Many people dream of finding a wrecked house, picking it up for next to nothing and then transforming it into a valuable asset, but how easy is it in reality?
First of all, you have to decide what type of property you want. Truly derelict properties are shells, ruins that are often missing vital bits of infrastructure - roofs and walls - and are uninhabitable in their present state. Semi-derelict properties, on the other hand, are spaces with basic amenities such as plumbing and wiring intact, but in need of major refurbishment.
How does one go about finding such properties? Combing the area you're interested in is a good start. Then, when you find a likely building, you can check on its status with the local authority. The people there should be able to tell you whether it is condemned, under a compulsory purchase order or if there are any development plans in the pipeline.
If none of these apply, your next stop will probably be the Land Registry to establish who, if anyone, is deed-holder to the land. Some properties aren't registered at all and these can sometimes be squatted or annexed, with ownership rights automatically kicking in after about 12 years.
Of the ones that are registered, however, there can be any number of reasons why they might have fallen into disrepair. "Sometimes properties get lost in endless town planning loops - abandoned, condemned, reclaimed and then abandoned again," says Simon Shinerock, chairman of Choices Investment Acquisition Service, a web-based agency specialising in quick-sell residential properties. "In some cases, the land the buildings stand on is more valuable than the buildings themselves. In others, people die intestate and legal wrangles about probate can snarl things up for years."
Most disused or semi-derelict properties that do come up for sale tend to appear at auction. The vast majority of these are semi-derelict. "We have two to three truly derelict properties that come up at each auction - places that are literally falling apart and that a builder would have second thoughts about taking on. However, we have a far greater number of ones that are simply very run down and maybe in need of roof work, a new kitchen or bathroom and possibly replumbing and rewiring," says Michael Linane, a partner with Allsop, the UK's largest auctioneer. Allsop holds about seven residential sales a year.
Auction buying is quick-moving and highly speculative. "We're not like normal estate agents and attract a lot of investment buyers," says Linane. "Buying properties at auction is a high-risk business and it's a myth that you can pick up bargains there easily. It's a highly competitive market in which bidders are expected to come up with large amounts of money at very short notice. However, on the plus side, there is a strong profit incentive."
There have recently been a number of initiatives aimed at regenerating the UK's disused housing stock. Principal among these is the Government-backed Empty Homes Agency - an organisation dedicated to recycling empty properties. It holds a database of 680,000 such properties and will often offer advice, assistance and grants to those willing to take them on.
The Ecology Building Society, meanwhile, can be another useful contact for those considering buying buildings in need of repair. "We specialise in lending on properties requiring major refurbishment - maybe rewiring or replumbing or a new roof, kitchen or bathroom," says marketing director Jenny Barton.
"We like to think of bringing these properties back into use as a way of reducing pressure on the environment and recycling housing stock."
As well as the loan, there are surveyor's costs to consider, not to mention the likelihood of obtaining planning permission. Careful budgeting also needs to be exercised in costing the proposed renovation and building works.
However, although there is a lot of cost and aggravation involved in buying and doing up disused properties, the potential rewards are also high.
"You generally get a better return for your money than you would with normal residential properties," says Shinerock. "Buying and renovating a property still works out a lot cheaper than buying a new one," agrees Barton.
Choices Investment Acquisition Service: 01342 840000; www.choices.co.uk
Ecology Building Society: 0845 674 5566
Empty Homes Agency: 020-7828 6288 or London hotline on 0870 901 6303
Allsop Auctioneers: 020-7494 3686; www.allsop.co.uk
Federation of Master Builders: 020-7242 7583; www.fmb.org.uk
Royal Institute of Chartered Surveyors: 0870 333 1600; www.rics.org.uk
* Check status of derelict properties with relevant local authorities and the Land Registry.
* Find out if you might qualify for a local authority grant to help modernise the property.
* Conduct a full survey before buying or bidding.
* Take advantage of tax breaks - VAT rates are typically much lower for renovating properties that have been empty for a considerable length of time.
* Compare mortgage deals on offer.
* Maintain a slush fund to help budget for unforeseen expenses.
* Be cautious in your choice of builders, and either supervise the building works yourself or employ a site manager.Reuse content