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And… action!

With hundreds of backers, cross-party support and a major victory already in the bag, Inside Housing’s Empty Promise campaign has been a blockbusting success. Caroline Thorpe puts our three campaign demands in the spotlight to determine how the fight to fill the UK’s voids can have an even happier ending

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DEMAND 1 : VAT

VAT cut to 5 per cent on refurbishment and renovations

Setting the scene

It’s not hard to work out how cutting the VAT bill on renovations and repairs would help bring more empty homes back into use. It costs an average £25,000 to do the necessary repairs to bring a vacant property back into use, estimates empty homes consultant Andrew Lavender.

Cutting VAT on refurbishment to 5 per cent would shave £2,500 off that cost. It’s certainly not going to discourage private landlords - who own the majority of empty homes in the UK - from making their properties habitable. And if you are a social landlord with multiple properties, the savings could be considerable.

‘It would make maintenance and repairs much more affordable,’ says Daniel Hunt, co-ordinator of the Cut the VAT coalition, which has been campaigning for the 5 per cent rate since last year.

But how much would this demand cost the public purse? Less than you’d expect, perhaps. Say a quarter of the 1 million empty homes across the UK were renovated at the average cost of £25,000 each. Cutting the VAT to 5 per cent would net the Treasury £625 million less than if the VAT was at 15 per cent. That’s not a sum of bank-bailout proportions - but enough to make the Treasury think twice.

The nature of tax returns makes it impossible to break down how much VAT is paid on renovation works annually, according to a spokesperson for HM Revenue and Customs.

However, according to the Federation of Master Builders, which is part of the Cut the VAT coalition, research shows that more than 50 per cent of customers would ‘employ a VAT dodging tradesman to cut their costs’. This costs the exchequer around £750 million a year in lost VAT receipts, the FMB reckons.

According to the Cut the VAT coalition, the tax cut would ‘diminish the financial incentive’ for people to employ these ‘VAT-dodgers’. The coalition adds that in 2007 the Isle of Man netted an increased tax take after trialling a 5 per cent VAT rate on repairs and maintenance.

The plot so far

Despite sustained lobbying since 2008 from the Cut the VAT coalition - which includes the Empty Homes Agency, the National Landlords’ Association and the Royal Institution of Chartered Surveyors, among others - the Treasury has traditionally batted away calls for the cut, citing prohibitive European rules. That changed last week.

European finance ministers agreed that member states were free to reduce VAT on repairs and maintenance if they want to.

What happens next?

It was hoped the Brussels announcement would be in time to persuade the chancellor to make the cut in next month’s Budget. That now looks unlikely since the European Union decision probably won’t be rubberstamped until the summer.
‘We need to be lobbying to make sure it’s taken forward in the pre-Budget report,’ says Mr Hunt.

 

DEMAND 2 : GRANT

Grant for social landlords to buy and repair empty properties

Setting the scene

Housing associations in England own 42,039 empty homes themselves, saying nothing for the empty homes pepper-potted around their patches.

The Empty Promise campaign calls on the Homes and Communities Agency to earmark some of the existing £8.4 billion national affordable housing programme pot for developing new homes, to bringing existing empty ones back into use instead.

Inviting associations to bid for reallocated grant would not only bring some relief at a time when their finances are stretched every which way and increase supply without the risk of development, but would also send a powerful message that the government is serious about tackling empty homes.

Gary Kirk, chief executive of Meden Valley Making Places, supports the call for grant. ‘Making refurbished and improved dwellings available for affordable housing will increase social housing stock without concentrating the homes in a single area,’ he argues.

He adds that housing providers can use their expertise to improve the environmental credentials of homes as they refurbish them, and ‘help prevent large scale dereliction and neighbourhoods falling into decline’.

The plot so far

More than 20 housing association chief executives have signed up to the Empty Promise campaign, and last week housing minister Margaret Beckett told Inside Housing that the grant demand is ‘an interesting idea’ to which she has ‘no objection in principal’. But, as Mrs Beckett went on to say, it’s up to the HCA to decide whether or not to meet the demand.

What happens next?

‘We are looking at whether we can spend some of the NAHP on doing that [renovating empty homes],’ says Trevor Beattie, director of policy and strategy at the HCA.

‘We are currently looking at the options for bringing more empty homes back into use… We’re actively discussing it with ministers.’

Mr Beattie won’t say when the agency might arrive at a decision. ‘There are lots of factors to be weighed up,’ he adds.

For a start, he says, there’s huge demand on the HCA’s budget. Would refurbishing empty homes represent best value, he asks.

Mr Beattie is also conscious of maintaining standards: ‘Often it’s more expensive to refurbish to the quality we as a public agency would expect.’

What if, as is rumoured, chancellor Alistair Darling announces additional funding for the HCA in April’s budget?

‘I’m not going to speculate about the Budget,’ answers Mr Beattie.

But despite the caveats, he’s not ruling out a happy ending: ‘Doesn’t mean we wouldn’t do it.’

 

DEMAND 3 : GUIDANCE

Clearer guidance to help councils get empty dwelling management orders off the ground

Setting the scene

Housing minister Margaret Beckett announced last week that she was granting the Empty Promise demand to give councils clearer guidance on EDMOs.

The Empty Homes Agency guidance, available at its website - www.emptyhomes.com - and with a foreword by Mrs Beckett, aims to encourage councils to use EDMOs by demystifying the orders.

Poorly drafted legislation is widely blamed for making EDMOs appear overly complex - one of the reasons just 17 have been issued in the last three years. Councils have shied away from using them, fearful they will be tripped up by procedure, the Residential Property Tribunal, which rules on EDMOs, will find against them and the effort will have been wasted.

The EHA’s guide offers step-by-step advice on avoiding this outcome, highlighting common pitfalls. It points out, for example, that the tribunal will expect to see that the council made serious efforts to discover what steps the property owner has or is intending to take themselves to bring their property back into use.
It also outlines the costs involved in serving an EDMO, and gives tips on ratcheting up the pressure on an owner to act before an order is served - saving the council time and money.

What happens next?

Our third Empty Promise demand may be in the can, but that doesn’t mean it’s the end of the story for EDMOs. Carson Millican is the empty property project officer for the East London Renewal Partnership, which represents eight of the capital’s boroughs.

East London has yet to issue an EDMO to tackle the 17,377 empty homes in its area, and Mr Millican welcomes the guidance. ‘It’s what authorities want, we need greater take up of [EDMOs]’.
His partnership is taking that one step further, and is about to announce a deal that it hopes will further encourage councils to use EDMOs. It has put together a framework agreement which provides a pool of contractors which all London boroughs initially will be able to draw on to manage the properties which have been successfully filled using an EDMO and/or renovate them to habitable standards beforehand.


The idea, explains Peter Snell, partnership co-ordinator, is to spread the risk of being among the first to use EDMOs as well as learn from councils already using the orders. He hopes the scheme will be running by 1 April.

In his bid to tackle empty homes through EDMOs, Mr Snell is even considering offering an EDMO insurance scheme: if an order fails and a council is left out of pocket, the east London partnership would pick up the tab.

Mr Snell adds that falling house prices make EDMOs a more attractive option in the fight against empty homes than during the boom years.

‘Traditionally we’d go for a compulsory purchase order and EDMOs would be for properties that didn’t require a lot of capital investment,’ he says, explaining that the council could bet on covering the costs of the CPO and renovations when it sold the property.

‘In this [current house market] situation EDMOs do become viable,’ he adds.

 

THE TOTALISER

Inside Housing’s Empty Promise campaign has 310 backers so far. Join them at www.insidehousing.co.uk/emptypromise

 


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