50 Housing Solutions Close-Up: Empty Homes Programmes
Although in physical form our 50 Housing Solutions Publication was finalised long ago, we intend to keep the conversation going regarding its many projects, and use it as a source from which we can keep building knowledge and generate new opportunities for mutual learning and exchange. In this interview we take a closer look at two empty homes programmes: initiatives led by public authorities, housing associations, or other private entities, which seek to match empty homes with those in desperate need of one.
About the Programmes:
Bizigune Programme, Basque Country, Spain
The Bizigune programme was created in 2002, and currently manages 6,079 units in the three territories of the Basque Country. It is run by Alokabide, a public company which in turn operates under the Basque Country's Department for Housing, Territorial Planning, and the Environment.The main aim of the programme is to promote the mobilisation of privately owned homes to increase the public rental housing stock in order to better respond to the social function of housing.
Peter McVerry Trust Empty Homes Initiative, Ireland
Peter McVerry Trust (PMV) is a non-profit housing association established in 1983. They have been working on empty homes since 2014 and started a formal campaign of action and advocacy in 2015. They currently manage 500 housing units, with the strategy that at least 20% of all the new social housing units delivered will be from reusing long-term vacant homes or derelict buildings. For their Empty Homes programme, Peter McVerry Trust works in partnership with central and local government, the National Housing Agency, and private property owners.
How do you find owners of empty homes? Or do they come to you?
Bizigune: Throughout the years, our outreach work has been done through regularly launched advertising campaigns, but word-of-mouth between homeowners has also been very important. In addition to this, we rely on close cooperation with local authorities and city governments to spread the word regarding the existence of the programme.
PMV: In 2017 we hired the first full-time empty homes officer in Ireland. Their role was to research and identify empty properties suitable for reuse and then to find and engage the owners of the properties. In Ireland there is no single comprehensive ownership database that is available to the public or NGOs. That means while we often know about lots of empty buildings we can't find out who owns them. Fortunately we still manage to find enough owners and convince them to work with us. The fact that we can secure lots of positive media stories about our empty homes works means lots of people come forward with empty properties too.
Bizigune, most of the homes identified by the Peter McVerry Trust require repairs and refurbishing, while your programme also seems to include homes that are ready to rent out immediately. How are these homeowners incentivised to rent out their property through your programme rather than at regular market rent?
Bizigune: There are indeed a few cases where the homes are ready to rent from the get go, but these remain a minority. But in any case, it is not only the financial incentive of a refurbishment loan that attracts homes to the programme. Above all, it is the security and benefits of the programme itself: risk-free guaranteed rental income for 72 months. Once the first tenant starts using the property, the homeowner starts receiving the agreed rental income. The agreement also includes multi-risk insurance and the return of the property in immaculate conditions at the end of the lease period. In this sense, any risks associated with tenancies on the regular market are virtually eliminated, and homeowners who choose to opt into the programme receive a slightly lower rental income in exchange for a number of guarantees.
Both your projects offer guaranteed rental income for the homeowner over a long time period plus all paperwork taken care of. This seems quite attractive. Based on your experience, is it enough for the programme to break through in larger cities?
Bizigune: Indeed, entry to the capital cities of the three territories of the Basque Country (Álava, Guipúzcoa and Vizcaya) is the most difficult part of the programme. Both Bilbao and Donostia are among the most expensive cities in Spain in terms of rent. The cap on a maximum rent to be paid to property owners does not exactly facilitate the entry of homes in these areas, although the abovementioned guarantees do help in certain cases. However, the key factor is that there are no large-scale property owners in the Basque Country, at least not to our knowledge, and individual property owners tend to share a preference for short-term rather than long-term contracts.
PMV: The model will work in most cities because it is guaranteed, state-backed rental income for up to 25 years without the need to look after tenants or property maintenance. This is on top of the fact that the property owners get an interest-free loan, and that they do not have to procure and manage a construction programme because Peter McVerry Trust manages these pieces for them.
Peter McVerry Trust, Alokabide matches empty properties with applicants through Etxebide, the Basque Housing Agency. The prospective tenants’ rent is always set at 30% of their income. How does this work in Ireland (how do you select the tenants and how is their rent set)?
PMV: Allocations come from the local municipal housing list, specifically the homeless sub-list, because we are a specialist provider of support to people impacted by homelessness. That means people can be coming from hotels, hostels or living rough on the streets. The rent is a differential rent model which is based on a percentage of the person’s income which for most of our tenants in Dublin is about €37 per week. This goes to Peter McVerry Trust for the cost of managing and supporting the tenant and maintaining the rental property. The rent paid to the property owner is 80% of the open market rent and this is paid directly by way of a State housing subsidy.
Based on your experience, what would be some useful advice or mistakes to avoid for public authorities or other entities looking to take on an initiative similar to yours?
Bizigune: The measures taken must be sustainable over time. Though it may not seem like it, a time horizon of six years is actually quite short. Any change made affects all existing contracts. For example, in 2013 the Basque Government decided that the maximum rent to be paid out to was to be revised down to €450 from €650. The Bizigune programme pays 65% of the market rent to the property for the transfer. €450 equals a market rent of €692.30. This revision therefore reduced the pool of housing in the Basque Country available for capture, and made it more difficult to enter capital cities. It also meant that homeowners whose contracts were expiring would see their rent payments reduced from €650 to €450, which led to a net reduction of the total housing stock of the programme.
PMV: In Ireland, the Government adopted an incentive-only model. There is no penalty for leaving a property empty or allowing it to fall into a derelict state. If there were additional property taxes levied on long-term empty homes, owners would be more likely to take up the incentives. I think in Ireland we have learned the potential that exists is likely to be unfulfilled until we have an empty homes tax. You can read more about Peter McVerry Trust here and here, and about Bizigune here and here.