Steve Grimshaw

KCC Programme Manager

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FLASHBACK 2005

• To improve the physical environment in four coastal districts of Kent - Dover, Shepway, Swale and Thanet by bringing empty properties back into use. These districts contain 19 out of the 20 most deprived wards in Kent and over 3,000 long term empty properties.

• PSA2 Target Performance Indicator (3 Year Project)

• Return 372 private sector long term empty or poorly used properties into occupation as quality accommodation (100% increase on performance).

• Improve both residents’ perceptions of the physical environment and business confidence by 15%.

• To extended the Initiative to all 12 local councils. (Achieved during 2009)

What we set out to achieve

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PARTNERSHIP APPROACH

• KCC appointed a project manager for the

initiative. • Undertook initial collection of evidence,

including residents & business survey, survey of empty properties, mapping exercise – support from Empty Homes (Agency).

• Appointed “Housing Consultancy” to

provide professional and technical expertise.

• Provide financial & non financial support

to the Districts.

• Appointed “FT International” to promote and raise the profile of the Initiative.

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No Use Empty Initiative: Achievements by Approach

CPO ESP CPO ESP

Works in Default or

Prosecution

Works in Default or

Prosecution

Enforcement (Notices Served on Owner)

Enforcement (Notices Served on Owner)

Threat of Enforcement Threat of Enforcement

Financial Assistance / Other Assistance (Loans, grants, home improvement agency, private sector

leasing)

Financial Assistance / Other Assistance (Loans, grants, home improvement agency, private sector

leasing)

Advice and Guidance (Development advice, tax and vat, reduced fees to sell via auctioneer,

guidance on extent of works, guidance on planning, raising finance)

Advice and Guidance (Development advice, tax and vat, reduced fees to sell via auctioneer,

guidance on extent of works, guidance on planning, raising finance)

Compulsory Purchase Orders, Enforced Sales Procedure or Empty Dwelling Management Order

Prosecution for non compliance of Notice or undertaking the works in default and using the County Court or Enforced Sales Procedure to recover costs

Statutory Notices under a range of legislation. Owner has right of appeal.

After exhausting voluntary assistance, threat of appropriate enforcement action is raised with owner

CPO, EDMO & Enforced Sales (3%)

Threat of or Actual Enforcement 11%

Grants > 3% &

Interest Free Loans 18%

Advice & Guidance 58%

Other (Auctioneer, sale of LA

land, PSL) 7%

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Informal Advice & Website

Awareness

• Newsletters, leaflets, mail outs

• Training – 1,200 officers trained – range of courses

Advice & guidance (first course of action)

• Open day empty property owners in each area

• Advice on Vat implications empty 10 years 0%, > 2 years 5%

• Home improvement agency - list of builders etc

• Advertise their property for sale for free / Auction reduced fees

• Advice on method of disposal or options including renting

• Guidance on planning – maximise profit etc

• Honest Broker between parties

• Private sector leasing / RSL Scheme

• Freedom for Information- referral service interested party

Website

• One stop resource for property owners & practitioners

• Hotline and web reporting of empties

• Extensive case studies

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KCC £6m Capital Funding Package

CAPITAL FUND WITH 3 STRANDS

LOAN FUND

• Kent County Council – not a Housing Authority

• Loans - £25,000 per unit, maximum of £175,000 per applicant at 0% interest, default rate 6%

• Properties must be sold (2 years) or let (3 years) on completion(comply with decent homes standard)

• Loans are secured as a financial charge against a property before funds released

• Maximum LTV 90%, independent RICS valuation

• Funding provided upfront (phased for larger projects)

• A variety of checks including ID, accounts, legal searches etc. are carried out on all applications

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KCC £6m Capital Funding Package

PARTNERSHIP FUND and DIRECT PURCHASE

• Compulsory Purchase Orders

• Works in Default • Empty Dwelling Management Orders

Supported by Consultant : • A floating resource to the district councils

• Identifying the most appropriate course of action

and provide professional & technical guidance on implementing course of action

• Working with EPO to encourage other departments to actively engage (Corporate approach)

DIRECT PURCHASE Benefits and Opportunities

The ability to acquire key properties to demonstrate benefits of returning empty properties back into use

Link with the wider regeneration activities

Provides opportunities to link with Registered Social Landlords

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Loan Scheme – Investment vs. Leverage

Loan Scheme

Ashford Canterbury

Dartford Dover

Gravesham Maidstone Sevenoaks Shepway

Swale Thanet

Tonbridge & Malling

Tunbridge Wells

Funding By No. of Units

% of Units

Value NUEI Loan £

Leverage Total Investment

% of Loan

% of Leverage

% of Total

Project

Individuals (<3 units)

243 34% £6,334,498 £7,930,133 £14,264,631 39% 34% 36%

Developers (> 4 units)

478 66% £9,710,099 £15,266,644 £24,976,743 61% 66% 64%

Total

721 100% £16,044,597 £23,196,777

£39,241,374

100% 100% 100%

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Money, Money, Money

£21,000 Average Loan per unit £53,500 Average Cost per unit

£8.2 Million Loans Repaid £50,000 Bad Debt (Off set by income generation)

£1,900 Cost to KCC to return 1 unit via loan

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No Use Empty – Investment & Leverage

Loan Scheme

• Provided homes for over 1,679 local people

• Loans to sell 15%, Loans to rent 85%

• A significant proportion of monies repaid early – Loan to sell

Job Creation

• £1 spent on interest and administration, translates into £20.63 being spent in local economy (labour & materials)

• Created/sustained over 746 jobs

Scheme Overall

• 4,445 empty properties brought back into use

• £80 Million estimated overall investment into empty homes through the initiative (loans & other interventions)

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NUE AFFORDABLE HOMES PROJECT

Average NUE Loan including HCA funds £ 38,200 per unit

Rank

Location Value Projects

No of Projects

AHP Units

% of Units Funded

1 Folkestone £1,380,625 6 26 62%

2 Dover £280,000 1 8 20%

3 Hythe £180,000 1 4 9%

4 Sittingbourne £250,000 1 4 9%

Total £2,090,625 9 42 100%

Funding Source HCA Funding £742,000 KCC Match Funding £865,000 Private Sector Leverage £493,000 Value of Projects £2.1 Million Partnership Approach • KCC interest free loans over 5 years • RSL Partner (Amicus) – 18% fees • Affordable Rent - 80% Market Rent • 5 year leases arrangements • Guaranteed rental income and tenant damage

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Shepway Top Up Loan

Problem • Larger buildings in very poor condition • Existing loan product maximum level of funding

£175,000 based on 7 units – inadequate in some cases

• Still reluctance from some lenders to support such schemes

Solution • Top up Loan Provided by Shepway DC

• 2015-2016 £400,00, 2016-2017 £450,000 • Additional funding £15K per unit available on

top of existing NUE empty loan • Same terms as NUE Loan 2-3 years etc • Administered in KCC name in partnership with

Shepway, supported by Service Level Agreement

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Thanet Owner Occupiers Loans

Problem • Clintonville (selected wards) – selective

licensing area • High level of empties, migration • Concentrations of HMOs, badly converted,

density of units and generally poor conditions Solution • Encourage more owner occupiers into area • Interest free loan up to £20,000 • Repayment period up to 10 years • Affordability checks and requires monthly re-

payment • Administered by KCC on behalf of Thanet DC

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Interest Bearing Loans

Problem • Greater pressure on budgets and a need

towards being self financing • Repeat clients who have previously benefitted

from our interest free loans – proven track record - quality work

Solution • Provide interest bearing loans – flexible on

loan amounts – tend to be larger projects • Generally - develop to sell (quick turn around) • Interest rates vary 3% to 7%, dependent on risk

and experience of contractor • KCC require to be 1st and only charge on

security property • To date £1.1 Million administered • Income overall from this £170,000

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When Negotiations Fail – Enforcement Options

• Councils have a range of powers at their disposal to secure the improvement of properties

• To deal effectively with the problem takes a corporate approach and using the most appropriate legislation to deal with the problem • Town & Country Planning Act 1990 (adversely affecting amenity) • Building Act 1984 (dangerous structures & ruinous and dilapidated) • Housing Act 1985 & 2004 (improvement notices, EDMO’s, demolition, CPO) • Environmental Protection Act 1990 (Statutory Nuisance) • Prevention of Damage by Pests Act 1949 (harbourage & treatment of pests) • Local Government (Miscellaneous Provisions) Act 1982 (boarding up) • Enforced sales procedure & compulsory purchase orders • Community Protection Notices (CPN)

• Debt Recovery • Recovered £350,000 works in default (stagnant debts), not including Council Tax debts • Prosecutions fines and costs in excess of £51,000 • More robust approach to Council Tax recovery

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Former Warren Court Hotel - Before

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Former Warren Court Hotel - After

Approach

• Enforcement, Threat of CPO, Direct Purchase – Lender

• 20 new homes are located at Dalby Square, Margate.

• £2.7M Development supported with HCA funding working in partnership with Town & Country Housing Group and Thanet District Council

• 8 x 2 bedroom flats and 12 x 3 bed houses, all for affordable rent.

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Dangerous Structure – Enforced Sales procedure

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Dangerous Structure – Enforced Sales procedure

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Completed Project – Three Self Contained Apartments

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Future Developments

• NUE Scheme currently supported to 2019/20

• Introduce pilot loan scheme for empty commercial properties

• Further extend the interest bearing loans

• Encourage local authorities to contribute capital funding to the NUE loan scheme

• Help provide housing for specific client groups, such as the elderly, disabled, disadvantaged individuals and Homes for Heroes

• Maximising investment opportunities

• Continue to work with our wider Partners, Bristol & West of England and encourage other Local Authorities

ANY QUESTIONS?

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