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Empty Property Costs & Incentives to Help

If a property is left empty for any length of time there are real financial costs which the owner of that property is likely to bear. Here are a few of the different costs associated with empty properties.

Empty Property Insurance

  • Empty properties are considered by insurers to represent greater risks than one that is occupied
  • From the insurer's point of view, a property becomes formally unoccupied after a typical 30-45 consecutive days when it is not being used and the building's standard insurance then usually lapses
  • A specialist form of unoccupied property insurance is typically required to continue to safeguard the premises

Maintenance and Security Costs

  • An empty property may involve higher than normal maintenance costs - since there may be no one around to spot minor problems until they turn into more serious maintenance issues
  • An empty property is prone to the unwanted attentions of vandals and thieves so that some form of additional security needs to be arranged and paid for
  • The insurers of the empty premises are likely to insist on certain minimum standards of maintenance and security in order for the cover to be effective

Council tax

  • The government website makes clear that you are still liable for the payment of council tax even when the property you own or rent is empty
  • Councils may offer discounts of up to 50% or as little as none at all, the decision is entirely up to the local authority concerned
  • Councils also have the right to charge up to 50% extra on the standard rate of council tax if your property has been empty and unfurnished for two years or more


  • Squatting in empty property has been illegal since September 2012
  • The police can arrest and remove any squatters, but you may still likely to be left with a hefty bill for repairing any damage caused and for improving your security defences

Loss of rental income

  • An empty property represents an asset that is being underused
  • If no one occupies the building, this represents a loss of the rent that might otherwise have been collected
  • Leaving a property empty, therefore, incurs a loss of rental income

Reduced rates of VAT

  • There’s increased expenditure on unoccupied properties
  • If you convert a property that has been empty for two years or more into residential accommodation, you may qualify for saving on the cost of the work through paying a discounted rate of VAT (5% instead of 20%) on the work done

Compulsory purchase

  • You may find that the local council has an armoury of measures - including a Compulsory Purchase Order - to take the problem of an empty property entirely out of your own hands.

All of these issues, therefore, provide very good reasons for leaving unoccupied and empty any property you own for the shortest possible time, before returning it to gainful commercial or residential use.

It appears to be quite illogical that there is such a widely acknowledged shortage of housing in the UK whilst government statistics put the number of empty homes in England at some 635,000, with an estimated 216,000 of those having been empty for at least six months.

The government is committed to bringing as many of these empty properties back into use as occupied homes. It is doing so by a combination of grants and incentives - many of which are also available to existing or prospective buy to let landlords.


Towards the end of 2011, the government's Homes and Communities Agency announced that some £100m capital funding was being made available to bring empty homes back into use during the period 2011 until 2015. 

By June of 2013, the Department of Communities and Local Government announced that a further £91m was being made available.

The funding is allocated on a regional basis and, by way of example, the first tranche was intended to achieve delivery of the following number of new homes during the period 2012-2015:

  • East and South-East - 748 homes
  • Midlands - 1,289 homes
  • North East, Yorkshire and The Humber - 945 homes
  • North West - 1,075 homes
  • South and South-West - 480 homes
  • London - 1,118 homes

Such regional funding is, in turn, made available for distribution by local councils. Each council tends to have its own policy, rules and conditions when it comes to allocating grants for empty housing, so these may differ according to the area in which you live.

A typical scheme is that operated by Chelmsford City Council which provides grants in the form of interest-free loans of up to £25,000 for bringing empty housing back into use. Once refurbishment has been completed, the scheme allows the owner either to sell the property or to let it at a market rate.

If you are a landlord interested in taking advantage of such a scheme run by your own council, it is important to remember that during the course of the refurbishment works you are likely to need vacant property insurance - a product that we here at UKinsurancenet specialise in providing.


Probably the single biggest incentive for buying, converting and releasing a previously empty home into the let property market is the discount often available on standard rates of VAT.

There are effectively two schemes operated by HM Revenue & Customs, depending on how long the property has been empty until you start to renovate or adapt it to use again as a home.

If the property has been empty for the previous two years, for example, any of the work carried out by a contracted builder, carpenter, electrician, plumber or other trade, qualifies for a discount from the standard rate of 20% VAT down to just 5%.

If the property has been empty for the previous ten years and you are converting what was previously a non-residential property (that is to say, commercial premises, agricultural buildings or a church) you may qualify for zero-rated VAT.

The reduced rate of VAT applies only to work carried out by those doing the work for you and is made on condition that the property is to be used as a single dwelling or a number of separate dwellings (such as flats) for sale or for rent upon completion of the works.