8 Tips for Buying a Derelict Property

Buying a derelict property can be a great way to get a bargain, create your dream home, or make a profit from the renovation. However, it also comes with many challenges and risks that you need to be aware of before you take the plunge. In this blog post, we will share 8 tips to help you buy a derelict property in the UK, and avoid some of the common pitfalls that can turn your project into a nightmare.

 

1. Structural Integrity

One of the first things you need to check when buying a derelict property is its structural integrity. A derelict property is likely to have suffered from years of neglect, damage, or vandalism, which can affect its stability and safety. You don’t want to buy a property that is about to collapse, or that will require extensive and costly repairs to make it habitable.

To assess the structural integrity of a derelict property, you should hire a qualified surveyor who can inspect the property and provide you with a detailed report on its condition. A surveyor can also advise you on the type and level of survey you need, depending on the age, size, and complexity of the property. For example, you may need a full structural survey, which is the most comprehensive and expensive type of survey, or a homebuyer report, which is less detailed but cheaper.
 

2. Location

Another important factor to consider when buying a derelict property is its location. Location can affect the value, demand, and potential of the property, as well as your quality of life if you plan to live in it. You should research the area where the property is located, and look for factors such as:

• Transport links: How easy is it to access the property by car, bus, train, or bike? Is there enough parking space? How long will it take you to commute to work or school?
• Amenities: What facilities are available nearby, such as shops, restaurants, pubs, schools, hospitals, parks, or leisure centres?
• Neighbourhood: What is the character and atmosphere of the area? Is it quiet or lively? Is it friendly or hostile? Is it attractive or ugly?
• Planning: What are the current and future plans for development in the area? Will they enhance or detract from the value and appeal of the property?
• Market trends: What is the demand and supply for properties in the area? How fast are they selling? How much are they selling for? How have they changed over time?

You should also visit the property in person at different times of the day and week, to get a feel for the location and its surroundings. You may discover things that are not obvious from online research or photos, such as noise levels, traffic patterns, or environmental issues.
 

3. Renovation Feasibility

Before you buy a derelict property, you need to have a clear idea of what you want to do with it, and whether it is feasible. You may have a vision of transforming the property into your dream home, or flipping it for a profit, but you need to be realistic about what is possible and practical.

You should consider factors such as:

• Design: What style and layout do you want for the property? How will you use the space? How will you blend the old and new elements?
• Materials: What materials do you want to use for the renovation? How will they affect the cost, quality, and durability of the project?
• Skills: What skills do you have or need for the renovation? Can you do some or all of the work yourself, or do you need to hire professionals?
• Resources: What resources do you have or need for the renovation? How much money can you spend on materials, labour, equipment, and fees? How much time can you devote to the project?

You can also consult with an architect or a builder who can help you with the design and feasibility of the renovation. They can also help you with obtaining the necessary permissions and approvals for the project, which we will discuss in the next tip.
 

4. Regulations and Permits

Buying a derelict property is not as simple as buying a ready-made property. You need to comply with various regulations and permits that govern the renovation and use of the property. These may include:

• Planning permission: This is required if you want to make any significant changes to the external appearance or use of the property, such as extensions, conversions, or alterations. You need to apply for planning permission from your local council.
• Building regulations: These are standards that ensure the safety, health, and efficiency of buildings. They cover aspects such as structure, fire, ventilation, drainage, insulation, and accessibility. You need to comply with building regulations for any building work that affects the structure or performance of the property.
• Listed building consent: This is required if your property is a listed building, which means it has special architectural or historical interest. Listed buildings are protected by law, and any changes to them must preserve their character and appearance. 
• Conservation area consent: This is required if your property is located in a conservation area, which means it has special architectural or historical character. 

You should always check with your local council or a professional adviser before you start any renovation work on a derelict property, to avoid any legal issues or penalties. You should also be prepared for delays, costs, and compromises that may arise from the regulatory process.
 

5. Costs and Budgeting

One of the main challenges of buying a derelict property is managing the costs and budgeting of the project. Renovating a derelict property can be very expensive and unpredictable, depending on the condition, size, and complexity of the property and the work involved.

You should estimate the costs of buying and renovating a derelict property before you make an offer, and compare them with your available funds and expected returns. 

Some of the costs that you need to consider when buying and renovating a derelict property include:

• Purchase price: This is the amount you pay for the property itself. Derelict properties are usually cheaper than finished properties, but they may still be competitively priced or subject to ‘best and final offers’ if there is a lot of interest.
• Stamp duty: This is a tax that you pay when you buy a property in England or Northern Ireland. The amount of stamp duty depends on the purchase price and whether you are a first-time buyer or not. 
• Survey fees: These are fees that you pay for hiring a surveyor to inspect the property and provide you with a report on its condition and value. 
• Legal fees: These are fees that you pay for hiring a solicitor or conveyancer to handle the legal aspects of buying a property, such as contracts, searches, transfers, and registrations.
• Renovation costs: These are costs that you incur for carrying out the renovation work on the property, such as materials, labour, equipment, and fees.
• Financing costs: These are costs that you incur for borrowing money to finance the purchase and renovation of the property, such as interest, fees, and charges. 

You should keep track of your costs and budget throughout the project, and adjust them as necessary. You should also look for ways to save money or increase your income, such as:

• Applying for grants or schemes that can help you with the cost of renovation, such as the Green Homes Grant or the Home Renovation Incentive.
• Selling or recycling any salvageable materials or items that you find in the property, such as bricks, tiles, wood, or furniture.
• Doing some or all of the work yourself, if you have the skills and time, or hiring local tradespeople who can offer you a better deal.

Renting out part or all of the property during or after the renovation, if you have the permission and facilities to do so.
 

6. Potential Returns

Whether you plan to sell or rent out the property after renovation, you need to have a realistic expectation of how much you can earn from it, and whether it will cover your costs and generate a profit.

To estimate the potential returns of a derelict property, you should research the market value and demand for similar properties in the area, and compare them with your costs and budget. You should also factor in any taxes, fees, or charges that may apply to your income or capital gains.

Some of the factors that can affect the potential returns of a derelict property include:

• Quality: The quality of your renovation work can have a significant impact on the value and appeal of your property. You should aim for a high standard of workmanship and materials, and avoid cutting corners or compromising on quality. Timing: The timing of your renovation project can also affect your potential returns. You should try to complete your project as soon as possible, to avoid paying unnecessary costs or losing opportunities. You should also consider the best time to sell or rent out your property, depending on the market conditions and trends. If you need support in selling your newly renovated home, get in touch with one of our branches today.

• Marketing: The marketing of your property can also influence your potential returns. You should promote your property effectively and efficiently, to reach and attract your target audience. 

7. Market Demand

Market demand refers to the level of interest and willingness of buyers or tenants to purchase or rent your property. Market demand can affect the value, speed, and ease of selling or renting out your property.

To assess the market demand for a derelict property, you should research the current and future trends and conditions in the local and national property market. You should look for factors such as:

• Supply: How many properties are available for sale or rent in the area? How does this compare to the number of buyers or tenants? Is there an oversupply or undersupply of properties?
• Demand: How many buyers or tenants are looking for properties in the area? What are their preferences and needs? Is there a high or low demand for properties?
• Competition: How many properties are similar or comparable to yours in terms of size, location, condition, or price? How does your property stand out from the competition? Is there a lot or little competition for properties?
• Price: How much are properties selling or renting for in the area? How does this compare to your costs and budget? Is the price affordable or attractive for buyers or tenants?
• Growth: How is the property market changing or developing in the area? What are the factors that are driving or affecting the growth, such as population, economy, infrastructure, or environment? Is the growth positive or negative for properties?

You should aim to buy a derelict property that has a high and stable market demand, or that has the potential to increase in demand in the future. 
 

8. Risks and Challenges

The last factor to consider when buying a derelict property is the risks and challenges that you may face during the project. Buying and renovating a derelict property can be a rewarding but risky venture, and you need to be aware and prepared for any possible problems or difficulties that may arise.

Some of the risks and challenges that you may encounter when buying a derelict property include:

• Hidden defects: Derelict properties may have hidden defects or damages that are not visible during the inspection, such as structural issues, dampness, rot, infestation, asbestos, or contamination. These defects may require extensive and costly repairs and may affect the safety, health, and value of your property.
• Unexpected costs: Derelict properties may incur unexpected costs that are not included in your initial budget, such as additional work, materials, equipment, fees, or charges. These costs may arise from unforeseen problems, delays, changes, or errors during the project.
• Legal disputes: Derelict properties may involve legal disputes that can affect your ownership, rights, or obligations regarding the property. These disputes may arise from unclear titles, boundary issues, planning breaches, contractual disputes, or claims from third parties.
• Delays: You may experience delays that can affect the completion and delivery of your project. These delays may result from bad weather, supply shortages, labour issues, regulatory issues, or other factors.
• Losses: You may incur losses that can affect your returns and profitability from your project. These losses may result from market fluctuations, valuation errors, overspending, underpricing, low demand, high competition, or other factors.

You should try to minimise and mitigate the risks and challenges of buying a derelict property by doing thorough research, planning, budgeting, and management of your project. You should also have a contingency plan and exit strategy in case things go wrong.
 

Final Thoughts

Buying a derelict property can be a great way to find a bargain and create your dream home or investment. However, it is not a simple or easy process. It requires a lot of research, planning, budgeting, work, and patience.

These factors can help you evaluate the feasibility and suitability of buying a derelict property for your goals and circumstances. They can also help you avoid common pitfalls and maximise your chances of success.

We hope this guide has given you some useful insights and tips on how to buy a derelict property. 
 

How Can Jones Robinson Help?

If you’re looking for your next investment and renovation project we are here to help. As leading, local estate agents in Devizes, Didcot, Lambourn and Hungerford, Marlborough and Newbury, and the surrounding areas, we are best placed to help you sell your property and find your next home.

We have a very clear sales procedure and a transparent way of working, so you know what to expect. If this is your first time renovating a property, this will prove helpful. Give us a call right now to discuss how we can assist you in your investment and to get market information about the neighbourhood.