Britain’s population is both growing and the age profile is getting older. These are just two of the factors contributing to an overall shortage of housing. Add in the fact that there are an estimated 700,000 empty homes in England alone, and you can see why it is important to make use of any empty property as a home – for yourself or for letting to tenants.
So, why are so many homes still empty and what is likely to be involved in returning them to valuable places in which to live?
Why are there so many empty properties?
There may be any number of reasons why a dwelling may be left empty for longer than six months:
- the property might have been inherited – solely or perhaps with other members of the family – and there is uncertainty whether to move into it, sell it or let it to tenants;
- although an empty property might have been bought with the intention of renovating it, the work has been shelved because of pressures of time or money and the necessary building work has come to a halt;
- some owners may be holding on to an unoccupied dwelling in the hope that it may realise a higher sale price in the future – or else they may be holding out for a sale at too high a price; or
- a landlord may have let the property in the past but is unable to afford the expense of those repairs and maintenance required for letting at present.
Whatever the reasons for the property currently lying vacant, any owner is likely to be well advised to ensure that it nevertheless retains the protection of adequate and appropriate insurance – in this case, empty property insurance, a niche product available from specialist providers such as ourselves at Cover4LetProperty.
Please also refer to our Guide to Unoccupied Property for more information.
Are you looking to buy an empty property?
When buying an empty property, there are several important factors and considerations to keep in mind.
- Condition of the property
- Structural issues: Empty properties may have been neglected for some time, so check for structural damage like cracks, dampness, subsidence, or roofing issues. Commission a full structural survey to identify these.
- Utilities: Water, gas, electricity, and plumbing might be outdated or disconnected. You may need to restore services or upgrade systems.
- Security: Unoccupied properties are more vulnerable to break-ins or vandalism. Consider checking if windows, doors, and security systems are intact or need updating.
- Legal considerations
- Ownership and Title: Ensure that there are no complications with the property’s title. You’ll need a conveyancer or solicitor to check for any title issues, restrictive covenants, or rights of way that could affect future use.
- Planning permission and regulations: If you plan to renovate or convert the property, check with the local planning authority whether the necessary planning permissions are required. Listed buildings or properties in conservation areas may have restrictions.
- Easements and boundaries: Verify property boundaries and any easements (legal rights others have to use your land, such as for utilities or shared access).
- Surveys and inspections
- Property survey: A detailed survey (HomeBuyer’s Report or full building survey) is crucial, especially for empty properties that may have been neglected.
- Asbestos and lead: Older properties may have hazardous materials like asbestos or lead pipes. Surveyors can identify these risks, and you may need specialists to handle removal.
- Damp and rot: Empty homes may suffer from damp, dry rot, or wet rot due to lack of heating or ventilation. Look out for mould, soft wood, or unusual smells.
- Financing an empty property
- Mortgages: Securing a mortgage for an empty property can be more challenging, particularly if the property is in poor condition. Some lenders might offer renovation mortgages, which release funds in stages as work is completed.
- Bridging loans: These are short-term loans that can be used to finance the purchase and initial renovations until the property is habitable or sold.
- Insurance: Insuring an empty property can be expensive or difficult because vacant homes are at a higher risk of damage or theft. You’ll need unoccupied property insurance, which may have stricter conditions.
- Renovation costs
Renovating an empty property can be costly. Create a realistic budget for repairs and improvements, considering hidden costs like VAT, professional fees, and unexpected problems. Build in a contingency fee, too, for unexpected costs.
Obtain quotes from several builders for any work required. Do consult contractors early to understand what renovations will cost.
Planning
As with any residential building works, the renovation you may be planning for an empty dwelling might require the separate consents of planning permission and compliance with building regulations. Check if the property qualifies for permitted development (certain renovations you can do without planning permission, like some extensions).
If any such applications are necessary, it clearly makes sense to enter into early discussion with the local authority’s planning department to ensure the acceptance of your plans.
You may typically also need renovations insurance, too. (Read our Guide to renovating here).
Incentives
A further financial incentive for anyone planning to return an empty property into residential use is the discounted rate of VAT that your builder and other tradesmen may charge.
At as January 2024, if the property has been emptying for at least two years prior to your beginning the renovations, HM Revenue and Customs (HMRC) allows contractors to charge you VAT at the discounted rate of 5% (instead of the standard 20% on building works). If the property has been empty for the previous 10 years, different rules may apply.
- Location and resale value
- Neighbourhood: Research the location thoroughly, considering local amenities, transport links, schools, and crime rates. An area undergoing regeneration could boost the property’s future value.
- Future value: Consider the potential resale value after renovations. Speak to local estate agents to understand how the property’s value could increase once improved.
- Council Tax and Rates
- Council Tax exemptions/discounts: You may qualify for a council tax exemption or discount for unoccupied properties. Check with the local authority if the property has been vacant long-term, as some councils offer discounts for renovation periods.
- Empty Homes premium: Some councils impose a higher council tax rate for properties left empty for at least a year.
- Grants and Incentives
Renovation grants: It is widely recognised that the long-term vacancy of housing is a waste of a valuable resource. Many dwellings remain empty because their owners lack the funds needed to make them habitable once again.
Government funding is available in some areas, therefore, to stimulate such housing being brought back into use and resources are allocated to local authorities for application in ways in which they see fit.
Each local authority has its own scheme for the use of such funding and the policies designed to stimulate the return of empty property to the housing stock. Many offer a range of services and advice relating to funding that may be available for renovating empty properties, advice on ways in which such renovations may be carried out, opportunities for letting the renovated property, or for its sale.
You can read more about Government empty house grants in our blog here.
Energy Efficiency grants: You might also qualify for grants related to improving the energy efficiency of the property, such as insulation or solar panels. Speak to your local council for more information.
- Utilities and Energy Efficiency
- Utility connection: Ensure that all essential services (electricity, gas, water, sewage) are connected and in good working order. If disconnected, there may be reconnection fees.
- Energy Performance Certificate (EPC): When purchasing, ensure the property has a valid EPC, as this is a legal requirement. If the property is below Band E, you’ll need to make improvements before it can be rented out.
- Time frame and planning
- Timescale: Be realistic about how long it will take to complete the purchase, especially if the property is in disrepair. Renovation projects can often take longer than anticipated.
- Project management: If planning a major renovation, consider whether you’ll manage the project yourself or hire a professional project manager to oversee the work.
By considering these factors, you can better navigate the challenges of buying or renovating an empty property and make informed decisions throughout the process.
Disclaimer: The information provided in this blog is correct at the time of writing (September 2024) and is based on our current understanding of the law. Please always seek professional help and advice.
