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Why we need more empty homes to end the housing crisis

Empty homes are a natural part of a healthy housing market, says Anthony Breach. To fix the housing crisis we need more houses, not fewer empty homes.

Last week was Empty Homes Week. Many organisations spent it saying they want to reduce the numbers of vacant homes to address the housing crisis, making them available for those who are homeless and facing housing emergencies.

But while there is nothing wrong with bringing derelict homes back into use, this sentiment gets the logic of the housing shortage the wrong way round – we actually need more empty homes to end the housing crisis.

Statistics on empty homes are often alarming at first glance. For instance, 268,000 homes have been identified in England as “long-term empty”, defined as empty and unused for more than six months. This does not include “unoccupied” homes which are empty between moves, or in-use “second homes”.

But while this sounds like a lot, it is not actually that many compared to the total 24,400,000 homes in England. Long-term vacant homes are only 1.1 per cent of the total housing stock.

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Furthermore, England appears to have an unusually low housing vacancy rate compared to other countries with more affordable housing. The Netherlands in 2014 had 272,000 long-term empty homes – but as the Netherlands is a much smaller country than England, this is 3.6 per cent of the total housing stock. Likewise, 5.6 per cent of Japanese homes are long term vacant. In fact, every country in Europe has a higher share of unoccupied homes than us, except Poland.

The most unaffordable cities also have the fewest empty homes. Parts of the South, with more expensive housing and unfortunately higher homelessness, had extra low vacancy rates in 2019, such as 0.7 per cent in London, and as low as 0.1 per cent in Crawley.

In contrast, there are more empty homes in cities in the Midlands and North of England where demand, housing costs, and homelessness are lower. Bringing all of these homes back into use for homeless households would therefore require people in unaffordable cities like Brighton and Bristol to be forced out of their hometown.

The solution is we need to build more, as homes for everyone makes all housing problems easier to solve

But even these vacancy rates are still low by international standards. For example, Tokyo has a higher long-term vacancy rate (2.4 per cent) than Burnley does (2.1 per cent), the most affordable urban area in the UK.

Altogether, this suggests that more empty homes mean more affordable housing. The widespread belief that empty homes are a policy failure is therefore misguided – a city with no empty homes would be facing severe housing problems!

The reason why is that even when homes are empty, they still play an important role in the housing market. A large surplus of unused homes signals to local landlords that renters have plenty of options in a ‘buyer’s market’ and will be looking for a good deal. In contrast, very few empty homes tells landlords that the city’s housing stock is nearly exhausted, and that there is a ‘seller’s market’ where residents have little power and must put up with poor quality and expensive housing.

Unfortunately, English housing is a seller’s market, as the planning system rations out new homes, creating a permanent shortage. Currently, a developer can propose building homes that comply with the local plan, but they can still be rejected. Fixing this requires planning reform, and a new flexible zoning system where developers must be granted planning permission if they follow the rules.

This does not mean that efforts to bring individual, derelict homes back into use are wrong. But it does mean that the efforts of campaigners and councils to reduce city-wide vacancy rates are futile. Empty homes are a natural part of healthy housing markets. Support to help homeless households should focus on emergency assistance or building new social housing in unaffordable cities, not tackling empty homes in cheaper towns.

Britain’s housing crisis is so bad our current housing stock is nearly exhausted, and homeless households experience the worst inequalities of us all. But the solution is we need to build more, as homes for everyone makes all housing problems easier to solve.

Anthony Breach is a senior analyst at the Centre for Cities.