority officers, some have said the risk involved with things like EDMOs is considerable, and, even if they throw the kitchen sink at it, there's no real certainty around getting a result. So, actually, if there was some sort of checklist—to oversimplify a bit—where they said, 'Well, if we've evidenced to a strong level of certainty these five things, we can be far more certain of getting a result,' which might decrease the risk and allow the authority actually to be more certain and take that action.
Okay. And I wonder—. If I could turn to one of the proposals coming out of Scotland, the compulsory sales orders, and we've heard some evidence on that this morning as well, do you—? Are you warm towards that idea being introduced in Wales, because that definitely is a simplification of the process in terms of compulsory purchase orders? Also, we've heard, if you can build a file, if you can show the evidence that you've been working with the owner all the way through, it is a much simpler way to force the hand on an empty property. Do you have a view on that?
I think it would be a positive thing as a last resort, because there has been enough resource to engage with that owner and find out why they haven't been able to bring the property back into use, why they're not selling it, et cetera. Yes, I think there is a place for it, but I do think it needs to be a last resort, because you could have somebody, for example, in negative equity, and you're making them sell the property and then there's going to be a knock-on effect to that, because they, obviously, won't have the money to repay it; their family home then—you may end up with somebody on the homelessness register. So, there is a knock-on effect to it, but I think it has got a place, personally.
It seems to be a good way of bringing, again, the risk off the local authority not having to put the case together for seven years' worth of management of that home, but it is clearly early days in Scotland as well, having just been introduced—[Inaudible.]—so, I think we obviously need to have that health warning with it.
Yes, indeed. How do you respond to the evidence we received in the last session regarding that seven-year term on EDMOs, and the mismatch with current programmes that only enable a maximum £25,000 per property over three years? How do you respond to the models—we had evidence to us; I don't know if you heard the session—where some local authorities in England, rather than wait for legislation to change the law, have brought innovative measures in to streamline processes and bring them more in line with normal rent arrears or whatever to try and access the owners earlier and engage them in the solutions? Finally, what role might reform of the housing health and safety rating system have in this, where, in the last Assembly, predecessor committees heard evidence about the alternative programme in Scotland, with the housing fitness standard, which was more easily understandable, cheaper to enforce, cheaper to apply, was recognised by the Royal Institute of Chartered Surveyors, and had also been tested successfully in court and case law established?
I'm not familiar with the approach in England, but that kind of—the rent arrears model for engaging and that sort of stuff does feel like a commonsense thing that some organisations are quite au fait with doing. The health and housing safety rating system, some of that, obviously, is reliant on implementing the homes Act stuff, and actually how that works in practice, and is definitely something I think that has really good mileage in this area as well, in terms of local authorities being able to act on evidence and actually take action as well. But we're still waiting on implementation stuff around that, so I think that feels like a good base on which to go off, but it feels like we're still behind the curve a little bit.
Okay. All right. Thank you for that. Can I just—? Before I move on to some questions from Leanne Wood, can I ask you, Michelle—in your evidence you talked about dealing with owners of empty properties, and you talked about the unrealistic expectations that some of them had. Could you say a little bit more about that and how you engage—perhaps all of you, actually—effectively with owners of empty properties?
I think a lot of the time when we get referrals through from the local authority or from our own website, they say, 'Oh, we've got this property; it just needs a lick of paint and it'll be fine, would you be able to take it on for us? We've been contacted, we're getting hassled by the local authority, we need to do something.' So, we go out, and we take our surveyor with us, and the property needs a full refurb—new kitchen, new bathroom—and their expectation on the phone call is it's going to cost a couple of thousand pounds, maybe, to put right, and then you tell them it's going to cost £25,000 to put right, and it is quite difficult. A lot of the time, they'll go away, and we don't hear from them—we try to contact them again, but we do try and manage their expectations on the first phone call, and say, 'How long has it been empty?' and try and get an understanding of where it is.
Then the other thing that we see is they will want us to buy their property, and a property in their street may have gone for X amount, and they think that their house is now worth that. They don't appreciate that somebody going in is going to have to spend, again, £25,000, because they may need a full rewire, a damp-proof course. But they don't necessarily understand that. So, it is trying to explain to people, and some people do come round and they do understand, and, ultimately, if they've got a property that's sat there empty, that they're having to pay council tax on, pay a mortgage on, it's better for us to spend the money to let it for them than for it to stay there. Even though it seems a lot of money, they do come round to the idea. Others, unfortunately, don't.
No, clearly not. And does the access to funding for them—is that a major consideration in terms of whether they say, 'Well, you get on and deal with it. I'll leave it to you', or 'I'm doing to do this'?
The Houses into Homes loan I think is great, and it's had its success, but I think again it's for a criterion of people—it's somebody who is prepared to deal with contractors, who knows about refurbs or is prepared to get involved in it, and maybe become a landlord themselves. We help people who—some people who've taken out the loan, we have the loan from them, we underwrite it, and obviously use that money to tender the works and do the works for them, or others do it themselves and then they come to us for a tenancy management package. But, like I say, it is, obviously—some people are very frightened by filling out the forms, even.
Yes, and to think about becoming a landlord. They may have inherited a property and they never thought about being a landlord, and they don't know what to do. It's quite daunting for people.
Sure. Okay. Okay, that's fine, thank you for that. Leanne Wood, you've got some questions on affordable homes.
Yes, thanks. You've just touched on this, I think—the leasing schemes. Can you explain to us how they work and what challenges there are, or obstacles, to rolling them out more widely throughout Wales?
Yes. So, the leasing scheme works—. We go out to the property—obviously we need to look at where that property is, we need the demand in the area, the rental in that area, so there are lots of variants. But, ultimately, we do a schedule of works, work out how much it's going to cost to bring the property back into use, we run it through our financial modelling to see how much rent, so how long that lease is going to be, and we then lease the property from the owner, renovate the property, we then find the tenant—that could be through social rented housing lists. We've also done supported housing—so, the Salvation Army rented a property from us for move-on accommodation. So, there are all different alternatives, because, obviously, as a housing association, we've got links to other people. So, that's how we do it. The downside is we have to, obviously, then, to protect our interest, we have to register a lease. If they've got a mortgage on the property, the mortgage company will only allow a lease to be registered for three years. So, that is a real—. I personally think it's a great scheme and it works really well, however, it's a very niche market, because unless they haven't got a mortgage on the property or, the work, it's only going to take us three years to recoup the money, or they're going to do it themselves, then—that's the downside, basically.
Is there anything you think we can do about that in terms of our recommendations?
I think it's difficult, because obviously they're a mortgage company; I can understand why. We could register the lease—we can go back to them after three years, but, obviously, from our point of view, that risk is too high for us, because if they turn around and say, 'Sorry, you can't re-register', we've got no way of recouping our money. So, that is the downside of it.
It's just that, having previously worked for a building society, it's not being nasty; the law says they must have first charge to protect the shareholders.
Oh, no, I understand they're not being nasty, but it's a bit difficult. [Laughter.]
So, to what extent are housing associations currently providing those kinds of services? How widespread is it, would you say?
As far as I'm aware, United Welsh are the only housing association providing the leasing scheme. I know others, obviously, do the tenancy management package. So, if somebody's got the property and they may have access to the Houses into Homes loan, they could go to another RSL. I don't know; across Wales, I'm not sure. In our local sector, I know it's only ourselves that are actually running that.
Okay. Thank you very much. We've received evidence to suggest that, if you can buy properties back in rural areas, it can have more of an impact. Do you think that turning empty properties into affordable homes in rural areas faces any specific challenges at the moment? And, if you do, can you explain to us how you think that they could be overcome?
I think the rural challenge is a little bit different in the sense that a lot of empty homes might be off the beaten track, so to speak, and might be less well linked into the community transport infrastructure, less desirable and maybe also larger—a few more bedrooms, that sort of thing. And I think, when we think about affordable housing, we've also got to think about local housing allowance rates and how easy it is to align those with rents—what people can claim for their rent if they're in receipt of housing benefit. So, some of that stuff is definitely a barrier in local areas. And, in more rural settings, they're harder to spot, as well, being more sparsely spread out, rather than, as in urban areas, where they might be a magnet for people to gather, or whatever—you know, there might be a greater awareness of them. Definitely, in rural areas, it feels to me that that's a significant challenge.
Thank you. Can I just go back to, particularly, Michelle? Because it was partly prompted by the answer to the question from Leanne Wood, because you're the only housing association, you say, that is involved in this tenancy scheme—
As far as I'm aware, yes.
As far as you're aware. What challenge does data protection legislation present to you in terms of making that contact with people? You've got to get information from the local authority, presumably, and so on—so, it's just about how you get the owners of empty properties in touch with organisations like yours to do these innovative schemes.
We find it really difficult. Obviously, local authorities can't provide us with the information because of data protection. So, we spoke to all the local authorities that we work with. We created a leaflet that they send out to the owners of empty properties when they do an annual write-out to them about their empty property. So, they send a leaflet out. It's not great—it's a leaflet. How many people are actually going to call us? But it's a way of showing them that we're there because we haven't got any other way of doing it. We have got our own website. We've run our own campaigns with our own finances, because we feel quite strongly in United Welsh about empty homes and we really want to do what we can to bring them back. So, we have run campaigns with WalesOnline, and we had quite a few referrals that way. But ultimately, we are reliant on them knowing that we're there and coming to us.
So, do you think there's more that local authorities could do in that regard? I know there are huge restrictions on data protection—we all know that—but do you think that there's anything more that a local authority could do to raise that awareness? There may be thousands of these people out there sat there waiting for somebody to come and approach them to do their house up.
I think, again, in some local authorities where we've got a dedicated empty homes officer, they are speaking to people and they are referring them to us and telling them about us, which is really good. In other local authorities where they haven't got the resource to do that, where they're only reacting to complaints, they may tell them about us, but they're not on the ground trying to find them, so we're not getting the referrals.
Right. So, that kind of goes back to Huw Irranca-Davies's point about the dedicated officers in the local authority. That could be the proactive work that I think you were talking about. Okay. That's fine.
I was just wondering, then, do you think, as a social landlord, that there ought to be specific funds and grants made available—
I think, as a social landlord, we're out there and we're building new homes all the time, and we get 58 per cent grant to build those new homes, and so it works for us and it's great. But we're creating new communities normally, because they're big developments elsewhere. We've already got communities set up and we've got these empty properties. And it's where people want to live, especially across Wales. People want to live by their parents because that's where they have the support network, and they walk past the empty properties and they feel that nobody's doing anything about it. As an RSL, if we were able to access grant or loan funding to be able to make it work for us, we could bring those properties and we would be over the moon to be able to do so.
Yes. In house, we've got the resource to do it. If people contact us and say, 'Will you buy our property?', unfortunately, financial viability-wise, it doesn't work for us to do it, because like I've said, £25,000 is the minimum we're going to have to spend after we've bought it to get it up to the standards that we need it to be.
Can I ask a supplementary on that point? Because surely, then, the market would say that in those areas where there are high levels of deprivation and poverty, it's less financially viable for you to be able to buy up those properties.
Of course it is, yes.
Yes, absolutely. Obviously, it's not going to work everywhere; there are going to be some areas where it doesn't. Again, even when it's still in high demand, from our point of view, it doesn't necessarily work financially for all our key performance indicators to use our private finance to buy that property.
There's a slight perversity from our perspective, because that means that the investment is likely to go into those areas where properties already are at a fairly high value, and possibly of a good standard as well as a result. And then those areas where there are high levels of deprivation that need the investment, because this is so market driven, they're losing out.
Of course, yes.
You could think about the new affordable housing supply partnerships that have come in as the new model for the social housing grant as maybe one of the means for helping to target resources, because, obviously, that approach is aimed at building more homes but, clearly, there's also an element of flexibility now in the grant level. There's an opportunity here not just to think about building, but how do we also make the most out of what seems on paper as a really good co-ordinated approach that could also tackle empty properties, or at least form part of the solution. It's not going to be able to do everything possible, but definitely if we have everyone at the table looking at a five-year regional development programmes, why can't that also be linked to things like empty properties? Clearly, it is linked to the wider regeneration agenda, so that feels like quite a natural thing to do.
It's about not—. You can't have the housing solutions in isolation, really, is the truth of it, isn't it? Okay, thank you all for that. Mark, you've got some questions on council tax premiums.
Can I slip in a couple of supplementaries first? Because we're doing reasonably well on time.
You referred to the beneficial effect there would be if there were dedicated funding for RSLs to better tackle existing properties. Because this takes us back, I think, to Tai Cymru and the fed in England in the late 1980s and 1990s, and there was a push on regeneration, particularly urban areas, but obviously funding was there for rural as well. That ties in, I think, with my earlier question about the need to reconcile, for instance, EDMO seven-year schemes with current three-year £25,000 cap schemes. What role might there be, therefore, not only in terms of perhaps enabling access through social housing grant, but perhaps a recyclable loan model based on the repayment through the rental streams that have been applied in other housing projects in the past?
We've run a scheme in Rhondda Cynon Taf that was partly grant, partly loan funded, where we were purchasing empty properties, renovating them, and then selling them at low-cost home ownership, so equity shared 70 per cent, to first time buyers. So, the grant element was to refurbish the property, the loan element, to be paid back in 30 years, was to be recycled. That's what we're currently doing and that works really well. So, we're buying the property, and we've got that loan, which we're recycling each time they're buying it, and doing it that way.
That was launched in 1995 by Tai Cymru as low-cost home ownership, and I introduced it in north Wales. It was Principality in the south.
We heard earlier also about the need for community-based approaches. Again, when I was on the board of a housing association, we initially came in top down, we employed a tenant participation officer, we plucked some people out and put them on the board, who were not comfortable because they were constantly referred to as 'the tenant board members', and they actually resigned because they said, 'No, we're board members who happen to be tenants.' Then, we had to turn it around and start real community engagement, unlocking strengths and making people want to become involved and build from street level up. How important is that if we're going to make this a sustainable model?
Finally, you refer to the point of data sharing, for example. My recollection, and correct me if I'm wrong, is that in the early days of empty homes officers and rural housing enablers, there was some sharing between local authorities and shared funding between local authorities and RSLs, and shared hosting as well of those officers, which might have helped overcome that. Could that be of help in the future?
I'm not sure that they were able to share—. I think the resource was shared. I'm not sure they were able to share the owner's name and address to us, if you see what I mean. But, yes, I do think that that would be helpful. But I still think we're going to have the problem, because especially with data protection and GDPR—they're not going to be able to give us that information.
We didn't have that then.
And the community-based model, in practice—. Ironically, with various names, this has been referred to, to my knowledge, for at least two decades, and probably longer. But, in practice, how could we be making recommendations to develop that on a truly co-productive model at community level?
I think the Wales Co-operative Centre have a really good toolkit at the moment. That literally puts in place all the mechanisms that bode well for success in this area. I think it's about sharing those approaches, learning from what already happens. We hold the Welsh housing awards every year, but we collect good practice in a compendium and we share that widely with professionals. But the onus is upon making sure that continues to gain momentum, but also those approaches of recognising, again, the commonplace thing to do. I think with the housing review that's just happened, there's a real opportunity and a real timeliness so we make sure those community-led approaches—that people feel involved, engaged and have a real say in how those homes are renovated, and those aspects can play a really key part. That feels like a really good opportunity for success.
It's very much on that point. If we've got the toolkit there and the understanding that this is a good approach, to actually work from community-based solutions, supported by expert input, including from local authorities and other housing and homes expertise, what are the impediments?
I guess widespread expertise, I would say. We know that these projects exist, but, again, they are still in their early days and there are still issues. It isn't perfect in practice, and it can certainly depend on—. There are some housing management issues. There are operational problems that need to be overcome for organisations to gain confidence that they can—. You know, some will see that as a greater risk than others, or will be able to carry that risk in a very different way compared to others. There's still a need to see that model well developed and learned from. So, it might just be that that evidence base needs to continue to gather before it's a more widespread practice.
Okay, so—. I'm just struggling a little bit with the timescale of how we get to this point, then. If you can identify what the major stumbling block is, and that we need to see the evidence and best practice, and then share that best practice and then get everybody doing the same thing—. Is this just a matter of resource, or is it cultural change within—? Sorry, I'm leading you in here. I sense there's an issue here of a different approach to dealing with empty properties that is based around place and communities. That, when you are trying to firefight and deal with reactive issues and day-by-day issues, is quite a change to do.
Yes, definitely. To embed those approaches, it does require knowledge, expertise and resource at a local authority level and also with housing associations. There has been a really good co-operative-led movement in Wales, and we are learning a lot from it, but it is important that it becomes commonplace. Those projects that we've already done that are either co-operative in their nature, or have elements of co-operative housing ingrained in their approach, are already showing how good the outcome can be in particular in tackling empty properties.
A suggestion, Chair, might be that we try and get some written submission from the Wales Co-operative Centre on their work within this area.
If I may suggest the Co-production Network for Wales—we could possible work with them as well.
Okay. Apparently, we have had some evidence from the co-op centre. Has it been in our papers? It has. We can recirculate that. That's great. Okay. Thank you very much. Mark, your last set of questions.
Right. A change of subject to the power to vary council tax on empty properties. What evidence exists to show what impact, if any, this has had in reducing the number of empty homes or bringing more homes back into occupation?
We've heard anecdotally that it's been a good measure, but anecdotally is what I would say—a health warning. I'm not saying absolutely that this has worked 100 per cent. I think that what people are saying is that the discount is really important as well. So, those six months and maybe 12 months, depending on if you're undertaking renovations—that can be a really important point to gain engagement. I guess not all local authorities are operating this measure either. It's clear that some might be learning from what others are doing, but it feels like there's a real opportunity here—we've spoken a lot about a lack of resource and that sort of thing—that anyone making proceeds from charging premiums should really be putting that back in to ramping up their ability to tackle more empty properties, to gain greater resources and to make that best practice that we spoke about earlier more viable in their area.
So, really, it's predominantly anecdotal. There's no database that we can refer to.
I guess it would be qualitative. If you were to speak to each local authority in isolation, some would be able to give a view of, 'Well, we haven't seen much yet', but others have said, 'Well, we have seen a few more, but it hasn't been significant numbers.'
No. And what understanding, if any, do you have of the local attitude to discretionary or mandatory exemptions that might be deterring local authorities? I think we heard earlier, regarding Scotland, that probate and bereavement are exempt in Scotland, for example.
I haven't got a strong sense over that, I'm afraid.
Neither have I.
I think there's a little bit of fear, maybe, from local authorities of unintended consequences. So, looking at council tax in relation to empty homes is possibly too narrow. We need to widen that out and maybe look at second homes, holiday lets. There needs to be a broader overview, because there are instances of owners changing the use of their properties. So, there are loopholes, yes. So, I think there's a little bit of fear from local authorities that, actually, if they come in too hard with this, there's going to be a negative consequence further down the line. I think that needs to be looked at in the wider context.
On the point you've just raised on the switch to holiday lets, obviously there is current legislation, which requires I think the property to be let from a minimum of 70 days and be available for rent for a minimum of—was it three months, or something like that, annually? To what extent, if anything, does this show whether this is holiday home owners actually turning their properties into real holiday lets in order to afford this, or masquerading? And also to what extent could this actually be genuine local residents who will continue, during the summer months particularly, to move into the caravan or a family member's home and rent out their main home as a holiday let for their own income reasons?
I think there's not clear evidence really. It's anecdotal from local authorities, and, in discussions, we've had, 'This could happen' or 'There are instances where it has happened.' It's quite a complex area and there's definitely potential for it to be exploited and for owners to find ways around. And I suppose as well that the level of priority that's given is going to vary on a local level. For some local areas actually, holiday homes, they might not want to dissuade that, as that might actually be a source of income, but then for others, actually, it might be really problematic. So, I think there probably needs to be quite a specific piece of work looking at that issue, and not just in relation to empty homes but in the wider context of second homes and holiday lets.
So, a specific piece of work around that, because it sounds, from what you're saying, we're looking at loopholes and plugging loopholes as much as anything else, which, as you say, is a completely separate piece of work, isn't it? Okay, any further questions from anyone at the moment? No, thank you. Okay. Well, in that case, thank you very much all of you for coming in. There will be a transcript provided for you to check the accuracy of the evidence that you've given today, and, any issues with that, please let us know. But, in the meantime, thank you very much for coming in. Thank you.
Morning. Welcome, everyone, and we'll now move on to item 4 on the agenda, which is the fifth formal evidence session for the committee's inquiry into empty properties, with representatives from the private sector. We've got Douglas Haig, vice-chairman of the Residential Landlords Association; Gavin Dick, local authority policy officer for the National Landlords Association; and Ifan Glyn, senior hub director, Federation of Master Builders. So, welcome, all of you, and we'll move straight into questions, and the first question actually is from me, which is, to what extent do you think that local strategies on housing in general and empty properties in particular involve the private sector? And is there a consistent approach across Wales?
I can start. I'd say, 'No, there's not a consistent approach across Wales'. I think you can look at most of the documents and you can see where the priorities lie, and there is very little engagement with the private sector—both private rented sector and owner-occupied sector. Coming from the other side as well, I don't think the owner-occupied sector or the private rented sector have that much engagement with local authorities, because there's no need to engage, in that if you're renting your property, you don't need to engage with the local authority. If you're a homeowner, as long as your bins are picked up, you're quite happy. You don't phone the council because your bins are collected; you only phone the council when your bins are not collected. And I think that's part of where the problem lies, in that you're dealing with challenges that are known to the council, not challenges taht you don't know. And that's part of the challenge, I think, from local authorities, the Welsh Government and from owner-occupiers and renters.
I think I agree—there's not a consistent approach, but I think we have to step back and look at where, historically, we’ve come from. Seven years ago-ish there was quite a high-profile focus in the media around empty homes. I think George Clarke, or whoever, brought to light how many empty homes there were across England and Wales. The Welsh Government took a very positive step in introducing the empty homes loan. But we said, even at that time, that it was just a starting point and that an awful lot more—. It was lot more sophisticated than creating a loan to try and bring the easy properties back into use, and, actually, it needed to go a lot further than that.
And whilst there is this travesty of—certainly, a housing crisis at the time—all these empty homes, we need to then join up with the reasons why there are empty homes and have greater leadership, I think, from Welsh Government to the local authorities, because I think the message was, ‘Get these empty homes back into use’, but not implementing enough in terms of the strategy on how they can all do that a time when the resources are really not there to fund it. And, actually, I think it needs to go even further than that, in that we need to, once we have a better strategy on how to bring the empty homes back into use, then look at some of the preventative reasons as to why some of those properties are becoming empty. And from the private rented sector, there are a number of issues coming down the track that I can see that may cause more of them to become empty, that maybe we’ll come on to a bit later.
Dwi'n mynd i ddweud hyn yn y Gymraeg. Dŷn ni’n cynrychioli cwmnïau adeiladu bach, felly dwi’n meddwl buasai hi’n annheg i mi sôn am y sector preifat yn ei gyfanrwydd, ond, i roi darlun i chi o faint o gydweithio sydd rhwng awdurdodau lleol a chwmnïau bach o ran creu strategaethau tai ac yn benodol tai gwag, dwi’n meddwl bod yna ddyhead i wneud hynny ar y ddwy ochr, ond, yn anffodus, dwi ddim yn meddwl ei fod o’n digwydd. A rhan o’r broblem, yn fy marn i, ydy nad ydy llywodraethau lleol yn ddigon rhagweithiol i ddenu barn adeiladwyr bach i mewn i’r broses, achos mae adeiladwyr bach wastad yn brysur ac maen nhw’n ei ffeindio hi'n anodd iawn i gydweithio ar bethau fel strategaethau. Felly, pan gewch chi broses lle mae llywodraeth leol neu lywodraeth ganolog hyd yn oed yn gofyn am farn cwmnïau adeiladu bach, does ganddyn nhw ddim yr amser i siarad efo nhw. Felly, beth sy’n bwysig i’w wneud ydy bod yn rhagweithiol, mynd atyn nhw, gofyn am eu barn nhw ynglŷn â phethau, yn hytrach na disgwyl i’r diwydiant ddod at y sector cyhoeddus yn y bôn.
I will be making my comments in Welsh. We represent small building and construction companies, so I think it would be unfair for us to mention the private sector in its entirety, but to give you a picture of how much collaboration there is between local authorities and small companies in terms of drawing up housing strategies, and specifically a vacant property strategy, I think there is an aspiration to do that on both sides, but, unfortunately, I don't think that it does happen. Part of the problem, in my view, is that local authorities aren't sufficiently proactive in seeking to involve small building firms into the process, because these firms are always busy and they find it very difficult to work on things such as strategies. So, when you do have a process where local government or even central government seeks the views of small construction companies, they simply don't have the time to speak to them. So, what's important is to be proactive, to approach them, and to ask their views on things, rather than expecting the industry to come to the public sector.
Yes. Thank you very much, Chair. Sorry, this sounds like a philosophical question, but there will be a lot of technical questions as well. But I'm just wondering, from your perspectives, what role you think house builders, individual builders, private landlords have in actually helping build communities and places. Now, that's a difficult one, because if I'm an individual property owner and I've rented something out or I've got a property I'm going to redevelop, I'm just thinking, 'Do the economics stack up?, and so on. But is there a role for people who have properties that may be temporarily empty to think about their role in that community place building and that good community?
I think there are a couple of parts to that question. A landlord would be looking to keep a tenant for as long as possible, for their business. So, therefore, from that part of the community, it makes sense. From a philosophical point of view, I don't think the person who's got an empty property is thinking about the community at large when they have an empty property—it's probably because of a specific reason. So, I don't think the actual train of thought goes all the way down to, 'What about the wider community?, at that point. Landlords want to have tenanted property—tenants obviously paying the rent on time and not causing problems in the community, because it makes their life easier and looks after the property at the same time. So, I think there are lots of things around that, which probably aren't the key thought in that from a philosophical, 'Let's look at the community', but looking at, 'I want this property to work and I want it to work in that I want the community to work'. Having a tenanted property in an area that is completely empty of other people isn't a great situation for a landlord. So, I think it's probably not at their core, but it's probably an afterthought in the sense of, actually, community is an important part of it.
Chair, I'll come back to it when I come back to powers. Thank you.
Okay, thank you for that. If I just move on now to some questions around what's being done to bring empty properties back into use, and some questions from Caroline Jones.
Diolch, Cadeirydd. Good morning, everyone. While we realise that empty properties are a blight on communities for all different sorts of reasons, they do present opportunities for the private sector. So, could you tell me what incentives you feel there are to encourage the private sector into bringing these properties back to life, and, indeed, what more could be done by way of incentives to encourage the private sector to invest?
Sure. So, there are some basic ones that are dependent on the length of time that the property has been empty for. So, if it's been empty for longer than two years, then, as to the works that can be carried out on the property, the VAT on that can be reduced to 5 per cent, and if it's empty for longer than 10 years, the VAT element can be reduced to 0 per cent, so the equivalent of building a new home, I suppose. They're UK-based incentives, for now. Then, of course, there's the empty homes loan, which, as I've mentioned before, we celebrated and applauded Welsh Government for bringing in at the time, but they did say that it was a starting point and, unfortunately, I think it's seven or eight years that it's been in existence and it's still at a starting point, and I think you can see that through the fact that it did have a beginning of being a success and is now no longer really having a huge impact on empty homes. Then, of course, there are different local authorities—
Sorry, could I ask you why you think this is—why you think it's still not progressed?
So, what happened was that it enabled a cherry-picking, I suppose, of properties that were fairly easy to get back into use, in the sense of properties that may have not had—. Because the way the empty homes loan works is that the local authority or the Welsh Government—I think it's the Welsh Government; I can't remember—takes a charge on the property, and they need about 70 per cent or 75 per cent of the capital value of that property at the time. So, the problem for their security, and therefore the problem for that, is that a lot of these properties are empty for a reason, as in they can't be rented or sold for that time and they need an awful lot of work done on them, so therefore the value of that is quite low.
So, I'll give you an example of a property in Rhondda Cynon Taf, and it was completely derelict. So, the valuation, because there's a separate valuation carried out for the purposes of this loan, valued that house at £6,000. So, to get a 70 per cent loan on that meant that they were just about getting £4,000 on it, and nearly £30,000 was required. It stacked up just about, because at the end of it, probably, it was worth around £50,000, but borrowing that much money is not going to get you anywhere. And they said, 'Oh, well, you can borrow it and then you can spend money on it, and then you can get it revalued and spend—.' It doesn't work that way. You've got to look at these things in a different way. And also, some of the empty properties are in a situation where they've already got a mortgage on them, so therefore Welsh Government can't take the—. Either there's not enough equity in that property for the Welsh Government to take a charge on that property, or, in some cases, the current mortgage lender will not allow a second charge onto that mortgage.
So, those are some of the technical issues. But these are things that we've been very keen to discuss in the past, as to how we can widen out the scheme, and I understand that Welsh Government feels that they don't want necessarily to take risk, because it is taxpayers' money they're putting at risk, but, ultimately, if they want to solve this problem, they need to look at this more holistically and say, 'In some cases we are going to have to take risks.'
Are there any other areas where you think that the barriers are sort of insurmountable into bringing empty homes back to life with the private sector, such as maybe planning restrictions or building regulations, or maybe even there's a low demand for the property in the area that it's empty in?
O ran y diwydiant adeiladu, mae yna fwlch sgiliau mawr yn bodoli ar hyn o bryd o fewn y diwydiant. Felly, rydym ni'n gwneud arolygon yn chwarterol efo'n haelodau ni ac mae'r arolwg mwyaf diweddar yn dangos bod 64 y cant o'n haelodau ni yng Nghymru yn ei ffeindio hi'n anodd i ddod o hyd i osodwyr brics ac mae 71 y cant o'n haelodau ni'n disgwyl y bydd cyflogau'n gorfod codi o fewn eu gweithlu nhw achos y bwlch sgiliau o fewn y chwe mis nesaf—o 71 y cant. Felly, o achos y bwlch sgiliau, mae'n haelodau ni, maen nhw'n brysur iawn, a beth maen nhw'n dweud wrthym ni yw bod yna ddigon o waith allan yna ond bod yna ddim digon o bobl i wneud y gwaith, felly maen nhw'n gallu pigo pa jobsys i wneud, a dydy dod â thai gwag yn ôl ar y farchnad ddim o reidrwydd ar dop yr agenda o ran rhai o'r cyfleoedd sydd ganddyn nhw yn y farchnad ar hyn o bryd. Mae'r rhan fwyaf o'n haelodau ni, maen nhw'n brysur, maen nhw wedi cael eu bwcio i fyny am 12 mis, 18 mis, rhai ohonyn nhw. Felly, achos y bwlch sgiliau yna, maen nhw'n gallu pigo pa jobsys maen nhw angen a dydy dod â thai gwag yn ôl, sydd yn aml yn beth costus iawn i'w wneud, sydd yn beth risky iawn i'w wneud, ddim ar dop yr agenda yna.
In terms of the construction industry, there is a large skills gap within the industry at the moment. We carry out quarterly surveys with our members and the most recent survey demonstrates that 64 per cent of our members in Wales find it difficult to find bricklayers and 71 per cent of our members expect that salaries will have to increase within their workforce because of the skills gap, and this will happen within the next six months. So, given that skills gap, our members are very busy, and they tell us that there's plenty of work out there, but there aren't enough people to do that work so they can pick and choose which jobs they take, and bringing vacant or empty properties back onto the market isn't necessarily on top of their agenda in terms of some of the opportunities that exist for them in the market at the moment. Most of our members are busy, they're booked up for 12 months, 18 months, even, some of them. So, because of that skills gap I mentioned, they can pick and choose which jobs to take and bringing empty properties back into use, which is often quite risky and quite expensive, isn't on top of their agenda.
Diolch yn fawr.
Thank you very much.
Does anyone else want to say anything?
Mr Haig commented about the borrowing on current value. When I was in the mortgage industry previously, we would frequently do improvements for regeneration properties or improvement properties on the will-be value, often with a series of staged payments, but that meant the developer had to fund that through some kind of bridging finance in the interim, which was not always easy to access. Might there be a role, for instance, for the Development Bank of Wales, who manage the housing—[Inaudible.]—Help to Buy at the moment, to fulfill those needs?
Yes, and that's an excellent opportunity for that establishment to get involved in that because the problem that we have is that most of the responsibility of implementing the Houses into Homes loan was given to the local authorities and most of the time those local authorities are either giving it to an already very busy local environmental health officer or they're creating a post that's usually part-time or part-funded for an empty homes officer who doesn't have the access to the information or, quite probably, the skill set to really bring them back into use. Because, ultimately, what we need to be looking at is the business case for each property.FootnoteLink
We've created a very blanket scheme to access these loans—excellent—but we need to be looking at the actual business case for each of these properties, which, ultimately, is not extremely complex. Ultimately, we can fairly easily get the market demand, which is a point, I think, Caroline was making earlier. Because in some areas there's just not the demand for these properties. So, we should be maybe looking at areas like 2,500 empty properties in Swansea, because we know there's a huge demand in the Swansea area to bring those properties back into use. So, we should be focusing on that. Taking the business cases, we know how much it can be rented for, we know how much it can be sold for, and with the help of Ifan's members, we know how much it can be developed for. And then it's the case of, okay, well, that gets put into a model that people like the development bank or mortgage lenders are very used to understanding, and having somebody that's skilled to be able to supervise that process to say—. Because, ultimately, you don't want them to turn around and say, 'Well, there you go, there's £25,000, I'll see you in a year's time', and they go, 'What did you do with it?', 'Well, I bought a nice boat.' So—[Laughter.]
You won't get a nice boat for £25,000.
Okay. I don't do boats, I do houses. That is true. [Laughter.] But, yes, we need to have a supervisory process in that, but we need to have the skill sets, and with all due respect to the environmental health officers, they are very, very skilled individuals but they're not skilled in that area and we need to be able to resource that in the right way.
Sorry, just to add to that as well, I think—. This is more for the private rented sector to take on an empty property and then bring it up to an agreeable standard. There's been a change in taxation so that landlords are now taxed on their turnover as opposed to their profit. So, for a landlord to go and take on a property and have all these additional costs put into it, actually, it doesn't financially stack up for them anymore, especially when you look at certain areas where the rent is set at the local housing allowance rate. So, therefore, the private rented sector isn't a vehicle to actually help in those areas because of the tax changes. So, you'd be more looking at home owners going into those areas, and actually, then, they're looking at, 'Is my job there? Am I going to stay there for the next five, 10 or 15 years?' So, whereas the private rented sector allows the flexibility for people to move into an area for a job for 18 months or two years and move on, the changes to tax will actually mean—. The private rented sector is not capable of going in to say, 'Well, here's a property that's worth £10,000 today, but I need to spend £30,000 on it', because there is no money there for the landlord. They'd actually be paying the Exchequer, not you—
Yet. [Laughter.] The money wouldn't be staying in Wales; it would be going to Westminster. And I think that's a big challenge around this area, because it's not a straightforward, linear line; there are so many indentations by HMRC, which makes it quite difficult.
And I think that has to come into the business case because at the moment, it’s a very strict repayment timescale for the loan: two years if you're selling it or three years if you're going to rent it. And I think, again, that should be pinned against what that local market is going to cope with. So, in Cardiff and Swansea, you can probably be a bit more aggressive with it, but in Rhondda Cynon Taf then, the rents are considerably lower, so you're not going to get that repayment in the timescale that the loan is looking at. So, I think it needs to be analysed and not just be a set—
Yes, and that's why you need the resources to have skilled people in those areas doing that job.
My next couple of questions are directed more at Ifan, but obviously, all come in, if you feel you want to. So, the committee received views as part of its consultation that some local authorities were reluctant to provide
approved tradesmen or contractors to owners of empty properties. So, a local authority may feel that they could be held responsible finally for the work, if they did recommend someone to do refurbishment work. So, how can this be addressed, if people are looking for approved tradesmen/builders?
Sure. So, I think, as it currently stands, the local authorities do it differently: some of them are reluctant to give lists; others have approved lists that work on certain projects they're already doing; and then others—and Rhondda Cynon Taf is an example—just point people towards the Federation of Master Builders website, because all of our members have been independently inspected, with onsite inspections, et cetera. So, one way to do it would be to—there's an organisation called TrustMark, which is backed by the UK Government. TrustMark is an umbrella body for different scheme operators and to be a member of TrustMark, you need to have jumped through certain hoops. Your work needs to have been inspected. You can't join organisations that are part of TrustMark if you've got outstanding county court judgments, et cetera. So, if you're a construction firm and you're eligible to join TrustMark, then it proves that you know what you're doing in terms of construction, but you also run your company in a responsible manner. So, something like that, if all local authorities in Wales were to point towards what is a public database for an organisation that's backed by UK Government, that seems to me like a relatively straightforward and consistent way to do it.
Yes, okay. So, with the Federation of Master Builders, supposing you had someone on there who didn't complete satisfactory work, how does that then rebound, may I ask?
So, we have a disputes resolution process and if a client or a member of the public complains about one of our members, then our members, as part of their membership, are obliged to take part in that independent disputes resolution process. And if, through that process, they're found guilty of misconduct, then they're thrown out of the federation and even though it's not legally binding, it doesn't look great in court, so, the likelihood is that, if it was ever taken to court, the case would be won.
Okay, thank you. Does anyone else want to come in on that? No. Thank you.
So, the committee has heard oral evidence from Carmarthenshire County Council. You've touched briefly on the VAT elements, but they referred to reduced rates of VAT payable on the refurbishment of properties. So, what awareness do you have of the concessionary VAT rates and discounts for residential properties being brought back into use?
The impression I get—. So, from talking to some of our members who are involved in—. That's part of their business model to look for properties that need doing up, that are empty and bring them back, those types of companies are, yes, very much aware of it. But in terms of the wider industry, I think the awareness is minimal, which is a shame, really, because if there was a wider awareness amongst general construction firms that this is a business opportunity, then maybe the sub-sector of bringing empty homes back onto the market would become more of an appealing sector. So, raising awareness of that, we'd be happy to work with colleagues, with Welsh Government and elsewhere to promote that.
Just a very quick comment on the VAT issue: it's quite complex once you start. It's just an awareness at the beginning, and many people don't know anything about it. Secondly, they're very unsure of it because starting to mess around with VAT rates, people get very wary with the VAT man, or woman, and then, when you really get into it, it's what can you put at 5 per cent or 0 per cent and what are you not allowed to. And it's not as simple as you might initially think. The basis is, well, if you can take it away, then it's fully chargeable with VAT, but it's not as simple as that. So, clarifications or explanations around that.
Yes, or very clear guidance.