Friday, May 28, 2010

It's Not Difficult

I think I’d rather be told straight “You’re wrong!” But ours is not the kind of issue that promotes outright opposition. The strongest resistance we normally get goes something like this “Of course I agree that bringing empty homes into use is a good idea, but in practice it’s just too difficult.”
It’s an annoying put down because it would be petulant to get cross in response. But that doesn’t mean I agree.
These words most commonly come from the lips of local authority councillors or people running housing associations. What it generally means is that they know they have to create more homes, but the way they know how to do it is to do a deal with a developer who is building a large new housing development. The skills and knowledge you need to pull off deals like this are not to be sniffed at. Many housing associations are very good at it. And it works – or at least it did.
What it also implies is the skills they used to have to negotiate the purchase of individual houses and the skills to renovate them are no longer needed.

But now housing associations have a problem. Last year just 118,000 homes were built in this country – half the government’s target. That’s half the number of potential deals they need; and unless millions of pounds of taxpayers money is poured in, half the number of new social homes.

Now lets look at a different type of housing supplier; a private landlord. Between them private landlords provide about the same amount of housing as councils and housing associations. Very few try to do deals with developers and hardly any build new homes. Where most acquire property is through buying existing second-hand homes. Visit a property auction house and you will see most that homes are bought by private landlords, what’s more most of those they buy have vacant possession and need to be improved before they can be let. Private landlords it seems still have the skills to buy and renovate empty property.

Now, of course, private landlords operate on a different scale to councils or housing associations. A recent ARLA survey showed the average private landlord owned seven properties. The National Housing Federation’s latest figures show that the average housing association has more than 2,000 properties. But if bringing an empty home into use isn’t too difficult for a landlord who owns a handful of property, there’s no rational reason why it should be too difficult for a landlord who owns thousands. The housing market has changed, and if social housing is going to keep pace it needs to borrow the skills of private landlords. Bringing empty homes really is a good idea, and it’s a highly viable way of creating new housing. It’s only too difficult if you don’t know how to do it.


  1. Fair point - housing associations should have the skills base to be able to enter the buy & renovate market but in reality this type of work isn't suited to large risk averse organisations that like to have neat upfront costs & ability to procure major contracts with predictable build/refurb cost projections. They like/need to work with multiple units of properties of common design so that they can lever in economies of scale.
    Private landlords and builders are much more flexible when it comes to buying at risk before full refurb costs have been costed. Some are good at this "gut reaction" approach and do well but a lot of these individuals do this naively and underestimate refurb costs vs uplift in value and pay too much for rough properties consequently lose a lot of money in the process. Maybe RSL's stay out of this market because they are more knowledgeable/realistic regardingthe finanical risks involved.
    Plus your critique is predicated on the assumption that the owner of the empty property actually wants to sell it. In my experience a significant proportion of the owners of empty homes behave in a manner that is financially irrational and have emotional links to properties that stop them seeing things clearly.
    What we need to break this deadlock is an enforcement tool for L/A's that would force the sale of properties where it can be demonstrated that the owner had not taken reasonable steps to bring it back into use independently.

  2. Dear Anon,
    If risk adversity doesn't deliver we need to try something else. True some private landlords fail, but that is the nature of a functional market. The flip side is the good ones succeed. Housing associations need to learn from the sucessful ones.
    Local authorities already have enforcement tools, but they have only had ocassional local impact.