Loan schemes often suffer from a lack of attention to detail, leaving councils scratching their heads as to why they can't seem to give the money away.
A new scheme launched by Rochdale Council to mark Empty Homes Week is a good example of how a detailed awareness of owners' needs helps shape the product to make it attractive without at the same time squandering public money.
Rochdale has already had considerable success in its strategy for tackling empty homes, with the Council's website claiming "we have already brought 776 properties back into use in the last 3 years, reducing the number of long term empty properties from 1,819 to 1,043..".
The revamped loan scheme should help further. It leaves the owner in control, rather than requiring them to work through a housing association or other third party. Nor does it require the home to be let as affordable housing. In fact the home need not be let at all - the loan is available for owner occupation too.
But looking at the other side of the equation, in terms of making best use of public money:
- there is a requirement for the loan to be repaid within three years
- the first year is interest free and the following two years involve an interest rate averaging 3.75%, so the average interest rate over the 3 years is 2.5% (those who pay back earlier will of course do better).
We understand that Rochdale has a fighting fund from which it can draw down cash for empty homes schemes such as this. But this would not prevent another authority from creating a similar scheme by drawing on prudential borrowing. A 4-year fixed-term loan can be had from the Public Works and Loans Board at 2.06% payable on maturity of the loan.
Additionally, New Homes Bonus earned on a longer-term empty brought back into use would be worth several thousand pounds.
There is a ceiling of £15,000 and a requirement for a 20% contribution by the owner: these parameters indicate that the money will not become easily available to those who don't have two beans to rub together. This may prove a disappointment in some cases but it minimises the risk to the Council which in any case has other schemes it can offer in more extreme circumstances.