According to official figures, more than 200,000 homes in England were empty for at least six months during 2016. In London, this equated to 19,847 vacant properties with a total value of £9.4bn, based on the average price in the capital.
For landlords, there are a number of reasons why a house may lie empty for this amount of time, whether they’re looking to sell or let. The world’s super-rich have come under fire for buying expensive London property then leaving them unoccupied until they can be sold later for a profit, at a time when more than 300,000 people in the UK are now categorised as homeless, according to the charity Shelter. The fire at Grenfell Tower in Kensington also helped to bring this topic to the fore again. But, for most landlords, a property isn’t left empty intentionally; it’s often a case that they’re waiting for a signed up tenant to move in or it needs work before it can be let/re-let.
For those looking to sell, a new league table produced by the HomeOwners Alliance shows that the average time for a property to go ‘under office’ is 61 days. The legal process typically takes around three months to complete, which means that the whole sale will take 5-6 months - tallying up to the aforementioned official figures.
What’s more shocking is the fact that more than 11,000 homes have stood empty for at least a decade, according to new research by the Liberal Democrats. However long it may be it’s important to assess the true cost of holding an empty property, because there are some ‘hidden’ expenses. For the purpose of this article let’s take a house that’s been vacant for six months.
Mortgage and council tax
Chances are you’ve got a buy-to-let mortgage on your property, with most buy-to-let landlords putting down a deposit of 20-25%, meaning they have a 75-80% loan-to-value mortgage. On a property worth £226,071 - the average house price in the UK as of November 2017 - you’ll be re-paying around £510 a month, based on an interest-only mortgage. It goes without saying that this will need to be taken into account when working out how much you’ll lose every month on an empty property. Over a six month period you’d need to pay £3,060 to keep up with the mortgage alone.
Council tax is another consideration, especially after the Government announced a 100% premium on empty properties last November, in a bid to clamp down on “buy-to-leave” landlords. It’s also worth bearing in mind that local authorities can use empty dwelling management orders (EDMO) to take over properties that have been empty for six months or more, though these are really used.
Vacant property insurance
It is, like any property and expensive possession, important to ensure that your empty house is insured. Most companies have a clause in their policy which states that if a property is vacant for 30-60 days then the insurance is void. According to MoneySuperMarket data it the average cost of insuring your home if it’s unoccupied for 30-60 is £131, which is worth the peace of mind when you consider that empty houses can attract issues such as asset theft, vandalism, fly-tipping, and increasingly, being used for fraudulent transactions.
Property fraud is increasingly common in void rental homes. There have been a number of high profile cases where fraudsters have assumed the identity of the landlord and then been able to sell the property and make off with the proceeds.
Top tip: you can get some monthly income back by renting out your driveway via Just Park. This will also help to make your property look lived in, and will reduce the chances of criminal damage/activity from occurring.
If your last tenants left the property in a poor condition, then this will be the first thing to sort. But of course, the more work that needs to be done, the longer the house is likely to be empty. Even if everything was left in a great condition, six months is a long time. Here are some maintenance expenses you will need to consider:
● Gardening - an unkept garden is one of the first telltale signs that a property is empty, which is why you may choose to hire a professional to mow the lawn/cut the hedges.
● Cleaning - dust and cobwebs makes a property look unattractive and multiple viewings will cause wear and tear to carpets overtime.
● Utility bills - you’ll still have to pay a standing charge on an empty property, but some may choose to keep the lights on via automatic timer switches. This creates the illusion that the house is lived in.
● Frequent visits - you may want to check on the property regularly, or hire a company that will do it for you - either is an expense that adds up over time.
By Jason Harris-Cohen, founder of fast house buying company Open Property Group.