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The introduction of empty dwelling management orders (EDMOs)ï'žµearlier this year prompted a flurry of indignation among the increasingly large percentage of the population who own second homes or investment properties in the UK. There was much speculation about local authorities being able to 'seize' properties simply by virtue of them being empty.

EDMOs were introduced by the Housing Act 2004 (although only implemented in July this year) and do give local authorities the ability to, in certain circumstances, take over the management of private sector houses where the owners of these properties prove unwilling or unable to arrange for them to be occupied themselves. Inevitably, it will take a while before a picture emerges as to how effective or otherwise this legislation is likely to be, but there are already some question marks over how easy it will be in practice for local authorities to be able to successfully see through an application for an order.

Why do we need EDMOs?

It is essential that dwellings remain empty for relatively short periods of time while they are being sold, let or renovated/repaired. These might be described as 'transactional' vacant dwellings. A common characteristic of 'non-transactional' vacant dwellings is that they are not being actively marketed or prepared for marketing and a general way of distinguishing the two types is to look at the length of time a dwelling has been vacant. In April 2004, nearly 298,000 privately owned dwellings in the UK had been empty for in excess of six months. It is fair to say that properties which have been left empty for a number of months may begin to have an adverse impact on the immediate surroundings and thereby affect the interests of other property owners. This was certainly one of the factors emphasised by the government in the run-up to the introduction of this legislation. Perhaps more significantly, there is an acute housing shortage in certain areas of the country and local housing authorities are finding themselves being forced to accommodate those with housing needs in expensive (often unsuitable) bed and breakfasts. So it is against this background that EDMOs were introduced as a solution to what the government viewed as the 'wasted resources' represented by empty properties.

What is an EDMO?

There are two types of order. The first is an interim order that continues for a period of up to 12 months. A local housing authority must apply to an independent residential property tribunal to get the order authorised. While an interim order is in place, the local authority can take charge of the management property and arrange for it to be occupied, but it can only do so with the co-operation and consent of the owner. During this 12-month period, the local authority must work with the owner in order to try and find a way to bring the property back into use. There must be no one in occupation of the dwelling at the time the interim order is made and the local authority must make reasonable efforts to notify the owner of the property that they are considering making an order and must ascertain what steps (if any) the owner is taking or intending to take to secure occupation of the dwelling. Before an interim order is authorised, the tribunal must be satisfied that:

• The dwelling has been unoccupied for at least six months (this excludes squatters).
• There is no reasonable prospect that the dwelling will become occupied in the near future.
• If an interim order is made, there is a reasonable prospect that the dwelling will become occupied.
• The local authority has complied with its duties in seeking to make an interim order (including any matters that may be prescribed in regulations).

The tribunal must also be satisfied that the case does not come within one of the 'exception' categories and these are potentially pretty broad. An order will not be made in relation to a dwelling in the following circumstances:

• It has been occupied solely or principally by the owner and is unoccupied because:

(a) he is temporarily resident elsewhere;

(b) he is absent from the dwelling in order that he may be cared for elsewhere;

e is absent from the dwelling because he is caring for someone else; or

(d) he is a serving member of the armed forces and is absent from the dwelling as a result of service.

• It is used as a holiday home (whether or not it is let as such on a commercial basis) or it is otherwise occupied by the owner or his guests on a temporary basis from time to time.
• The person who was the owner of it has died and six months has not elapsed since the grant of representation was obtained in respect of such person.
• It is genuinely on the market for sale or
• letting.

A final order replaces an interim order (or a previous final order that has expired). A final order to replace an interim order may be made by the local authority if they consider that, unless a final order is made, the dwelling is likely to become or to remain unoccupied. In reaching its decision, the local authority is obliged to take into account 'the interests of the community' and the effect that the order will have on the rights of the owner and may have on the rights of third parties. The local authority does not need to obtain authorisation from the tribunal before making a final order. Once a final order has been made, a local authority may at that stage let the property without the owner's consent and may carry out essential repairs to the property to ensure it is fit for occupation. A final order can last for up to seven years. It is possible to make an application for revocation of a final order and this would usually happen if circumstances changed and an owner wanted to sell or live in the property

What are the practical effects of an EDMO?

A local authority does not need to obtain authorisation from the residential property tribunal to make a final order, but the property owner may appeal to the tribunal against the decision. Local authorities are obliged to review the operation of a final order from time to time and must consider whether there are any steps it could take to secure occupation of the dwelling and whether it is necessary to keep the order in force. If it concludes that there are no steps it could take to secure occupation or that keeping the order in force is not necessary, it is obliged to revoke the order. A final order must contain a management scheme that sets out how the local authority intends to carry out its duties and how it will account for any monies which are spent and collected while the order is in effect. The management scheme must include details of :

• Work the local authority intends to carry out to the dwelling and an estimate of the expenditure.
• The rent the dwelling might be expected to fetch on the open market and the rent the local authority will seek to obtain.
• Any compensation payable to third parties.
• Where the amount of rent payable is less than the open market rent, the management scheme must account for the difference.

Variation and revocation of EDMOs

A property owner is entitled to ask the local authority to vary or revoke an interim or final order at any time. There is also a right of appeal to the tribunal against any decision of the local authority to refuse to vary or revoke the order. The local authority may make revocation subject to payment of any expenditure it has incurred, for example, in relation to essential repairs that have been carried out to the property (and which have not already been recovered from rental income). Once an order comes to an end, the local authority is obliged to pay to the owner any surplus funds after deduction of the cost of any repairs. There are no restrictions on the works of repair or renovation that a local authority may undertake under an order.

Limitations and practical problems

The main objection to the concept of an EDMO has been that it represents an unreasonable interference with an individual's choice as to what to do with his or her property. This is particularly so since the property does not have to be run down or uninhabitable in order to be potentially vulnerable to an order. A property may be well maintained and presentable (albeit empty), yet the owner may find himself in a position where he has to justify to the local authority why there is no one living there. It has also been perceived that the prescribed exceptions have been fairly loosely defined and that it would be relatively easy for a property owner to argue that the property is occupied by him or his guests on a temporary basis from time to time. It would be somewhat difficult for the local authority to disprove this unless the property is uninhabitable. One of the prescribed exceptions is that a property is 'genuinely on the market for sale or letting'. Again, one would expect that certain property owners could place a property on the market at an unrealistically high asking price that would make it difficult for the local authority to show that it was not genuinely being marketed for sale. Is a contract with an agent sufficient evidence of an intention to sell? Questions have also been raised as to how the sixth-month 'empty' period could be measured whether there is insufficient information, such as council tax records, for a local authority to determine precisely when a property became empty. It is questionable whether the requirement for a local authority to demonstrate that it has made significant efforts to get the owner of the property to bring it back into use by voluntary means is sufficient and this could leave local authorities open to the suggestion that they are using orders simply to increase their own housing stock at the expense of private owners.

Conclusion

The intention was that EDMOs should bridge the gap between the existing powers of a local authority under compulsory purchase procedures and those voluntary measures currently open to them. Responsible property owners with a genuine reason for having property which remains empty for more than six months should not fear these new measures. The legislation provides plenty of scope for dialogue with the local authority before an order can be obtained. The real impact is likely to be on those who own property that has been left to fall into a state of disrepair and is attracting attention in the community and it remains to be seen how easily those owners can dodge the effects of this legislation if they are minded to do so.

Conclusion

The intention was that EDMOs should bridge the gap between the existing powers of a local authority under compulsory purchase procedures and those voluntary measures currently open to them. Responsible property owners with a genuine reason for having property which remains empty for more than six months should not fear these new measures. The legislation provides plenty of scope for dialogue with the local authority before an order can be obtained. The real impact is likely to be on those who own property that has been left to fall into a state of disrepair and is attracting attention in the community and it remains to be seen how easily those owners can dodge the effects of this legislation if they are minded to do so.

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