Thursday, November 15, 2012

Why properties remain empty?

Despite France's housing crisis, an estimated 200 000 apartments and houses remain unoccupied, sometimes for several years.

A recent article in the French newspaper 'Libération'* gave some clues. Aside from (private) landlords who have had bad experiences from tenants who did not pay the rent or left the property in a dilapidated state, many properties remain empty for long periods awaiting planning decisions. These can involve not only the local commune - such as a decision by the Mairie - but th consent of all the residents if the property is owned as part of a condominium (in French = 'copropriété'). Decisions of the owners can overule those of the local commune even when outline or full planning permission has been given - for example to change or extend an existing property. Many co-owners refuse to give their approval, in order to avoid the inconvenience of several months of building works, often prefering to 'leave things as they are'.

Where unused or surplus buildings are publicly owned or are the property of large corporations, it may take months or years to reach a decision about what to do with them. And even when a change of use is agreed, further time is need to secure the necessary planning permissions, consult with architects and put works out to tender, before any construction can begin.

In terms of revenues from renting, an occupied property is generally worth 10 or 20 per cent less on the market, so owners tend to leave them empty or un-let pending a sale. Buildings let as offices command higher rentals than if they are converted into apartments.

French law is highly protective of tenants, even bad payers, and there is a block on expulsions during the winter months. As a result many landlords prefer to keep their properties empty (in anticipation of a sale) or  for short-term furnished letting where the rules are easier, rentals are higher and the turnover of tenants more frequent.

A French TV investigation** into the housing crisis examined the situation in British cities such as Birmingham which has a policy of searching out empty properties and entering into an agreement with landlords, under which the local council agrees to bring the properties up to standard, find a suitable tenant from their waiting list, and recoup its costs for the repair works, usually over a period of five years, after which future rental income reverts to the building owner. Some 80% of owners agree to these arrangements when approached, enabling many otherwise derelict properties to be renovated and occupied to the benefit of tenants and neighbours formerly blighted by an unoccupied building falling into disrepair. Rentals charged are geneally below market levels and there is no shortage of tenants seeking this type of property.

Finally, a couple of interesting statistics - out of France's total 30 million households, around 3 million are second homes, mainly located in country or coastal regions, and occupied for just a few weeks of the year. And around 56% of French own their main or principal home, and prefer to rent, compared with Britain's 70% owner occupies (and 83% in Spain, 78% in Ireland).

* 13 November 2012; ** 'En quete des solutions' Channel D8 14 November 2012.