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Empty threats

Vacant commercial buildings are increasingly at risk from squatters, metal thieves and other hazards. Guy Other, CEO of Orbis, warns that failure to protect empty property can have severe consequences.

It was hard to escape the irony of the news that Camelot, a property management company specialising in vacant property, had fallen victim to squatting. The squatters reportedly strolled through an open door to occupy the company’s former headquarters building in east London, demonstrating that no property is above being targeted. 

Nor was this an isolated incident; stories of activists and protesters squatting in commercial buildings have featured prominently in the news in recent years. In 2015, an anti-capitalist group chose to make its political point by moving into the former Royal Mint building in the City of London. Earlier that same year, campaigners for the homeless set up shop in the historic Manchester Stock Exchange, slated for conversion to a boutique hotel by football legends Gary Neville and Ryan Giggs.

Squatting is a major ongoing issue for anyone responsible for managing vacant property. While it’s difficult to arrive at a precise figure, it’s estimated that there are between 20,000 and 50,000 people squatting in the UK – compared to just 9,500 in 1995.

In last year’s vacant property survey, carried out by the British Institute of Facilities Management (BIFM) and Orbis, facilities managers and property managers made it clear that squatting is a problem for the industry. The issue appears to be more acute for commercial premises; 16 per cent of respondents reported an increase in commercial squatting, compared to a rise of seven per cent in residential squatting. London property managers are experiencing the highest squatting rates (83 per cent), followed by the South East (78 per cent), Wales and the North West (75 per cent), and the Midlands (73 per cent).

Changing legislation
Changes to the law have produced unintended consequences, as so often happens. As of September 2012, squatting in residential property has become a criminal offence. Anyone who occupies a property without proof of ownership, a lease or tenancy agreement, or with no record of having paid rent, is defined as a squatter. Under the new laws the courts can hand out custodial sentences of up to six months and fines of £5,000 to squatters found occupying a residential property.

Unfortunately, this has forced squatters to change their approach in an attempt to reduce the risk of prosecution. It’s believed that before the new laws, 60 per cent of squatters were living in residential property. However, a property litigation partner at Charles Russell Speechlys (CRS) reported to the Financial Times that the number of instructions relating to commercial property squatting increased by 100 per cent in the first two months following the changes. Squatters appear to regard commercial property as a lower risk alternative.

Insurance group Aviva has reported a doubling in squatter-related claims in recent years. In some cases, claims for more than £1 million have been made, including the cost of removing the squatters and repairing damage to the property. And that does not take account of the negative impact on a company’s reputation or knock-on effects such as increased crime, littering and graffiti, affecting property values in the surrounding area.

The BIFM/Orbis survey also revealed that squatters are not the only issue for facilities and property managers in charge of vacant premises. Over a quarter of respondents said they had been targeted by ‘urban explorers’, and almost half believed that the problem of urban exploration is on the rise. Urban explorers, or ‘place hackers’, target empty buildings and abandoned structures in order to explore their interiors, often trespassing on private property.

Injury and damage
Urban explorers often act alone, placing themselves at even more risk. If they do incur an injury, the property owner could be liable for compensation. Under the Defective Premises Act and Occupiers Liability Act, landlords are under a duty of care to third parties who could be injured in their buildings. Property owners are legally required to maintain a safe property, even when the building is vacant, and injuries caused by their failure to maintain or repair the property can result in a claim being made against them.

Accidentally or on purpose, squatters and explorers may inflict structural damage that can be costly to rectify and pose a danger to others. According to Aviva, £2 billion of damage is done to property in the UK through vandalism and arson, a quarter of which occurs in empty properties. When a building is occupied, CCTV surveillance and the vigilance of tenants help prevent fire, but these do not apply to empty buildings. There are no detailed figures relating to fires and theft in vacant buildings in the UK, but many insurers report this as a very significant loss.

While most squatters and explorers probably break into properties without malicious intent, those intent on stealing scrap metal are another matter. Scrap metal thieves not only cause structural damage that can be costly to rectify, they can also cause dangerous, life-threatening situations.

Metal theft
In October 2013, thieves stealing live overhead cables in Perth caused a power surge that set a house on fire. The man and his pregnant wife who were there at the time were lucky to survive. The following month, four houses caught fire and about 280 properties suffered power cuts after copper wire was stolen from an electricity substation in Greenock. There have been similar incidents all around the UK. A gas explosion tore through a row of houses in Castleford in 2011 after copper cabling was stolen. Days earlier in Leeds, a boy died during a suspected metal theft from a substation.

Even where there is no threat to people, metal theft causes other costs. Stealing copper pipes causes problems with heating and water systems, and properties may need replastering or redecorating when stolen roof lead leads to severe leaks. Commercial buildings have faced costs of up to £2.5 million as the result of metal thief activity.

Metal theft is clearly criminal, yet landlords are still left with a statutory obligation to maintain a safe property, even when it’s vacant. As explained above, empty buildings are covered under the Defective Premises Act and Occupiers Liability Act, and even a metal thief could make a claim against the property owner.

Humans are not the only source of nuisance and harm to a vacant property. Wildlife can also be a serious problem. Rats, mice and other pests are carriers of diseases and can create a fair amount of havoc inside a building. They gnaw on fixtures, furnishings, walls and pipes, causing substantial damage which can be costly to repair. Rats and mice often target vacant buildings, particularly if they’re next to or near occupied ones. Empty property that is rarely inspected is the perfect place to build a nest; such a haven becomes a safe base point for pests to return to after scavenging for food from the surrounding occupied buildings.

Security solutions
In recent years, many facilities and property managers have turned to guardianship as a way of keeping their void property secure. Guardianship involves recruiting people to live in vacant property (residential or commercial) at a reduced ‘rent’ to discourage break-ins, vandalism and squatting. This has the benefit of ensuring premises are protected while providing people with a cheap place to live in the short term.

However, there are serious legal implications that need to be considered before using a property guardian. As well as the insurance implications, there is the risk that the guardians could become squatters and refuse to leave. Owners and managers will also continue to be bound by their duty of care to keep these people safe while in the building.

The best way to protect a property during a long- or short-term vacant period is to develop a solution that fits the needs of the particular circumstances. It will probably combine property inspection with various building security products.

Inspections should be carried out regularly but at different times to ensure they are not predictable by criminals. Inspections will involve checking the building for damage or signs of illicit activity, and should make it clear that the property is being monitored. This is usually a requirement for most insurance policies and a full audit trail will be needed.

In addition to regular inspections, the property should be secured using steel or polymer doors and screens, with key and access management systems in place to allow authorised people to enter. CCTV and alarms can also be installed to deter criminals while allowing third parties to be contracted to survey the building.

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