Owning or maintaining a vacant property can be very expensive. Traditional security fees and maintenance costs alone can leave the landlord with a large bill to pay, however, there are also plenty of unexpected costs that can come as a nasty surprise. Not ideal while the building is empty and making no revenue.
It’s easy to get wrapped up in thinking about the future of the property and where the next lease will come from. However, careful planning for the short term can go a long way to save money in the long term. In the interim period, while the building is vacant and needs protection, it’s important to try and avoid outgoing bills that dramatically outweigh a building’s pay-off.
We’ve identified the 3 main unexpected costs that often catch landlords out and provided some simple solutions to help you avoid paying them.
1 - Empty Property Business Rates
Introduced by the government to try and encourage landlords to lease their empty buildings as soon as possible, most vacant properties have to pay empty business rates after 3 months. (There are some exceptions. For example, agricultural or religious buildings may not have to pay. However, there are strict legal requirements for these exemptions, so it is worth speaking to your local council.) For non-exempt vacant properties, the empty property business rates kick in after 3 months and can cost the landlord a fair amount.
How to Avoid:
We’ve heard of all sorts of different suggestions and schemes to try and avoid empty property business rates (we’ve even heard of landlords moving into the property to avoid the bills). However, by far the simplest and easiest way to avoid empty property rates is to find a temporary use for the building.
Property Guardianship is a good option here. Short-term guardians move into the property to protect the building while it is empty. They live on-site 24-hours a day to provide around the clock security (saving the landlord money on security fees), and as the building is no longer considered empty – the landlord doesn’t have to pay empty property business rates.
The guardians do not count as tenants but they will pay any council tax due. Plus, if your property is entitled to any further business rates relief, at Blue Door Property Guardians we have a specific team on hand to help you save even more money.
Photo by Trinity Nguyen on Unsplash
2 - Vacant Property Insurance
If your property is going to be empty for more than 30-60 days (depending on your policy), then you will need to upgrade to vacant property insurance.
This specific type of cover protects you from any damage costs incurred as a result of the property standing empty - for example, rodent infestations, weather damage or squatters (every policy will be different, so read the fine print carefully).
It can be expensive but as vacant properties are so much more vulnerable to damage, having the right insurance is very important. Plus, if you fail to tell your provider that your property is now empty, you risk invalidating your current cover.
How to Avoid:
The only way to avoid needing vacant property insurance is to make sure your property doesn’t stay empty for longer than 30-60 days. If you are unable to lease your vacant property within this time, property guardianship can save you from needing to upgrade your insurance.
As the property guardians physically move into your property, the building is no longer considered vacant and there’s no need to upgrade your insurance policy. You also have the added benefit of the guardians doing regular patrols and checks. If there are any small problems, such as dripping pipes or broken windows, the guardians will alert us, so it can be fixed before it turns into a big problem. Reducing the likelihood that you will need to make an insurance claim anyway.
3 - Security Fees
Security fees themselves aren’t necessarily unexpected – but the amount they cost is often underestimated.
To secure a building properly, you will generally require two security guards patrolling the property 24/7. This is typically considered the minimum level of security needed to avoid the most common threats. But security guards are also the most expensive form of security, which is not surprising when you consider the man-hours involved in 24/7-365 guarding. We estimate that for a vacant commercial property, this could cost upwards of £105,000 per anum.
Photo by Edward Howell on Unsplash
How to Avoid:
Property guardians perform the most essential part of a security guard’s role (namely living in the property and sleeping - especially at night when the property is most vulnerable) but there is a key difference: Blue Door property guardians cost you nothing. That’s not to say that they fill this role for free, though—our property guardians get a great deal, too. In exchange for low-cost temporary accommodation, our guardians maintain a visible presence at our landlords’ property, deterring the threats posed by opportunists such as squatters. Our property guardians also keep an eye out for any security risks such as burglars, fly-tippers or thieves intent on stripping your building of metals, pavings, radiators, etc.
With vacant property rates rising across the capital (specifically in the retail sector) - property owners need short term, money-saving solutions to avoid being burdened by costly bills.
Property Guardianship is our zero-cost short-term solution that protects and secures your building while you consider its future sale, demolition or refurb. Plus, it supports young working professionals to find affordable housing in the city.
To find out more you can contact us today or register your property here and we’ll get in touch with you.