Empty homes given a new lease of life

Landlord Focus article, Issue 48

Some 93,000 properties are abandoned and derelict across Scotland, but many ‘hidden gems’ are being turned from drab into fab rentals.

With an estimated 93,000 properties sitting abandoned and derelict across Scotland, Homes Under The Hammer presenter Lucy Alexander, is now backing a campaign to revive these ‘hidden gems’, and for property developers and landlords to breathe new life into these buildings to help alleviate the housing crisis.

Research from property lender Together, released in March this year, showed that, as of 2023, there are 93,938 residential homes worth £18.468 billion sitting empty across Scotland.

The analysis categorised the properties as registered as completely ‘abandoned’, with no usual or short-term residents in place, or use as a second home, and without any clarity on plans for sale or redevelopment.

The issue of empty homes is growing and the research showed that the total volume of vacant homes in Scotland has risen by 5.6% in the past three years, with the biggest empty home hotspots being Edinburgh with 10,479, followed by Aberdeen with 7,863. 

Official Scottish Government statistics for empty homes are based on council tax data and, as of April this year, this showed that 43,000 homes that have been liable for council tax have been empty for six months or more across Scotland – of these, about 28,000 have been empty for 12 months or more.

Properties can remain empty for a number of reasons, such as an owner going into care, dying intestate, or moving and finding the property difficult to sell. The most common reason for homes remaining empty in the longer term is they need extensive refurbishment to sell on and the owner does not have the financial resources, or it is taking them longer than expected to upgrade the property.

Councils have been looking to redress this issue by establishing Empty Homes Officers (EHOs) to help trace owners and provide them with advice on letting, selling or renovating their home to bring it back into use. These officers also act as conduits between property owners and potential investors to get the buildings back into the private rented sector (PRS).

Dundee case study

One property developer who found his local EHO particularly helpful was Andy Watson, who has just renovated and rented out a six-bedroom house to a family. The property had lain empty for 10 years.

Andy was alerted to the issue of empty homes while listening to a Scottish Property podcast interview with Shaheena Din, who is the national project manager for Empty Homes at Shelter Scotland.

This led him to contacting Dundee Council’s EHO, Michelle Morrison.

He said: “Shaheena was highlighting the issue with empty homes in Scotland, saying there were more than 40,000 across Scotland and at least 1,000 properties in Dundee. I had been investing in property in Dundee, but over the past five years had found that suitable properties were hard to find in the city, so the idea of renovating empty properties peaked my interest.

“When I contacted Michelle at Dundee Council, she explained that properties often become empty after the death of a family member when the children or relatives inheriting the property often do not have the resources, or cannot agree on renovating the property to a market condition. As it is often elderly people who have lived in these properties all their lives, the properties are generally in a poor condition and need total modernisation, such as rewiring and decorating, as well as new kitchen and bathrooms.

“As EHO, Michelle also runs a matchmaking service for people with empty homes and motivated investors who have the potential to buy these types of properties and put them back on the market.”

That is how Andy became interested in a six-bedroom terraced house on Hill Street in the north of the city, near Dens Park, which had been empty for a decade. The owner had been trying to convert it himself, gradually, into a house of multiple occupation (HMO). He had completed the renovations on the first floor but was unable to fully complete the work himself.

Andy said: “I met the owner and could see he had put a lot of love into this property over 10 years, so it was really important for me to show him what I envisaged the property would look like at the end. I showed him ‘before and after’ photos of renovations at my rented properties and we built a really good rapport. Even though he was considering three other offers, he was happy to sell to me.” 

However, one of the conditions within the matchmaker scheme was the requirement to get the original building warrant renewed, as it had expired.

This warrant had allowed the previous owner to change the layout within the property and make other adjustments because he wanted it to be an HMO.

As Andy wanted to renovate the house to a six-bedroom family house for buy-to-let rent, he had to contact the council’s building standards department to get advice to extend the building warrant. 

He said: “I had never dealt with building warrants before but I had a call with Gordon Caird, Dundee Council’s principal building standards surveyor, and one of his colleagues, and they were really helpful. They talked me through the whole process, which included getting an architect involved to update the drawings and resubmitting a new warrant.”

The warrant was approved and Andy, who had bought the house in May, had until November to complete the renovation work with the updated building warrant, which included flooring, fire-protective doors, plastering and repainting throughout, a new kitchen with white goods and four bathrooms, totalling £35,000.

Later that month, Dundee Council inspected the property and approved the standard of work and compliance with the new building warrant stipulations.

Andy had bought the property for £125,000 and when he remortgaged, it was revalued at £190,000.

By December, Andy had found the perfect tenants – a couple with four children, two of whom were disabled so could use one of the bedrooms on the ground floor. 

He is proud he has been able to bring an empty property back to life and grateful for the support of Dundee Council, adding: “I would definitely do it again. The experience from the point of agreeing the price and buying is a positive one, and Michelle was great in terms of matching me up with the seller. There is such an untapped potential in empty homes to solve the country’s housing problem.”

Homes for Good case study

An organisation that works closely with its EHO in Glasgow is Homes for Good (HfG), Scotland’s first social enterprise letting agency. HfG was set up in 2013 to improve conditions in the PRS for tenants and landlords, and to support people on low incomes to access quality homes for rent.

The operating model is to buy neglected homes and renovate them to a high standard – HfG even employs its own interior designer. So far, it has raised £20 million in social investment, has bought and developed more than 350 homes, and manages 550 properties on behalf of landlords in the north and east of Glasgow and parts of Ayrshire.

HfG has a lot of experience of bringing empty houses back to life and, with funding from Shelter, has launched a pilot programme called ‘Rent Ready’ to help owners of empty properties see their best options – this could be to either sell the property to HfG or put it out to auction, or an interest-free loan to enable them to renovate and bring the property back to the PRS.

An early success of the Rent Ready programme was with a flat in Dyke Street, Baillieston, in the east end of Glasgow.

It had been empty for seven years after the owner went into care and their relatives did not know what to do with the property as it required a total refurbishment.

Barry Sweeney, HfG’s head of acquisitions and development, said: “Glasgow Council’s EHO got in touch with us to see if we would be interested in the one-bedroom tenement property, so I met the owner’s relative at the flat. He explained that the ceiling had caved in from a leak above and the property had become a bit of a nightmare for him. He just wanted to sell it.

“The place was in a sorry state as the last time it was decorated was probably in the 1960s and it was no way near rental standard. However, that’s fine for us because we look at it like a blank canvas – you can really make a great impact with a property that needs to be completely taken apart.” 

HfG bought the property for £23,000 and spent £18,000 upgrading the property, with new insulation, rewiring, gas central heating, bathroom, kitchen and a better layout. After their interior designer had decorated the home using HfG’s ‘contemporary Georgian’ style palette, it was valued at £50,000.

The flat is in a street where HfG already has a number of properties and Barry said this was part of the organisation’s strategy, to help improve the housing stock in a specific location to make a positive impact on the community’s environment.

When the Dyke Street property was put on the market, Barry said HfG was inundated with interest. The new tenant chosen was an older man who was living with relatives after being made homeless.

Barry added: “What we have tried to do through our empty homes strategy is to break down those barriers for owners and share the experience that we have gained over the past 10 years bringing properties back to life.

“Typically, we would meet them at the property to assess the condition and explain their options. It is crucial that you walk alongside them and understand what their challenges are, and help them break those challenges down into manageable portions. A lot of the time it is just about a lack of experience around renovations, a shortage of cash, or not understanding the responsibilities of being a landlord.

“We find that once we have these initial discussions and put them at ease, it starts to make sense to people and they can make informed decisions.

“Often there is an issue with money for the refurbishment so, under the Rent Ready programme, we can give them an interest-free loan, which they can pay back over five years. For example, if the refurb costs £20,000, we might give them a loan of £8,000 to help but there would also be a management fee for the refurbishment. However, sometimes when they appreciate what is involved they may decide to sell the property as it is and that is fine, as we may buy it for our own property portfolio.”

The establishment of EHOs has certainly helped stimulate interest in bringing homes back on the market, however, investors need patience, as the officers are constrained by the Data Protection Act to protect the identity of the property’s owners.

Barry explained: “If I see an empty house boarded up and I phone them up, I appreciate that they may not be able to talk about the property right there and then. It is important they first talk to the owner to explain the options in order for them to be willing to speak to us.

“On the other hand, sometimes when we learn about the condition of the property and the owner’s situation we can find that the property does not fit with our business model.

However, we are happy to give people advice on their options and we also like to think that these conversations are contributing to bringing back homes to life.” 

After his experience in Dundee, Andy believes that further government support could help to bring more empty homes to market.

He explained: “The challenge for EHOs is trying to find enough motivated sellers and there is quite a bit of work that needs to be done. It needs government support to be able to get these empty properties back on the market.

“If we have a housing crisis and the Scottish Government is quoting that they need to build 115,000 houses by 2030, then they need to be creating something like 19,000 homes a year, yet we have more than 40,000 empty homes sitting there already – why is no one talking about it?”

Lucy Alexander, as ‘hidden gems’ campaign ambassador, agrees, saying: “Throughout my TV career I have seen my fair share of once-loved-now-neglected properties, some of which can quickly become an eyesore for local residents. 

“It is a real shame, especially as so many people struggle to find affordable housing options and get that first foot onto the property ladder to begin with.

“Spotting those property ‘hidden gems’ can really help potential buyers and developers open the doors to a new-found building opportunity – be it for housing, the creation of a new business, or restoration project.

“So many existing sites today could see their former glory restored and new purpose given if the right support can be put in place.” //

This article was featured in Landlord Focus magazine, issue 48 (summer 2024). You can read our most recent Landlord Focus magazines online here.