Sunday, June 18, 2006

The Housing (Empty Dwelling Management Orders) (Prescribed Exceptions and Requirements) (England) Order 2006

Lots of bloggers are writing indignantly about this Order. What is it exactly, and what does it actually say? The links in the heading and below go to the official text, but I will try to talk you through it.

It is already law. It came into force on 6th April 2006. It is a "statutory instrument" which is a form of "delegated legislation." Delegated legislation is made by a Minister without Parliamentary debate or positive approval, under specific powers in an Act of Parliament. Sometimes Acts which give ministers such power are called "primary legislation" or "enabling acts" and such delegated legislation is called "secondary legislation".

In my opinion, there is far too much secondary legislation. I think it is irresponsible of our MPs to entrust so much power and discretion to ministers. It is one more way in which they are failing in their duties to us. They are failing to scrutinise new laws adequately and allowing the Executive to get away with too much.

Ministers adore secondary legislation. The Legislative and Regulatory Reform Bill, for example, would be the enabling Act to end all enabling Acts. Ministers would have general widespread powers to make secondary legislation, without the need for a specific enabling Act. Adolf Hitler pushed through just such a law in his first months in power.

This secondary legislation, however, is quite inoffensive. It only sets out the "prescribed exceptions" to the power to make Empty Dwelling Management Orders (EDMO's) and the "prescribed requirements" to be complied with by a local authority asking a tribunal to make an EDMO. The indignation now being expressed should properly have been heard when The Housing Act 2004 was passed. It is an index of the mediocrity of HM Opposition and the British Press that there was no uproar then.

Once you accept the horror of the EDMO concept, Ruth Kelly's exemptions look OK on the face of them. As you would expect, they cover all the Labour Party's client groups (e.g. people absent "for the purpose of receiving personal care by reason of old age, disablement, illness, past or present alcohol or drug dependence or past or present mental disorder"). However, there are a lot of people who could be at risk. Those who have not got around to selling a house they have inherited, for example. That's the one the press has picked up on. Another group could be expatriates or servicemen abroad who have bought a house to return to, but did not live there before they left.

Fortunately, my wife has established her permanent residence in our UK home, although she spends a lot of time with me in Russia as a visitor. If she had not done that, or if (God forbid) she were to die, my home and principal investment would be at risk as our present house in the UK is not the one we lived in before we left to work abroad.

The prescribed requirements are again (if you accept the pernicious principle of the Act) sensible. The local authority must produce evidence of "reasonable efforts" to inform the owner of the possible EDMO, and of all their attempts to persuade him to arrange for his property to be occupied " required by the Act..." (damn their impertinence!).

All this shows that the current fuss over the Order is two years too late. All the bad stuff is in the Act. Follow the link to that and have a crack at reading sections 133 to 138 if you are interested (and don't forget to read Schedule 7, as I did - when first writing this post - until corrected by a comment from the man behind the idea of the EDMO).

The wording of section 138 on compensation for third parties is particularly interesting. It says a tribunal "may" order compensation to anyone whose property rights have been affected, but the principles of such compensation are not defined and it is entirely in the tribunal's discretion. I am not at all sure that adjoining owners will be compensated or that, if they are, the compensation will reflect their real loss. I would have to do more research on the composition of the relevant tribunal to take a firmer view on that (and this blogging thing is only a hobby done in snatched moments of a busy life, you know).

Whether or not you have a defence or a claim for compensation, you will be put to a lot of trouble and cost if your local Labour busybodies (dear God, please assure me no Tories or Liberals would do something so disgusting) decide to try to seize your house. The more such laws are passed, the greater the "chilling" effect on free expression. More and more people are too much at the State's mercy in many such arbitrary ways, for them to oppose the Government with the vigour that its status as the nastiest of the modern era deserves.

Local authorities can already expropriate ("compulsorily purchase") property for public purposes. I see no reason why they shouldn't do this in the case of "abandoned" housing in order to use it for social housing. If they did so, however, they would have to go through a complicated process and pay compensation for the full value of the property. An EDMO is a power not forcibly to buy at market value (which is bad enough) but to take and use your property for a period, against your will. Your capital is tied up, deployed for government use. They will account to you for net income, but their duty of care to maximise that it far from clear and they can deduct costs (including administrative costs) which as inefficient public authorities will be high (and may even be loaded unfairly). Besides, if you decided (for whatever reason) that you didn't want income [see examples in comments], who is the local authority to second guess you?

Consider also the plight of the neighbours. For whatever reason, they will have social housing tenants inserted amongst them. My wife and I considered buying a modest apartment in London a while back, to which we would have retired. Almost every apartment in the building was empty, having been bought as a London "pied a terre" by various wealthy foreigners. Were the local authority to seize all the empty apartments and turn them into social housing (a) our lives would have become intolerable, (b) the value of our home would have plummeted and (c) our chances of selling out would have been nil. Maybe or maybe not the tribunal would accept their defence that they were second homes. Maybe or maybe not they or their representatives would be on hand to respond to notices.

Compare and contrast to a compulsory purchase solution, whereby at least we would have been out on the market with the full value of our home looking for somewhere else. The power to make EDMO's is wrong in principle and capable of abuse in discriminatory ways. When Tony Blair's home was vacant because he couldn't find a tenant, he was reasonably sure that his mate Prescott (whose pile of garbage all this is) would not use his powers against him. I am not sure than any opponent of the government, or of a Labour authority, can feel so safe.

If Britain were to experience a housing market crash on the scale of that at the end of the Eighties' boom (and I don't see why it shouldn't) a lot of people might have to relocate for work but be unable to sell their homes because of "negative equity". Six month delays in such circumstances are quite likely. The only way a mortgage company can protect itself in such circumstances (for it is also screwed if an EDMO is imposed on a property subject to its mortgage) is to go into possession - i.e. enforce the mortgage. Even if an owner has a temporary relocation package which allows him to service his debt on a vacant house, the building society or bank may be forced to seize the property to avoid the risk of an EDMO. It will be more difficult for British expatriates to buy houses to which to retire, because their mortgage lenders will (if well advised) be concerned about EDMO risk.

As a matter of principle, I object to government using other people's property in this (or any other way). If there is a genuine social need to be met in housing, government and local authorities have many ways to meet that need. It is typically nasty and dictatorial of New Labour to try to interfere in the use of peoples' private property in this way. What is mine, is mine. If I choose to use it, not use it, or burn it down, that should be bugger all to do with the State.

The Opposition cannot be blamed for having failed to prevent this law from being passed. Under our Constitution, the winner takes all. But they are highly to blame for having failed even to make it a matter of public debate then, and for continuing to ignore it now.

Unfortunately, Dapper Dave is busy "triangulating" non-traditional Tory supporters, such as the homeless and Labour councillors. To defend the sacred rights of Englishmen to their private property is just too Old Tory for him.



Bishop Hill said...

Surely many Labour MPs and councillors must own vacant properties. I'm sure councils run by the other parties would like to appropriate these.

David said...

Dear Tom, I can understand your anguish if all this were true but you've only read half the facts. The legislation gives an exemption for homes empty where the owner has died, for 6 months after probate has been resolved. The article in the Telegraph was factually wrong on this point.

You've also overlooked the fact that the owner gets paid rent received from the tenant minus reasonable expenses incurred by the council. Seeing as the property was empty anyway this is money the owner would not otherwise have received. Also the owner is free to sell the property at any time, although they may have to repay any unpaid management expenses to the council. And finally your pied a terre would have been safe they are second homes so exempt.

Tom Paine said...

I fear you may be reading government guidance, not the law. It's the law that matters, not the intent of sponsoring Ministers nor policy guidance which may change over time (and may anyway be ignored). The six months run from the grant of representation (the point at which the executors are empowered to begin dealing with the assets). I don't know about the Telegraph's statement of the position (I haven't read it) but I believe mine is correct. Your use of legal terms, both here and on your own blog, is delightfully vague. I gather from your blog that all this was your idea, but are you sure you understand how it has been executed?

I had not read Schedule 7, you are right. I have done so now and, while I take the point about accounting for net income, I am not that much happier. The authority seems to owe no duty of care to the owner. My family has direct experience of the abuse of power by a corrupt Labour authority in the Northern heartlands which are effective one party states. These are further powers for such authorities to abuse.

I can easily imagine them, for example, commandeering private properties to house the worst social tenants. The authority would not care if it did not collect the rents. They must account for net income, of which there will be none if there is no gross income. I can also imagine such authorities abusing their powers to insert social tenants into a district to lower the value of surrounding properties so they can acquire them more cheaply - or just to punish those in areas that vote against them. I can certainly imagine such rotten Labour boroughs loading "administrative costs" onto EDMO properties improperly. How is a private citizen to detect or contest that, without incurring what may be disproportionate expense? The authorities will be able to to judge finely what they can get away with. The citizen will have to weigh legal costs and litigation risk against the deep pockets of an authority whose officials are blithely spending other peoples' money.

You may so "So what if they don't make an effort to collect income? There was no income before anyway", but that was the owner's choice. There are many reasons why he might make such a choice rationally. Maybe he was slowly assembling a site for development, or simply waiting for different market circumstances or changes in the planning regime which would permit a higher and better use. Maybe he was holding the property for future use by a member of his family, but not wasting the money on upgrading it in the meantime. Maybe he was avoiding tax, quite legitimately, by keeping a property vacant and unrestored so that it can pass on his death at a lower value to be improved by his heirs. Maybe he is an expatriate buying in an area he expects to "gentrify" by the time he returns - a legitimate gamble made by many New Labour Islingtonians.

If - in the meantime - the property is only suitable for letting to low-rent, high-risk tenants, any such person may well not be interested. Whether or not his judgement of his commercial interests is correct - or even, in your opinion, ethical - in a civilised society it is his to make, not the local authority's.

Incidentally, the abuses suffered by my family were designed to force a member of my family to sell land to the council below value. They backfired, because we have taken advantage of the malicious value destruction for tax avoidance (I said they were corrupt, not clever). We have now decided to leave the property vacant - possibly for years - to allow it to pass on death at a low value. That's legitimate. No-one has the right to tell us to spend money on suing the council to overturn its malicious and probably illegal decision. No-one has the right to tell us to apply for planning permissions so as to increase values (and pay higher taxes). We are entitled (or should be) to make our own judgements about our own family's property. The property in question is not housing, but the position would be no different if it were - except that now, the Labour rotten borough in question could EDMO our property to put further pressure on us.

If the property is mortgaged, even if the owner is servicing the mortgage properly from his other resources, the mortgagee can only prevent an EDMO by going into possession to enforce. If the owner was paying the mortgage, why should that have to happen? What changes will well-advised mortgagees make to their contracts further to limit the owners' discretion as to the use fo his property in order to minimise the mortgagee's EDMO risk? I don't suppose the government has thought about that or, if it has, cares.

The provision for the tribunal to order payment of compensation to "third parties" does not remove my concern about what happens to neighbours who are prejudiced by the decrease in property values caused by social tenants being introduced into their street or building. The principles for compensation are not set out, and the tribunal has wide discretion.

Finally, my pied a terre (or more precisely that of the foreign neighours) might or might not have been accepted by a tribunal as being a second home. Everything depends on my (or their) intentions and the tribunal might conclude that I was (or they were) claiming whatever would prevent the property from being taken. I or the foreign neighbours might, or might not, have been there to respond to the various notices. Orders could be made if the tribunal was satisfied reasonable attempts had been made to contact them (probably by leaving notices at the property). Why on earth should they have to appoint people to be on hand to respond to such notices on the off chance?

In the end, I am only addressing all these detailed points so as to comment accurately (and particularly to correct the error you correctly pointed out and which I will now correct in the main post). None of this detail affects the major point of principle. I can - just about - accept that a state can take property compulsorily for public purposes, paying compensation at full value. That it should have the right to comandeer property against the owner's will for seven years (and more if, as the law contemplates, there are successive EDMO's) is an outrage. It would be unconsitutional here in Russia, which is not exactly the gentlest state in the world. Russians I have discussed it with cannot believe it has been accepted without public disorder in a country which they tend to think of as a bastion of private property rights.

tim said...

Of course this will be another sledgehammer the council will use when determining planning applications. My father in laws house is standing empty because the developers who have the option to buy it are still arguing with the council over the plans for a replacement building after five years! (As part of the deal they have built him a replacement house into which he has already moved.) So what is stop the council threatening to fill the house with soap dodgers unless the developers withdraw the appeal and accept the councils view of what should be built!

Umbongo said...

Thank you David for being so caring. I think everybody - especially those of us who've scraped together enough to buy a house - is indebted to you for your wonderful idea. What's next? I've got £50 in my current account which I'm not using at present. Can you direct me to the nearest council so they can use this money far better than me? BTW my car is not used every day - maybe one of the council's dependants needs some transport. Why don't you just take your bleeding heart elsewhere - preferably at your expense.

Paul said...

You're behind the times Umbongo. Brown has already tried that one, trying to get his mitts on money held in dormant bank accounts.

What is it with these f*ckers that they think they are entitled to other people's property ?

Mike Rogers said...

What is with these fakers is that they've never read Adam Smith, nor the American constitution, which was based on the ideas of the best British thinkers from our great liberal (not US Dumb-o-crat Liberal) age.

These apes think like Zaphod Beeblebrox ("Property is theft...), instead of like the servants and protectors of the people that they are elected to be.

Una said...

Whether the legislation says that property is exempt until 6 months after probate or not that is not what is happening. I received a letter on 10th July about my mother's empty retirement flat, she died in February.It was written on the 3rd July - quick off the mark I'd say. Probate was granted on 7th April which was a lot quicker than many people in this position. I was shocked, distressed and very disturbed that this is happening in the UK in the 21st century. The need to bring derelict property back into the market is obvious but I draw the line at putting pressure on recently bereaved people in this way. I am seething with indignation.