Whoever the new Prime Minister is, there is sure to be much talk about “difficult choices” over public spending cuts or tax increases to bring the public finances into order. But another option that is sometimes overlooked is the sale of surplus public sector assets. I have written previously for this site about state land banking in its various forms. The Ministry of Defence owning 553,000 acres (roughly equivalent to the size of Surrey) is one favourite theme. Another is the 100,000 empty municipal garages – which could often be replaced with rows of cottages.
A sales drive would have the twin advantage of easing the National Debt (and thus the cost to the taxpayer of debt interest payments) and also allowing development opportunities that would increase the housing supply.
But perhaps the most obvious place to start is existing council housing that is left empty. For some years of Conservative rule, progress in reducing the scandalous waste was impressive. This was partly due to the New Homes Bonus – which includes homes brought back into use as well as new builds. The funding provides a useful incentive for councils not only to allow newly built homes but also the restoration of derelict properties. But the number of empty council homes has gone back up again. In 2010 it amounted to 31,400 properties. That figure fell to 23,100 in 2017. But the latest figures, for last year, show a tally of 30,600.
It is no surprise that the worst offenders are Labour councils. In London, we have Southwark topping the league of shame with 1,211 empty council homes. Next comes Ealing with 1,039. Camden is on 691. Newham on 617.
Outside London, we have Sheffield on 1,205. Leeds on 728. Newcastle on 681. Gateshead on 625, Leicester on 418.
Naturally, there will always be properties empty for a few days between tenants moving out and new ones coming in. But these statistics are for long term vacant properties – at least six months.
Doubtless, the Labour councillors presiding over this mismanagement will often be quick to denounce the uncaring Conservative Government for the number of homeless people. They will also lament the number of properties “lost” under the right to buy – although those properties continue to be put to good use.
How much are those 30,600 empty homes worth? Those right to buy sales allow a rough estimate. The average proceeds were £97,796 for each sale last year. But, of course, those are sold at a discount on their market price – which varies, but averages out at around 45 per cent. Even if we ignore house price rises over the last year that comes to £175,000 each. Perhaps knock off £50,000 each as many of them presumably need some repairs. So, perhaps, worth £125,000 each. That would come to over £3.8 billion.
Local authorities should cease being allowed to hoard those assets. They should be put up for sale. Some of the proceeds could be retained by the councils for new homes and improving the existing stock. Some could be retained by central Government to reduce borrowing.
Incentives and “good practice guidance” are evidently not enough. Forced auction sales are needed to end the scandal of council housing being allowed to remain vacant for long periods.