Rescue Your Empty Property
How can I put my empty home back into use?
If you own an empty home, you will know that it is an asset at risk; what should be making you money is costing you money. Empty properties deteriorate rapidly and become targets for vandalism and crime, are more costly to insure (if insurance is available at all) and provide no rental income. Excluding the cost of vandalism and depreciation, keeping your property empty could be costing you as much as £135 a week (that’s £7018 each year)*. This factsheet outlines the options available to you to put your empty home back into use.
If your empty home is in good condition:
You may decide to let your property through your local council under a private sector leasing scheme (availability of these schemes varies from area to area). You grant the council a lease on your property for, say, five years and in return the council acts as managing agent, which means it will find a suitable tenant, collect rent, deal with the administrative and legal side of the tenancy, deal with queries from the tenant and arrange for internal repairs and maintenance. As landlord you would be responsible for external/structural repairs and maintenance and buildings insurance. Councils usually charge one month’s rent a year for managing the tenancy, but this can vary so check with your local council. The advantages of this option include regular, guaranteed rental income for a fixed period, longer leases, effective management of the property, and the return of the property to you in good condition. Terms and conditions of local authority letting schemes vary from council to council, and you should contact the empty property officer or the accommodation team at your local council’s homeless persons unit for further information.
You may decide to let your property through a housing association. This option is similar to renting through your local council, except that the housing association would act as managing agent instead of the council. In exchange for a lease the housing association does all the legwork in terms of finding and dealing with tenants, collecting rent and so on, and you as landlord would be responsible for buildings insurance and external repairs and maintenance. Again, terms and conditions of letting schemes vary depending on the housing association, and you should contact housing associations in your region – your local council empty property officer can give you details of housing association schemes in your area.
You may wish to let your property through a private rental agency. If so, you may be interested in The National Approved Letting Scheme (NALS). Letting agents who have signed up to the NALS scheme must provide professional standards of service to both landlord and tenant. NALS-approved agents will: advise you on rent levels and insurance; find tenants and check references; collect rent and hold the money in a separate client account; provide a monthly statement; arrange utilities safety checks and transfer bills into the tenants’ name; arrange routine maintenance work; arrange regular inspections of the property; and deal with all legal and administrative paperwork between tenant and landlord. Fees vary from agency to agency. As landlord you would be responsible for insuring the building and major repairs and maintenance.
NALS is supported by the Association of Residential Letting Agents (ARLA), the National Association of Estate Agents (NAEA) and the Royal Institution of Chartered Surveyors (RICS) who all operate similar schemes to ensure high professional standards for lettings agents. It is in your interests to ensure that the agent you use belongs to one of these schemes – contact details overleaf.
You may wish to let your property with yourself acting as landlord. If you are not sure how to go about this, contact your local authority to see if they run a course for landlords. You could also contact the Association of Residential Letting Agents who can provide information on letting – contact details overleaf. Alternatively, Informed Property Systems will provide you with a fully comprehensive ‘landlord’s pack’ for £99 – contact details overleaf. Your local housing adviser may also be able to provide you with useful contacts.
You could choose to sell your property to a housing association under an ‘existing satisfactory purchase’ scheme. The advantage of selling to a housing association is that you do not have to pay estate agents’ fees and it is normally a quick sale, with a cash purchase and no chain. For an agreed price you transfer your ownership of the property to the housing association, and your responsibility for the property ends there. For details of housing associations with purchasing schemes in your area, contact your local authority empty property officer.
You could choose to simply sell your property on the open market. Once again, choose an estate agent carefully using the same standards as you would for letting agents. Contact the National Association of Estate Agents (NAEA) – details overleaf.
If your empty home needs renovation before it can be let/sold:
Your local authority may be able to give you a grant for refurbishment costs in exchange for a lease on the property, and the government has recently reduced the cost of converting property (for example converting a house into flats) in some areas. Availability of refurbishment grants varies from area to area – contact your local authority empty property officer.
Some housing associations will pay either the full cost or a percentage of the cost of the refurbishment work in return for a lease at a reduced rent. This is an attractive option to owners who want to retain their property but cannot afford refurbishment costs. For details of schemes in your area, contact your local council empty property officer.
In addition, some housing associations will buy your dilapidated home under a purchase and repair scheme. Once again, contact your empty property officer for details of schemes in your area.
You might want to consider selling your home by auction. Prospective buyers make bids for the property on the auction day, and the successful (highest) bidder must go through with the purchase within a specified number of days. This can be an effective way to dispose of property which is difficult to sell and often results in a good price being achieved for dilapidated property. Contact the Royal Institution of Chartered Surveyors (RICS) (see below) for details of estate agents running auctions in your area.
Remember that whatever you decide to do with your empty home, bringing it back into use is always to your advantage. Bear in mind that, ultimately, local authorities have powers to order the compulsory purchase of your empty home if you have been asked to bring it back into use and have not done so. Your first point of contact should be the empty property officer at your local authority – he/she will be able to advise you on all the options available to owners in your area. If your local council does not have an empty property officer, let us know and we will do our best to put you in contact with an alternative local council officer.
How to rent your empty house?
Firstly do you want to become a landlord? Don't underestimate the work involved in managing a house. You will be responsible for its maintenance and will need to arrange things like annual gas safety checks. If you are interested there are a number of guidebooks that offer advice. It's not a bad idea to join a landlord's organisation such as The National Landlord's Association, which provide advice, support and regular magazines that keep you up to date. Some council's offer landlord accreditation schemes, which often include courses on becoming a landlord and discounts on products and services.
If this sounds like too much grief, you can get somebody else to manage the property for you. There is an industry of managing agents out there who will, for a fee, find tenants, collect rent, and maintain the property. Some are better than others but a good place to look is the Association of Residential Managing Agents website.
Another option is to get a housing association or your local council to manage it for you. They often have families and households who they need to house. Often they will offer good leasing schemes where they will lease the property for a few years usually in exchange for a guaranteed rent. Contact your local authority and ask to speak to the empty property officer.
How to sell an empty house?
In many ways selling an empty house is no different to selling any other type of property. The main difference is that the potential buyers are different. When the property market is booming this doesn't really matter. Most estate agents will be able to sell your property for you. However, in areas and at times when the housing market isn't so strong you may be better off selling at an auction or through a specialist agent. Look out for estate agents that specifically market properties to developers. You could advertise through a self-build plot agency that advertises properties to those wanting to restore or redevelop them. Try local housing associations or your local council they sometimes buy properties to restore and let out.
Auctions
Most empty properties are sold via auctions. Over 25,000 properties are sold in more than 1000 property auctions every year in the UK. Auctions are a quick and decisive way of selling; once the hammer has fallen a binding contract of sale is established. It can be much quicker than having the property hanging about for months with an estate agent. One of the great advantages is that auctions have a targeted audience made up of developers, cash buyers, investors and portfolio landlords who may well have different requirements to prospective homeowners buying at an estate agent. The very issues that make empty properties unattractive to homeowners may be appealing to these buyers.
There are many property auctioneers some of them are household names like Halifax, Savills and Allsop who operate nationally and run auctions featuring properties across the whole country. Other auctioneers are small local operations and will feature properties from a region or even just one town.
Auctioneers publish a catalogue a few weeks before the auction. This gives details of all the properties that it expects to be available. In practice some properties are removed and occasionally some properties are added before the auction itself.
Those interested in bidding can visit the properties in advance and carry out a survey
Auctions are held at centrally located venues often hotels. Anybody is free to attend
Choosing the right auctioneer is important. Clearly trying to sell an old wreck in an auction specialising in prestige mansions isn’t the best idea. Different auction houses attract different client groups and picking the one most likely to be interested in your property is a good way of choosing. Other factors you should consider are the size of the potential attendance at the auction; the more people that attend the more likely that a property is going to sell.
Look for the success rates of different auction houses. They vary between 60 and 90 percent. And lastly look for the fees, these vary too, but don’t forget that a good auction house that achieves good sales price will be better value even if its fees are higher.
What does it cost?
The seller is normally charged a fee by the auctioneer this covers a proportion of the cost of marketing the property and running the auction. This fee has to be paid even if the property is not sold. In addition if the property is sold the seller pays a commission to the auctioneer in much the same way an estate agent does. Charges are similar to estate agents fees. In addition most auctioneers charge a small buyers fee that is paid by the buyer if they are the successful bidder.
When the hammer falls at an auction, it establishes agreement of a binding contract between buyer and seller. The buyer must pay 10 percent of the total sale price of the property before leaving the auction house. And will normally have to pay off the remainder within 28 days
Click here for the most comprehensive list of UK residential auctioneers on the web
Really short-term options
Property owners often say that they need flexibility. Changes in the property market or their personal circumstances make it difficult to decide what to do with their property in the long term. This often leads to properties being left empty. Empty properties run the risk of being vandalised, and squatted and can deteriorate without anybody noticing.
There are a number of options that enable you to put the property to use for a short time and then review it later.
Shortlife housing – A housing co-op or association effectively borrows the property from you on a licence or a short lease. They manage the property for a short time (often in the region of 6 months to 2 years) Residents are found by the co-op they stay in the property with no security of tenure. The owner has a guarantee that they will receive the property back with vacant possession. The coop usually pays the owner a small rent, but the main benefit is the security provided by having the property occupied.
Alamo Housing Co-op 020 7272 3391
Brent Community Housing 020 7624 3168
Phoenix Housing Co-op 020 8980 1069
Westminster Housing Co-op 020 7289 0105
Property Guardians – Essentially the same idea as shortlife housing, commercial companies offer a “housesitting” service and install occupants in empty buildings to keep an eye on them. The owner has to pay a small weekly fee, but this is usually much less than paying for 24 hour security.
What can the council do to me if I leave my property empty?
Most councils have an empty property officer. Their job is to help you find a use for the property. Usually they will only use legal sanctions when a voluntary solution is not possible.
Compulsory purchase - Your local authority almost certainly has the power to buy your empty property with or without your permission. However, they can only do so if you have no realistic plans for it yourself and you won't consider any voluntary options for returning it to use. Council’s don’t use the power that often, although some use it more than others. If the council compulsorily purchases your property they will pay you full market value and sometimes additional compensation payments. If the council threatens to compulsorily purchase your property and you want to avoid it happening, talk to the council and try and agree a voluntary solution. If the council go ahead anyway you do of course have a right of appeal.
Empty Dwellings Management orders - If your property is in England or Wales the council may be able to use these to get your property back into use. If you have rejected reasonable voluntary solutions the local authority has the power to take over the management of the property. Initially for up to a year, but if you still can't agree on a voluntary solution with the local authority it can be extended by up to seven years. You will retain ownership of the property and will receive rent if any is due. The council will have most of the rights of a landlord including the right to do repairs and rent out the property, although they won't be able to sell it or secure debts on it. If a council uses this power you can contest it at any stage.
Enforced Sale - If you have debts to the council secured on the property the council can require you to pay them back. If you don't the council can force the property's sale in order to get its money. Councils are much more likely to do this if the property is empty.