Loans for empty property owners
The Empty Property Loan Scheme helps empty property owners carry out essential repairs to their property to bring them back into use.
Who is the loan for?
The loan is for anyone who owns a property that has been empty for more than 6 months and wants to carry out renovation works. We think that the loan will be of greatest interest to you if you are struggling to get the finance to do this, or would like some help from the Council to manage this task.
We know that some owners will not be able to get a loan, for instance because they do not have enough equity in the empty property (equity is the difference between the value of the home and the amount of any secured loans, such as a mortgage, that need to be paid back). In these cases we also have an Empty Property Assistance Scheme which gives financial assistance that doesn’t need to be paid back, up to a maximum of £5,000. The Council will not give this financial assistance if it thinks that you can access other forms of funding such as an empty property loan or commercial lending.
How does the loan work?
- The loan has been devised to help unlock the potential of empty properties
- The loan is an equity release product. This means you don’t have any monthly repayments
- The loan is secured as a legal charge against the empty property. Similar to the security required on a mortgage
- The loan is for a fixed term of five years, or sooner if you sell the property, or want to pay the loan off in full, before that time
- Bradford Council will lend you the money to have repairs and improvement works carried out
- This is converted to a percentage of what a valuer thinks the property would be worth if the works were carried out
- When the loan is re-paid, if the value of your property has increased we will use this percentage to work out what you should repay, based on the value of the house at that time
- See the table below for examples of how this works
- When the loan is re-paid if the value of your property has fallen then you will be asked to re-pay the original amount that you borrowed
| Cost of works required | What property would be worth if improved | % of costs to value | Property value at end of loan period (assuming inflation) | Amount to be re-paid for the loan |
|---|---|---|---|---|
| £10,000 | £100,000 | 10% | £120,000 | (10% x £120,000) = £12,000 |
| £30,000 | £60,000 | 50% | £66,000 | (50% x £66,000) = £33,000 |
How much is the loan for and what will it cover?
- Bradford Council will advise you on what works are necessary at the property and check that the works are done properly before payment is made to your builder
- The amount borrowed can range from £1,000-£30,000 dependent on what works need doing, existing borrowings and the anticipated improved property value
- The loan also includes some costs for setting up and administering the loan, but these will be explained to you
How long does the process take?
- This varies, but it can take between 6 and 12 months for the loan to be approved and the work to be done
- This is because there are lots of stages and there is involvement from so many parties, such as banks, builders and solicitors, as well as the work that needs to be done by the Council in inspecting the house and gathering information
- The different stages involved will be explained to you if you decide to proceed with an enquiry
What happens once the works are done?
- Once the property has been improved, you may wish to sell it or rent it out, but remember, the loan still has to be re-paid at the end of the 5 year term
- A condition of the loan is that your property is occupied as a home or sold within 12 months
How do I find out more?
If you would be interested in finding out more about the loan and what your property could be worth, please contact us for a no obligation or commitment discussion regarding your empty property.