United Kingdom

The risks from a vacant property

High profile retail failures in 2018, including the collapse of Toys ‘R’ Us and Maplins, have threatened to leave more than 1,200 retail premises empty according to figures for the first four months of 2018 –compared to 1383 stores for the whole of 2017.

For landlords of vacated properties, there is not only the hit from loss of rental income to manage but also the increased risks of problems such as illegal squatting, fly-tipping, vandalism, metal theft, or fire and flood damage.

Given the bleak outlook for the retail sector, the problem of vacant units is only likely to get worse which means landlords will need to take a proactive approach to protect their properties.

Notify your insurer

Whatever type of commercial property owned or managed, as soon as it’s vacated, landlords must notify their insurer. Failure to do so could mean any future potential claims will not be paid.

Landlords may have insurance cover for removal of tenants’ property when the tenant has suddenly vacated due to going into administration. These claims also need to be notified immediately and agreement reached with the loss adjuster on both the value of the claim and whether these costs should be factored in the discussion with the administrator.

Policy wordings should also be checked to ensure cover for areas such as fly tipping, removal of squatters and loss prevention. Landlords are still liable for public liability if people enter the property and are injured – a particular problem with vacant properties is children illegally accessing the site.

Practical Steps to reduce risk

As we enter the season for squatters and fly tipping in industrial sites, we recommend the following protective measures for any recently vacated commercial premises:

  1. Increase security
    Web cams and other surveillance systems can be useful and alarm systems should be checked to make sure they are in good working order. Security guards on site could be an option as well as other physical security measures such as perimeter fencing and steel doors.
  2. Increase inspections
    Increase the inspection timetable and include random inspections making sure that doors, windows and other openings are properly locked and secured.
  3. Turn off utilities
    Turn off gas, electricity and water and drain down heating systems to avoid potential flood damage.
  4. Reduce risk of theft
    Remove any items of value from the premises.
  5. Keep the premises clean
    Make sure the site stays clean and free from combustible materials.
  6. Have a rehearsed plan for responding to site incursions
    The plan should include involving the police as early as possible and presenting them with any evidence of criminal damage to assist them in taking action.

If there is a problem, landlords should let their insurer know as soon as possible.

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