Buying an Empty Property as an Investment
Buying an empty property is not a decision to be taken lightly. Even experienced property developers can find the prospect a daunting one, but given enough time, cash and know-how an empty home can be turned into a desirable residence. There is certainly no shortage of empty properties in Britain, with approximately 870,000 empty homes and enough empty commercial property to create another 420,000 new homes.
That means around five per cent of homes throughout the UK are empty, so it is not too difficult to find one. Most local authorities keep a list of all the empty properties in their area, and some are happy to share the information. Members of the public have a legal right to request such information, so if the local authority is not so open it is worth making an approach in writing.
Estate agents are unlikely to advertise empty properties in shop windows, but a simple request can reveal what is available, and property auctions will typically include a selection of empty homes. Land for sale will often include a property deemed fit only for demolition, but on occasion the house is salvageable.
Find the Owner
If a promising property is found, the easiest way to discover who owns it is to ask neighbours. Local authorities with a register of empty properties will know who the owner is, but policies differ on disclosing this information. A written request citing the Freedom of Information Act 2000 may persuade the local authority to divulge the owner's name. Another option is to pay a small fee to look at the Land Registry. Many properties are registered and those that are will list the owner.
Before taking the plunge and buying an empty property, a number of factors must be considered. Take time to work out a budget and ensure there is enough money available to complete the project. Find out what grants may be available to subsidize the cost of the work. Employ reliable conveyancers, architects and builders and ensure the property is eligible to undergo the changes that are planned, as a project can be wrecked by legal restrictions or a listed property.
With homes in such short supply in the UK, help is available for those willing and able to salvage an empty property. Local authorities will often employ an empty property officer to get vacant buildings back in use. If unable to persuade the owner of a desolate property to act, many empty property officers have the power to force change by:
- Compulsory purchase - the local authority can, as a last resort, buy an empty property without the owner's permission.
- Enforced sale - if the owner has debts owed to the local authority secured on the property, the local authority can force the owner to repay them or face the prospect of the property being sold to recoup the money.
- Public Request to Order Disposal - public authorities can be forced to sell buildings that are left empty.
It can be difficult to find a mortgage lender willing to finance the renovation of an empty property. Most property developers will want to borrow the purchase price and the renovation costs, but lenders consider this to be high risk. In general, lenders want to be able to recover the loan amount by repossessing the property if a borrower defaults on payments. An empty property is unlikely to provide this option, as it is worth so little in its broken down state.
Fortunately, and thanks in part to the growing market in environmentally friendly mortgages, an increasing number of lenders offer products that are ideally suited to those determined to salvage an empty properties.
