Bridging loans for renovating uninhabitable property

Buying uninhabitable property with the intention of renovating to let or sell can be a great way to make money from bricks and mortar.

To ensure you achieve a return on your investment it is vital to do the maths on what the property is going to cost versus how much it will take to renovate it and bring it up to code, and how much this will increase the value of the property.

How do you define “uninhabitable property”?

Legislation regarding whether a property is uninhabitable is largely of relevance to those in rented accommodation, given that you pretty much write your own destiny when you own the property you live in (and if something goes wrong, you can’t sue yourself!).

In England and Wales The Department for Communities and Local Government have penned a tome entitled “Housing Health and Safety Rating System, Guidance for Landlords and Property Related Professionals” (HHSRS) off the back of the Housing Act 2004. This document outlines the responsibilities of a Landlord to their tenants which encompass the exterior, elements of the structure and facilities inside a property.

Installations within a rented property that you are accountable for:

  • Water, gas and electricity equipment must be able to be utilised in a safe manner (removable equipment/appliances don’t count as installations)
  • Personal hygiene facilities must include sinks and either showers or baths
  • Sanitation and drainage refers to toilets, sinks, drains, waste pipes, rain water goods, inlet gullies, and inspection chambers
  • Food safety refers to sinks, draining boards, work tops, cooking facilities and storage space (to include cupboards, shelves and electric socket with space for refrigerator)
  • Ventilation covers air bricks, trickle vents and ventilation equipment
  • Heating refers to fitted heating equipment for rooms and water, but does not cover mobile heating equipment owned by the tenant

The Northern Ireland government services website outlines their own view of whether a property can be deemed habitable based on the following attributes:

  • Structural stability – the property should not show signs of possible collapse or major failure
  • Freedom from dampness – ceilings, walls and floors should be free from damp
  • Heating – heating systems should be economical, safe and easy to run. Insulation is also advised
  • Lighting – windows should be 1/10 of the floor space of a room and lights and light switches should be provided throughout
  • Ventilation – rooms should be ventilated with windows or mechanical ventilation
  • The property should meet the requirements of the Statutory Fitness Standard

Council tax discounts on uninhabitable property

When it comes to getting a discount on council tax for uninhabitable property, all councils operate under the same legislation, as laid out by central government. However, each may interpret the legislation differently, so make sure you check with the authority that has jurisdiction over the property you propose to buy.

In order to qualify as uninhabitable a property will be in need of either “structural alterations” or “major repair work”. A summary of what each might constitute is below, but largely this refers to unsound foundations, walls, floors, ceilings or roofs.

Structural alterations

A property is uninhabitable if it is subject to one or more of the following types of structural problem:

  • The roof is structurally unsound significant work is needed to make it safe
  • The chimney needs to be rebuilt
  • The external walls are being rebuilt
  • Significant work is being done to the property foundations
  • Solid floors or floor joists need replacement
  • Internal walls have been removed
  • Ceiling joists or defective walls need replacement

Major repair work

A property is uninhabitable if it is in need of the following major repair work:

  • Gutting the property
  • Removal of all plaster from walls
  • Taking down the majority of the ceilings
  • Removing timber walls
  • Installing new water tanks
  • Installing new damp proofing

If you need a bridging loan for an uninhabitable property purchase, call our experienced team of advisers on the number above for the best advice and a quote on available products in the marketplace.

This information should not be interpreted as financial advice. Bridging loan rates are subject to change. Speak to our advisors for a loan illustration.