Ben Lloyd

Are abandoned properties a good investment for developers?



I’ve recently looked into the number of abandoned properties in the UK, and the reasons why investors and developers aren’t choosing to invest in them.

After examining freedom of information responses from 276 councils, the Liberal Democrats recently revealed how many homes had been abandoned. The figures were astonishing.

At the moment, there are 216,000 homes in the UK that have been empty for over six months, with 60,000 of them having been left empty for two years or more. A staggering 23,000 have been empty for five years-plus, while 11,000 homes have been abandoned for at least 10 years.

If homes are abandoned and not looked after, they will eventually degrade and probably be more hassle for investors than its worth, not to mention, more expensive. Overall, this will make the profit a lot lower than it should be. 

Deciding on whether a house would be worth investing in and developing comes down to the sort of property in question, how much work actually needs to be done and what sort of returns you’re likely to get. 

For example, if the property was in good condition and wouldn’t need much doing up, then it would be a pretty smooth investment as it would be an easy renovation and you could just stick it back on the market for profit.

However, if the house has any major issues, then it may not be worth it — unless you investigate gaining planning permission, knock the house down and start from scratch. It may prove to be a great investment if you could knock the house down and build multiple homes on the same plot, so this is something to consider.

Some of the greatest-yielding investments and developments are born from properties in ruins or disrepair. The key to making a success of it is knowing your market values, who your target audience is and, most important of all, knowing your risk through build costs to get it to a saleable/lettable condition. Some of the most common mistakes with redeveloping properties sit in these areas and they can quite easily cause investors problems on a project. 

A few key risk mitigants when looking to invest in such properties would be to get a steer on the likely cost to redevelop/renovate from a cost consultant and gaining an estate agent’s opinion on end values before you commit to the purchase. 

Often, if the property has been on the market for a long period of time, there is a reason why an investor hasn’t swept it up, so this is something to consider when undertaking your analysis of the proposed project.


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