Wednesday, May 31, 2006

VAT for DIYers

I had a troubling call from North Wales yesterday. The caller had just completed the restoration of a derelict cottage. It had been empty for seven years. As is his right, and as I have been advocating, he put in a claim to the local Customs and Excise office to reclaim his VAT under the VAT refund scheme.

The general and rather strange rule on VAT on restorations is that all building costs (materials and labour) are liable for VAT at 17.5%. New build properties however, are zero-rated.
This gives a perverse incentive to build new houses when restoring existing ones may make more sense. The VAT rules on empty homes were changed in 2000 to try to overcome this. They partly succeeded. Put simply, restoration of homes that have been empty for less than 3 years VAT is charged at the full 17.5%. Homes empty for between 3 and 10 years VAT charges are 5%, and for homes empty for more than 10 years VAT is zero-rated. Details are set out in HM Customs and Excise Notice 708

My Welsh caller had carried out all the work himself and so had incurred no labour costs his claim was for 12.5% of the material costs (17.5% - 5%). To his (and my) surprise Customs and Excise said that he was a DIY builder and could only claim under the DIY builders and converters scheme. This scheme is essentially there to enable self-builders to be able to reclaim VAT for new build. Details are set out under Notice 719. The notice makes no mention of properties empty for between 3 and 10 years and so my caller’s claim was rejected.

This case may have been a one-off or a mistake. I sincerely hope so. If not it appears that there is now one rule for developers and another for DIY builders. Lots of homes have been empty for between 3 and 10 years and there are many budding DIYers out there who are trying to rescue them. They should be given every encouragement we can give them.

Tuesday, May 30, 2006

The Day of the Triffids - Japanese Knotweed in Empty Property

In the 1960s a hugely successful science fiction book “The Day of The Triffids” got us all worried about the country being taken over by a plague of fast growing plants. If you are in the business of redeveloping empty property you may be forgiven for thinking that reality has caught up with fiction. Japanese knotweed has been in the UK for over a hundred yeas but it’s spread particularly around abandoned land and property has grown to problematic proportions in recent years

Japanese knotweed is a quite extraordinary plant, It is one of the most invasive plants you will come across and the hardest to get rid of. It grows through tarmac, concrete and has even been known to grow through the floorboards of houses. It grows to a height of up to 4 meters, with bamboo like stems, arching branches and clusters of white flowers appearing in the late summer. The dead woody stems stay throughout the winter and new shoots appear each spring, they grow at an incredible rate producing impenetrable thickets within a few weeks. The dead stems and leaf litter decompose very slowly and form a thick layer that prevent other plants from growing. Once present, Japanese knotweed increases in area very rapidly and takes over completely.

One of the things that makes it so weird is that all the plants in the UK are in reality the same plant. In Japan there are male and female plants that reproduce to form seeds that germinate to form new plants. But in Europe and North America we get only female plants. All are genetically identical clones of one original female plant that got imported into Europe in the nineteenth century. Over the years bits of plant have got broken off and grown into new plants in new locations. If you consider all the plants collectively to be one organism, it has a claim to be the largest single living thing on earth!

Japanese knotweed regenerates vegetatively. This means tiny fragments of the root or the stem can grow and form new plants. So you need to be incredibly careful when you are handling it. Causing it to spread into the wild is a criminal offence in the UK under the 1981 Wildlife and Countryside Act. And carelessly disposing of it or chopping it down with a strimmer would probably be considered offences. The plants are considered to be pollutants and you can’t just sling them in the skip. You will need special permission to dispose of them. If you have it in the garden you need to take special precautions when you have building work carried out. The requirements are set out in the Environment Agency’s website.

You can get special permission to use some horrendous herbicides on Japanese knotweed, but recent research indicates that herbicide treatment may be ineffective. It just knocks it back for a little while only for it to come back again stronger than before. The best method of disposal is physical removal. To do this you need to dispose of all the above ground bits of the plant, then dig and remove all the soil that contains the roots (rhizomes). You will be amazed how much soil you need to remove; several tons, even in a small garden. When you think that even a piece of rhizome as small as a gram can form a new plant, you can see how meticulous you need to be. In reality you won’t get rid of it all and you will need to deal with new plants as they appear each spring. You can remove these individually digging out as much rhizome as you can find, or apply a herbicide. Effective herbicides include triclopyr, picloram and impazapyr but these are nasty chemicals and will prevent you from growing anything else for some time.

I have yet to hear about a practical environmentally sensitive way of getting rid of this plant. One positive thought though; in Japan where the plant originates from natural controls (fungi, and insects) keep the plant under control and it is not a problem. CABI scientists are investigating using these natural predators as controls in the UK so a cure could be just around the corner.

Thursday, May 25, 2006

Curtains for Empty Homes

Reducing council tax discounts on empty and second homes was always likely to have some odd consequences. A caller this morning told me how he has bought and put up thick curtains at the windows of his empty property so that the council couldn’t “snoop in and see whether the house was furnished” The reason for his apparent paranoia is that in many council areas there is a larger discount for unfurnished empty homes. He directed me to this rather interesting bulletin board which gives disgruntled empty home owners the opportunity to have a whinge.

The other consequence is that the new council tax rules mean that it is often cheaper to live in the property than to leave it empty. No doubt this is annoying if you happen to own an empty home, but if it helps encourage owners to bring them back into use that must be a good thing. If not at least it might give the curtain industry a minor boost.

Wednesday, May 24, 2006

Development Rush Goes Wrong

Saranda is a rather unlovely port and would-be holiday resort on the southern Albanian coast. No particular reason for talking about it now other than I happened to be there this time last week and it is one the most extraordinary examples of what happens when speculative building development goes out of control.

The Ionian Sea is arguably the most beautiful part of the Mediterranean and for most of the countries bordering it it has become a tourist money-spinner. Italy, Greece, and Croatia have dotted their coastlines with apartments and hotels. But there is a hundred mile stretch of almost pristine coastline – Albania. The poorest country in Europe with rudimentary infrastructure and until recently a highly isolationist government it has been a no-go for holidaymakers. But things are changing fast and Albania not unreasonably wants some of the action. Saranda is one of the few places on the coast with much infrastructure and developers have seen the opportunity. Concrete shells of apartment blocks, hotels and houses have spread out of the town along the coast. Chunks of hillside blasted out to make room for more and more. Occasionally there is a pile of rubble where the planning authorities have caught up with an illegal development and blown it up. The developers are not deterred and more and more buildings are being started in the belief that the tourists will come soon. But the tourists haven’t come. Much of the construction has been abandoned and Saranda now has an estimated 50% vacancy rate. I suspect it's rather less of a tourist draw than it was before the development rush started.

Tuesday, May 23, 2006

Claiming Free Properties - It's a Myth

I regret to have to tell you that the concept of the ownerless property does not exist in the UK. There are a number of spam emails going around at the moment and at least two websites that tell you otherwise. Sign up, pay a fee, and they promise to tell you the secret of how you can claim ownerless empty properties up and down the country. Nice idea but I’m afraid it’s a scam. Since 1066 the UK has operated a system called Bona Vacantia. Properties of people who die without a will and without any apparent heirs are transferred to the crown where they are disposed of usually through estate agents or auction houses.

Monday, May 22, 2006

Empty Key Worker Homes

With news that half of all key worker homes were lying empty Inside Housing is reporting that the government has responded and effectively axed the Key Worker Living Programme. Although it will live on in name, all new properties built under the scheme over the next two years will be available for anybody on council housing waiting lists to buy, not just people fitting the key worker criteria. Thus we are perhaps seeing the end of the rather sorry story we reported last month here. Key Worker Living and its predecessors were a worthy attempt to find a solution to the affordability gap which has opened up in house prices for public sector workers. Unfortunately it missed two crucial points, firstly it wasn't only certain designated "key" workers who couldn't afford house prices, it was most of the population who didn't either already own a home or were on a very good income. And secondly people don't want to be labelled and stuck in a ghetto. The result of the scheme was a large number of new homes were built many of which proved to be very hard to sell and were left empty.

Friday, May 19, 2006

Missing a trick on Council Tax 2

According to recent Parliamentary questions asked by David Kidney MP, 186 local authorities (or 53%) have used their discretionary powers to abolish the council tax discount on empty homes.

In 2005/6 this abolition of the empty homes discount raised £72 million, rising from £49 million the year before.

Just think what this money could do if it was directed towards bringing more empty homes back into use to meet housing need.

Thursday, May 18, 2006

Missing a trick on Council Tax

Has the Government has missed a trick? From April 1st 2004, local authorities have had the discretionary right to abolish the long-standing discount on council tax for empty property. For too long this discount had acted as a perverse incentive to keep property empty.

While they were allowed to keep the extra income raised from the abolition of the second homes discount, local authorities were not allowed to keep the income raised from the empty homes discount. Last year we highlighted that both the Mayor of London and Kent County Council were urging the Government to allow local authorities to keep this additional income for work on empty homes.

But the Government has refused to budge on this issue. Yet at a time that they are introducing new powers on empty homes for local authorities, wouldn’t it also be a good time to agree to a source of income to encourage local authorities to invest in tackling this issue?
A key issue that I hear as I travel across the country is that the Government’s ambitions for work on empty homes could be undermined by a lack of funding. At a stroke the Government could allow local authorities to retain this council tax income, so ensuring that they have both the tools and the funding – then we could really see some progress on empty homes. What do you think?

Friday, May 12, 2006

How to Find Empty Homes (Part Three Self-Build and Heritage Homes)

With self-build housing becoming increasingly popular a whole industry has grown up to provide information on plots of land for sale. Many of the plots are just that; a plot of open land. But these are becoming increasingly scarce and most plot-finding lists have a large smattering of plots with empty and redundant buildings built on them. Some of these are wrecks that are no good for anything other than demolishing. But you may be surprised how many rescuable empty homes you can find this way. Most plot finding companies will require you to register for a fee and this will allow you to search their database in a few chosen county areas for a set period of time. Most agencies are web based, the main ones are The National Building Plot Register, Property spy, and Plotbrowser. In addition the main self build magazines have listings of available plots, although most of the information on them is sourced from one or other of the agency websites.

Another potential source of empty homes to rescue is the heritage industry (if I can call it that). Several organisations working to save historic buildings publish catalogues of buildings they consider to be at risk, many of which are empty and abandoned. The catalogues make fascinating reading with everything from castles to greenhouses included. ‘At risk’ doesn’t always mean they are on the point of collapse, it can mean that the architectural features are in danger of being lost or damaged, or it can mean that the building’s use has become ambiguous or redundant. That being said the buildings featured have all been neglected by their owner, most are in poor condition and a few are downright derelict. The owners have not necessarily given permission for their property to be featured, and if you are interested in one you will need to find a way of getting the owner to sell it to you. The publishing organisations do not take a fee or commission if you manage to buy the property, but in most cases you will need to buy the register catalogue or a subscription to it for a few pounds. "Heaps of Delight" is the current catalogue published by Save Britain’s Heritage (SAVE). This contains details of hundreds of properties across England and Wales (but not London). You can order of from their website English Heritage’s buildings at risk register includes information on all grade 1 and 2* listed buildings known to English Heritage to be at risk in England and Wales. This is the only catalogue that covers London. You can get a copy of the register from English Heritage or view the whole thing on their website. Buildings at Risk Register For properties in Scotland try For properties in Northern Ireland In the Republic of Ireland the buildings at risk register is operated by An Taisce – the Irish National Trust .

Wednesday, May 10, 2006

China Crisis

If you want to find an example of a rapidly growing and potentially overheating property market there is nowhere on the planet at the moment quite like China. The extraordinary economic growth that China has experienced is translating into a demand for more housing and rapidly escalating house prices (up 17.3% in Beijing in just two months earlier this year)

Construction companies are having a field day according to the People's DailyChina is building more houses every year than the whole of the developed world”. But the Ministry of Construction is getting worried. Does China really need all these new homes? It’s outdated statistic compiling systems don’t really give the answers. It appears to have reached the conclusion that just because it is profitable to build houses it doesn’t follow that they are really needed. So how do you measure need? The Ministry of Construction has reached an interesting conclusion – it’s empty homes. “It has issued an instruction to authorities in 40 major cities to conduct a thorough survey of empty homes before policymakers take any further measures.” The thinking presumably is that if there are lots of empty homes people could live in them rather than building lots of new homes. A conclusion we don’t yet seem to have reached in the UK.

Tuesday, May 09, 2006

"Unlocking the Potential" Short-listed for Award

"Unlocking the Potential of Empty Homes" has been short-listed in the New Statesman New Media Awards. In the Independent information category

The key themes of this year’s awards are "ingenuity, modernisation and accessibility". They intend to award those who have achieved something of benefit to others, whether in their community or in society at large. Since 1998, these awards have promoted projects that embrace new technology, fresh thinking and creative management in the UK. “Society has always been promised a great deal by the digital revolution,” says John Kampfner, editor of the New Statesman. “The 2006 New Media Awards will highlight the projects that have really delivered on that promise.”

Monday, May 08, 2006

How to Find Empty Homes (Part Two - Auctions and Websites)

This is part two of a three or four part look at ways in which individuals and developers can track down empty homes that they may be interested in buying. The place that most empty homes come up for sale is at auction. Auctions are a quick and decisive way of disposing of property, which is why neglected properties that don’t have immediate saleability appeal are often sold through them. Loads of properties are sold through auctions every week.For a comprehensive list of property auction houses in the UK and Ireland see here.

As the country wakes up to the possibilities of rescuing empty homes some websites have sprung up that can really help. The sites feature empty and neglected properties that are not actively marketed elsewhere.The first is a not for profit website featuring empty properties. It is designed simply to put you in touch with owners of properties featured on the website. Currently the website covers West London and Birmingham, but there are plans for expansion. Register your interest in any of the properties featured on the site and your enquiry will be put to the owner. With a bit of luck the owner will contact you to discuss a possible sale. The site is free to use, the start this site is a portal for properties in London in need of renovation that are being marketed by estate agents. Many of these are the properties I talked about as lemons in part one and the estate agents may not be marketing them as strongly as other properties on their books. This site lets you see lots of them without the hassle of visiting each estate agent in turn.

Finally for this post nothing beats having a walk around. If you have a reasonably clear idea of the geographical location in which you want to buy a home, you could just have a wander round and see what properties are there. Don’t try and save time and drive instead, you won’t be able to look at the properties properly, or if you do you will probably crash your car. It’s amazing what you will see when you are walking; most roads have a few rather unloved looking houses on them. Some may be empty, and there may be the odd redundant commercial or agricultural building that may inspire you with its potential.

Friday, May 05, 2006

Cross Party Consensus on EDMOs returns

There was a debate on empty dwellings management orders in the House of Lords earlier this week. It was triggered by when two conservative peers, Baronesses Scott and Hanham, prayed against the new legislation.
Baroness Hanham (Conservative) objected, but it turns out her objections were mainly based on misunderstandings over how the legislation will work. A sensible contribution from Baroness Maddock (Liberal Democrat) and a very full response from Baroness Andrews (government minister) put everybody at ease and the objection was withdrawn. Cross party consensus on EDMOs it seems has returned.

New Ideas Must Use Old Buildings - A Tribute to Jane Jacobs

It is with some shame that I admit to having missed the sad news of Jane Jacobs ’ death last week. She would have been 90 yesterday.

There is little I can add to the tributes and obituaries already written about this remarkable and influential woman other than to say her thinking is as relevant now as it ever was.

She was an American born activist who campaigned for community based urban planning. Her philosophy was to think of cities as living beings and ecosystems. She suggested that over time, buildings, streets and neighbourhoods function as dynamic organisms, changing in response to how people interact with them. She fiercely opposed many of the plans in the US and Canada to give cities over to the car and made the case for the reuse of existing buildings. To quote her:
"Old ideas can sometimes use new buildings. New ideas must use old buildings."

How to Find Empty Homes (part one)

A few months ago I was asked to write an article for the BBC's website on tracking down empty homes. In one paragraph I mentioned that most local authorities had a list of empty properties that you could ask to see. I went on to say that under the Freedom of Information Act you have the right to request the list; all completely true. What I hadn’t anticipated was the effect this was going to have. Hundreds of people who read the article went straight out and made written requests to their local authority. Most I have to say were given the cold shoulder. No doubt many have very good grounds of appeal, but I suspect that most people will have found this a rather dispiriting experience and are still left looking for an empty home to rescue. On the positive side the sheer number of requests is causing local authorities to reconsider their policies on releasing information and many are beginning to take a more positive view. But whatever the rights and wrongs, most people who requested information didn’t get what they want. So I thought this would be a good moment to look at some of the other ways of finding empty homes. There's a lot to say so I'm going to stick with this subject for the next three or four posts. Today I want to look at estate agents:

Estate agents are the first place most people think of when they are looking for a new home. But if you are looking for an empty house to rescue it will appear at first glance that they don’t have what you are looking for. This is not really surprising; estate agents are trying to promote new homes as desirable places to aspire to. A window display full of derelict old wrecks is hardly the image they are looking for.Estate agents will normally have many more properties for sale on their books than those in the window display, on their website or the newspaper advert. Their properties will often fall into three categories. Hot cakes: new on the market quick selling properties that are likely to appeal strongly to the market. Plodders; houses that will sell in the end, but may not be everybody’s cup of tea, and lemons; properties that will only appeal to a specific segment of the market (or nobody all) and take ages to sell. Estate agents want to be associated with hot cakes, they want to give the impression they are selling lots of properties very quickly that are very appealing to purchasers. So these are the properties they market strongly. If they can’t sell a potential purchaser a hot cake they may drag the odd plodder out of the filing cabinet. Empty homes usually fall into the lemons category, and so don’t get promoted much if at all by estate agents. You won’t know whether these properties are for sale unless you ask. Of course estate agents will be happy to sell you any property on their books but they won’t want to alienate you as a purchaser and try and sell you a lemon unless you make it clear that that a lemon is what you want.

Wednesday, May 03, 2006

Green Fields and Brown Gardens

Before John Prescott’s current set of difficulties emerged he was getting it in the neck over this: emerged during consultation over the government’s new planning guidelines PPS3 that back gardens are considered to be brownfield sites. The implication is that gardens sold off for housing development would be included within the developers target that 70% of new housing should be built on brownfield sites. Some felt this was a cheat. In fact gardens were considered to be brownfield land under the old set of guidance PPG3 so it’s not really news at all. But it’s raised an interesting debate. Why do we people object to Greenfield development? Some object on grounds of urban sprawl others on grounds of biodiversity. The issue of developing new housing on old gardens divides them. It turns out that back gardens particularly big unkempt ones are havens of biodiversity. Many native insects, birds and small mammals live in them. Farmland on the other hand, particularly arable land, is pretty sterile on an biodiversity level. Monoculture crops, large fields with few hedgerows as well as fertilisers pesticides and herbicides mean that little lives in them except the crop that is being grown. So if you want to protect biodiversity may be building on farmland is OK. Bringing empty homes back into use however raises no such dilemas.