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Tips for managing Empty Property

Published on December 29, 2014 by Danko Puskaric in News, Property Investment

Empty property means no income for the landlord; boarded up empty property means a blight on the area for the local council or residents and finally, empty property means a lack of choice for potential tenants!

Obviously, there are a number of reasons that can result in a property being laid empty. For example the property may be undergoing renovation or redecoration. It may well be that there is a gap in the period between the departure of the incumbent tenants and the arrival of the new ones. It might very well be that there is an overall lack of tenants searching for properties in the area. However the worst scenario of all is when the property has fallen into such a state of disrepair that it is impossible to rent out, without the expense of extensive renovations.

 

Funnily enough and despite the national shortage of housing, it would appear that there is an overall increase in empty residential property throughout the country. This is normally brought because of the state of repair of the property but an empty property brings with it an additional amount of social problems.

Empty properties attract vandals and potential squatters. Remember that once a squatter takes over premises, it can be extremely expensive and involve a long period of time before the landlord is able to regain control of the property.

Graffiti artists need somewhere to practice and what better than the external walls of an empty building! Similarly, an empty property is virtually an open invitation for thieves to extract anything of value, such as copper piping, lead flashings and electrical wiring.

I mention all of these aspects at the outset because each and every one of them not only contributes to the loss of income for a landlord but also to a potential large increase in expenses in order to put right any damage that may occur during the period of vacancy.

There is also the matter of Empty Dwelling Management Orders which were introduced within the Housing Act 2004. I will deal with this in more detail further in the article.

Voids Management

At first glance, this might seem a shocking headline but in reality what it means is by good management of property stock, a landlord can keep the vacancy of properties to a minimum.

At some time or another, a property will need redecoration, repair or even full renovation. The secret is to try and keep the property vacant for the shortest time possible and thus substantially reduce the risk of any of the problems listed above.

To make this work effectively, a landlord should keep detailed records of each property, such as the essential details of the tenant, including expiry date of the existent tenancy agreement; the date and nature of the last repairs and/or redecoration; a current list of the actual state of the property, detailing any major repairs or renovation that needs to be undertaken at some time.

The ideal situation occurs when all renovation, repairs and redecoration can be completed at the same time. As soon as one tenancy has finished, a coordinated repair schedule should be put into place so that as soon as the tenant leaves, repairs can be started immediately.

Whilst this may mean that the building is not necessarily being “lived in” it does give an appearance of occupancy of some sort and thus reduce some of the risks I have previously mentioned. However, there is often a gap between the time repairs are completed and the arrival of a new tenant.

The best way to overcome this void – hence the name Void Management – is as soon feasible during repairs, show potential new tenants around the property so that when repairs are finished, they can move in immediately. Good management, particularly when there is demand for rental property in the area, can ensure the well-being of the property, whilst at the same time reducing the loss of rental income to the absolute minimum.

There are a number of companies throughout the country that specialise in Voids Management when it comes to refurbishment. Such companies will closely manage and undertake the repairs to ensure that unoccupancy time is kept to the minimum, yet the building is protected at all times. This actually takes away from the landlord the coordination time to make this an effective operation and is well worth consideration by the smaller landlord.

Local Council Re-lets

It is interesting to note that several Local Councils throughout the country offer private property owners and indeed on occasion, private landlords, the facility whereby the council will take over the empty premise for a period of up to say six months and let it out on behalf of the property owner. This is not a normal Tenancy Agreement and therefore is not subject to these terms and conditions. Any agreement issued under this scheme is subject to a maximum of 28 days termination. As I have said, whilst the scheme operated by a few councils is primarily intended for the private property owner, there are a limited number of councils who will assist private landlords, particularly where there is an abundance of empty properties in the area.

Property Guardians

Once more this is a new concept that is starting to attract attention throughout the country. It appears to have been based around a format known as Trusted House Sitters whereby people wishing to go on holiday but not wanting to place their pets in care, arrange for somebody to come in and look after the property and pets whilst the owner is away. The advantages are mutual since the owner’s pets are looked after and the Guardian has a holiday in another part of the world free of charge.

In the commercial world, this has been applied in a similar way and works in this manner: –

A company who offers the services of Property Guardians will, for a small management fee, locate a Guardian to inhabit your property. This person will be granted the sole use of one-bedroom and the additional use of bathrooms and kitchen. Each person is carefully vetted and must be employed at the time of agreement. The habitation by the Guardian does not form part of a normal Tenancy Agreement but occupancy rights are granted to the management company by way of a licence. This means that a period of 28 days’ notice can be served upon the occupant to vacate the premises.

This offers several advantages to the private landlord who has a number of empty properties. First and foremost, it provides a minimal income by way of the nominal rent. More important, it turns the property from an empty one to an occupied property. This in itself strictly minimises the risks of theft, vandalism and potential squatters. Furthermore, it can also reduce a substantial increase in insurance premiums when a property lies idle and empty.

Obviously, this may not be an ideal solution when major renovations are being undertaken to the property concerned. However, by careful negotiation with the management company, any renovations could be undertaken on staged bases so that work is completed, yet at the same time, the property remains occupied.

Protective Measures

If you find that your property is going to be vacant for a long period of time without any form of possible occupation or, repair work is not being undertaken, then you need to put in hand immediate steps to prevent theft, malicious damage, vandalism or invasion by squatters.

In the first instance, make immediate contact with your insurance company. There is no doubt that they will have certain limitations with regards to actual insurance cover when the property is vacant and they may also require certain forms of physical protection.

Security measures – a number of the necessary measures you should undertake relate to the area in which the property is located. For example, if the property is in a generally run down area, it would be perfectly in order to place external protective metal grills over all windows and doors, since these would not look out of place. In other areas, it would be possible to board up the windows on the inside, having first placed blinds or curtains over the actual glazed area and so gives the impression that the premises were not empty.

Ideally all utilities should be switched off at the mains supply during the period of unoccupancy. An interesting development within the security industry is the use of monitored CCTV cameras. Such cameras are placed at critical points within the building and record a 10 second loop. If activated, the monitoring station can immediately look at the recorded 10 second loop and identify it is an actual intrusion which requires an urgent police response.

In any event, either the landlord or their property agent should make regular visits to the vacant property to ascertain as to whether there has been any damage such as vandalism or theft, or indeed whether the property has been invaded by squatters. I cannot emphasise enough the problems that can be caused by squatters when they take over the property!

Empty Property Management Order

Now as I mentioned at the beginning of this article, the Empty Dwelling Management Order (EMDO) granted new powers to local authorities under the auspices of the Housing Act 2004.

Effectively what this means is that any private dwelling, rental property or otherwise, that lies vacant for a period in excess of six months can fall under the control of a Local Authority.

The property does not need to be in a dilapidated state or completely uninhabitable for the enforcement of an EMDO, which should be a warning to a private landlord.

There are normally 10 exceptions where an order may not be enforced but these primarily relate to a private owner and not a rental property. The only real exception that may apply to a landlord is where it can be proven that the property is genuinely up for sale or, the property is part of an inheritance by the landlord on which probate has yet to be finalised.

A council may not grant itself an Empty Dwelling Management Order without obtaining approval from the Residential Property Tribunal, which is an independent body. However, once approval is granted, the EMDO effectively gives the council the right to take possession of the property, although not ownership. As a result, the council may enter the property and inspect its condition but more important, it can prevent the landlord or agents from letting the property during the enforcement period of the order.

The initial period is for 12 months and is known as the interim EMDO. It is a councils’ responsibility to try and reach agreement with the landlord during this period as to how the property may be brought back into use. If an agreement cannot be reached, then the council may apply for a final EMDO which could well be in force for a period up to 7 years.

During this interim period, the council will try to reach agreement with a landlord which may well involve introducing a tenant into the property. However if such an agreement cannot be reached, then the council must either hand back possession to the landlord or enforce a final EMDO and at that stage, the council will have the right to introduce tenants whether the landlord grants permission or not.

One interesting point is that should such a property require money to be spent in order to bring it up to a habitable state, this is not normally recovered from the landlord but is recouped by the council from the rental income.

Concluding Remarks

There are various areas within the UK where there is neither a shortage of rental property nor indeed a demand. This has caused a surplus of unoccupied dwellings.

Obviously if a landlord owns a rental property, then it becomes an overhead whilst empty since there is no rental income. Selling such properties, particularly when not in a good state of repair, can take many months and thus prove expensive.

Should you as a landlord have such properties for sale, we may often be able to help by arranging a cash purchase which can normally be completed within a matter of days rather than months. Don’t hesitate to contact us in order to find out more about this potential option.

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About the author
Danko PuskaricDanko is IT professional with big passion about properties from young age. He is based in Manchester where he actively investing in properties and helping others to sell their houses.

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