Two kinds of empty homes impact affordable housing.
Some houses are empty because they are second homes, used infrequently, provide wealthy foreigners with an overseas base, or are owned for speculation purposes. This article is not about these kinds of empty homes.
We’re looking instead at some £50 billion’s worth of empty homes in England alone, foreclosed upon, seized by local government for back taxes, held onto but ignored by landlords, take your pick: whatever leaves the housing abandoned and slowly decaying. The Guardian article linked below explores a variety of projects that are refurbishing these homes to create affordable housing, based on a variety of somewhat precarious government and charitable funding streams.
We’re also looking at an affordable housing initiative in the state of New York, where housing left vacant since the 2008 housing crisis is slated for refurbishment thanks to a unique, albeit eventually exhaustible, funding stream.
While the English initiatives are tapping various funding sources in order to bring abandoned housing back onto the market, there is no single tried-and-true method for doing so. Landlords who own these homes are in some regions being enticed with grants to refurbish their properties. Other schemes include charities that buy the homes, then provide work training opportunities for the homeless in order to make the housing habitable for the lowest possible cost.
Keeping the housing affordable? The Guardian article notes the value of land trusts for ensuring that the housing remains out of the housing market where it would inevitably rise in value beyond affordability.
In contrast, the New York project — supported by charitable NGO(s) — depends upon a rather unique funding stream: penalties paid by the banks in settlement of legal actions taken against them for their behaviour in the 2008 housing crisis.
The New York refurbishing method is also quite unusual. Rather than targeting existing landlords, or providing funds to charitable NGOs to own, upgrade and then rent the properties, they are funding neighbourhood “junior investors” to take on the role of both landlord and renovator, providing them with both the housing as well as a substantial portion of renovation costs.
One obvious disadvantage: these local investor/refurbisher/landlords will be able to take profits 20 years or more down the road, when the housing reverts to market rate. This outcome is unlike the land trust approach highlighted by the Guardian, which keeps the housing affordable beyond the foreseeable future.
For more on the English experiments, see in the Guardian: England has more than 200,000 empty homes. How to revive them?
For the American experiment in New York state, read more in the Post-Journal: Property Renovation: Private, Public Investment Improves City Neighborhood
