ISLE OF ANGLESEY COUNTY COUNCIL. Housing and Social Services Scrutiny Committee. Financial Incentives Empty Homes Project

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1 ISLE OF ANGLESEY COUNTY COUNCIL REPORT TO: Housing and Social Services Scrutiny Committee DATE: 23 rd April 2012 TITLE OF REPORT: PURPOSE OF REPORT: Financial Incentives Empty Homes Project Provide a progress update on the existing Empty Homes Grant Schemes, setting out the reasons why amendments are required. Provide a summary of alternative schemes considered. Make recommendations in relation to how capital funding allocated to incentivise the bringing back into use of empty properties could be utilised. To seek approval to implement the proposed recyclable loan scheme(s). To seek approval to continue to pilot the first time buyer empty homes grant scheme. REPORT BY: CORPORATE DIRECTOR: COMMISSIONER: SHAN LLOYD WILLIAMS, HEAD OF HOUSING SERVICES GWYNFOR DAVIES, PRINCIPAL TECHNICAL OFFICER STEPHEN SLOSS, INTERIM DIRECTOR OF COMMUNITY DEPARTMENT MARGARET FOSTER RECOMMENDATIONS: R1 R2 R3 R4 R5 R6 Note the Council s commitment to participate in the National Houses into Homes Recyclable Loan Scheme. Approve the proposal to investigate whether the Host Authority managing the National Scheme would permit the Council to invest 300k of its General Capital Fund into the scheme, ring fenced for applicants from Anglesey. In the event that the proposal in recommendation 2 is refused and subject to the approval of the Head of Finance, that the Council invest its capital allocation in an Ynys Môn Loan Scheme. The scheme to be administered internally, adopting the same processes as those of the National Scheme. Should recommendation 3 not be possible, investment of General Capital Fund in the Regional Scheme, to be administered by an external organisation. That the Head of Housing Services be delegated the authority to determine the eligibility criteria and terms and conditions for accessing a Recyclable Loan Scheme. Approve the investment of 100K of General Capital Funding to an Empty Homes Grant Scheme aimed at first time buyers, who purchase an empty property requiring renovation. 1

2 REPORT: 1.0 Introduction 1.1 Private Sector Housing represents the majority of housing in Anglesey, with in the region of units. Of these around 2.7% (750) are known to be empty. Over the past 15 to 20 years, the Council has made considerable investment in private sector housing through a range of grant schemes. Despite this, on-going surveys of empty properties indicate that a high number require some type of refurbishment, from total renovation to minor/ moderate up-dating, with the owners either reluctant or unable to fund the required work. 1.2 The Council currently offers a discretionary empty homes grant to support owners to bring properties back into use. This grant is targeted towards:- a. First time buyers purchasing empty properties for owner occupation. b. Landlords/Owners of empty properties in areas of housing need identified by the Council s and Housing Association s waiting lists and who are willing to enter into a nomination agreement to rent the property to persons from the waiting lists on completion of renovation works 1.3 The Empty Homes Officer has identified the need to revise the eligibility criteria and terms and conditions of the grant as they have proved restrictive, for a number of reasons:- a. Owner occupiers are reluctant to enter into a nomination agreement with the Council to let the property. b. First time buyers experience difficulties in obtaining a mortgage on a property which requires renovation, despite this type of property being affordable to them. c. Properties on offer within areas of identified housing need do not match the indicative needs of prospective tenants, e.g. inadequate parking areas, no garden space and small rooms. d. Properties not being in an area of identified housing need. 1.4 Due to a corporate commitment to divert general capital funding to improve the quality of its own housing stock in order to meet Welsh Housing Quality Standards, the grants work programme has been reduced by 1m annually over the last three years and the same trend will continue in If the Council is to continue to deliver positive outcomes with regard to returning empty properties back into use, any incentivising schemes must be innovative and sustainable in the longer term. Recyclable loan schemes, which will become self-funding over a period of time are therefore viewed as a viable alternative to grant schemes. 2.0 National Context 2.1 The benefits of bringing empty homes back into use and the difficulties that can be caused by not doing so are well rehearsed. 2

3 2.2 Tackling empty homes is now a core part of the Welsh Government s national housing strategy, Improving Lives and Communities (April 2010). In September 2010, they published Empty Homes Good Practice Guidance in partnership with Shelter Cymru, focusing on supporting local authorities to prepare effective empty home strategies. 2.3 The Welsh Government recently launched its Houses into Homes initiative and has introduced a 5m Recyclable Loan Fund to support work on empty homes across Wales. 2.4 Whilst this is likely to be the main source of additional finance for local authorities to tackle empty homes, authorities will need to continue to use the full range of tools open to them to tackle empty homes. To be effective, the fund will need to be used alongside other measures including advice and enforcement. The Houses into Homes initiative began on 2nd April 2012 and it is anticipated that local authorities will begin to draw down funding from June Local Authorities will need to demonstrate regional collaboration in order to access the fund. The intention is that regions should be in a position to draw down all funding by September The recyclable loan scheme will be administered by one Host Authority, yet to be announced. A copy of the proposal is attached. (Appendix 1) 3.0 Regional Context 3.1 Three North Wales Counties (Flintshire, Denbighshire and Gwynedd) have worked collaboratively to develop a wide range of borrowing options for property owners who would otherwise be unable to access the necessary funding. Officers have worked closely with ARC 4 consultancy to develop a loan scheme, which will be administered by an externally appointed organisation and it is anticipated that the cost of running the scheme would be cost neutral by March Local Context 4.1 The Council aims to Promote and protect the interest of the Island in order to ensure that the people in Anglesey are healthy and safe 1 and is committed to ensuring the housing needs of the island s residents are met. Bringing empty homes back into use through working with, and incentivising owners of properties to return them to affordable use will contribute to meeting this aim. 4.3 As part of the wider Affordable Housing Agenda, empty homes have been identified as an additional resource available to help meet the affordable housing needs of the Island s residents. Opportunities include but are not limited to:- the identification of suitable empty properties for acquisition using Social Housing Grant for letting by Registered Social Landlords. Identification of suitable empty properties for purchase by first time buyers linking in to empty homes renovation grant availability. Opportunities to engage with landlords to encourage them to set rental rates at affordable levels. 1 Corporate Business Plan (Isle of Anglesey County Council, 2012) 3

4 4.2 Whilst the Council s Empty Homes Strategy 2 was approved in October 2010, implementation had been delayed due to the need to appoint a dedicated Empty Homes Officer. This appointment was made in September 2011 and the Officer has been successful in bringing a number of empty homes back into use. Since October 2011, 31 households have moved into their new homes on the Island as a result of intervention by the Empty Homes Officer. 4.3 In order to bring empty properties back into use a combination of solutions are offered to owners, ranging from low level intervention, such as advice and guidance; to the use of Enforcement Powers. (Appendix 2, Empty Homes Initiative Enforcement Pathway Plan). Pivotal to the avoidance of enforcement, will be the ability of the Council to offer some form of financial incentive/assistance to assist empty property owners. 5.0 Options for financial incentives/assistance for consideration 5.1 General Principles of the Regional Loan Scheme These principles are based on the proposed North Wales Counties Scheme (Gwynedd, Flintshire and Denbighshire), which was being developed prior to the launch of the Houses into Homes initiative. It must be acknowledged that loans which do not attract interest do not have to be regulated. 5.2 The loan scheme would be available to owners of empty properties who, are unable to access mainstream funding. The Council would provide capital funding to contribute to the appointment of an external administrator who would manage the loan scheme on its behalf. 5.3 Subject to Commissioner approval, Isle of Anglesey County Council could join the scheme at a set up cost of For the reasons noted above, specialist companies, registered with the Financial Services Authority have been set up to act as loan administrators 5.5 Should an external loan administrator be appointed, the Council would retain legal charge of funding transferred into the scheme. Any capital invested into the scheme would be held by the loan administrator, ring fenced for Anglesey and distributed in accordance with the eligibility criteria noted within the Council s Policy. 5.6 The Council would continue to be involved in each step of the process, including inspection of the property, preparing a list of eligible works, monitoring the work on site and approving payment of the loan to the contractor. The loan administrator would be responsible for registering the legal charge, monitoring compliance with the regulations and recovering the money on payment dates or should a property be sold or transferred or applicant defaults on repayment. 2 Empty Homes Strategy (Isle of Anglesey County Council, 2010) 4

5 6.0 Recyclable Loans Options The Empty Homes Officer has researched best practise options on recyclable loans, in order to formulate recommendations for Elected Members and Commissioners to consider, to benefit the householder of Anglesey through bringing empty properties back into use.. (See Appendix 3) 7.0 Isle of Anglesey County Council s Housing Services Preferred Options The Council is committed to participating in the mandatory National Houses into Homes Recyclable Loan Scheme. The administration of this scheme will be undertaken by one Host Authority. This will result in one process for the whole of Wales and uniformity of approach. On a pro-rata basis the Housing Service expects share of approximately 123k for use in Anglesey from the 5m pot of recyclable loans. (Recommendation 1) 7.2 The Council utilises 300k of its General Capital Fund to introduce interest free, recyclable loans for owners of empty properties wishing to return them to use, thus replacing the Empty Homes Grant schemes currently available to landlords. The Scheme could be administered in one of three ways:- (Preferred Option 1) Once the Host Authority for the National Scheme has been announced, the Empty Homes Officer could approach the Host Authority to discuss the possibility of transferring the 300k from our General Capital Fund into the National scheme, ring fenced for the sole use of Isle of Anglesey County Council. This would result in a single application process and consistency of administrative procedures. It is anticipated that the administration costs will be in the region of 295 per application. At the same time local control over eligibility criteria would be retained. (Recommendations 2 and 5) (Preferred Option 2) The Council may wish to explore the possibility of administering an in-house recyclable loan scheme, adopting the same principles as that of the Host Authority for the National Loan Scheme. This would develop expertise within the Authority on managing loan products. However, there is a risk that setting up such a scheme during this financial year may delay the product launch. (Recommendation 3) (Preferred Option 3) Should further investment in the National Loan Scheme not be possible, the Council could then consider investing in the Regional Loan Scheme for a period of 3 years, by which time membership of the scheme should be cost neutral. It is anticipated that the administration cost will be in the region of 500 per application, which is considerably higher than that of the National Scheme. There would also be a one off joining fee to the Authority of 5,000. (Recommendation 4) 5

6 7.3 The pilot scheme currently offering empty homes grants to first time buyers purchasing a long term empty property has enabled young people to enter the property market. The cost of an empty property is often lower than ready to move into properties and the offer of a renovation grant makes them an even more attractive prospect. To offer loans to first time buyers would probably be futile as they would be unable or unwilling to commit to repayment terms when already committed to their first mortgage. It is therefore proposed that capital funding of 100k be allocated to provide empty homes grants to first time buyers purchasing long term empty properties requiring renovation. The scheme will be actively marketed both with estate agents and the Tai Teg website and take-up closely monitored. (Recommendation 6) 7.4 The Product(s) The Council would wish to have one recyclable loan product in the form of an interest free loan and will adopt the principles of the National Houses into Homes Recyclable Loan Scheme General Capital Fund cound be allocated to the following schemes:- 1. Scheme A Renovate to let Scheme Owners/Commercial Landlords Rationale: To increase the number, and improve the quality, of private sector rental properties. Eligible group: Commercial or small accredited landlords. Eligible property: The property must have been empty for a minimum period of 6 months and available to rent. Available Funding: Up to a maximum of 20k per property, ( 15k per flat). Loan not to exceed loan to value of 80% Repayment Period: Three years from date of completed works, with annual repayments. Additional Conditions: The loan would be secured by registering a first or second charge with the Land Registry. Property must be ready for occupation within 6 months of loan allocation (9 months if planning permission is required). 2. Scheme B Owners of Empty Properties Renovate to sell Rationale: Many empty properties are in a state of dis-repair and require major renovation/updating before they become attractive to a buyer. Undertaking renovation work prior to placing them on the market stimulates the sale of the property and improves housing standards. Eligible Group: Owners of empty properties who wish to sell the property on once renovation is complete. 6

7 Eligible Property: The property must have been empty for six months or more and the applicant must have been the registered owner for six months or more. Available Funding: Up to a maximum of 20k per property, ( 15k per flat). Loan not to exceed loan to value of 80% Repayment Period: Two years. Additional Conditions: Property must be ready for occupation within 6 months of loan allocation (9 months if planning permission is required). The loan would be secured by registering a first or second charge with the Land Registry. Scheme C Loans to undertake Works in Default Rationale: A cross-departmental approach to tackling problematic long term empty properties will lead to the Authority implementing enforced sales on properties in order to recoup the costs of any works done in default. Due to pressures on departmental budgets, there is currently a lack of available funding for this process. A separate source of funding for undertaking works in default on empty properties, will incentivise the Council and strengthen the crossdepartmental approach to tackling empty properties. Where the Authority is considering exercising its right to enforce the sale of the property, the Authority may loan the funding required to undertake Works in Default on Empty Properties with a view to recovering it through the enforced sales process. On average, the enforced sales process takes around 10 months to complete, the recycling period would be short. This would result in the Council having continuous funding available to undertake works in default for a relatively low investment. Scheme D Loans in Exceptional Circumstances The Head of Housing will have delegated authority to authorise exceptional requests for funding, which fall outside Schemes A to C, on a case by case basis. Scheme E - Grants for First Time Buyers Purchasing Empty Properties Rationale: Affordability is a key barrier to persons purchasing their first home. Empty properties requiring renovation provide a source of affordable housing and are particularly attractive when empty homes grants are made available to cover part or all of the renovation costs. Eligible Group: First time buyers wishing to purchase an empty property requiring renovation for owner occupation, subject to confirmation of first time buyer status by the mortgage provider. Eligible Property: The property must have been empty for six months or more and require renovation. Available Funding: Up to a maximum of 20k 7

8 8.0 Next Steps Repayment Period: A local land charge to be placed on the property for a period of 5 years, after which time the property could be sold without having to repay the grant. 8.1 The Council will need to update its Private Sector Housing Renewal Policy 3 to reflect any changes, e.g. eligible works, client eligibility, property eligibility, succession rights, exceptions etc. 8.2 If required, the Council could develop a list of Independent Financial Advisors, with each loan applicant being advised to seek independent advice before they commit to any loan. 9.0 Conclusion 9.1 There is a strategic commitment on both a National and local level to introduce loan schemes as an incentive to support home owners to improve housing standards and conditions. 9.2 Documented evidence indicates that loan schemes are operating successfully in many Local Authorities in the country and with the reduction in housing grants, the Council now needs to welcome an alternative option, i.e. loans. 9.3 An effective loan scheme should be self-funding due to the need to re-pay the loans. In time, this leads to re-cycling of the original investment, which enables the money to be used to assist more people. This will result in an increased number of empty homes being brought back into use, with increased numbers of housing stock being improved than would otherwise have been possible under an empty homes grant scheme. 9.4 In order to provide a realistic incentive to empty property owners, interest-free loans are considered to be the most effective product. Interest bearing loans, with a high set up cost and relatively short repayment periods would not stimulate the return to use of empty properties or compete with mainstream loan products. Contact Officer: Mrs Gwenda Owen, Empty Homes Officer Tel. No goxhp@anglesey.gov.uk / emptyhomesofficer@anglesey.gov.uk 3 Private Sector Housing Renewal Policy (Isle of Anglesey County Council 2010) 8

9 Appendix 1 Houses into Homes: Roles and responsibilities Local Authority Role Identify suitable properties Must be empty for more than 6 months (house & flat(s)) Suitable conversion of commercial to residential (offices, churches, space above shops) Conversion of houses into flats Ensure that the owner is suitable i.e. no debt owed to LA or history of non cooperation i.e. comes to the table with clean hands Meet on site to discuss the viability of scheme Available finance to undertake work (establish viable scheme from start) Ownership arrangements (company, individual, joint names, charity) Vat and tax strategies Other possible options o Private Sector Leasing, Social Lettings o Selling (private treaty / auction). o Conversion, renovation, demolition and new build) Take photographs of the property for internal records and future publicity Provide owner with a list of works that would be required to be completed as part of the loan scheme (suitable to be let/occupied usually where it is a straight forward renovation). Where the property is a conversion then no need to specify works as they will be incorporated into the Planning approval and Building Regs approval and these can be incorporated into the loan agreement. Application Pack issued (Either by host or LA to Issue)- must keep register of application sent and record, name, address, tel no, , empty property address, number of units, possible loan amount and cost of works (very important for monitoring) Application form, Draft loan facility agreement, Draft legal charge document, Loan information booklet, FAQs and a Newsletter Schedule of works Application Pack Returned and should include (must include): 2 written quotes or professional RICS Costing Land Registry Title and Title Plan, Valuation Document (RICS approved) could be dispensed with if no mortgage and value clearly sufficient (steering group decision to set parameters) 9

10 Proof of ID and current address including supporting documents must match Land Registry Title and Companies House (Company only), if not instruct owner to update them 28 days with Land Registry Proof of Income 3 pay slips / 3 years Company Accounts Copy of Planning Permission and Building Control approvals (if required) Consent from freeholder, where the works relate to a leasehold flat. In addition, may require a copy of the freehold block insurance (depends on how thorough Legal Services wish to be) Proof of adequate finance to complete scheme in addition to loan scheme (works 50K, loan 25K, need proof of 25K in the form of a bank statement of mortgage offer to confirm that they have sufficient funds to make the scheme viable) List of any other properties owned (address and post code), including approximate value, current mortgage and rental income Application fee 295 (a higher fee for loans over 30,000 is being considered), land registry fee & Companies House 70. Review returned Documents Certified copies of identity and address checks to comply with money laundering regulations (must have met each applicant in person) matches Land Registry and Companies House records Credit checks undertaken on applicant:- Bankruptcy/IVA from: Credit reference if required. Check owner has provided a consent letter to enable the host LA and LA to discuss the application with fist charge, needs to provide mortgage roll number and if possible name and contact details of the person they have dealt with. Note: certain lenders will not allow second charge i.e. mortgage express Possible review of other properties owned Land Registry and Google Earth. Check Planning, Building Regulations and that the quotes cover the works necessary. Check valuation and ensure that any existing loan and the scheme loan does not exceed the loan to value agreed i.e. 80% Check adequate finance to support scheme evidence of bank statement showing shortfall in funds. Correct application fee, land reg and Companies House fee. Local Authority to undertake local land search in house at their own cost and confirm there is no relevant matter of concern to the host or host LA undertake official search (cost ) or buy insurance 20 residential 30 commercial. Risk assess the application (Lack of finance or business case does not stack up deal breakers) Summary sheet confirming approval from LA and instruct host LA to undertake legal work to register charge and release funds (file passed to host LA suggest copy kept with LA in case file goes missing). Loans Approved (Monies Released) LA monitors works on a regular basis and ensures that reasonable progress is being made Once works are completed, obtain the necessary Completion Certificates and take photographs for publicity purposes If reasonable progress not made, then review case and if necessary instruct host LA to recover loan 10

11 Loan period expired and works not complete or other breach of the loan, instruct host LA to recover monies or take no action at this stage and extend loan period (Possible oversight by regional group if no steps taken within 6 months of expiry). Host Local Authority Role Legal/Financial/Administration aspects of scheme including: receiving capital contribution from Welsh Government and signing off on Terms and Conditions; maintaining accurate data on expenditure and commitments; placing legal charges on properties secured against loans; recovery of loans including organising/ coordinating default measures with regions; redistribution of funding across regions in line with priorities etc by national steering group; Co-ordinating Central Support Service and national publicity and marketing* (websites development and maintenance) Additional roles and functions agreed by national steering group as experience of scheme develops and changes are made Contributing fully to evaluation Monitoring and report on scheme progress Review file Information & ensure application in order Deal with existing lender and obtain deed of priority etc, if there is an existing lender Produce two copies of the loan facility agreement, Produce two copies legal charge document (incorporate schedule of works, timescales for completion of works, timescales to market for sale (12 weeks) or to rent out (12 weeks) and date of repayment of loan) Send both copies of loan facility agreement & legal charge document to owner to be signed and returned If company Loan: register charge with Companies House, then register in District Land Registry Individual loan: register charge with District Land Registry Once charge registered, release funds (takes approximately 8 weeks from receipt of full application to funds in their account) Works can be commenced prior to loan being approved, but at owner s own risk. LA periodically inspect progress Host LA monitor loans 28 days before the loan is due to be repaid letter should be sent to applicant confirming loan amount and repayment date. If loan remains outstanding then LA must confirm what they want to be done i.e give an extension of time, accept partial payment and ensure interest is charged as breach of loan conditions. Pursue non payment & formal recovery procedure, need some flexibility rather than hard set of rules If loan repaid, then host LA tasked with removing the entry from the land registry / companies house and writing to owner confirming that the charge has been removed. Keep files for appropriate period 12 years. Regional Group (Share / Split Tasks) Agreeing priorities for the region as regards which properties are to be targeted by which means and providing details to national steering group 11

12 Identifying and agreeing targets for Houses into Homes support including liaison with landlords re: application and supporting material Providing guidance to applicants on other potential sources of support (e.g. energy companies etc) Monitoring of regional targets Local publicity/communication including: marketing and promotion of scheme, and its successes, internally and externally; working with RSLs and wider stakeholders to develop a joined up approach to maximising numbers of empty residential properties to use; and, ensuring there is a strong web presentation of the scheme in the region. Achieving a strong working link between Houses into Homes and other housing functions such as allocations, homelessness etc Identifying options for scheme to be revised/improved to ensure it achieves maximum impact Monitoring and report on scheme progress Contributing fully to evaluation Website design* - each LA to provide case studies with before and after pictures, including video clips etc. This will enable the website to be populated quickly. All LAs to provide their policies and procedures in relation to empty home work, standard letters etc and put on password protected area on website. Newsletter & Logo design think about the name of the scheme and check domain names. Develop Standard letters in conjunction with central support* Guidance on VAT / Tax Procedures CPO, enforced sales procedure, Empty Dwelling Management Orders, Private Sector Leasing Scheme Develop reduced fees with all auction houses and develop a section on website to advertise properties for sale for free or for rent. Same page can be replicated on LAW website Develop money off discount vouchers with large discount stores i.e. carpet right, B&Q, approved builders list LA bulk buy discount, local contractors for gas safety, electrical safety, Energy Performance Certificates, inventory clerks (similar to Landlord Accreditation Scheme).m Discount to certain professional purchases i.e. tax guide, inventory software Architect in the house scheme, approved list of agency including LAs. Develop landlords letting pack i.e. standard tenancy agreements, guarantor letters, inventory etc, Landlord Accreditation Scheme National Group The National Steering Group will be responsible for- Maintaining overview of scheme making recommendations for changes etc Setting targets for total number of empty residential properties returned to use and monitoring performance Agreeing priorities for Houses into Homes Fund and communicating this to Lead Authority and regions. Analysis of regional work programmes, identifying shortcomings and support needs. 12

13 Production and updating of scheme literature and documentation Ensuring presence of scheme on website of stakeholders etc (e.g. Shelter Cymru). Monitoring of national targets. National publicity/communication including: marketing and promotion of scheme, and its successes, internally and externally; working with CHC and wider stakeholders to develop a joined up approach to maximising numbers of empty residential properties to use; and, ensuring there is a strong web presentation of the scheme in the region. Ensuring there is a strong regional link between Houses into Homes and other housing functions such as allocations, homelessness etc Agreeing proposals for scheme to be revised/improved to ensure it achieves maximum impact Monitoring and report on scheme progress Contributing fully to evaluation (* Central support funding being sought from Welsh Government WLGA progressing) 13

14 Overview: 1. What can the funds be used for: Loans to sell 2 years Loans to let 3 years Works In Default 2. Property must be: Empty for more than 6 months Creation of new dwellings i.e. LOTS/HARP Conversion of commercial buildings (not new build per se) 3. Standard of works no Cat 1 hazards and suitable for let/sale 4. Level of Funding Loan amount 25,000 per unit, Maximum loan 150,000 per applicant 5. Local land charge search required LA provide for free Host LA official does one Purchase Insurance 20 residential 30 Commercial Do not undertake one implications 6. Valuation required Always require valuation (safest and possible recourse if negligent) Where there is no mortgage and clear evidence that the property has sufficient equity Do not need a valuation ( / Can be very difficult to value part finished developments would officer be content to make an assessment in this way? If there is a mortgage then always obtain a valuation 7. Payment of Loans Payment upfront Large loan of 150k, payment plan 25k or 50K sums, proof of expenditure and site visit to confirm progress, last 25K on completion 8. Maximum Loan to Value 80%, 9. Host to Administer Loan Loans in Hosts LA name 10. Application from a company Further guidance to be provided on applications from companies. 14

15 Appendix 2 Empty Homes Initiative - Enforcement Pathway Plan 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 CPO, EDMO & Enforced Sales Statutory Notices under a range of legislation. Owner has right of appeal After exhausting of voluntary assistance, threat of appropriate enforcement action is raised with the owner Threat of or Actual Enforcement Grants & Interest Free Loans Other (Auctioneer, sale of LA land, PSL) 15 Advice & Guidance

16 Appendix 3 Best Practise Options evaluated Scheme 1 North Wales Regional Scheme offering three types of products. Early indications are that there will be a charge of 500 per loan added to the capital value of the loan which will attract interest and be re-payable by the applicant.. It should be noted that these schemes are not targeted purely at empty homes.. 1a) Property Appreciation Loan (PAL) This is an equity release scheme, where owners are able to borrow up to 80% of the value of the equity in their property, up to a maximum of 30,000. Repayment is made on sale or transfer of the property, with the Council claiming a percentage of the equity and therefore gaining from any increase in the value of the property at point of sale. Should house prices drop, the repayment would be the same as the sum originally loaned. The loan would be secured by placing a charge on the property. Strengths The Local Authority will benefit if value of the property rises. Weaknesses Difficult to forecast when the property will be sold and therefore difficult to recycle the funding within an acceptable time period. Terms will not be attractive to applicants who plan to sell the property. The Council is currently considering a Local Authority Mortgage Scheme which may be reduce the need to offer Property Appreciation Loans. Scheme is not specific to empty homes. 1b) Capital and Interest Loan This loan (up to a maximum of 7,500) will be secured by placing a charge against the property value. It is aimed at owners who are unable to access mainstream lenders at an affordable rate but who can demonstrate an ability to meet monthly repayments. Strengths Improve housing standards by being able to undertake work which would otherwise be unaffordable. Enable buyers to purchase empty properties which they may not otherwise consider. Weaknesses No indication of the repayment period, which may therefore result in high/unaffordable monthly repayments. May be unattractive or a dis-incentive if interest rate was similar to those available on the high street. Scheme is not specific to empty homes. 1c) Unsecured Loans Unsecured loans for householders who wish to do minor works up to the value of 3k, mainly for owners who have no access to mainstream banks at affordable interest rates. Strengths 16

17 Improving housing standards. Weaknesses High financial risk to the Authority if loans are unsecured. Scheme is not specific to empty homes. Scheme 2 - Kent Type Scheme One interest free loan product, with a repayment period of 2 to 3 years. Maximum loan amount 25k per unit, up to a total of 175k. Secured as a first or second charge on the property. Money is paid to the owner/developer in advance. Will lend 90% loan to value. Strengths Flexibility in terms of target group. Easier to administer and decisions can be made on a case by case assessment. The offer of an interest free loan is viewed as an incentive. Weaknesses Repayment period may be restrictive for certain groups, particularly owner occupiers. Increased financial risk for the Local Authority if money is paid in advance. This could be mitigated by offering stage payments as work progresses. Scheme 3 Powys type Scheme Interest free loan to landlords, with first repayment made on the first anniversary, followed by 20% annual instalments over the following five years. Agreement to let the property for duration of the loan agreement, with the loan secured against the property. Any breech of conditions results in loan having to be re-paid in full. Scheme internally administered by the Local Authority. Strengths Low cost and easy to administer. Weaknesses Requires commitment from other departments if the scheme is to be administered internally. Scheme only available to landlords. Scheme 4 Houses into Homes Initiative One interest free loan product. Variable repayment period 2 years for renovate to sell and 3 years for renovate to let. Maximum loan amount 20-25k per unit, up to a total of 125k. Secured as a first or second charge on the property. Money is paid to the owner/developer in advance. Will lend 90% loan to value. Strengths Flexibility in terms of target group. Easier to administer and decisions can be made on a case by case assessment. The offer of an interest free loan is viewed as an incentive. Weaknesses Repayment period may be restrictive for certain groups. 17