Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Neil O'Brien Excerpts

2nd reading: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 23rd April 2018 Commons Chamber

[Bob Blackman]

Clearly, we want our town centres and shopping areas to be revitalised through people living in them and going to them. If people live in the flats above shops, that brings life to the area 24 hours a day, rather than for maybe 12 hours a day, and that must be to our advantage.

[Neil O’Brien (Harborough) (Con)]

Further to the point made by our hon. Friend the Member for Walsall North (Eddie Hughes) about empty shops, I am aware of a house in Huddersfield, where I grew up, that was empty for literally decades on end. It was not just a waste of space and precious land; it was a huge eyesore that dragged down property prices all around. It was deeply ugly and people wanted shot of it. Does my hon. Friend agree that bringing those kinds of properties back into use is the first place we should go to, rather than necessarily building on greenfield sites?

[Bob Blackman]

I am sure that colleagues across the House could come up with example after example of empty homes that could have been brought back into use many years ago. Some should possibly have been demolished and replaced—I have those in my constituency —but the sad reality is that we still have far too many empty homes that should be brought back into use. Those that are derelict and have not been used for literally decades are the first that we should penalise and look to bring back into operation.

Let me end by asking Ministers to look sympathetically at how we can compensate local authorities for the loss of revenue—we have suggested a means by which that could be done—how we can get guidance to local authorities so that they do not penalise small businesses because we are correcting the law in the interim, and how we can get to a position whereby some sensible decisions can be taken as quickly as possible and small businesses that face difficulties meeting their finances are given help and advice, rather than being closed down by banks and other operations that may wish to penalise them in that way. If we can do those things, this will be a good Bill.

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[Eddie Hughes (Walsall North) (Con)]

It is a pleasure to follow my hon. Friend the Member for Harrow East (Bob Blackman). It is obviously a particularly great pleasure to speak on St George’s day and as we in this House celebrate the birth of a new member of the royal family, so today’s speech will certainly be memorable for me. And boy have we got some exciting stuff to discuss today!

If I remember correctly, clause 2 amends section 11 of the Local Government Finance Act 1992. It is perhaps not particularly sexy, but I hope that it will be effective—and boy does it need to be effective. At the moment, we have approximately 200,000 empty properties. In fact, if I remember correctly from the briefing, it is 205,593 empty properties. I do not know who comes up with these statistics, but I think that they should be slightly vaguer, unless they put a time stamp on them. Anyway, there are approximately 200,000 properties in this country that have been empty for a substantial period of time.

[Neil O'Brien]

My hon. Friend will be aware that the number of empty homes—more than 200,000 of them—is down from nearly 300,000 in 2010, so there has been a huge improvement. We have 100,000 more homes for families as a result of the changes that we have already made, which has avoided 100,000 extra homes being built. Many people in green-belt areas will welcome that change. Does he agree that the progress that we have already made on empty homes will be further boosted by the measures that we are discussing today?

[Eddie Hughes]

I agree entirely. When we talk, as we frequently do, about the housing crisis in this country, we can see that there are many elements to it. Of course, it is incredibly laudable that this Government have an ambition, which I am sure they will achieve, to build 300,000 houses per year, but it is also incredibly important that we make the best use of our existing housing stock.

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[Eddie Hughes]

All I can say is that I have been in the House for less than a year and I hope that, over the passage of time, I will develop the insight and eloquence of my hon. Friend. Unfortunately for the moment, Madam Deputy Speaker, you have to put up with this stuttering Brummie trying to work his way through his speech, and taking yet another intervention.

[Neil O'Brien]

I am not in search of flattery. Does my hon. Friend agree that, as well as bringing empty residential properties back into use, it is strategically important to bring into use buildings that are not currently registered as residential properties? Is he aware that the number of conversions and change-of-use properties has increased from 17,000 in 2010 to 43,000 last year—from 12% of all new supply to 20%? As well as turning old houses back into homes that people are occupying, it is also important, as part of the same strategy, that we go further and liberalise change of use.

[Eddie Hughes]

Were it not for the fact that I am speaking totally extemporaneously, I would have thought that my hon. Friends had read my speech, but, as I have already pointed out, in order to do so they would have had to read my mind. I will indeed be coming on to that very point subsequently, in talking about the excellent period that I spent working for YMCA Birmingham.

For the moment, Members will no doubt remember that I was about to talk about Beechdale, and we should return there immediately. Beechdale housing area, which was built in the ’50s and ’60s in my constituency, has Stephenson Square, a row of shops, and, above the shops, 10 flats that had remained unoccupied for 10 years. Beechdale Community Housing group took the opportunity to refurbish those flats, creating nine self-contained properties that could then be let to members of the local community. However, one flat has been retained for the use of the House to Home project, facilitated by the amazing Jemma Betts, who works for Beechdale Community Housing. Her role is to ensure that, when people move into those newly refurbished, previously vacant properties, they can be helped to sustain their tenancies. Of course it is our objective to bring empty homes back into use, but they must be used by people who can maintain the tenancy for a protracted period. It is difficult for some people who have had previously chaotic lives to develop the skills to enable them to sustain that tenancy. Jemma’s work is to help them understand how they can, for a reasonable price, furnish that property, access rent statements online and therefore maintain that tenancy.

What is also important about this particular area is the fact that there are shops beneath the flats that have been brought back into use. I am thinking particularly of Rob Mullett Butchers, which I thoroughly recommend that you visit, Madam Deputy Speaker, if ever you are in Beechdale, or W.E. Whitty’s grocery, which has been run by—[Interruption.] I am embarrassed. It has been run by Jane and Phil for a number of years. As I mentioned in an earlier intervention, Phil recently said to me, “When you bring properties back into use, particularly those properties that are above shops, you regenerate the entire area. People are living there 24 hours a day and they are making use of the shops.” This has caused a general lowering in the incidence of antisocial behaviour in the area. But it is not just that. Jemma has also taken the opportunity to create a community garden to the rear of the flats now that they have been brought back into use, having been vacant for 10 years. This facility allows children the opportunity to learn how to grow vegetables.

[Neil O’Brien]

I am lucky to represent Market Harborough, which has seen the fastest growth in the number of new shops anywhere in the east midlands, but many retail centres are suffering from the growth of the internet. In future, this country will probably have more retail space with potential homes above than it needs. Does my hon. Friend agree that local government must play a strong role in helping to consolidate those retail centres into housing, so that they can become vibrant places where people want to hang around?

[Eddie Hughes]

I agree entirely. We are seeing a shift in the profile of our town centres. Of course, many people are keen to shop online these days, so there are some empty properties. Unfortunately, there is a particular example of empty shop units in Walsall, where the Labour-led council has decided to spend £13 million buying a shopping centre with empty units and a leaking roof. I hope that the vociferous campaigning of local Conservatives will ensure that we take back control of the council.

[Eddie Hughes]

Of course, Madam Deputy Speaker; I was merely responding to my hon. Friend the Member for Harborough (Neil O’Brien), who suggested that there might be a change-of-use opportunity for empty commercial properties. Hon. Members will no doubt remember that when the Government provided £100 million of funding through their empty homes programme, they were not only targeting empty residential properties, but allowing organisations to have the facility for a change of use from commercial to residential. I was just about to come to an example of that.

Madam Deputy Speaker, I do not know whether you have ever been to watch Aston Villa play football in Birmingham. I would suggest that you do not come at the moment; we are hoping for promotion, but it can be a bit hit and miss. Anyway, YMCA Birmingham took the opportunity of taking over Harry Watton House in Aston, which was previously a social care building that had been used for residential purposes occasionally, but was left empty for a considerable time. YMCA Birmingham took the opportunity of approximately £450,000 of Government funding to convert that building back into use as 33 self-contained flats. YMCA Birmingham has been in existence since 1849 and currently offers 300 units of accommodation for young, previously homeless people; bringing empty properties back into use has to be the best use of that Government money.

[Neil O’Brien]

I thank my hon. Friend for his patience. There are currently around 400 empty properties in the Harborough district, and there are also occasionally homeless people in the district. All my constituents would want those homes brought back into use so that we can tackle the problem of homelessness that my hon. Friend mentioned.

[Eddie Hughes]

My hon. Friend makes a valid point, although there are occasional cases where people who appear to be homeless are not open to the good will and hospitality of neighbouring organisations. YMCA Birmingham was given £1 million to create new residential accommodation at its Erdington site, which was only about 20 or 30 metres away from a Tesco store. Some people used to turn up and beg outside that store, which was very bad for the credibility of the YMCA as an organisation seeking to home homeless people. Despite our best efforts, they would never be removed and come into our accommodation.

Let me return to the matter of how empty homes can be brought back into use. There is a block of flats on Henrietta Street in Birmingham that was owned by somebody who failed to develop it over a sustained period of time, but thanks to money through the empty homes programme—YMCA Birmingham was allocated a total of £890,000—we were able to bring those flats back into use. The block is now excellent accommodation for young people in Birmingham, on the edge of the Jewellery Quarter, which is quite a prestigious address these days. The units of accommodation are relatively small at approximately 25 to 30 square metres, so they are perhaps not palatial.

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[Eddie Hughes]

I think that there are stats available for everybody in the Chamber. Perhaps they could celebrate, as I have, not only St George’s day, and not only the birth of a new member of the royal family, but a 40% decrease in the number of empty properties in Walsall. Those are, I suggest, three very good reasons for a party, or possibly another bank holiday—for St George’s day, I mean. I am not for one minute suggesting that we have a bank holiday just because the people of Walsall have reduced the number of empty homes by 40%.

[Neil O’Brien]

Much of the debate about empty homes assumes that the greater part of the problem is in the capital. While we must of course use measures like those in this Bill to bring more homes back into use in the capital, is my hon. Friend aware that the greatest proportions of empty homes are actually in the north, particularly the north-east? About 0.5% of homes in London are empty, whereas about 1.5% are empty in the north-east, where, I must say, we have largely Labour councils.

[Eddie Hughes]

One of the difficulties that I had when I first came to the House was recalibrating with regard to the intellectual ability of those with whom I spend time. My hon. Friend was, I believe, a policy adviser at No. 10, and he appears to know everything. I defer entirely to his encyclopaedic knowledge of housing issues, and I agree entirely with his point. When I sit in meetings, I have found that because so many people are focused on housing problems in London and the south-east, they sometimes fail to see that there could be any empty properties outside London. To be honest, I am not entirely sure they care about the rest of the country. It is a pleasure to be joined in the new 2017 intake by somebody with the gifts and abilities of my hon. Friend. As I say, he made a very important point.

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[Eddie Hughes]

That is the brilliance of the drafting of this Bill. Clearly, whoever was associated with that in any way, shape or form was insightful, intuitive and gifted. I am hoping that the Minister was involved in some way with the drafting of the Bill and will remember the praise that I have heaped on the people who were involved.

[Neil O’Brien]

While I share the passion of everyone in this House who is keen to see empty properties brought back into use, does my hon. Friend agree that this measure, which is effectively a tax and incentives-based measure, takes the right approach, as opposed to a more dirigiste one? Although the empty homes development orders brought in by the Labour Government were a good thing, they led to only about 40 homes in England being taken into possession. Does he agree that we need a tax and incentives-based approach rather than trying to take people’s property off them?

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[Michelle Donelan (Chippenham) (Con)]

I am delighted to follow my hon. Friend the Member for Walsall North (Eddie Hughes), who gave an informed and energised speech. I cannot elaborate enough on how much we all enjoyed it. I reiterate his point about St George’s day and congratulate the royal family on the birth of another child.

I welcome the opportunity to speak about the Bill, which is pro-business and therefore will support job creation and which seeks to help to increase our housing stock. Those are two issues that my constituents regularly raise with me in my surgeries and when I am at events.

The staircase tax has been the top issue raised with me by a number of local businesses, including at events I have attended, such as at Corsham chamber of commerce, local Inspire events and other networking events around the constituency. I am delighted that the Bill seeks to rectify the bizarre situation that we have found ourselves in. Although we must not criticise the Supreme Court, I welcome the Government’s initiative to right a wrong today and to honour the commitment made in the autumn Budget. The Bill will mean that all ratepayers who lost small business rate relief directly as a result of the judgment will have their relief reinstated to their bills retrospectively.

As we all know, the staircase tax means that business rates in England and Wales are being set depending on how many rooms are being used and how they are linked. That really is arbitrary. Companies with offices linked by a communal lift, corridors or stairs are being charged. In fact, some of those businesses would have been eligible for 100% rate relief were the case different. That has led to an increase in bills, which concerns a number of businesses. Some have faced charges being backdated to 2010. If you owned your own business, Madam Deputy Speaker, can you imagine the shock and the horror of getting a massive bill that you had not budgeted or planned for and that could stifle your small business? That is what has happened in businesses in my constituency and up and down the country.

[Neil O'Brien]

While talking with the Market Harborough chamber of commerce just last Friday, I met a business owner in my constituency who runs a small fishmonger and has a whole set of offices connected by a staircase in a tall building in the most expensive part of the town. Were this ruling to have affected her, she would have been completely clobbered. In fact, even in the current business rates environment, because it is a rather archaic tax, she is already paying a lot, and without measures such as this, she could have been paying an awful lot more.

[Michelle Donelan]

I thank my hon. Friend for his very valid point and I completely agree. We all have sympathy with the case he outlines and have heard many similar examples throughout our constituencies. This is not just about existing businesses; it is also about people who are looking to get into business—the entrepreneurs and business owners of tomorrow, who will look at this tax and think the risk is too high.

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[Michelle Donelan]

I completely agree. My constituency has four market towns and our high streets have suffered. The Bill sends a message out to local high street business owners and all small businesses that this Government are behind them, supporting them, and recognise that they are the backbone of our economy.

[Neil O'Brien]

Does my hon. Friend agree that this is a good example of the Government addressing some of the most egregious problems with the business rates system, and that it is a further improvement following the revaluation, which has seen 5% cuts in the business rate bills of shops in the east midlands?

[Michelle Donelan]

I completely agree. As I said before, the Bill is righting a few wrongs.

Last Friday in my constituency, I met the regional director for the south-west of the Federation of Small Businesses, who estimates that, while the staircase tax has affected around 30,000 businesses, it has actually impacted around 80,000 properties. Sometimes we think too much about the number of businesses and do not think about the number of properties affected. These properties and businesses have been unfairly and illogically punished for sharing facilities such as communal staircases, corridors or even car parking with another business. In fact, Mike Cherry, the chairman of the FSB, said last September that some small business owners were knocking holes in their walls or trying to put staircases on the outside of their premises to try to get around these rules. That is a bizarre and ludicrous situation that we cannot tolerate any longer, so I am delighted that the Bill will rectify it and that we are sorting out a sensible solution.

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[Michelle Donelan]

I completely agree. The Bill is also about providing more business confidence and more confidence for entrepreneurs who want to grow their business and develop it, rather than the opposite. It is important to reiterate that small business is the lifeblood of our economy.

[Neil O'Brien]

Harborough is a place of small businesses and does not have one dominant employer. There is a lot of demand for large buildings which are broken up into much smaller office spaces. Does my hon. Friend agree that that would be much more difficult if we did not address the problems with the staircase tax that we are addressing and the absurdities that she has pointed out?

[Michelle Donelan]

I completely agree and I thank my hon. Friend for another interesting and to-the-point intervention.

My constituency, as I have said, has four market towns—Chippenham, Corsham, Melksham and Bradford on Avon—and the staircase tax has affected each one of them, as well as our villages. It has impacted on high streets. It is important to remember that there are office spaces above shops and that members of staff go out for lunch in the high street. If they are impacted, there are job losses and if there is no extra recruitment round, those people will not be out for their lunch in the high street. The tax has also affected some of our shops. Our high streets are suffering up and down the country, so we should do everything we possibly can to promote and support them to avoid having dormitory towns.

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[Michelle Donelan]

I agree. It is a two-point strategy: it is about the money that is raised and incentivising people to stop leaving those homes empty.

The point about exemptions has been made by other Members, but it is important to labour it, because I do not want my Chippenham constituents to be unduly concerned or worried that they might be penalised by the policy. They will not because it has exemptions for people in the military, for carers and for people who are going into hospital which are designed to help them. If a home is left empty because of probate, the people concerned will be protected. This is not an arbitrary measure—it is smart and fair.

[Neil O'Brien]

My hon. Friend is listing some sensible exemptions. Does she agree that it is important that we remain localists and do not impose the measure on every council? We should give them the power to make the decision for themselves.

[Michelle Donelan]

I completely agree and I will come on to deal with that point.

I want to reiterate the point that empty homes attract squatters, which can result in vandalism and antisocial behaviour. That helps to bring down areas and can be upsetting for local residents. Residents often come to my surgery asking, “Why is that property still empty and what can we do about it?” Today, we have an example of what we can do about it, with a measure to incentivise people to use those empty homes.

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[Michelle Donelan]

I completely agree. I have said that these properties are more susceptible to vandalism and there is antisocial behaviour around them. It is uncomfortable for neighbours and people in those communities.

The two-year period is fair. It allows homeowners sufficient opportunity to sell the property, rent it out or complete major renovations that might be required. The Bill is an example of the Government supporting localism because local authorities, as has been mentioned by many hon. Members, will still make the decision on whether to apply the premium and the exact rate that is to be charged. They can review the empty housing stock and the housing supply and demand locally, and make an informed decision. That is an example of this Government trusting local authorities.

I am confident that the majority will continue to use that power. In fact, 2017-18 figures show that 291 of the 326 local authorities chose to apply the empty homes premium. In addition, there is scope for them to assess on a case-by-case basis—for example, where a homeowner is struggling to rent out or sell a property or to do the repairs. This is not a punitive measure, but a fair and measured one. The 2013 guidance will still stand, reminding local authorities to take into account the reasons a property is empty. As I have said, this is about protecting rather than penalising owners of homes. This Government do not want to stop or discourage people from getting into the property market and on to the housing ladder; it wants to encourage and facilitate them. That is the very nature and essence of this Bill.

I agree with my hon. Friend the Member for Harrow East (Bob Blackman) that we must be careful that this is not abused. We do not want people to find a loophole whereby they tinker with the property as they approach the two-year marker. I would like to hear the Minister explain how we will address that because it is very difficult to protect those homeowners who are doing the right thing, as opposed to those who are trying to avoid the rules. We need to seriously tackle our housing crisis.

My only ask of the Minister is to review the impact of the increase and to later look at increasing it again. I believe that, to truly incentivise homeowners to rent out or to sell their property, the cost must be quite high, especially in areas of London or other places where the housing market is very high, because people will sit on those houses and their value will go up considerably, month after month, and they can then write off the increase in the empty homes premium if it is not high enough. There is an argument to review it and increase it times five. If someone is doing the right thing and renting the property out, selling it or doing it up in a timely fashion, they will not be punished at all. There is an argument for looking at whether we have gone far enough today and whether in the future we could go further and build on this.

[Neil O'Brien]

My hon. Friend is making her case with great passion on an issue about which so many people care. Will she join me in congratulating the campaign groups that have worked so hard to put it on the agenda, in particular The Big Issue and its “Fill ’Em Up” campaign and Empty Homes?

[Michelle Donelan]

I completely agree with my hon. Friend that it is important to recognise the work done by campaign groups and all bodies with a vested interest in the issue. It is not just about urban areas. In fact, Graham Biggs, chief executive of the Rural Services Network, a body representing 143 rural local authorities in England, has said:

“Anything that enables councils to bring empty properties back into use is welcome.”

It is also interesting to discuss this Bill in relation to homelessness. We have an odd situation whereby there are thousands of empty homes in the country but also a dreadful and rising problem of homelessness, although the Government are tackling it. As the chief executive of Shelter has pointed out, addressing the situation is not as simple as swapping or flipping those two elements around, because often homes are in different areas from those with the core homelessness problem.

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[Michelle Donelan]

I completely agree that it will be very interesting to watch the actions of the Mayor of Manchester and the impact of his work, and to look at other cities around the country.

[Neil O'Brien]

I entirely agree with my hon. Friend’s point about the mismatch between empty properties and the homeless, but does she agree with me and the estimate by The Big Issue that in some parts of the country there are 10 empty properties for every homeless family, so surely the Bill can play an important role, along with other measures such as Housing First, in addressing the problem of homelessness?

[Michelle Donelan]

Yes, it will have an impact. It is one of a number of ingredients in a recipe for tackling homelessness, an issue on which my hon. Friend the Member for Harrow East has led considerably and on which I worked with him on the Homelessness Reduction Act. We also have the homelessness taskforce and Housing First. All of those together will help to tackle homelessness.

I want to air caution, however, because Opposition Members have talked frequently about seizing empty properties and giving them to the homeless. That is not a solution. The answer is about incentivising the owners of those empty properties and encouraging them to put them into the housing stock, not seizing them. We are not a Government who want to downgrade or derail property rights; we are a Government who want to promote and protect property rights, and also ensure that we can get that housing stock up and tackle the housing crisis.

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[Michelle Donelan]

I completely agree. That is exactly what we need people to do: we need them to think twice about whether it is a sensible decision for their pocket, and then the issue can be resolved for our country.

[Neil O'Brien]

Further to the question asked by my hon. Friend the Member for Bexhill and Battle (Huw Merriman) about the role that corporately owned empty properties might be playing in the problem, does my hon. Friend the Member for Chippenham (Michelle Donelan) agree that the situation might be more severe than we think, given that previous measures against it, such as the annual tax on enveloped dwellings, brought in by this Government, have raised far more than we expected because there were more of them than we thought?

[Michelle Donelan]

My hon. Friend makes yet another very interesting point. He has made several interesting points and is very informed and articulate. I thank him for his contribution.

In conclusion, this Bill will be welcomed by my constituents in the Chippenham area, because it seeks to right two ludicrous wrongs. It seeks to support local businesses and to boost our housing stock. It will help our job creators and help to tackle our broken housing market. I urge the Minister to explore further the opportunity of increasing the empty housing premium in the future and I hope that this will act as a first step. I look forward to supporting the Bill tonight.