Maximising the value of your property asset: what to do about empty properties
Posted on September 30, 2016.
On the 11th October, Global Guardians will be attending the Property Asset Management Summit, an event of which we are also a sponsor. Stuart Woolgar, our Security Director, will be speaking on a panel at an event entitled "Maximising the Value of Your Asset". If you are a commercial property owner, then there are a number of ways the value of your asset can depreciate, or quickly turn into a net loss. At Global Guardians, our focus is on helping property managers and owners to gain maximum value from empty or vacant properties, as well as devising security and maintenance solutions to extend the life cycle of an asset. What happens when a property is left vacant? For property owners and property managers, the costs of an empty property can quickly spiral, meaning an investment can just as easily become a drain on your financial resources. There are a number of ways in which a vacant property can lose money; for the purposes of this article, we shall be focusing on three core factors. 1. Security costs One of the most obvious ways in which the value of a vacant property can be adversely affected is through costs incurred by security maintenance. There is no one set figure for maintaining a security presence in a building, but an example of a daily rate includes £240 a day or £10 per hour. If you are faced with the prospect of your property lying vacant for a long time, the cost of security may quickly escalate. 2. Business rates This is the second major expense facing any property owner or asset manager who may find themselves facing long-term vacancy. Once again, the longer your property lies empty, the greater the net loss to your portfolio. For the first three months of a property lying empty, you will not have to pay business rates on it (for an industrial building, you will be exempt for a further 3 months). However, after this, business rates will eat into your outgoings very quickly. 3. Squatting and anti-social behaviour Technically this an extension of the security concerns which we listed above, but squatting and anti-social behaviour can quickly escalate into a bigger problem for a commercial property owners if left unchecked. properties that go unoccupied for weeks at a time can become the target for squatters. Squatting has finally been outlawed as illegal for residential properties only, but it nonetheless remains a risk for property investors whose commercial property may have fallen vacant. In addition, vacant properties leave themselves open to further costs.
- Natural depreciation: The value of the property can depreciate in value over a number of months, or indeed years, if the property continues to go unoccupied.
- The problem of utilities: the longer a property goes unoccupied, the longer you could be faced with paying utility costs that will continue to rack up. However, you will also incur costs should you decide to cut off your electricity or water supply.
This is essentially the paradox of the empty property – the cost of maintaining the property could become a black hole into which your money will quickly disappear if the property owner is unable to find a new use for it. Yet at the same time, you will find the value of the property depreciates if you don’t invest the necessary funds in upkeep and maintenance; in addition, you may find it harder to attract future tenants, thus deepening an already existing problem. Put simply, the problem lies in breaking the vicious cycle – how to ensure that a property is kept in good order, whilst also ensuring that you are not incurring unnecessary costs? This is why property guardianship is an effective new security solution for those who have a long-term investment to protect: it brings the residential and commercial together, providing a new solution to common security problems.
How property guardianship is leading the way
Property guardianship has been making national headlines with greater frequency over the past few years, as it has become a radical new solution to the twin problems of vacant properties and lack of affordable accommodation in urban areas. Here’s how Global Guardians have been shaping the property guardian market in recent years. Bespoke Building Management Property guardianship breaks the “vacant property paradox” by offering bespoke building management solutions for any property. This includes gas, electric and water testing, inspections to check for asbestos, as well as a full fire risk assessment. Rejuvenating local areas Property guardianship aims to not only rejuvenate a building, but also to breathe life back into a local area through ensuring our property guardians are making a contribution to the local community. High end house sitting For the particularly expensive, high end properties, a property guardian service like Global Guardians are able to offer a house sitting package to ensure the safety and security of your investment. Guardians are a key resource in keeping squatters from empty properties. Property guardianship brings an added legal benefit in the fight to get rid of squatters or unwanted occupants in a commercial building. When you hire a property guardian company, the ancillary use of your building will automatically change under the terms of the guardian license agreement, from commercial to residential, meaning that squatting becomes automatically illegal Keeping costs down Properties that are vacant for longer will often require specialist insurance and owners may find themselves having to pay business rates and council tax for an empty property; as we mentioned above, the presence of property guardians changes the definition of the building, meaning that you are likely to pay less money on maintenance costs.
Case Study – Global Guardians in Haringey
The Global Guardians team recently assisted with the eviction of squatters from a church building in the heart of Haringey, London. The building had been squatted for over 12 months by 10 individuals, using their ‘squatters rights’ to hold exclusivity of the building. The property owner contacted Global Guardians to help assist and advise in the eviction of the squatters, and to secure the building through the use of our Guardian Solution. Costing approximately £10,000 of legal fees over several weeks and £10,000 worth of other costs, which included a dog handler, lock smith, security guards and bailiffs. Prior to the eviction, a full brief was presented to everybody ensuring the process was done quickly and efficiently. This was done at a nearby site, so the squatters did not identify that this was going to take place and position barricades or attempt escape via the easy-accessible roof of the property, which would have caused great issues and delays throughout the eviction process. Once the strategy was in place, a team comprised of police, bailiffs, a locksmith, the property owner and Global Guardians, made their way to the property with the intention of evicting the squatters using the court ordered Interim Possession Order which was obtained prior to the eviction. The security guards carefully scaled the roof of the building and locked off all of the access, whilst the lock smith and bailiffs gained access through the front garage. On this occasion, the squatters were unaware of the forced entry into the building, and they were evicted calmly from the premises along with all their possessions. The building was left in a very poor state by the squatters, risking depreciation of the value of the building. The electric meter had been removed and the property was in a deteriorated condition as seen in the pictures below. We placed two 24/7 security guards on site to secure the building at the most vulnerable points to prevent any potential break-ins and squatters immediately before placing our property guardians on site. Global Guardians are currently in the process of securing the building for the Reverend and the Church; our Operations Manager is a conducting a thorough inspection of the property to ensure it is habitable for our property guardians to reside in, and protect the building. This includes the installation of the bathroom and kitchen facilities, clearing and cleaning out the building and mess left by the squatters, placing lockable doors on each guardian room and ensuring the utilities (gas safe and electrics NIC) are all certificated. This work took our in-house maintenance team approximately 2-3 days and £10,000 worth of expenditure before vetting and placing our property guardians into the building to secure it for the client under an occupational license agreement. The building is now being protected by three property guardians who have living spaces strategically placed throughout the Church building. If you have any questions regarding your vacant property, and the risks associated with squatting, please give our experts a call on 0208 370 0288.