The Landlord Blog

Unoccupied Property Insurance – How to Protect Your Property

Unoccupied property insurance is vital to protect your investment property while it is vacant. In addition, you may be shocked to discover that your homeowner’s policy will not cover your home when it is vacant. Never go on a long holiday without unoccupied property insurance covering your home. If you have planned a flat share, you must get special letting insurance to cover any damages that occur while you are away. Let property insurance does not cover unrented property. Even if there is only a short period of vacancy, you must notify the insurance company and obtain insurance for unoccupied property. Unoccupied building insurance is required for empty commercial buildings as well. If there is anything left inside the building one must obtain contents insurance for unoccupied premises insurance.

Protecting your property begins with the right unoccupied property insurance, but there is much more to protecting vacant property than simply buying insurance. It is also important to perform necessary maintenance and take action to prevent accidents, fire, vandalism and water damage. Protecting your property is simply a common sense matter. It is vital to insure that your property is kept safe while vacant.

 Protecting Property

• Before leaving a home make sure windows are closed and latched to prevent water damage as well as vandalism and squatters.

• Cut off the water and drain the pipes before leaving a home uninhabited and unheated in the winter.

• If you plan to leave the water and heat on for a couple of winter weeks when no one will be home, leave the taps with a generous drip, and be sure the pipes are wrapped and that they are in an insulated area. Perhaps leave a warming light bulb in particularly venerable spots.

• Make sure the doors are locked if you will be away, but leave a trusted neighbour your key so that they can check on the house, if you will be out of the area.

 Preventive Maintenance

It is important to maintain the property, and during a vacancy is the perfect time to spruce up let property between tenants. A good coat of paint, not only makes wood look better, its main purpose is to protect the underlying wood from rot. Protect any exterior exposed wood, with paint or an approved weather resistant stain.

Bring An Empty House Back to Life – Tips for Homes That Are In Good Condition.

Yesterday we spoke about how empty houses deteriorate rapidly and become targets for vandalism. We noted that putting your vacant property back into circulation would remedy this.  Having covered empty property that was in need of a few fixer-uppers, today we’ll move on to how to get some usage (and monetary value) out of a house that’s ready to be lived in.

Letting Through Local Council

If your house is in move-in condition, you might want to let the property through your local council “under a private sector leasing scheme (availability of these schemes varies from area to area),” per the instructive independent charity Homes From Empty Homes.

If that’s what you decide to do, you’ll grant the council a lease on your property for, say, a period of five years. In turn, the council will act as a sort of managing agent.

“Councils usually charge one month’s rent a year for managing the tenancy,” notes EH, but this can vary so check with your local council.

(This, in and of itself, will save you quite a lot of money. Although salaries vary greatly, depending on area, managing or estate agents can bring in £55,000 plus OTE.) Source: Prospects – the UK’s Official Graduate Careers Website

What does a managing agent do?  She or he does the following:

• Screens for a suitable tenant;
• Acts as a go-between, between you and the tenant where the tenant has queries or needs repairs;
• Arranges for these very repairs (inside and outside the property);
• Collects rent; and
• Handles all administrative and legal issues arising out of the tenancy.

What would your responsibilities be, as a landlord, throughout the time frame of this leasing scheme?  You’d have to:

• Take care of all internal and external repairs to the structure;
• Handle all maintenance on the property; and
• Pay buildings insurance.

 Letting Through a Housing Association

If you choose to let through a housing association, the process is similar to the one described above except that the housing association (rather than your local council) would act as managing agent.   Per the EH site, “your local council empty property officer can give you details of housing association schemes in your area.”

Letting Through a Private Rental Agency

If this is the option you are going for, make sure your rental agent is signed up to The National Approved Letting Scheme (NALS).  Such agents have certain standards they are obligated to live up to. NALS-approved agents will:

• Screen for and locate the ideal tenant. This includes checking references;
• Give you up-to-the-minute advice on rent and insurance levels;
• Collect the monthly rent and hold it in a separate account;
• Prepare and provide a monthly statement;
• Arrange for safety checks for the utilities;
• Transfer bills into your new tenants’ name;
• Set up necessary and routine maintenance work;
• Handle all administrative and legal paperwork; and
• Arrange for regular inspections of the property.

Your only responsibilities would be to insure and pay for building insurance, and to take care of any extensive repairs and maintenance.

Selling vs. Letting

If you’re not interested in renting your property, and would prefer to sell, you might consider selling it to a housing association under an “existing satisfactory purchase” scheme.  The process is quick, streamlined and painless.

According to the EH site, “The advantage of selling to a housing association is that you do not have to pay estate agents’ fees and it is normally a quick sale, with a cash purchase and no chain.” 

After both parties have agreed on the price, you transfer your property’s ownership to the housing association and your responsibilities end there.  To be steered in the direction of housing associations which are affiliated with such a scheme, and for further details, contact your local authority empty property officer.

Finally, if you are confident that you could do a good job selling your empty house  on the open market, it’s recommended that you take the same care in  choosing an estate agent as you would a letting agent.  Contacting the National Association of Estate Agents (NAEA) for a referral might not be a bad idea. 

 Graphic courtesy of “Homes from Empty Homes”.

 -David Slade

Guardians or Squatters? The Former Might Prove Attractive, Insurance-Wise.

The Guardian’s Money/Property section recently disclosed a government consultation specifically on the so-called criminalisation of squatting.  Interesting, because not so many years ago, squatting by key workers  (as written about in a BBC News Blog.) was seen as viable, profitable and preferable to its alternative…the actual criminalisation of your property via theft and vandalism.

In the more recent news, Lisa Bachelor earlier this month wrote on how most property owners’ chief concerns have been that they have no idea if dealing with squatters is a civil or criminal matter.  So they hadn’t the slightest idea on how to approach those unwanted guests.

Additionally, squatters rights, by their very definition, means you can’t use force to evict.

Not a problem, you might be thinking.  There aren’t that many of them around anyway, right?  Wrong. There are, as of the latest government figures, about 20,000 squatters in the UK.  And “the real figure is probably higher,” notes Bachelor. 

 “If you are going to be away from a property for a number of weeks you should inform your neighbours so they can act as watchdogs,” Bachelor writes, quoting a Directgov site that lists tips on protecting your unoccupied property.

And “[o]wners of empty commercial property should consider hiring security guards.” 

Nick Martyn, a property litigation solicitor at Mundays Solicitors says:.  “Squatters can’t force their way into your property – they could then be arrested for causing criminal damage.”  However, forced entry can be hard to prove.  “[T]here are often practical difficulties in establishing exactly how they entered” explains Martyn, ” and it can be [hard] to prove a lock was not already broken if they argue otherwise.”

OK, let’s turn the clock back a few years, to 2003, when that BBC News blog reported that  workers-squatters known as Guardians  deterred non-key workers-squatters and, more important, damage.

 “Key workers like nurses and teachers, who cannot afford the high rents in London, are being helped by a new housing scheme,” noted the blog. It seems that, by paying low rents in these vacant properties, they had found a way to stay in the city of their choice.

The idea of Guardians started in Holland, where key workers had been placed in everything from banks to a mayor’s country retreat. It was such a popular concept in London that the waiting list grew to 500. Back then, Camelot Properties, the property management company operating the “scheme”, claimed that the people moving in were cheaper than security guards and tended to develop a proprietary air.

We read that Camelot’s Joost Van Gestel told BBC London: “People move in with their belongings and live there for the time it is vacant. “The signal to the neighbourhood is ‘property in use, please stay away’.”

Also, if there was anything that needed to be repaired, it was reported right away.

Back then, “low rents” must have been REAL low. And as squatters were “living” in these premises, owners even qualified for lower insurance rates.  A win/win situation.

Perhaps if you got to know your squatters—asked them if they’d promise to protect the premises and ensure good maintenance–the whole issue might be worth revisiting.  As the Guardian at the Emerald City Gates* once put it: “That’s a horse of a different colour!.…Come on in!”

 *”The Wizard of Oz” (1939).

Graphic  – Linda Nylind for the Guardian.

-David Slade

Bring an Empty House Back to Life – Tips For Property That Needs TLC.

If you have an empty house which is currently not being lived in, it’s an asset-at-risk, per the Homes From Empty Homes site. 

Not only are you not making money from your property, but you are allowing your property to deteriorate. This, in the long run, costs you money. 

“Empty properties deteriorate rapidly and become targets for vandalism and crime,” says the site. “[They] are more costly to insure (if insurance is available at all)* and provide no rental income. Excluding the cost of vandalism and depreciation, keeping your property empty could be costing you as much as £135 a week (that’s £7018 each year).”  These figures were arrived at by the Empty Homes Agency, ORBIS, DETR, RICS, Insurance Broker.

So what’s a vacant homeowner to do? Realistically speaking, it’s easy to feel a bit overwhelmed as there are so many expenses and options to weigh. It’s important to keep in mind, ’though, that the expenses will never be as high as they are now…when you’re leaving your house to stand idle. 

Determine Which Category Your House Falls Into

There are proactive steps you can take to revive your vacant property.  First you must ascertain which category your house falls under: sale-, lease- or rent-ready…or in need of  Tender Loving Care (or repairs).

Grants For Homes That Need Repairs

If your property is in need of repairs, you can, in exchange for a lease on the property, apply to your local authority for a grant for the cost of refurbishing your home .  According to a reference page** on the bbc.co.uk site, “Most local authorities employ an empty property officer whose job it is to get empty properties back in use.”

Additionally, there are some housing associations which will pay either the full cost or a portion of the refurbishment monies in exchange for a lease “at a reduced rent”. (You are still receiving monies that you were not receiving, before.)

If you’re open to the idea of selling your house outright, there are housing associations that, according to the Empty Homes site, “will buy your dilapidated home under a purchase and repair scheme.”  Again, you are encouraged to contact your empty property officer for details.

Another reason to contact your empty property officer is to be advised on all your options as, ultimately, you may be forced to sell your property if you do not comply with certain requests.

Per the Empty Homes site: “[L]ocal authorities have powers to order the compulsory purchase of your empty home if you have been asked to bring it back into use and have not done so.” The BBC.co.uk site explains it thusly: “As a last resort, the local authority has the power to buy a empty property with or without the owner’s permission.”

Renting/Selling Your House If It Needs Work

Before hanging out a “Property to Let” shingle, reconsider the amount of work and responsibility involved in being a landlord. “You will be responsible for its maintenance and will need to arrange things like annual gas safety checks,” notes the Empty Homes site. There are national groups which might offer insight and support. One to consider is the National Landlord’s Association.  (They offer regular magazines to keep you up-to-date on timely topics.)

If you would like to sell your house, you should research the state of the housing market.  If times are booming, you won’t have much trouble. Any professional agent will be able to help.  If times are lean, however, you might have to sell through a specialist agent—or through an auction.

Consider Auctioning Off Your Hard-To-Sell House

If the idea of selling your house via an auction appeals, this is how it works:  prospective buyers bid on a pre-selected auction day.  The highest, or winning, bidder must make good on that purchase within a number of days.  “This can be an effective way to dispose of property which is difficult to sell and often results in a good price being achieved for dilapidated property,” notes the Empty Homes site. 

(More tomorrow on what to do if your vacant house is in good condition.)

-Graphic courtesy of “Homes from Empty Homes“.

-David Slade

*   It’s important to note that there are groups—Insurance Protector Group is one—that will provide unoccupied property products and unoccupied residential property insurance.  A Google search will provide more.

**  A page which, due to unchanging information,  does not need to be updated.