Empty Homes Strategies

The UK is experiencing high levels of homelessness. However, Government figures have identified a continued increase in empty properties, with more than 676,000 listed in 2022, 248,600 classed as long-term empty homes.

The impact of empty properties can have a negative impact on communities - denying vulnerable families of a home; and if left vacant, can fall into a state of disrepair, attracting vandalism and damage to adjacent properties. However, local authorities have a range of powers to bring these homes back into use including Empty Dwelling Management Orders, Enforced Sales and Compulsory Purchase Orders.

Enforced sales

The Enforced Sales route can be extremely beneficial for both the council and its community. The benefits include:

• Social Impact – it enables a property to become brought back into use for occupation, aiding regeneration of an area and removing the social impacts and empty property and create in an area.
• Council Tax – once the vacant property is sold, a local authority may be able to recover unpaid council tax arrears and will be able to generate council tax income going forwards from the new owner/occupier.
• Recovery of Costs – a council can recover all of its costs from the sales proceeds, including the costs of maintaining the property and costs of sale.
• New Homes Bonus – local authorities may be able to claim grants from central government where a long term empty property is brought back into use.
• Speed – the enforced sales process can often provide faster results than embarking on a Compulsory Purchase of a property.

Compulsory purchase orders

As long as there is a proven need within the area for an empty home to be put to an alternative use, Compulsory Purchase Orders (CPOs) may be able to be used where owners refuse to take action to bring a property back into use, where:

• an owner cannot be traced
• owners refuse to take action to bring a property back into use
• where a property has been empty for a long time and is causing a nuisance, or
• is a danger to the public.

Compulsory purchase is a lengthy process but has been proven to be effective. Local authorities have a range of compulsory purchase powers which include:

• Housing Act 1985, section 17 – provides powers to take over land, houses or other properties to increase the number of houses available or improve the quality of the housing stock. The main uses of this power are to acquire land for housing. This includes bringing empty properties back into use as homes, and improving substandard ones. 
• Town and Country Planning Act 1990, section 226 – the powers in section 226 allow local authorities to acquire property if the authority thinks that the acquisition will facilitate the carrying out of development, re-development or improvement of  that property, or to achieve the proper planning of the area.

Before a CPO is confirmed the authority will have to show that they have taken reasonable steps to acquire the property by agreement, or to bring into back into an acceptable use and that there are no impediments to redeveloping the property. The authority will also have to demonstrate their reasons for making a CPO and that they justify an interference with human rights.

Council tax recovery

Where a local authority has a liability order or orders securing for arrears of at least £1,000, a local authority is entitled to apply to County Court for a Charging Order over the debtor’s beneficial interest in the relevant property (Regulations 50 & 51 of the Council Tax (Administration & Enforcement) Regulations 1992).

Unpaid care home fees

Another route to a charging order is unpaid care home fees. Where the debtor has a liability for unpaid care home fees recoverable under the Care Act 201, for charges which were incurred within the previous six years, the sum due is recoverable by the local authority as a civil debt. 

The local authority can pursue a money claim in the County Court or High Court (if debt is over £100k). Once Judgment is obtained, a Charging Order can be secured over any properties in which the debt has an interest (can be secured over multiple titles). A local authority may also be able to bring a money  claim in the Court or High Court to recover a variety of other unrelated debts from the owner of an empty home. If a judgment is secured, the local authority can apply for a charging order over the debtor’s interest in the empty home.

If a debt remains unpaid after a charging order is secured, the local authority may apply to the Court for an order for sale, to enforce the sale of any property against which the charging order has been registered. A Charging Order can be registered against the title to the Property at Land Registry or Land Charges Registry but won’t bind a future purchaser where there are multiple owners and the charge is only against one owner’s interest. 

Unlike a Local Land Charge, a charging order only creates an equitable charge over the debtor’s interest in the property. It will not give the local authority a legal charge or the ability to sell the property without a further order from the Court (known as an order for sale).

Local authorities must apply for an Order for Sale from the Court under s.14 of the Trusts of Land and Appointment of Trustees Act (TOLATA) in order to force the sale of the property. An order for sale is discretionary and Court will consider a number of factors when deciding to make an order, such as:

• the size of the debt and how long the debt has been outstanding
• whether there is anyone else with an interest in the property 
• whether prejudice will be caused to any other creditors
• the attitude of the debtor towards clearing the debt

You should be prepared to show other steps that have been taken to recover the debt before applying for an order of sale – that selling the property will be only realistic way to recover the debt. If an order for sale is secured, the local authority will have conduct of the sale on terms set by the Court. If there is a surplus after the debt and all of the local authorities’ costs have been deducted from the sale proceeds, it must be paid over to the debtor or any other party entitled to receive it. Alternatively, it may be paid into Court or to the Bona Vacanti Division (if the debtor died without leaving a Will) where there is nobody to receive the funds.

Provision of loans

Another solution implemented by some local authorities is to provide low interest loans to facilitate the bringing back into use of empty, disused properties. Similarly, such loans can be used as a catalyst to bring back into use commercial premises thus creating valuable local jobs and helping grow the local economy.

One example is the Award winning “No use Empty” (NUE) scheme operated by Kent County Council since 2005. The scheme provides affordable loans to landlords, owners and developers over a short period of time – typically three years or less. It assists with acquisition costs and the development costs associated with bringing back properties into use, which have been empty for at least six month.

Loans are secured against suitable properties and can be made available in tranches for larger projects and to assist with mitigating security risk. Lending is subject to robust monitoring and lending applications need to align with a lending criteria approved by the Council.

Results include:

• bringing back into use 7,789 retail and residential units
• reducing the number of empty properties in Kent by a significant 36% in 2022 compared to 2005
• creating modern quality homes for 3,000 people
• improving the council’s tax receipts by an estimated £1m per annum
• attracting £43.3m worth of private investment to the Kent economy
• providing or safeguarding over 1,600 local jobs.