Getting Started with Derelict Property

What is derelict property?

Derelict property can be defined as a place or building that is empty and in a bad state of repair, caused by it not being lived in or unused for a long period.

Another term that may be used before a property is defined as derelict would be a long-term empty home.

Whilst there are many derelict properties across the country, you can be sure there are more long-term empty homes than you might expect.

Getting started with derelict property

Empty Homes in the UK and England

A generally accepted definition of a long-term empty home is when it has been unoccupied for at least six months.

Although it is worth keeping in mind that this “definition” doesn’t always consider any military housing, holiday homes, or rental properties.

Official statistics show that across almost 100 local councils, at least 1 in 50 homes in the UK are empty long-term, and when you add vacant 2nd homes, it reveals that 1 in 25 homes in England have nobody living in it.

Action on Empty Homes recently published an article on the most authoritative guide to empty homes data. They collated data provided directly from the UK government website and converted it into an easy-to-read table in a downloadable PDF.

With such high numbers of long-term empty homes in the UK and England, it’s not difficult to see how so much property becomes derelict!

Top 10 Reasons why property becomes derelict

  1. The owner may have struggled with the financial side of upkeep and repairs to the property.
  2. There may be planning restrictions that can impact the occupancy of the property.
  3. Problems with banks or leaseholders.
  4. Land disputes and road closures can cause access problems for property owners, especially if looking for a renovation project.
  5. Owners can sometimes hold out for investment reasons, waiting for the local housing market prices to align with their expected ROI (return on investment).
  6. Sometimes an owner can keep hold of a property for too long, the market stagnates, and the cost of marketing the property to sell it becomes prohibitive.
  7. Finding the right tenants to move in and occupy the property can be difficult, especially in more rural locations.
  8. Regarding development, planning submissions can often hit multiple issues along the way.
  9. It is possible that the previous owner passed away and the new owner has inherited the property, or they may be untraceable.
  10. Death duties, or inheritance tax, can also be an issue when it comes to the passing of a previous owner.

Whilst this isn’t an exhaustive list by any stretch of the imagination, and it certainly does not encompass the granular detail of any individual situation, the top 10 list does highlight a common pattern for why homes can often become derelict over some time.

Unoccupied property insurance

On the subject of empty homes – if you own a home you know will be empty for 30 days or more, you should probably look into unoccupied property insurance.

It’s also important to inform your standard home insurance cover provider that the property will be vacant for an extended period. Otherwise, it may invalidate your cover, meaning that any future claims you make could be turned down!

How does an empty home become derelict property?

So we’ve already mentioned why a property may become derelict, but this doesn’t explain how an empty home can become so run down and distressed in appearance and structure that it can have the following impact:

Gardens become overgrown and unsightly

When a garden isn’t maintained and is left to its own devices, depending on the foliage, plants, trees, ivy, etc., located close to the building, it can start to cause expensive damage to the property, even impacting its structure and safety.

Empty homes are an easy target for anti-social behaviour

An empty house can become a target for anti-social behaviour and crime, including theft, vandalism, arson, and squatters.

Long-term empty homes can often become too intriguing for mischievous or bored kids and teens. They can often lead to accidental (or purposeful) fires – which could have unforeseen consequences if suppliers have not cut the gas off.

It’s also possible for fires to be started accidentally, caused by leaking gas pipes and faulty electrics, especially when there’s been no maintenance for extended periods.

Burglars and empty property

When burglars target an empty property, they will steal anything of value, including radiators, copper pipes, lead roofing and flashing, etc., for scrap value.

This will obviously start to create issues with water ingress and, over time, the property’s structural integrity.

The negative financial impact of derelict property

The visual state of a property, along with the structural safety of a building, can impact the valuation of other local properties and estates and insurance premiums over extended periods.

So if you’re open to buying derelict property, you may find that communities will be thankful and quite receptive when it comes to enquiring about potential renovation properties.

How to find derelict property for sale

In the age of the internet, you’d think it would be easy to find derelict property for sale, right?

But, as mentioned earlier, there can be many intricate reasons why a property is derelict in the first place, so, unfortunately, it’s not as easy as doing a property search on Zoopla or Rightmove.

It will take a bit of manual work to find the property first, and even more work to try and find the current owner to make an offer! But don’t let that put you off.

As I mentioned earlier, you will probably find that communities will usually be quite receptive to potential buyers looking to buy the derelict property that has caused their house valuations to plummet, and home insurance premiums to skyrocket over the years!

Can you claim derelict property?

In the UK, it is possible to apply for adverse possession, otherwise known as “squatter’s rights”. It’s based on an ancient philosophy of ensuring landowners use it properly.

While I will cover this subject matter in more detail in the future, I think this guide to adverse possession is worth reading.

How to buy a derelict property?

When it comes to buying a derelict property, you are probably going to hit a few kinks in the road, as the process isn’t quite as straightforward as when buying a house that is suitable to live in.

One of the key issues you will probably face, especially if you have no prior experience with buying derelict properties, is financing the purchase.

Can I get a mortgage on a derelict property?

Unfortunately, many (most?) lenders will likely reject mortgage applications where the property is uninhabitable. This is because the property itself tends to act as the guarantor of the lender receiving their money back.

After all, a derelict property has very little immediate value to recoup for the lender if something happens to you, the borrower.

You do still have options, though, in the form of bridging finance or a bridging loan.

What is a bridging loan?

A bridge loan is a short-term interest-only loan designed to “bridge” a financial gap between an incoming debt and credit becoming available or to provide a borrower with an influx of immediate capital needed to fund a project, such as the renovation project you’ve been planning!

The downside of a bridging loan is usually a higher interest rate when compared to standard loans, mainly due to the higher risk to the lender.

This means you should be sure that your project management skills are up to scratch before signing on the dotted line.

Getting a mortgage for a renovation project

Fortunately for you, there are some pretty solid guidelines for defining a habitable property that is mortgage suitable for your renovation project.

These guidelines would usually be based on whether a property is habitable, including the following (but not limited to):

  • Ensure the property is both waterproof and windproof.
  • Ensuring there is no significant dampness or mould that could be a health risk.
  • The property has a standard roof(s), preferably with tiles or slate. You will probably have issues getting approval with flat, felt, thatched, or tin roofs.
  • If the property can be made secure.
  • Staircases have building regulation handrails.
  • A working kitchen and bathroom.
  • No contaminated outside areas, which can include: Japanese knotweed, oils & tars, chemical substances, gases, asbestos, etc.

In order to get a mortgage for your derelict property renovation project, you will need to make it safe and secure.

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