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.
It is hardly surprising, therefore, that 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 afurther £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; and
- 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 for 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 were previously 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.