1. Empty Homes Loan Fund

2. Empty properties – why are they empty?
Owners may have inherited property and feel overwhelmed at amount of work required
Sentimental reasons – family home and don’t know what to do with it
Don’t have time/skill/know how to do the work required
Don’t have the finance to do work required
What are some of the reasons that some properties are lying empty?
Some people may have inherited the property and are overwhelmed by how much work has to be done to it.
It may have been the family home and for sentimental reasons, don’t want to sell, but don’t want know what to do.
Some owners just don’t have the time, skill, know how or finance to do any work to the property.

3. Costs to owner of an Empty property
Shelter Scotland estimate that an empty property can cost an owner approximately £7000 per year
Higher to insure due to increased risk of fire and vandalism
Security costs
Ongoing maintenance and repair
Additional council tax levy
Shelter Scotland estimate that an empty property can cost an owner approximately £7000 per year.
They are costlier to insure due to an increased risk of fire and vandalism; incur costs needed to secure the property; ongoing maintenance and repairs to prevent further disrepair, damp and infestation, and under new legislative powers available to the local authority instead of CT discounts available for empty properties, there are now additional levies up to 200% on a sliding scale according to how long property has been empty.

4. Negative impacts of an empty property
An empty property has a negative impact in the community, causing problems for residents, whilst house prices may be adversely affected.
The property may fall further into disrepair which may start to affect adjoining properties
Empty properties can have a negative impact in a community. It can attract vandalism and anti social behaviour, causing feelings of insecurity in a community, so impacting negatively. It can also adversely affect other house prices in the area.
Further disrepair such as damp and structural problems may creep into adjoining properties if not kept in check.

5. Empty Homes Loan Fund - criteria
Property has to be empty for at least 6 months
Must be owned by applicant(s), and have enough equity in property to cover the loan and interest
Not currently in a lettable condition
Owner not bankrupt/sequestrated, and no CT arrears
Willing to sign a lease agreement for a minimum of 5 years
Aberdeenshire Council now operate a loan fund which is intended to bring empty properties back into use as affordable housing to assist those in housing need. It is aimed at those wishing to bring their property back into use, but perhaps for reasons given previously, are not able to.
This can offer loans of up to £30,000 to an owner of an empty property which fulfils the criteria (as above)
There are other criteria to follow, such as property must be in an area where there is an identified need for that size and type of property for affordable housing.
Applications for empty shops welcomed too, however there may be change of use for planning permission required which would need checked first.

6. How does it work? A/C work with an RSL who will cost works required
Financial appraisal shows length of time of loan/lease
Legal agreement signed
Works done
Property let
Rental income pays loan and costs
Aberdeenshire Council work with Registered Social Landlords like Grampian HA and Langstane HA, who will cost the works required to bring the property up to lettable standard. These costs along with any other costs incurred, and the interest rate applied are run through a financial appraisal which shows the likely length of the lease period, which is a minimum of 5 years, along with how long it takes to repay the loan based on the rental income charged, whilst deducting a management fee off for the RSL.
The rental income is based on the local housing allowance figures for that area. The property will be let out at a mid-market rate which is typically between 80% to 100% of the Local Housing Allowance rate.
If all parties are in agreement with the figures and works to be done, then a legal agreement will be signed. The RSL will then do the works established, a tenant will be identified from the Aberdeenshire Council waiting list, and when the property is ready the tenant will sign up for the property.
The rental income from the tenant will repay the loan and management fee.
The RSL will use management fee to manage day to day repairs, void periods and management of the property for the length of the lease.
The reason for a lease of minimum of 5 years is to give comfort to the RSL, and gives the tenant relative security of tenure. If the loan is shorter than 5 years, then once it’s paid off, any rental income after the management fee is deducted will be paid back to the owner for the remainder of the lease period. An exit strategy will also be in place for the end of the lease period.

7. Challenges
LHA (Local Housing Allowance) may be higher than private rental prices in certain areas
E.g. Banff - £500 pcm open market
“Affordable” rent may not be affordable
Could render scheme unviable
There are challenges to the scheme. One particular challenge is that in some areas, for example in Banff, open market private rentals are relatively inexpensive compared to other areas. This may be typically around £500 per month for a 2 bed property there. As the property is being let out as “affordable” housing i.e a mid market tenure which is normally 80% to 100% of the Local Housing Allowance (LHA) rates, a 2 bed property in Banff would be charged at between £562 and £703 per calendar month under this scheme. Therefore our scheme would be more expensive and not “affordable”, so potentially not viable for the scheme to work and with more associated risk.

8. Benefits of bringing properties back into use – for owner
No more repairs or bills
No more Council Tax – tenant is liable for this
Property returned at the end of the lease in a better condition than it was in previously, with a possibility that it has increased in value
What are the benefits of bringing a property back into use? For the owner – (above)
As the property is managed by a regulated housing provider there are no concerns in terms of managing the property or collecting rents.

9. Benefits of bringing properties back into use – for the community
wasted resource back into use as affordable housing, assisting those in housing need
new residents help sustain local amenities and services
helps benefit local economies
increases feelings of community safety
positively reflects on house prices in the locale

10. Contact details: emptyhomes@aberdeenshire.gov.uk
Moira Simpson, Development Officer (Affordable Housing) Tel: