Landlords concerned with making moves amid the current market may be biding their time and holding on to vacant properties. Is the cost of holding your empty property spiralling?
The property market finds itself in an uncertain place amid covid-19 and the restrictions that have been imposed to keep us all safe. This may extend the time that properties are left empty as development and sale plans are put on pause.
Security costs, council tax, business rates, bills and maintenance still apply when properties are empty leading to significant burning costs and negative returns.
Property guardianship can mitigate the costs of holding empty property as guardian companies tend to cover the costs attached to running the buildings.
For commercial property owners, the costs savings are significant if business rates can be reduced by temporarily converting to residential (no planning implications). We have a 100% success rate in reducing business rate though our relationship with the Valuation Office by using our guardian solution.
Empty Property Costs
Vacant Property Security
Visibly empty homes attract unwanted attention. Vacant properties are a target for squatters, vandals and other criminal activity so it is important to ensure the building is secure.
Empty property security options involve everything from 24 hour security guards through to security dogs and metal screens. A 24 hour security solution can costs in the region of £100,000 a year. Even security screens cost several thousand of pounds and do nothing to guarantee against the risks to empty buildings.
Vacant Property Insurance
Due to the vulnerability of empty buildings, standard property insurance will become void if the property remains empty for a lengthy period of time. This period varies depending on the insurance provider but many policies are void after 3 months. Vacant property insurance is more expensive than standard insurance due to the risks attached to periods of vacancy.
Bills and Maintenance
Even if a property is empty, it will still have bills to pay leading to outgoings that can add up to significant amounts. Regular bills such as water, electricity and gas usually incur a standing charge. Maintenance issues regularly arise as empty properties tend to deteriorate over time if it is not being inspected on a regular basis. One of the biggest risks to empty buildings comes from expensive accidents such as flooding or water damage.
Council Tax and Business Rates
For some owners, the only option may be to allow these assets to remain empty during this time but the cost of owning empty buildings are higher than ever. Councils now have the option to charge a 200% premium on council tax – trebling the bill for properties that have been empty for five years or more. For those that have been empty for 10 years or more, from April 2021 your local authority could charge you a 300% premium.
This applies even if you recently took ownership of the building if the building was vacant with the previous owner.
Business rates have a crippling effect on occupied businesses let alone for the owners of vacant properties. Our ability to reduce rates makes our solution a no brainer for the owners of empty buildings as no other method of security offers the financial benefits on offer through the use of guardians.
If you would like to make saving from your vacant property portfolio, get in touch for a free proposal.