Refurbishing a Derelict Property Can Be a Sound Investment
Parmdeep Vadesha
September 12, 2008
Many investors find restoring old, derelict properties a good investment. In the past, renovating a property in a ruined state has became a suitable way of getting on the first rung of the property ladder and taking on a project that not many people want to tackle. Now, investing in a derelict property is considered a popular way of buying a house thanks to TV programmes that advertise this kind of renovation. As long as moderate and careful repair remains your first priority and restoration is done to a high standard using appropriate materials, the value of the property should increase significantly if you purchased well.
According to the National Property Developers Association, there is an estimated 900,000 empty or derelict properties in Britain. This means that if you´re an investor interested in purchasing a derelict property and converting it into a profit-earner, you have plenty to choose from.
What you should know if you´re considering purchasing a derelict property
You can start looking for a derelict property by combing the area you´re interested in. When you´re able to locate a likely establishment, you can check its status with local authorities, who will be able to tell you if the property is condemned, is under an obligatory purchase order or if there are development plans being arranged.
You can also contact the Land Registry and check who the owner of the property is. There are some properties that aren´t registered and are sometimes squatted or annexed. These properties often lose ownership rights after about 12 years.
Councils sometimes offer properties in deprived locations at keen prices in an effort to regenerate these areas. This process is known as homesteading. The properties are reserved for those how have a stake in the area and any owner would have to agree to remain in the property for a certain period of time and to invest in it. They will usually be offered a grant to assist with the renovations.
Residential property auction catalogues are also good places to locate empty properties that are already for sale. A lot of derelict properties tend to turn up at auction. While a number may be literally falling apart and builders would be thinking twice about renovating them, there´s a far greater number that are merely rundown and need only, for instance, roof work, replumbing or rewiring, or a new bathroom or kitchen.
How to finance a derelict property
Obtaining a mortgage for an empty property can be tricky. Insurance is slightly more expensive too. However, some lenders are open to the idea and will offer you green, self-build or renovation mortgages. There are mainstream mortgage providers that will lend on derelict properties and provide a financing solution as long as the scheme is financially viable.
Restorations must be carried out by qualified personnel, valuations need to be taken at every renovation stage and funds are released fittingly. This practice is most often adopted by lenders who provide financing for derelict properties. This is so that if you default on your mortgage payments and the property needs to be sold, the lender can be certain that it will be able to regain its money.
While there may be a lot of expenses and aggravation involved in buying and renovating a derelict property, the potential returns are also high. In general, you can get a better return for your money than you would with typical residential properties.
According to the National Property Developers Association, there is an estimated 900,000 empty or derelict properties in Britain. This means that if you´re an investor interested in purchasing a derelict property and converting it into a profit-earner, you have plenty to choose from.
What you should know if you´re considering purchasing a derelict property
You can start looking for a derelict property by combing the area you´re interested in. When you´re able to locate a likely establishment, you can check its status with local authorities, who will be able to tell you if the property is condemned, is under an obligatory purchase order or if there are development plans being arranged.
You can also contact the Land Registry and check who the owner of the property is. There are some properties that aren´t registered and are sometimes squatted or annexed. These properties often lose ownership rights after about 12 years.
Councils sometimes offer properties in deprived locations at keen prices in an effort to regenerate these areas. This process is known as homesteading. The properties are reserved for those how have a stake in the area and any owner would have to agree to remain in the property for a certain period of time and to invest in it. They will usually be offered a grant to assist with the renovations.
Residential property auction catalogues are also good places to locate empty properties that are already for sale. A lot of derelict properties tend to turn up at auction. While a number may be literally falling apart and builders would be thinking twice about renovating them, there´s a far greater number that are merely rundown and need only, for instance, roof work, replumbing or rewiring, or a new bathroom or kitchen.
How to finance a derelict property
Obtaining a mortgage for an empty property can be tricky. Insurance is slightly more expensive too. However, some lenders are open to the idea and will offer you green, self-build or renovation mortgages. There are mainstream mortgage providers that will lend on derelict properties and provide a financing solution as long as the scheme is financially viable.
Restorations must be carried out by qualified personnel, valuations need to be taken at every renovation stage and funds are released fittingly. This practice is most often adopted by lenders who provide financing for derelict properties. This is so that if you default on your mortgage payments and the property needs to be sold, the lender can be certain that it will be able to regain its money.
While there may be a lot of expenses and aggravation involved in buying and renovating a derelict property, the potential returns are also high. In general, you can get a better return for your money than you would with typical residential properties.
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