Not only have various UK governments struggled to build the requisite number of houses dating back for the last decade, but it’s also through that were some 238,306 properties unoccupied and classed as ‘long-term empty homes’ in November 2021.
Of course, it’s also known that recessions tend to see huge quantities of unfinished residential and commercial construction projects, which are forced to terminate due to several financial and technical factors.
But what are the main causes of unfinished houses in a recession or economic downturn, and what can landlords do if they’re affected?
What are the Main Causes of Unfinished Houses?
Of course, a lack of cash or borrowing remains the single biggest reason behind unfinished homes, particularly when dealing with expansive or expensive projects that haven’t been fully budgeted for.
If you’re dealing with larger projects that are backed by private borrowing, you should also note that the base interest rate continues to drive up the associated costs of borrowing. This may suddenly make a project unaffordable or unprofitable, causing it to be scrapped or paused for the time being.
Poor or inadequate project management can also play into this, as this may cause capital to be mismanagement or lead to overspending. This may cause your money to run out quicker than expected, forcing you to consider taking out a secured loan or causing damaging project delays.
Substandard planning is also a potential trigger, as this can scupper projects and completely stop them in their tracks when permissions are denied. Therefore, preparation is so important, while expert advice can also prevent you from making costly mistakes.
What to Do if Your Project Stalls
The question that remains, of course, is how you can react to such challenges as a landlord. Here are some ideas to keep in mind:
- #1. Understand Your Minimum Requirements as a Landlord: In some instances, you may run into issues once the project is almost complete. For example, you may have run out of cash before you’ve been able to furnish your home, but this isn’t a legal requirement, and you can simply adjust your listing and potentially revise the monthly rental fee. We’d also recommend understanding your minimum requirements as a landlord, so you can fulfil these and reduce the scope of your project without compromising on compliance.
- #2. Liaise With Experts: If you’re new to real estate, it’s worth investing in the expertise of relevant people in the industry. For example, architects can help with the design of projects while also streamlining the planning process, while interior designers may be able to optimise your property’s layout and aesthetic appearance. Regardless, the key is to consider any gaps in your knowledge and experience, before seeking out experts who can fill these successfully.
- #3. Don’t Panic: It’s also important to retain a level head as an investor, as there’s little point in selling or flipping your asset for a loss even as the UK hovers on the precipice of a recession. Instead, review your circumstances and the near and medium-term economic outlook, ensuring that you come to an informed decision that safeguards your investment. Selling for a loss should be a last resort, and you should consider a myriad of other options before taking this step.