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Martin's Blog 05/03/12 - Empty Properties - Are they Untapped Opportunities?
Empty properties are abit of a sore point for most councils and local authorities. Aside from the fact that they are often the cause of complaint to the council by neighbours and local residents because of their unsightly appearance, they can also attract other anti-social issues such as squatters and criminals.
Councils across the country are keen to put empty properties back into use, especially since in most cities there is a shortage of housing, and if you check with your local council, you’ll probably find that they have an ‘Empty Property Strategy’ which will outline their initiatives to work with owners to get empty properties habited again.
As property investors / developers, empty properties are good fodder and you may be able to register your interest in receiving details of empty properties that the owners would like to sell, with the local council. They can then ‘match make’ owners of empty properties who want to offload them, with developers and renovators who would be interested in buying.
According to The Empty Homes Agency, there are an estimated 785,708 empty homes in the UK and enough empty commercial property to create 420,000 new homes so there is a strong incentive to get these dwellings back into circulation.
Empty properties are defined as those that have been empty for more than 6 months. This includes dwellings that are:
Any group of bedsits, counted as one dwelling, only count as vacant when all are vacant.
Empty properties considered exempt from this definition are:-
- Second homes, holiday lets, and flats and houses normally occupied by students;
However, for you to benefit from the VAT exemptions below, no part of the property must have been lived in during the past 2 years (reduced rate) or 10 years (zero rate).
What are the advantage of buying an empty property to restore?
There are VAT exemptions available on empty properties to encourage restoration and re-use of them. If you renovate or carry out work on a ‘normal’ building, you will normally be liable to VAT at the standard rate. This applies to materials used and labour costs. However, this can be significantly reduced or eliminated if the property has been empty for over 2 years. The 2 main exemptions are:
- If the property has been empty for 2 years or more – VAT is reduced to 5% on most costs associated with renovating single house dwellings.
Local Authority Grants
Many local authorities will provide grants to owners of empty property to assist them in getting them restored and back into use. The eligibility will vary between different councils but you could find that up to half of the cost of your renovation bill is funded by the council. There will, of course, be a maximum grant and any funding provided will come with terms and conditions - so you should check with the local authority that covers where the property is located for their own rules.
You may also find that you can get a grant for home insulation etc. Contact the Energy Saving Trust on 0800 512012 or visit www.energysavingtrust.org.uk for information on what grants might be available
There are certainly plenty of compelling reasons as to why to seek out empty property to invest in, but before you start, your should first consider these points:
These are some of the lenders offering mortgage products particularly suited to rescuing empty properties: The Ecology Building Society, Buildstore, The Co-operative Bank and the Norwich and Peterborough Building Society. However, do search on the internet for other recommendations.
Aside from registering your interest with the local council as above there are other ways that you can find Empty Properties:
• Local council - Your local council will probably have a list of all the empty properties in their area. Some councils will be happy to let you see the information, but beware that others may not be so open. If they won't disclose the information you could make a written request - you've got a legal right to request it.
A couple of ways that you can trace the owner of an empty property are:
- Ask around. It may be as simple as asking the people who live near by. If you explain to them why you want to know, they will probably be happy to tell you.
Most local authorities employ an empty property officer whose job it is to get empty properties back in use. The officers work by persuading owners that it's more valuable to have a lived-in property than to have it vacant. They often have good contacts and can help to match up property owners with ready-made schemes and local housing providers. If this is unsuccessful, many have powers to compel owners to do something about the property, these include:
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Martin appeared on Jeremy Vine's Money Spot (BBC Radio 2) and spoke about the state of the property market in the UK and why now is a good time to consider buying.
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