Empty Property Loans Explained

If you own a house or flat that has been standing empty, you may have seen councils mention "empty property grants". Grants for renovating empty homes are uncommon these days, though not extinct: a handful of councils still run one, usually tied to a particular street, a particular type of property, or a pot of funding that runs out. What many councils offer instead is a loan, and the wording on their websites does not always make that obvious at first glance.

That matters, because a loan changes what you are agreeing to. It has to be paid back, it may come with conditions attached to what you do with the property afterwards, and it is normally registered against the property itself.

Grant or loan: what the difference means

A grant is money you do not repay, provided you meet the conditions it was given under. The best known council grant is the Disabled Facilities Grant for adaptations, which is a different thing entirely. General renovation grants for empty homes have largely disappeared.

An empty property loan is repayable. The appeal is the cost: many are interest free, and others charge well below what a commercial or bridging lender would ask. In return, councils often want the property occupied again, and some will have conditions about who occupies it and on what terms. Not every scheme goes that far, so read the actual terms rather than assuming.

These schemes are discretionary, which means no council is obliged to run one. Funding is often capped for the year, eligibility on paper does not guarantee approval, and plenty of authorities have no scheme at all.

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Typical terms

These terms are typical rather than prescriptive. Individual schemes differ a lot.

• Interest free, or at a low fixed rate, sometimes with an arrangement fee added to the amount borrowed.
• Secured on the property by a legal charge, usually a second charge sitting behind an existing mortgage.
• Repayable on sale or transfer, or at the end of a fixed period, whichever comes first. Some schemes ask for monthly instalments instead, or a mix of the two.
• Paid in stages against invoices or inspections rather than as a lump sum up front.
• Conditional on finishing the work within an agreed timescale and bringing the property back into use.
• Sometimes conditional on letting the property, occasionally through the council's own scheme or a nominated agent, and occasionally at a rent tied to local housing allowance or another affordability measure, for an agreed number of years.

The letting condition is the one people underestimate. If your plan was to renovate and sell, a loan that ties you to several years of letting at a set rent may not suit you whatever the interest rate.

Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.

Eligibility, tax and paperwork

Most schemes target properties that have been empty for a sustained period. How long varies: some councils count six months, others want a year or two, and a few look at whether the property is on their register of long term empty homes rather than counting from a fixed date. Your council will tell you what it uses. You will normally need to own the property, either outright or with a mortgage, and be in a position to grant a charge over it. Properties that are uninhabitable or causing problems for neighbours tend to be prioritised.

Expect to provide proof of ownership, evidence of how long the place has been empty, a schedule of works with contractor quotes, any planning permission or building regulations approval needed, and enough detail about your finances for the council to judge whether you can finish the job and repay. They will also check for outstanding enforcement notices or council tax arrears.

Two tax points are worth raising with an accountant. Renovating a home that has been empty for a long time can attract a reduced rate of VAT on the building work, with the qualifying period set out on GOV.UK. Separately, if the property is not your main home, selling it after renovation may trigger capital gains tax, and the money you spent on improvements can usually be set against the gain, so keep the invoices.

Charges, selling later, and what to do if there is no scheme

If the property is mortgaged, check your mortgage terms. Many lenders require consent before a second charge is registered, and councils commonly ask for that consent in writing before releasing funds. Lenders can refuse, and some take weeks to reply, so sort it out before you have builders booked.

The charge stays on the title at the Land Registry until the loan is repaid. When you sell, your solicitor redeems it from the sale proceeds. If values have fallen or you have little equity, that can leave a shortfall you have to find elsewhere. A letting condition still running may also mean you need the council's agreement before selling or transferring.

Contact the empty homes officer or private sector housing team at the council where the property sits. Schemes are often buried on council websites or not advertised at all, so ring and ask directly rather than relying on a search. Outside England, look at the national picture too: the Scottish Empty Homes Partnership and the Welsh Government's empty homes work both run alongside council schemes, and Northern Ireland handles this differently again.

If nothing is available, the usual routes are a further advance from your existing lender, a renovation or bridging loan, or phasing the work and paying as you go. Those cost more than a council loan, but they come without letting conditions. Whichever way you go, get the full terms in writing and have a solicitor look at the loan agreement and the charge before you sign.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Empty Property Grant Finder lets you find out what funding, loans and VAT relief might be available for bringing an empty or derelict property back into use. Try it now →