Last month the Portuguese government laid out its plans to reform the housing sector as part of a plan called ‘Mais Habitação’ (More Housing). These included some drastic measures to combat the housing crisis. Vast numbers of Portuguese people have seen their rents and property prices escalating over 15 years but change looks likely.
This package of reforms are far reaching and controversial, in so far as they will tear-up some of the policies that have shaped the sector over the last decade. The most significant measures it includes would address ‘Long Term Empty Homes’ in Portugal.
Here in Scotland, political leaders have made recent pledges on just this issue and there is now new data on how many properties lie empty. I’ve tried to formulate a basic comparison as to what both countries are up to.
In Portugal, the most controversial new proposal is the ‘forced rental’ policy. This measure would target homes that have been unoccupied for 2 years or more. It would demand that the owners of the property either rent the home or live in it. If they fail to comply, the property would be reclaimed by the local authorities and immediately converted to a socially rented home. There are more than 700,000 empty homes in Portugal and so many families would benefit.
This is a significant number, far more than in Scotland but we will get to that shortly.
Home owners of vacant properties are beginning to prepare themselves, despite the fact that the policy is not yet law in Portugal. And it is somewhat telling just how committed António Costa the Prime Minister is to this measure. He leads the Socialist Government who have doubled down on their intention to see the reforms pass despite opposition. Not least from the head of state: President Marcelo Rebelo de Sousa who appears to have been caught off guard by the relative popularity of the proposals. Amongst his choice phrases for the bill was that it was “like a melon” -people say you only know if a melon is good when you open it” – what great forensic insight there from a man who is set to provide the legal oversight.
Actually, people have speculated that De Sousa has been in favour of derailing the bill, because of other concerns. Such as the fact it would immediately end the “Golden Visa” programme. If you’re wondering what the Golden Visa is because it sounds ‘shiny’ let me explain.
in Portugal, Golden Visas were issued to prospective property buyers. Wealthy investors from around the world were encouraged to buy properties which cost more than €500,000. And to sweeten the deal they were granted residency permits by Portugal. They did not need to live in the country, just to spend a fortnight there at some point. This sent house prices and rents rocketing. Also at that time, Portugal issued a separate “non-habitual residency scheme”, which gave foreign citizens who spent half the year in Portugal a 10-year tax break on income earned elsewhere.
Therein lies some context as to how Portugal ended up with so many vacant homes in the first place. To cut a long story short, Portugal’s property market has grown really rapidly in the last 15 years very much accelerated by tourism. This was kickstarted as a direct result of the 2008 financial Crisis. At a time of extraordinary uncertainty, Portugal was forced to ask the EU and IMF for funds to stabilise the economy. As the Guardian puts it: “To entice foreign investment, Portugal was required to deregulate as a condition of its international bailout.”
Such decisions may have recovered the economy, but they have inflicted catastrophe on working classes trying to rent and severely impacted middle classes too, not just in Lisbon or Porto but all over the country. Now it seems the Socialist Government has an opportunity to reverse many of the policies. Costa has said, they are sticking to their priority” to generate a sufficient and accessible supply of housing for Portuguese families and for this we need to adopt measures that may have an effect of regulating the market during the next few years.”
There is much more in this bill that supports tenants and creates licence law changes to speed up housebuilding or conversion to public housing. I recommend readers take a look in full.
Like in many European countries the housing systems are complex. For several left wing groups in Portugal the current proposals do not go far enough. Residents in cities like Lisbon, have had to combat the devastating effects of segregation of communities. Much of this segregation was racialised too. neighbourhoods were demolished and migrant families pushed from peripheries to new peripheries, under state initiated ‘housing’ projects. There is a wish to give communities more ownership of the housing systems themselves, something they used to enjoy even if in somewhat clandestine circumstances.
Let’s at least admit that the Portuguese current government are willing to see the crisis for what it is and not stop short of radical change to improve peoples lives.
As I’ve already said the complexity of housing, makes international comparisons difficult. However Scottish people should ask: What might a downright bold approach to filling empty homes look like here?
There is a reason why Portugal and Scottish tenants’ movements opt for the same slogan: Homes for people not for profit (casas sao para habitar nao para lucrar). The Scottish housing crisis stems from ideologically driven structure of UK housing in general. Our families have witnessed deregulation and mismanagement, which has been fixated on mortgages and ‘buy-to-let’ schemes. Social housing has been sold off, Investment strangled and new provisions lacking.
Scotland has 42,865 Long-Term Empty Homes. Approximately 1.6% of all residences. The definition of an empty home is one not lived in for 6 months (or more) and liable for council tax. Of these some 28,000 have been empty for 12 months or more. We do not know of this final proportion how long these have been empty; years, decades perhaps?.
The fact that there has been ambiguity in the figures, until recently is a sign that what Scotland lacks primarily on the issue of housing is leadership.
Why do I say this? Well if we had active leaders on the issue, we would have a better system of data collection to start with. Don’t dismiss this connection. Just as the primary setback to Rent Controls stems from Government inactivity on collecting information on what people actually pay in rent. This might be handy for landlords who don’t wish to declare rent increases, I would call it ‘neglectful’ at best by the Scottish Government.
I hint there that unlocking ‘Long-Term Empty Homes’, should be lower down the priority list than lowering rents and a rapid social house building project. It should be. But it is part of the solution and Scotland can do so, so much better.
Portugal’s empty properties are 12% of total homes. This clearly dwarfs Scotlands 1.6%. In actual fact If data included those Scottish homes which are exempt from council tax, undeclared or nearing 6 months empty. the figure is likely to be above 90,000 and these are classed as ‘Vacant’ properties – this is approximately 3.3% of all homes in this country- not so insubstantial.
You might think these are tucked away in coastal or island locations, not particularly. Half of the 43,000 Long- Term Empty Homes are in just 6 council areas. Each of these Local authorities is supposed to have a strategy dedicated to this. Below are some roundabout figures for certain areas. Are these near where you stay? Does your Local Authority have a long waiting list for renters?
There are many, many reasons why homes are uninhabited for long term periods. In most cases it is normal life events that create these scenarios. People pass away, move into care homes, some people just haven’t got round to refurbishing or are struggling to sell. There are cases in Scotland of people who’ve inherited homes and pretty much forgotten about them over decades.
For nearly 20 years, Scotland has flagged empty homes as a situation that needs to be remedied. I would suggest that the covid pandemic, the migrant crisis and and the cost of living crisis have changed our perceptions on the urgency four walls that need filling. Traditionally people objected to vacant or derelict houses on the grounds that they were an eyesore or reduced the marketability of a neighbourhood. Now I sense a clearer understanding from communities of the reality of the home as a basic unit of survival. Being on a housing waiting list is an extremely unsettling factor in one’s life.
However in contrast, our housing culture establishes profit seeking as the norm, therefore most owners who hang onto a vacant home, will speculate on their options for some months. A large proportion will set up their bricks and mortar as private rents. Individuals still explore multiple options but when haste is required they often apply to become private landlords because this route is promoted as the most profitable and straightforward.
For example, if I had inherited a flat from a deceased parent, I may have been distraught for 6 months or a year during my grieving. When I might finally be ready to do something about If I web search: “Can I sell my house to my local authority?” I’ll be guided through a very dense set of signals not to pursue that option. I’ll find instead WeBuyAnyHouse.com or cash.sellanyhousefast.co.uk being my first outposts for advice. People are being taught to distrust the opacity and delay of council purchase processes. They are also becoming reluctant landlords, some of whom feel very little responsibility for their tenants or the property.
I want to be clear that people’s lives are complex. Grief can be particularly debilitating. Renovating a home can be stressful and requires skilled help to make it habitable. I, like many others, would like to see more processes to turn these situations into Social Rents, since that is the glaring need in Scotland. We need simpler procedures for an owner to transfer their home to a Social Landlord in need of housing stock.
So how could this be done? There are two current powers in Scotland for returning empty homes to ones which are lived in. Local Authorities can double a property’s Council Tax. This occurs after 12 months of it lying empty, to incentivise it being sold or rented-out. This cost does not escalate any further for the home owner and therefore does very little to change the process.
If I imagine again, that I am an owner of a flat that I’ve stripped bare but I’m still sticking my head in the sand. Rather than taking action I might accept this council tax cost for the meantime.
The second route available to local authorities is the currently incredibly clunky Compulsory Purchasing Order processes. This is the means by which a transfer of ownership from an absent property owner to local authority would be legally approved. Many people are more enthusiastic about the extension of this policy to include a policy of Compulsory Sales. These would see more direct, strengthened powers to implement an ownership handover. The Scottish government have delayed releasing any information on when such legislation may be considered.
Both these powers require significant reform and leadership, that’s why I make comparisons to the very detailed plans of the Portuguese Government.
This month, details are missing from both plans put forward by Humza Yousaf (New Scottish First Minister) and separately Anas Sarwar (Scottish Labour Leader). They have both pledged to turn Long-Term Empty properties into key worker’s homes. Neither Party has put much detail on how the CPO process would be sped up. Anas Sarwar’s proposal came first with a fairly jumbled suggestion. Scottish Labour would buy homes for £1 and gift them to key worker families so they could enter the housing ladder.
The initial Labour proposal would offer a government-backed loan of £25,000 to renovate the home. The owners would be required to live in the property for 5 years thereafter.
But wait what about the need for socially rented homes? Surely one Housing Association or another could manage these buildings and it would still be a home for key workers, only there could be more of them? Also how would you decide which workers get the chance to own their own home, would you get them to draw straws? And what is then to disincentives owners then become private landlords after 5 years? That’s not the model we should be aspiring to? I feel like I have either misunderstood something or this plan is not fully worked through.
By comparison, In Portugal, the proposed ‘forced rental’ measures controversial as they are work like this: “Owners of vacant properties in habitable condition have 100 days to use or rent them before the process of forced lease begins.” Then the council would renovate ready for Social Rent. Those who are exempt from such seizures include: Emigrants or people displaced for health reasons, people who’ve moved to a care facility or themselves are providing informal care to someone. Holiday homes are also subject to new licensing laws, but won’t be seized under the same policy. I suspect this is Portugal’s attempt not to spook the markets too much just yet.
I’m much more in favour of general universal reform a la António Costa, if it empowers the local authority. In Scotland, it comes down to what the force of the incentive is on individuals and I hate to use the word Incentive.
Here one of the key organisations which has begun to shift the debate is the partnerships between Scottish Government and Shelter Scotland. Called the Scottish Empty Homes Partnership, this is an admirable voice on the issue, but one which needs much more support. This partnership has provided the data that has made this article possible. Their aim is primarily to put Scotland’s empty homes back into use. They use the limited tools at their disposal, speaking with home owners, to advise and guide them to sell or rent in order to avoid 100% added to their council tax. They also advise people to buy or submit auctions on previously unoccupied homes.
This partnership are approaching the task by building relationships with home owners via soft marketing campaigns, and speaking to Local Authorities. There’s nothing wrong with that. It is a fitting approach if you recall the many scenarios that lead to properties being unoccupied. I think sensitivity may work in some cases to unlock homes. I’m even seeing their communications in landlord forums, the ones which are usually hostile to such intervention.
However, if the only incentive is via council tax, with no other option to escalate the situation, then I’m afraid we are failing to get the basics right.
Common Weal policy already outlines one solution: Don’t use Council tax as incentive but initiate a Property Tax for Scottish homes instead. Council tax is unfair and measured on very old averages, A property tax would be based on the property’s REAL value, including the land it occupies, therefore those owners who have benefited from rising house prices, while the house was occupied would pay their fair share, even when its vacant.
Scotland could reevaluate those 50,000 or vacant properties that don’t qualify for Council Tax. Under this new system there maybe exemptions from paying extra while a home is uninhabited; After all, wouldn’t it be great to encourage more retrofitting while houses are being renovated anyway.
Finally for returning empty homes to rental properties, we want to see dual implementation of a Property Tax with Rent Control. What better way to create equitable, clear terms terms where if Landlords improved the quality of the home they could make an agreement l with tenants on what proportion they pay for these improved dwellings.
Nothing like the boldness of the Portuguese, there was however a less timid proposal In the loose statement by Sarwar. Using the current Council tax system, but accelerating the increases till its made available. So that costs don’t just double after 12 months, but increases year on year by 100%. The trouble with that is no clear link to acquire properties other than still via incentive, and there would still be around 3 years until a home owner begins to feels mounting financial pressure. Perhaps for the purposes of empty homes a Common Weal style Property Tax could at least consider having an accelerated increase element as well. Or it could be applied earlier than 12 months after people move out.
As far as I’m aware there are still some Local Authorities refusing to double council tax for Long Term-Empty Properties in their areas. This can’t go on. Scottish Empty Homes Partnership also have a role to bring all Local Authorities closer to taking other forms of action. They are trying to encourage every council to have a dedicated Officer to address the situation. And they are succeeding.
However this partnership are frank about the issue that one solitary staff member trying to persuade 2000 odd homeowners to fill their homes, is an extraordinarily hard task. If this initiative is to have teeth, it must be given real support and resource to unlock homes for any more people. With each Local Authority approaching this differently, there is a troubling lack of consistency.
I hope that the policies in Portugal see the light of day. I also hope Humza Yousaf, and new Housing Minister Paul McLennan commit to the pledges here in Scotland. They could start by seeing through Compulsory Sales Proposals on houses and land whilst committing more support to the Scottish Empty Homes Partnership. For Common Weal supporters who want to become active on the issue, you should seek to contact your Local Empty Homes Officer to find out what campaigns there are and use your local knowledge. However its worth restating: We cannot last with the number of dwindling social houses and flats for rent, we must demand that If we support unlocking homes, to prioritise these Social Tenants. And we should resist the interference of private finance on efforts to unlock homes. Finally, advancing these positions is best approached collectively: Join a Tenants Union to campaign for change.
Just as we need to change the culture around housing, to be one of redistribution rather than extraction. Is it also time to reframe this issue of empty homes as one of justice. This is a solvable area for Scotland and we have an incredible chance to put the first steps right towards this.