That empty feeling
The last thing property owners and managers want is a vacant building, but in the current economic climate they’re facing significant risks associated with empty property. Nick Tubbs offers advice on how property owners and managers can mitigate the risks and protect their assets
Weak occupier demand and stalled progress on regeneration schemes and developments has led to property owners and managers facing increased risks and costs associated with all types of vacant property. Vacant property is affecting nearly two thirds (60 percent) of property managers and owners in the UK, France, and USA, with vandalism topping the list of concerns owners have.
In the UK, according to the Empty Homes Agency there are currently over 700,000 homes standing vacant, despite a major housing shortage, and a survey by the Local Data Company revealed the number of vacant shops has risen to an all time high of 14.5 percent.
Findings from independent research commissioned by VPS reveal that the problem is set to continue with an average of 84 percent of property managers expecting vacant property to increase or remain at current levels during 2011.
With this in mind many property owners and managers will be handling portfolios with significant empty properties that have incomplete insurance cover because they are now unoccupied. In order to comply with health and safety, duty of care and building insurance requirements it is critical that property managers carefully manage buildings and legal issues that surface when buildings become vacant. Undertaking a comprehensive risk assessment by a specialist firm will ensure that potential risks are assessed. A range of cost effective and innovative solutions can be employed for vacant property security and surveillance, which can actually help to reduce the hidden costs of vacant property.
It’s no surprise that loss of income was sighted as the biggest issue arising from vacant property. However in the UK over half of respondents were worried about security and compliance with insurance. Empty Property Tax was less of an issue, but still impacted one in four of the sample.
Surprisingly the results reveal that property owners and managers perceive vandalism to be a bigger risk to their vacant property than asset depreciation.
Among the biggest concerns for vacant property managers is vandalism and squatting, because where there are empty buildings, squatters soon follow. Squatting poses a risk for approximately 1 in 10 respondents (10.5 percent) in the UK. According to the Government, there are an estimated 20,000 squatters in the UK. You only have to open a newspaper to see the increasing number of news stories reporting on vacant properties being taken over by squatters.
A £40m building between High Holborn and Oxford Street was recently taken over by partygoers to host an illegal party. The building was occupied for nearly 48 hours until the trespassers finally called an end to the party, leaving behind a repair bill costing tens of thousands of pounds. Another high profile case saw serial squatters take over two buildings in Mayfair, including the former Mexican Embassy, worth a combined total of £50m.
Even celebrities have recently fallen victim to squatting as Madonna’s ex husband, Guy Ritchie, found out. He had his £6m London mansion taken over by squatters while it was being extensively renovated.
Law and order
Reacting to the surge in squatting, the Ministry of Justice is looking at how to strengthen the law to make it a criminal offence. The situation may be set to get worse as cuts to housing allowance set out in the Government’s Comprehensive Spending Review take effect. According to research commissioned by housing charity Shelter, over 134,000 households will either be evicted or forced to move as they will be unable to negotiate cheaper rents leading to a rise in homelessness.
In the meantime property owners and managers can take the following steps to ensure their property is well protected:
» Taking immediate action when a building becomes vacant is the most effective way to protect a property and mitigate the risks associated with squatting. You are required by law to inform your insurer immediately when a property becomes vacant. They may have specific requirements to ensure that your building is properly covered.
» Undertake a comprehensive risk assessment using a specialist company to assess potential risks, such as fire hazards and public liability exposure as well as the exposure to damage from squatters/criminals.
» Isolate and shut down the power and gas supplies and drain down your water systems properly to avoid flooding. Clear the property making sure to remove any combustible material. Install a letter box seal to prevent arsonists or squatters setting fire to the property. A build up of mail is also a vital clue that a property is empty.
» Ensure the perimeter of the property is secure and where required fit steel fittings to windows and doors. Instigate a minimum weekly inspection of the property both internally and externally – as required by most insurance providers.
» Secure the property with a permanent security officer and/or alarm (which includes passive infrared smoke detectors and water detectors). Not only will the alarm act as a deterrent, but if squatters do gain access, the alarm activation will register any break-in. This can act as evidence when applying for an Interim Possession Order – a fast track eviction process.
Not only will these steps help to address property managers’ concerns linked to squatting, but minimise the negative impact on local communities.
As our research reveals, the current excess of property standing empty brings with it a whole host of problems for property managers and owners, with one of the worst of these being an increased threat from vandalism. Vacant or temporarily unoccupied buildings are potential targets for vandals, trespassers, or squatters, which not only cause concern and increased costs, but can become a real issue for local communities.
The most effective way to protect a vacant property and mitigate the risks is to take immediate action when a building becomes vacant. VPS helps to make vacant property safe and secure identifying cost effective integrated solutions for customers, using a combination of technology and manned services to ensure legal and insurance requirements are met. This enables property owners and managers to control the financial cost of vacancy and ensure their vacant property assets retain value and become re-occupied quickly. Importantly it also reduces the negative impact that vacant property can have on local communities and help make areas safer.to top
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