Management failure responsible for unprecedented rent loss

Swindon Tenants Campaign Group media release February 1st 2019

The article in the Advertiser on empty council homes (Empty council homes cost taxpayer nearly one million in lost rent is claim) was wrong in one respect. Empty council homes don’t cost the taxpayer a penny. The cost is born by council tenants who have to wait longer for repairs or renewal of housing components. Since the Housing Revenue Account is ring-fenced (no council tax can be spent on it) its only income is from tenants’ rent and service charges. So the more rent it loses as a result of empty properties then the less work it can do on existing homes.

Each year council housing departments send in a wide range of statistics to the Ministry of Housing on their council stock. This includes the number of empty properties they have at the end of the year and the amount of rent lost as a result. The Ministry publishes these statistics. The council spokesperson’s denial that they lost nearly a million in rent in the last financial year is bizarre. Why? For the simple reason that their own housing department reported to the government that £974,000 rent was lost as a result of empty properties!

According to the council spokesperson empty properties reached a high of 230 in February. Alas, what the housing department told the government was that on April 1st 2018 it was 272.1

As you can see from the table below this unprecedented loss was more than double the amount lost in any one year of the previous six. The reason for this is management failure on a grand scale. What the council spokesperson failed to mention as they desperately tried to spin something positive is that the contract was given to a single company with no office and no staff in the town. When it was finally accepted that they could not fulfil the contract, and they departed, the housing department department found it necessary to set up an in-house team to specifically work on empty properties.

However, this had a knock-on impact on day to day repairs since a dozen staff were taken from the repairs section. The council then had to try and fill these vacant posts. As a consequence a big backlog of ordinary repairs work built up. The housing department found it necessary to take on some (more expensive) agency staff to help tackle the backlog.

Martin Wicks, Secretary of Swindon Tenants Campaign Group, said:

“The loss of nearly a million pounds in rent as a result of empty properties being empty for longer, was a disaster resulting from a major management failure. The average relet time has usually been around 25 days. Last year it was 64. Hardly surprising that so much rent was lost.

Instead of trying to spin something positive out of this disaster the council should simply admit that this is a case of management failure, which has financial and other consequences. As well as the unprecedented loss of rent it has meant a deterioration in the service for tenants owing to the repairs backlog.

Historically, one of the major problems in relation to council housing works has been the inability of the council to control contractors, especially given the sub-contracting set up in the building industry. There is surely a lesson in the fact that the council has had to put together a team of its own workers to try and rescue the situation. We need more work brought back in-house. It is much easier to control your own workforce and deal with any problems which arise. Staff have to spend less time on contracts disputes and managing the contractors/sub-contractors.

When tenants die or leave a council property it is sometimes necessary to replace a bathroom or kitchen, or some other works. This is inevitable. However, every week without a tenant is a week’s lost rent. Having a good system in place for work on empty properties is therefore critical. The decision to give all the work to one company without a base in the town was a huge mistake. The council should admit it and make sure it never happens again.”

SBC Rent arrears as a result of voids

2017-18

2016-17

2015-16

2014-15

2013-14

2012-13

2011-12

Vacant stock

266

191

97

94

92

125

88

Vacant 0-6 weeks

66

104

70

26

79

58

83

Vacant 6 weeks to 6 months

101

70

21

62

13

60

4

Vacant more than 6 months

99

17

5

6

0

7

1

Average re-let days

64

30

25

25

25

25

24.7

Rent loss from vacant dwellings

£974,712.00

£243,835.00

£419,918.00

£407,487.20

£417,721.00

£375,040.00

£360,194.29