What Exactly is a Derelict Building?

What Exactly is a Derelict Building?
What Exactly is a Derelict Building?

Empty buildings that have fallen into disrepair are often sold at extremely competitive prices, usually at property auctions, and can be an attractive renovation project or investment asset.

There are countless reasons a building might be deemed derelict, but the specific conditions matter when you need to find appropriate insurance coverage.

If you’re interested in buying a dilapidated property, an empty site that has been unused for some time, or a conversion project, in this article we’ll explain the technicalities of classifying a building as derelict – and what that means for you.

The Definition of a Derelict Property for Insurance

Every insurance company that offers vacant or unoccupied coverage will have slightly different terms and provisions, depending on the condition of the building and the underlying risks. They will often ask you to provide information about the value, intended use, and security provisions in place before deciding whether to offer coverage.

Property is normally deemed derelict if any of the below factors apply:

  • The building is not in use – no visits, building work or regular inspections are taking place.
  • Overgrown land – the areas around the building are overgrown, impossible to access or full of fly-tipped waste.
  • Contaminations – there are rodent or insect infestations, wild animals living in the property or roof spaces, or signs of invasive weeds or trees.
  • Boarding – the property is boarded with screens or plywood panels over doors and windows, preventing access.
  • Criminal activity – squatters or trespassers are living on the property, or it is used for illegal activities or targeted by vandals.
  • Uninhabitable condition – a derelict property will usually have broken glass (if not boarded), holes in the roofline or otherwise be in a state that would be unsuitable for habitation.

There is a big difference between a run-down site needing some TLC and a derelict building. The most important being that the property is not in use for any reason and has been abandoned by the previous owners.

Why Do Properties Become Derelict?

If you purchase a derelict property, you’ll normally have some idea about the history behind the building and how it came to be in such a bad state of repair.

Common examples include:

  • Poor structural condition or extensive repairs required, which the previous owner could not finance. In some cases, a home becomes derelict because the owner cannot manage the upkeep costs and leaves the building to decay.
  • Insolvency or repossession proceedings. Although a bank or financier will always attempt to sell a repossessed property quickly, stalling legal action or other complications may mean the building sits empty for a considerable period.
  • Unfinished developments, usually because the developer or self-build owner runs out of money, cannot sell the plot, and leaves it empty and incomplete indefinitely.
  • Inherited properties in limbo where the beneficiary cannot pay the associated taxes or is not traceable, and the building remains unused.

You may also discover that a property has been abandoned due to environmental issues such as a contaminated water supply or pollutants in the surrounding ground. Extensive surveys are crucial to determine the viability of renovating the property, the safety of the site, and the realistic future sale value if any of these problems apply.

When is a Derelict Property Considered a Dangerous Structure?

Derelict buildings can quickly deteriorate without basic upkeep and ongoing protection from the elements. If the foundations are unstable, the roof is unsecure, or the building is otherwise exposed, it may become dangerous – in which case you may need to consider a range of safety precautions to mitigate any potential liability.

A structure could be deemed a public health risk due to:

  • Lack of maintenance causing severe structural issues.
  • Fire or storm damage rendering the building unsafe.
  • Explosions or the presence of flammable materials.
  • Loose walls or fencing at risk of collapse.
  • Unsafe flooring or roof spaces that are not weight-bearing.
  • Badly maintained roofs with the potential for falling tiles.
  • Chimneys that are shaky or unstable and also at risk of falling.

Properties that become dangerous following a storm or fire can often be repaired, with temporary precautions such as fencing, warning signs or netting to avoid a risk from developing. Buying a derelict site involves a thorough assessment process to identify if any dangers exist and decide on the right way to make the area safe before proceeding.

Is it Possible to Insure a Derelict Property?

There are several possible insurance options, including vacant property coverage, to protect a derelict home from further damage or decay. However, depending on the severity of the structural issues, an insurer may impose rigorous security requirements to offer cover against the cost of further damage. You will normally need to provide a full structural survey, evidence of your planned repairs, and images (or a site visit) to help the insurer evaluate the site thoroughly. Standard buildings insurance is inappropriate for derelict buildings and will not cover any incidents or accidents that impact the property’s value.

Derelict property insurance will normally cover you for:

  • Damage from storms, floods or fires.
  • Thefts, vandalism and break-ins.
  • Legal expenses and public liability.

Comprehensive insurance is crucial to protect the value of your investment and avoid a derelict property from incurring further costs that may make a renovation unviable.

Securing a Derelict Building

The insurer will typically need to know what steps you have taken to preserve the security of the building while it is empty.

Their requirements will depend on the nature of the property but can include:

  • Steel security screens/doors and window boarding (rather than short-term timber panelling).
  • Changing the locks to all entry points, including outhouses, doors and windows.
  • Erecting signage warning of potential dangers, such as falling tiles or unstable walls.
  • Scheduling regular site visits to identify attempted break-ins or fly-tipping.
  • Installing safety nets, screens, fencing or other barriers to prevent members of the public from accessing the site.

One of the key risks for property owners is that a derelict building causes an injury or accident, and they are liable even if the injured person has entered the property illegally. It is therefore important to understand the security requirements and select a suitable derelict property policy to ensure you are not exposed to legal liabilities.

If you’re looking to secure an empty property, get in touch with Clearway today. Clearway is one of the UK’s leading vacant property security, environmental and property services companies, trusted to secure, monitor and protect vacant properties, sites and their associated assets since 1992. Our extensive portfolio of solutions ensures your critical assets are protected with minimal hassle.

We look after residential and commercial buildings, working directly with property managers, landlords, estate agents, local authorities, retail businesses and some of the largest hotel and leisure groups and housing associations throughout the UK.

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