Vacant Property

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Vacant Property - Untapped Wealth

The charity, The Empty Homes Agency estimates that there are some 840,000 homes in Britain that have been empty for more than six months. Add to this the number of homes that are temporarily vacant whilst awaiting sale, awaiting the determination of probate after the owner's death, or in the process of renovation before being lived in once again and there is a truly huge stock of vacant property in the country. In sheer numbers alone, this represents a considerable asset value and a wealth just waiting to be tapped.

The problem, however, is that it is a reservoir of wealth potentially losing its value the longer the properties remain vacant and empty. When a property is vacant, even a small amount of damage - such as a broken window pane - can rapidly attract much bigger problems. One broken pane attracts two; two broken windows attract illegal entry, crime and vandalism; the apparently run-down property then attracts major fly-tipping; and so on in a steadily downward spiral.

Properties blighted in this way also become far more vulnerable to arson. In London, for example, the Fire Brigade calculates that as many as a quarter of all calls they receive are to fires in vacant and empty homes.

Hometrack, the UK's leading housing and mortgage market analysts estimated a few years ago that a house put up for sale next door to an empty property would fetch 18% less than would otherwise be expected.

In a word, therefore, vacant properties pose something of a problem. And this is the main reason why most insurers offering buildings and contents insurance regard policies as either as lapsed once they have been left unoccupied for a month or more, or reduce the level of cover to the most basic FLEE (Fire, Lightning, Earthquake, Escape of water) risks.

Some of the more enlightened, specialist insurers, however, have recognised that properties can fall vacant for any number of very good reasons. In partnership with the owners of such buildings, they recognise that they can play their part in halting the downward spiral of dilapidation and loss of value by providing the sort of insurance cover that gives a much greater incentive to preserving the general state of repair, structural integrity and security necessary.

Empty building insurance, for example, is a specialist type of insurance that strikes just this sort of partnership with the property's owner. The owner is expected to take the basic security and maintenance precautions appropriate for an unoccupied dwelling, such as visiting the property regularly, say, each week or two, and attending to obvious minor repairs (the "thin end of the wedge" in the broken window pane mentioned above, for example). Similarly, the owner would be expected to keep the garden clear of rubbish, both to discourage fly-tipping and to reduce the risk of fire.

Inside the building, mail should be collected and junk-mail disposed of (since its accumulation poses a further fire risk) and all main services should of course be shut down.

In return, such insurers can generally arrange fairly broad cover to protect the building against a number of risks. Of course, the level of cover will depend not only on the premiums the owner is prepared to pay, but also the insurer's assessment on the current state of repair of the property and the owner's future intentions. Evidence of the owner's intention to renovate or restore the building for imminent re-occupation, for example, will make the insurer's job considerably easier.

Specialist insurance for unoccupied properties such as this is by no means widespread in Britain at the moment. Finding a suitable insurer who can arrange a policy to match your particular needs and intentions can prove quite difficult. Therefore, the guidance of a specialist insurance adviser might help the owner of currently vacant property find the insurance solution that is most suitable for their needs.