Zombie property laws: what happens when property is abandoned?

Zombie properties, also known as abandoned or vacant properties, are a growing issue in many UK communities. These properties, often left behind after repossession or other financial troubles, can pose significant legal challenges for local governments, property owners, and lenders.

But what exactly happens to these properties when they’re abandoned, and how do UK laws govern their upkeep?

What are zombie properties?

A zombie property typically refers to a property that has been abandoned by its owner, often during the repossession process. In some cases, the owner may leave the property under the assumption that the lender (often a bank) has taken over. However, if the repossession is never completed, or the lender delays taking possession, the property remains in legal limbo. This leaves the home vacant and unmaintained, often for extended periods.

Abandoned properties are problematic for several reasons:

• They can attract vandalism and crime.
• They lower the property values of surrounding homes.
• They can become dangerous due to lack of maintenance (e.g., structural deterioration, fire hazards).

How to find zombie properties

If you are a real estate investor, you may decide to develop relationships with local real estate agents, property managers, tax professionals or lenders to find out about upcoming properties that are in a pre-foreclosure state which can help you find zombie properties.

While the investment opportunity exists, it is important to note that a strong understanding of property data is needed when exploring this area of real estate investment, alongside the right team of professionals to help guide you through the process.

Legal responsibilities for zombie properties

The legal responsibilities for zombie properties in the UK vary depending on the stage of repossession and local laws. Typically, responsibility for a property falls on the last registered owner until the repossession process is fully concluded. However, once repossession is complete and the lender takes possession, they become responsible for maintaining the property.

Potential legal issues that arise surrounding abandoned properties include:

Owner’s responsibility

In the UK, the original property owner remains legally responsible for the property until the repossession is completed through a court order. Under UK law, they may still be liable for council tax, property maintenance, and any damage or crimes that occur on the property during this period. This includes obligations under local authority laws such as the Environmental Protection Act 1990, which deals with public health and safety issues arising from abandoned properties.

Lender’s responsibility

Once a lender has taken possession of the property, usually under the Law of Property Act 1925, they are responsible for maintaining the property in line with local housing and safety standards. This includes making sure it meets local safety codes and paying council tax after any exemptions expire. However, lenders sometimes delay taking possession, leaving the property in limbo due to the costs involved in maintaining or selling it.

Municipal responsibilities and nuisance laws

Local councils in the UK have powers to intervene if a property becomes a danger to the community. Under laws such as the Building Act 1984 and the Town and Country Planning Act 1990, councils can designate abandoned properties as dangerous structures or public nuisances. In these cases, they can carry out necessary repairs or secure the property, passing on the costs to the owner or lender. The Housing Act 2004 also allows councils to enforce empty dwelling management orders (EDMOs) to take control of properties that have been empty for a long time.

Local efforts to combat zombie properties

In the UK, many local authorities have developed strategies to address the growing problem of zombie properties, including:

Empty property strategies

Many councils have established empty property strategies, which track vacant homes and aim to bring them back into use. These strategies often include providing grants or loans to property owners to refurbish their homes. Additionally, some councils offer reduced council tax for homes that are vacant for short periods but may increase council tax for homes left vacant long-term.

Compulsory purchase orders

In extreme cases, where a property is a persistent problem and the owner or lender fails to act, local authorities may issue a compulsory purchase order (CPO). This allows the council to forcibly buy the property, often to renovate or demolish it. CPOs are an important tool in regenerating areas blighted by zombie properties.

Empty dwelling management orders

Under the Housing Act 2004, local councils can apply for an EDMO if a property has been vacant for at least two years and is causing problems for the local community. Once in place, the council can take over the management of the property, carry out repairs, and rent it out to recover costs.

Legal recourse for neighbours

Neighbours of zombie properties often experience a decline in their own property values and may face safety concerns due to the neglect of the abandoned property. In some cases, neighbours may have legal recourse to force action on the property including:

Nuisance lawsuits

Under UK common law, neighbours can file a nuisance lawsuit against the property owner if the abandoned home negatively affects their property or quality of life. If the property is a public health risk, neighbours may also seek action from the local council under the Environmental Protection Act 1990.

Quiet title actions

If a property is truly abandoned and ownership is unclear, neighbours or the local council may pursue a quiet title action to resolve any disputes over legal ownership and facilitate the transfer of the title to a new party. Although less common in the UK than in other jurisdictions, this can be an option in extreme cases.

Zombie properties present a unique legal challenge in the UK that affects homeowners, lenders, and local councils alike. While laws regarding the maintenance and responsibility of these properties vary by location, the burden often falls on the last legal owner or the lender once repossession is complete. Local authorities have implemented strategies, such as empty dwelling management orders and compulsory purchase orders, to combat the negative effects of zombie properties. Ensuring that zombie properties are maintained and re-enter the housing market is a priority for many UK councils seeking to keep neighbourhoods safe and property values stable.