Empty dwellings – should UK councils be given additional powers?
Local Government analysis: In light of Barcelona City Council acting on its promise to fine banks for empty homes, Nathan Holden, partner and head of local government at Freeths LLP, talks about the laws in place, and why it would be very difficult to implement such measures in the UK.
Spain: Barcelona council fines banks for empty properties, LNB News 11/09/2015 40
Guardian, 11 September 2015: Several Spanish banks have been issued fines by Barcelona City Council for having twelve empty homes on their books for more than two years. Barcelona’s mayor, Ada Colau, has levied fines of EUR 60,000 in total on BBVA, Banco Sabadell and Sareb and is investigating a further 62 properties.
Could councils (especially with a view to increased devolution) implement similar measures in the UK?
Councils don’t currently have the power to make laws. Instead they have bye-law making powers that effectively allow them to opt-in to national made laws that typically regulate certain types of behaviour-usually anti-social-with criminal sanctions attached, but these powers tend to be very limited.
You would essentially need a form of devolved power to make law and I cannot at present see this happening in England. Firstly because it would give powers to local authorities that they have not exercised previously, and secondly, it is not clear that the sorts of problems that exist in Spain in this context, exist here.
The Barcelona case is fairly interesting in the sense that it’s about councils wanting to push banks into taking action as the Spanish banks have been repossessing properties and not selling them on-presumably because the demand for housing is so depressed.
I’m not aware that the same problem exists here specifically-or it’s not perceived to be a problem. In the UK, the relative health of the housing market is such that there is no incentive to delay sales. The empty dwelling problem in the UK has more complex and varied causes.
Would this require a change in law? What laws are currently in place to disincentivise owners from keeping properties empty?
In terms of a change in the law, you would definitely need to give powers to local authorities if you wanted to impose criminal sanctions similar to those adopted in Barcelona. Interestingly, some local authorities are already adopting financial incentives to deal with empty dwellings. For example, there is scope to increase council tax-typically by 150% of the normal council tax-to encourage owners of properties that have been empty for two years or more, to bring them back into occupation.
To what extent are local authorities able to pursue novel methods to unlock housing in their areas?
In terms of tailored solutions there are the following methods:
- Empty dwelling management orders (EDMOs) – These provide local authorities with the power to take over an empty dwelling so that it can be rented out for up to seven years. It is effectively a form of state sponsored squatting, as the ownership of the dwelling is not otherwise affected.
Although specifically aimed at dealing with the empty dwelling problem, these powers are not widely used. This may be because the procedures are not particularly user-friendly, and their time-limited nature is not a permanent solution to the problem.
- Enforced sale procedure (ESP) – This option is more popular and involves forcing the sale of an empty property when the owner is in breach of an obligation to pay a financial debt owed to the council-this is not unusual with empty dwellings. However its critics would argue that it is a draconian remedy in light of the fact that the powers arise simply from a situation where money is owed.
- Compulsory purchase (CP) – This is typically the most popular mechanism for dealing with empty properties. It involves compulsorily purchasing the empty dwelling usually because it is in a dilapidated state, and it can be justified that there is a compelling case in the public interest that it be brought back into beneficial use.
The main drawback of this procedure is that it is procedurally quite dense and can be expensive and drawn out if the owner objects.
Are these measures effective in unlocking housing?
The interesting thing about these measures (other than EDMOs) is that the two most popular remedies, CP and ESP, are not specifically designed to deal with the problem.
The measure specifically aimed at the problem, the EDMO procedure, is less readily used which does suggest that it either needs to be reinforced or replaced. In practice, most councils would probably like to have some sort of tailored fasttracked compulsory purchase order process for dealing with empty dwellings.
Would a fining system similar to that used by Barcelona city council be effective in the UK?
Whether adding to the tool box the power to fine owners for leaving dwellings empty would make a difference is difficult to say. I suspect councils would welcome any new powers to address the problem, although in many cases it is unlikely a fine would have the desired effect.
In a minority of cases where empty properties are owned by commercial property owners, a fine would likely be effective. However, in a majority of cases the motivation for leaving dwellings empty is not financial and is instead more to do with the personal circumstances of the owner (in some cases mental illness). In these cases prosecuting is unlikely to have the desired effect.
The problem in the UK is not really reflective of the Barcelona issue. The problem in Barcelona is a product of a housing boom followed by deep economic recession which has led to a surplus of empty dwellings, combined with the spectre of the economically stretched homeowner being made homeless by banks because they cannot afford to keep up with their mortgage payments.
In the UK the problem has its roots, in many cases, not with institutional owners but with individuals who leave dwellings they own empty-for a range of reasons. As mentioned, the mechanisms for dealing with the issue could be improved. Although fining may be part of the answer, it is unlikely it would have much more than a marginal impact in tackling the problem.
This article was first published on Lexis(r)PSL Environment on 21 September 2015.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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