Counting the costs of empty properties

May 21, 2021

Many property owners focus on the lost rental revenue when calculating the cost of an empty building, but, says Dot Dot Dot chief executive Peter Brown, there are many more savings to be had when using property guardians.

When a mainstream use of a property comes to an end e.g. because an occupier has left, or the building needs to be redeveloped, the focus on the financial loss to the property owner is usually on lost rental revenue. This is understandable, because those figures usually quickly add up, but there are also significant costs involved with managing and stewarding empty buildings which can hit the property owner’s bottom line. 

In my experience, most organisations will underestimate these costs as they aren’t used to holding property empty. And in larger buildings that have had a commercial tenant, the property owner won’t have been responsible for the building’s day to day costs and so may not even have a sense of the running costs of the building, so won’t have been able to make an assessment for how much the building may cost to keep empty. Every month when we run through our budgets, I never cease to be surprised by how quickly the savings of using guardians, rather than leaving buildings empty, can add up. 

For example, we took responsibility for around 165 Council Tax accounts in the last financial year, saving 14 of our clients more than £220k in Council Tax payments alone. Single accounts ranged from individual studio flats up to our largest 90-person property, and, there were plenty – hundreds – more accounts where the guardians paid Council Tax directly, thereby contributing even more savings. We’re also working up the savings on utilities, maintenance and alternative security options for each of our projects, so we can give our clients a more complete understanding of all the money they’re saving by choosing to work with us.

The costs of empty property that we typically see fall into two categories – direct and indirect. 

Direct costs are things that clients would have had to pay for themselves if the building lay empty – for example:

  • Council tax: discounts and exemptions for empty property have not been available for a number of years, and in some areas policies to incentivise owners to use property means that Council Tax bills can double for longer-term empty property
  • Energy and utilities: even when equipment is switched off, there are often standing charges to pay for
  • Hard security products: many of our clients have historically used third party security products such as metal screens to secure their empty properties. These products are either rented or purchased, and so using guardians removes the need to pay for them
  • Repairs and maintenance: we will often be able to take on some of the routine repairs and maintenance, depending on the building
  • Health and safety, and compliance: even an empty building needs to be managed and kept safe, for visitors and to avoid it becoming a hazard.
  • Depreciation: though it’s hard to measure, an empty building will most likely lose value over time as it becomes more dilapidated. There’s a value in a building that is cared-for and looked after. 

But there are also other costs – indirect ones – that only become relevant once a property is empty:

  • Insurance – many insurers have clauses requiring property to be occupied without long void periods, and some insurers will charge more for empty property given the risks of vandalism or damage going unnoticed and unchecked
  • Theft or vandalism – these costs can be high in terms of both the cleanup and securing the building again. Unfortunately, we’ve seen even the smallest property being the target of metal thieves.
  • Squatters or unauthorised access – the court and bailiff costs associated with removing squatters can easily run into five figures.

So, when faced with an empty building, my advice would be to consider and make provision for a wider set of these costs and not just rent loss.

If you want to get an idea of how much property guardianship could save you, get in touch with us at partnerships@dotdotdotproperty.com.

On the ground: Regeneration schemes and gradual decants – build and flex

May 20, 2021

Last month our Director of Services, Mark Ackroyd, explained how we put in place the right support for regeneration schemes and other long, gradual decant programmes. In that first piece, he explained how we like to understand the properties, project and community to deliver a tailored service.  In this follow-up, he explains how tailored workflows and a flexible long-term approach can help our clients to achieve their goals.

Build a workflow that fits around the client

Our careful up-front research gives us a strong chance to hit the ground running in a regeneration or decant project. As well as giving us useful knowledge and a tailored model, we have already engaged in great conversations with our new clients, which helps us to establish working relationships quickly when the work starts.

Part of this preparation is about the detailed work of designing procedures and workflows that fit around our client’s existing operations and teams. This is key to the success of regeneration or decant projects. We need to be able to receive, manage and return properties to the client in a way that fits with their resources and needs.

At an operational level, this means understanding how the client wants to prepare and handle properties before handing them over to us. This usually involves agreeing a clear specification for the client’s voids or maintenance teams to follow. This will cover familiar areas such as:

  • Gas and electrical compliance
  • Clearance
  • Key cutting and locks
  • Fire safety systems

Some clients will do significant work and others will do none – this varies according to each client’s compliance needs, budgets and operational priorities. Our work needs to fit around the agreed specification, filling the gaps and ensuring that the property handover process is smooth and efficient. Getting this ‘recipe’ right is a key step – it gives our clients certainty about their own workflow, it allows us to make detailed plans, and it gives us an insight into the unique pressures and preferences of a new organisation or team.

Beyond that, we will also put in place the tracking, reporting, administrative and compliance elements of our service so that each client can access the right service and the right information in a way that works for them.

As well as the obvious property management issues, each client’s way of working needs to be accommodated. This is not just about ‘receiving’ properties, but also to their ongoing management and maintenance.

  • How are utilities handled and how should we transfer those services effectively?
  • Do operational staff prefer to share documents in paper form, by email or by using shared online drives and documents?
  • Do the client’s teams want us on site so that we can react to a flexible timetable? Or do they want a more structured approach with fixed schedules?
  • Do clients want us to liaise directly with their contractors and suppliers? Or should we work directly via the client’s own representatives?
  • Does the client have specific policy or practical requirements around anniversary or repeat compliance checks?
  • Are there particular elements of housekeeping or maintenance that are particularly important for the client? Perhaps one area or block needs special attention?

These are just some of the factors that we consider, and although this seems like a lot of detail, we are able to get ‘under the hood’ of these requirements quickly by combining our wide experience with good quality client conversations.  We have our own standards for high quality guardians and well-managed housing, and we understand how those can be delivered in a wide variety of operational contexts. We love the challenge of moulding our service so that we become a flexible and low-hassle part of each client’s toolkit.

A lot of this is worked out at the proposal stage before a contract starts, but detailed process-building continues after we are on the ground and working closely together with clients. We like to build high quality relationships with both decision-makers and operational staff within our client organisations. This allows us to respond intelligently and quickly, to find efficiencies, and to pre-empt risks and difficulties. 

Flex and change with the project

Regeneration and decant programmes can change and evolve significantly over time. Our detailed planning is not just about what a client needs now, but also about what could change in the future, and our experience helps us to understand how our service may need to adapt.

We are typically prepared for the changes in size, pace and structure that could affect us, but we are also used to responding flexibly to unforeseen issues. By working collaboratively with our clients, we constantly review the outlook and risks for each project, and we are ready to adjust plans rapidly if needed.

This could mean tweaking a compliance policy to address an area of risk, or overhauling our entire contract to take on a new range of responsibilities. We often have insights and ideas from previous work that will help us and our clients to navigate changes. Although the details of every project will vary, there are common challenges that we are used to addressing:

  • Delays that mean old buildings are kept in use for longer
  • Changes in financial or political priorities meaning that the speed or scale of our work changes quickly or that previous decisions about properties need to be reversed
  • Changes to other suppliers that affect teams, workflows and responsibilities
  • Policy or legislative changes requiring us to evolve alongside our clients
  • Issues or crises in the local area that require us to change the focus of our social impact, resident liaison or other work

These are just a few examples of the issues that we have tackled with clients in the past. Because we can draw on insights from multiple projects and organisations, we can be a useful source of stability and knowledge for teams facing new phases or transitions in their major programmes.  An important part of our approach is that we structure our service to be effective throughout the lifetime of a project, with in-built flexibility and resilience, and a commitment to long-term outcomes.

Working sensitively to support regeneration programmes or the decant of multiple properties has always been a core part of Dot Dot Dot’s work. This experience informs every part of our operations, and we take pride in supporting clients in a tailored way through their most challenging and important programmes. 

 

If you would like to find out more about how we could work with you on a new or existing project, contact us at partnerships@dotdotdotproperty.com

Tailoring a management plan with A2 Dominion in Oxford

February 11, 2021

Gibbs Crescent is an estate made up of studios and 1-bed flats, located by Osney Marina in west Oxford. Since July 2019, we have worked with A2 Dominion, a housing association with a social purpose, to house property guardians whilst the estate prepares for a period of regeneration. We currently house 19 guardians across 17 flats in the estate. Since our occupation in 2019, Oxford guardians like Beth have contributed 3,691 hours to good causes. 

 

A set-up plan to meet individual needs

When a client comes to us with an empty asset, their list of priorities will rarely exactly match that of the clients that have come before them. We manage a varied portfolio of properties and the clients we work with are just as varied. With that in mind, we know that taking a ‘one size fits all’ approach will not deliver the best results. We can call upon our previous experience of what has worked well in the past in a variety of projects to propose a tailored management plan that suits a new client’s specific needs.

 

What A2 Dominion needed at Gibbs Crescent

At Gibbs Crescent, it was important to A2 Dominion that we be sensitive to existing residents on the estate. In any project where there are existing residents to consider, it is vital to hand properties over to Dot Dot Dot in an appropriate way that will not disturb the residents or attract any negative attention. We initially took on 12 flats so as not to over-occupy, expanding to 17 in 2020. In this way, the introduction of guardians to Gibbs Crescent was manageable for both Dot Dot Dot and A2 Dominion, as well as not inconveniencing residents. 

A2 Dominion are particularly happy with their experience of using Dot Dot Dot guardians to secure their empty buildings, and said about their work with us: “Our experience with the guardians has been very positive. Once the void properties have been accepted there is very little involvement from our side. Having the guardians in the void properties has given us the peace of mind we needed whilst preparing to redevelop the estate. The guardians have been invaluable as they have enabled us to identify leaks, which we would have been otherwise unaware of and would have potentially caused structural damage if left undetected. They have also made us aware of some anti-social behaviour on the estate and have helped to maintain a number of the small private gardens in the empty properties, even working alongside some of the remaining residents to grow their own vegetables.”

A central part of our model for property guardianship is to only house well-vetted, responsible guardians who are interested in volunteering in their local community; this ensures that they will be sensitive to their surroundings and the other people that live there. It is also important for us to house a diverse range of guardians, and we are particularly happy to be able to house people that are local to the area. Our Oxford guardians vary greatly in age, from 21 to 62, and 14 were living locally in Oxford and two in Oxfordshire before their guardianship. 

As we offer a flexible and open-minded approach, we are able to better collaborate with our clients to allow them to spend their valuable time and resources on the things that matter to them most. In the case of Gibbs Crescent, we worked together to develop a triage process, in which responsibility was clearly divided between Dot Dot Dot and A2 Dominion. In many cases, projects are time sensitive because empty properties can pose a security risk. We are committed to fast service delivery in Oxford, aiming to turnaround the triage process within two weeks. You can see the flow of the triage process below. 

 

 

A flexible approach to property management

As our Head of Services, Mark Ackroyd, explores in his ‘On the ground’ blog, understanding at the outset how property management will operate across the lifetime of a guardian contract is critical to delivering maximum benefits for property owners. That’s why we offer a flexible approach, which can be modified and calibrated to our clients’ changing needs.

As the property industry was hit by the emergence of Covid-19 in 2020, many in the sector had to adjust to a new normal and in some instances redevelopment plans were put on hold. It is at times like these that meanwhile residential use is so vital – to avoid the plight of empty buildings which can so often be empty for longer than intended due to factors out of the client’s control. As was the case with many of our clients’ plans, redevelopment timelines at Gibbs Crescent were pushed back to keep everyone working as safely as possible. We were able to offer a solution by taking on another phase of flats on the estate, growing from the 12 properties we managed in 2019 to 17 properties in 2020. 

Because we build flexibility into our approach, we can modify our practices instead of having to overhaul them completely, and we are resilient when met with obstacles such as the Covid-19 crisis. Our agile model allows us not only to meet our clients’ needs, but also to adapt to new challenges when they arise. 

If you’d like to find out more about our agile approach to property management, you can sign up to our newsletter here or get in touch with us at partnerships@dotdotdotproperty.com.

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