Guest Blog: Converting empty properties into profit15th July 2013

Did you know that there are around 920,000 empty homes currently in the UK? 

Thanks to the economic downturn and property crash in some parts of Britain, many buildings have been left derelict and uninhabitable across the country – while more than a third of all vacant properties have been empty for more than six months. 

Research from Endsleigh and the vacant property action group Empty Homes estimated that there’s £115 billion tied up in empty homes in England alone. But property prices are starting to look a little more encouraging and there are plenty of vacant homes that could be worth a pretty penny for ambitious investors.



Why are properties empty?



The fact that there are so many empty homes across the country does hint at the difficulties inherent with purchasing and renovating a home – not to mention profiting from it. Regenerating a dilapidated property can be a thorny, difficult process and an empty home can be harder to buy than you think. Existing legislation dictates that an owner receiving medical care or support can’t have their property seized by a local authority empty dwelling management order.

 Many homes also lie empty during protracted probate proceedings or when the cost of care is being reclaimed from the deceased’s estate.



Location, location, location



Some cynics often point out that empty properties are far from a perfect investment opportunity because of their location. After all, there are plenty of vacant homes in depressed, ex-industrial areas such as the North-West, Yorkshire and the North-East. And while it’s undoubted that a wide number of empty homes lie vacant in less affluent areas, there are plenty of opportunities for investors in up-and-coming and exciting areas. For instance, Empty Homes estimate there are over 75,000 vacant properties in London alone – and a good investor will be able to pinpoint good investment opportunities. 



Find your finance



If you’re to make a profit from the property then securing the appropriate funding is important too. Many investors are dissuaded from doing up decrepit properties because they’re not able to obtain a commercial mortgage in the house’s current run-down state. But you can fund a purchase with structured development finance that pays out at different points in construction, and then apply for a cheaper commercial mortgage when the property is fully developed and ready for renting or selling. 



Help is available



There are some enterprising local authorities who are keen to help individuals and developers to regenerate deprived areas and dilapidated homes, with grants to help with renovations. For example, Ealing Council have offered grants of up to £30,000 for owners to repair a property in the west London borough – provided they let them at an inexpensive rate for five years. There are other schemes available across the country, so it’s well worth investigating local planning incentives if you’re buying a previously discarded property.



Work is a four letter word



Few profitable property investors are scared of hard work, but making a vacant property liveable and profitable again involves long hours and a fair amount of financial outlay. Snapping up empty, derelict properties can be done relatively cheaply from auctions as well as more mainstream estate agents, but you’ll need to act quickly to prevent others securing the deal before you. 




About the author

With nearly a decade of experience in arranging commercial mortgages, first with Barclays and then as a consultant with The Money Partnership, Ben Lloyd now heads Pure Commercial Finance, where he is involved in brokering finance for businesses, property developers and property investors. When not spending his time arranging bridging loans and commercial mortgages, Ben enjoys Rugby, Football, Golf and Skiing.