Nearly 290,000 empty homes in England

To coincide with the Empty Homes National Week of Action (3rd to 7th December), new Halifax research shows that there were 288,763 empty private homes in England in April 2006, accounting for 1.6% of all privately owned dwellings in England.

Empty homes account for 3% or more of all homes in 15 local authorities

Fifteen local authorities (LAs) have a high proportion of empty homes. In these areas, at least 3.0% of the private dwelling stock is empty. This is nearly double the English average of 1.6%.

Areas with a high proportion of empty homes are nearly all in the north of England

Fourteen of the fifteen LAs with a high proportion of empty private homes are outside southern England and nine are in the North West. The biggest proportions of private empty homes are in Pendle (6.2%), Manchester (5.7%) and Liverpool (5.0%). Significantly, there was a rise in the number of private empty homes in 12 of these 15 LAs during the past three years, with a combined rise of 10,260 empty homes in these areas.

House prices are 17% lower in areas with highest proportion of empty homes

The average house price in all 15 of the LAs with a high level of empty homes is below the regional average. The discount is, on average, £30,004 (or 17%). The largest discount is in Stoke-on-Trent, at £63,145 (34%).

High levels of deprivation in most areas with high level of empty homes

Twelve of the 15 LAs with a high level of empty private homes rank amongst the 20% most deprived areas in England, according to the government's Indices of Deprivation. (The Indices of Deprivation are produced by the Department of Communities and Local Government and rank LAs in England by a range of factors including income, education, health and living conditions.)

Average earnings are below the regional average in all 15 LAs with a high level of empty private homes. Average weekly earnings in areas with a high amount of private empty homes are, on average, 10% below the regional average and 17% below the English average.

Nine of the 15 LAs with a high level of empty private homes have an unemployment rate at, or above, the regional average. On average, high empty home areas had a claimant count rate 0.3 percentage points above the regional average. The worst performer in the group – Liverpool - had an unemployment rate of 5.1%, more than double the regional average of 2.5%.

6% fall in the number of empty homes in England over the past three years

There was a 19,675 fall in the number of empty homes between April 2003 and April 2006, reducing the total from 308,438 (1.8%) in April 2003. There was also a fall in the number of areas with a high level of empty homes with the number of LAs where at least 3% of private properties are empty dropping from 40 in 2003 to 15 in 2006.

12 areas with a high level of publicly owned empty homes

There are 89,953 vacant public dwellings, 1.5% of the public dwelling stock. Twelve LAs have more than 5% of their public dwelling stock vacant. Nine are in the north of England with the highest proportions in Tyndale (7.9%), Hartlepool (6.7%) and North Norfolk (6.5%).

Restoring an empty home vacant for less than two years attracts 17.5% VAT

The cost of restoring an empty home attracts the full rate of VAT (17.5%) unless the property has been vacant for more than two years when a reduced rate of 5% applies. A property vacant more than 10 years, which is renovated and sold, attracts a zero rate of VAT. New build properties, by contrast, are not liable for VAT on construction costs.

Restoring an empty home could attract VAT of more than £5,200

Halifax estimates that the average cost of restoring an empty home is £29,824 and involves significant repair to many aspects of a house including plumbing, kitchen, windows, roof and wiring. On this basis, the average VAT payment for restoring an empty home vacant for less than two years would be £5,219. This is three and half time more than the VAT for restoring an empty home vacant for more than 2 years, which would attract an average VAT payment of £1,491.

Reduced VAT rate on renovating empty homes should be extended.

Halifax calls on the government to extend the reduced 5% rate of VAT for restoring an empty home to all properties vacant for more than 6 months, not just properties vacant for more than 2 years. This will provide a more level playing field between individuals and local authorities. Typically, local authorities do not pay VAT on renovation activities.

There should be a unified approach to council tax reductions for empty homes

Local authorities adopt various approaches to council tax reductions for empty homes. Some offer an unlimited 10% discount, while others have a 50% discount but for a limited time only. Halifax calls for a united approach to council tax discounts with a 50% discount for up to 6 months after renovations are completed with a maximum 12 month period.

Little use of Empty Dwelling Management Orders by local authorities

Empty dwelling management orders (EDMOs) were introduced in July 2006, giving LAs the power to take control of empty private homes and bring them back into the housing stock. However, only six EDMOs have been granted since July 2006 and none have been granted in areas with a high level of empty homes.

Martin Ellis, Chief Economist at Halifax, commented: "It is encouraging that the number of empty homes in England has fallen by nearly 20,000 over the past three years, but it is also notable that the problem has become worse in many areas with the highest number of empty homes.

Rising property prices encourage the rejuvenation of empty homes in many parts of England. However, it is clear that intervention is also necessary. We would like the government to extend the 5% rate of VAT for renovating an empty home to all properties vacant for more than 6 months not just those properties that have been un-occupied for more than two years."