Wednesday, March 08, 2006

Empty Dwelling Management Orders - still some confusion

In four weeks time Empty Dwellings Management Orders finally come into force. The power contained in the Housing Act 2004 allows local authorities to take temporary management control of empty homes. It allows them to carry out refurbishing works, let the property and recover their costs from the rent.

I've had a number of queries and questions from local authorities in recent days about these new powers that may be worth sharing:

q. The legislation says that we need to get the owner's permission before we can let the property is this really the case and if so what is the point of the legislation?

a. This question comes up remarkably often and I can only put it down to people having only read the first few sections in the act. There are in fact two types of EDMOs; interim management orders and final management orders. If a local authority wants to use an EDMO it has to apply to a residential property tribunal. If the tribunal finds in the local authorities favour it will make an interim management order. This can last for up to a year and transfers some of the powers of management of the empty property from the owner to the local authority. One power it does not transfer is the power to let the property. So if the local authority wants to do this it needs to seek the owner's permission. If the owner and local authority are unable to come to an amicable agreement over the future of the property the local authority can serve a final management order. This transfers even more management powers over to the local authority amongst them the power to let the property. So under a final management order the local authority is able to let the property without seeking the owner's permission - thus bringing it back into use. And that's the point of the legislation.


q. Can the local authority charge the owner for costs such as staff time, decorating the property, legal costs, gardening?

a. The legislation isn't prescriptive on these points. The local authority needs to take a view on what costs it has incurred and what it is going to charge to the owner from the rent it receives for the property. It should set out what it will charge in a management plan to which the owner has a right of appeal to the residential property tribunal. So the answer is if you have incurred costs directly related to the property, the costs are reasonable and you can justify them if challenged I would include them. If not - don't.


q. It looks as if local authorities will only be able to get an EDMO if they can demonstrate a need for the property so this legislation will only be any use in the South of England where there is high housing demand

a. The decision the residential property tribunal will have to make is - Is there a reasonable chance of the property being brought back into use if the local authority is granted the EDMO? Clearly there is no point granting an EDMO if the local authority leaves the property empty too. The question for the local authority is - can they let the property? Housing need isn't exclusive to the south of England and if the local authority can match up the property with people who need housing then I think this could be useful. Behind this question is an important point. The purpose of this legislation is to get empty properties back into use, it's not a compulsory procurement tool for local authorities wanting to expand thier housing portfolio.

8 comments:

  1. David, I can see very few circumstances in which we would use EDMOs, councils are likely to lose money on them but the owner is guarentedd not a loose a penny. Why not use CPOS instead?

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  2. Dear Anonymous, I think the name of the game is encouraging empty homes back into use. If you think you can make better progress with methods other than EDMOs that's great. CPOs (compulsory purchase orders) have thier place so do EDMOs so do 20 or so other approaches you might take

    But implicit in your comment was something about risk. I detect that you feel that the local authority is expected to take more than the owner and that you think this is unfair. Fair point and on a technical level you're right. On a legal and moral level I'm not so sure. Everybody has human rights even an owner of an empty home. It surely can't be right that an owner should take the hit if the local authority doesn't get its accounts right.

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  3. To my mind, a signal problem with EDMOs is that the Local Authority has to fund the repairs and refurbishment up front, only recovering the costs retrospectively from rents received. How many LAs have funding available to do this? Mine doesn't.

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  4. I agee I seem to remember the government saying it would subsidise the start up costs for EDMOs. What ever happened to that promise? I think it is good for us to have more statutory powers but if we can't use them it will all be for nothing.

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  5. I feel that EDMOs will be a useful tool for Local Authrorities & we are working on a voluntaury leasing scheme in preparation for the implementation of EDMOs. Management will be discharged to an RSL, who has the finances & forecasting experience to work out exactly what the scheme will cost & how much they can afford to offer the owner in return. I don't really see the point of interim EDMOs as I envisage we will be dealing with owners who have been unco-operative & I wouldn't expect them to give permission for the property to be occupied. I intend to serve a final EDMO sooner rather than later so the RSL is able to commence works & re-occupy the property asap.

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  6. Dear Anonymous, and Anonymous, (i'm guessing you are different people). You both raise interesting points about money.

    ODPM promised to fund start up costs for the whole of the Housing Act. The main manifestation of this is the training programme currently operated by IDe&A. You may have been on HHSRS courses and there is an empty dwellings module in the pipeline. But I take the point they haven't provided a sink fund for up-front costs of EDMOs. What has happened though is that several regional government offices have offered ear-marked funding for empty homes work (£20m in East of England, £30m in London for example). Some of this can be used for EDMOs. Unfortunately the take up by local authorities hasn't been overwhelming.

    One other idea: EDMOs suit the "invest to save" model very well. Local authorities have much more flexibility to borrow money than they used to have, and are able to borrow at very favourable rates. EDMOs are a predictable and relatively low risk process that lend itself to this sort of arrangement quite well. I would investigate your local authorites borrowing arrangements with your finance section and see if you can set something up. My guess is that you could.

    Dear Sue,

    I guess you can't presume how somebody is going to react when served with an EDMO. The interim order gives a fianl opportunity to reach a voluntary solution. Once you reach the point that you are sure that a voluntary solution is impossible you can serve the fianl order, that point may occur very soon after serving the interim order or it might take months.

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  7. I'm with you annon. Who wants to pay out to do up a wreck then try and get the money back through rental?!
    What I want is a fast track compulsory purchase proceedure. Zero to sold in 6 months should do the trick.

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  8. Dear Sherlock,

    I guess the critical thing is that local authorities use the enforcement power that they think is most appropriate for them to use locally.

    If you have exhausted voluntary routes, the LA must then consider which enforcement route is the best. For some CPO is the route, others favour enforced sale and EDMOs are another option. EDMOs were never meant to be the only answer, but that fact that so few LAs use CPO or ES makes me think that EDMOs will be a useful option.

    So if you want to stick with other tools no problem - but there are a number of LAs who are keen to use the new EDMO power.

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