Void property poses several challenges for housing associations and social housing providers, but Andy Thompson, auctions expert and director at BTG Eddisons, argues that the solution to these could be found under the hammer.
Housing associations and social housing providers in the North are facing a challenge. How can ambitious housing, financial and environmental targets be met across their portfolio while maintaining their responsibilities to tenants and the wider community?
Rationalising building stock is key to getting this right as it can reduce liabilities and pave the way for conversion, upgrade and building of new housing in line with targets. The underlying difficulty, and the challenge that many organisations find difficult to balance, is ensuring that any decisions made benefit of the community.
There is plenty of value in property across the North to provide the finance needed to fund projects for these organisations. Identifying which property should be sold and making sure the buyer goes on to develop it to the benefit of the local area and future tenants is the potential barrier for many.
National challenge, local solutions
Our work with housing associations, local authorities and social housing providers across the UK shows the void property challenge is not only a problem in the North. Many organisations have hundreds if not thousands of lots in their void stock, be that commercial property from public toilets up to office buildings, or empty homes awaiting sale or upgrade.
There is not only a legal liability posed by keeping these properties in the estate. The maintenance, insurance and security cost is a financial burden preventing organisations from unlocking the most value to upgrade and develop the rest of their estate.
To meet the targets for homes and efficiency, this value would be better put towards supporting new housebuilding plans to provide efficient, safe and comfortable homes fit for the future for their tenants. For smaller housing associations and social landlords, rationalising some of their stock could unlock the capital required to support their retrofitting strategy for the wider estate.
The property they sell to fund this, particularly the void homes, could go on to be a fit for owner-occupiers or first-time buyers to support community stability, or for approved, reputable landlords to take them on where rental demand is high. Also, more common than may be thought, land and property can be bought by the local community to convert and enhance the area.
Whichever route a void property takes, there must be some considerations made by the seller.
The sale of commercial and residential property by local authorities and housing associations is under more scrutiny than ever. Particularly in light of new policy like the Renters Reform Bill, it is important to ensure that any property moving from social housing to private rental is used positively, rented responsibly and is balanced with the number of social homes available.
Working through each void property in the estate to understand potential value, possible uses and suitable buyer profiles is a vital step in ensuring the sale aligns with strategic objectives of the area and organisations in the long term.
Void properties under the hammer
Property auctions have often been exclusively considered a route for the difficult-to-sell or very unusual lots in a property portfolio. In recent years, this has been changing.
Housing associations and social housing providers have been using auctions increasingly as a route to quickly and effectively manage void stock. This fast-growing popularity is down to the transparency, speed and security that sales through this route can offer in comparison to private treaty.
It isn’t just popular with sellers. The pool of buyers at auctions has been growing too, particularly as online and livestream options became more commonplace during the pandemic and have continued to grow. With the growth in attendance from buyers, competition has also risen, seeing sellers achieve market value, and even above, for their property.
For housing associations, local authorities and social housing providers, a portfolio-level rationalisation strategy created in collaboration with an auction provider can be a precise tool that leverages these benefits.
In the sales process, information about properties is detailed and transparent, meaning buyers know what they are looking for and are more likely to go to auctions with the intention of buying. As the sale completion happens with the drop of the hammer, this also means sales are far quicker and guaranteed through the auction route.
Working with auction providers who have cultivated larger and more varied pools of buyers nationally, sellers can be targeted with who has access to their auctions, with the option to have exclusive bespoke auctions for their void estate. This means that potential buyers can be limited to fit the profile of responsible buyers they want to sell to, such as owner-occupiers from the local area, accredited landlords or other housing associations.
We have seen this type of rationalisation through our auction service increase in popularity with local authorities, housing associations and social housing providers, with many selling high volumes of lots and unlocking significant value. It isn’t only the public sector and social housing this is an effective route for, however. For retailers, hospitality businesses, manufacturers, private schools and other commercial enterprises, a portfolio rationalisation strategy leveraging auctions can be a quick way to unlock value, and ensure property is put to better use.
As pressure piles on housing associations and social housing providers meet the growing demand for safe, comfortable, healthy and efficient homes, unlocking value from thousands of void properties can be a practical way to raise the funds needed. However, more than just being about unlocking funds, this is also an opportunity to continue building the community through local people and the assets it already owns by unlocking value from the right buyers. With plenty of potential waiting in towns across the North, auctions could be a practical route for public and private sector organisations to evolve and develop towns and communities to promote growth and meet the ever-changing needs of residents.
