Residential Property Auction
Residential Property Auctions are an efficient and cost effective way of selling property. Through effective marketing and advertising, auctions can offer a high degree of certainty that a sale will be achieved on a given day and, more importantly, on the fall of the hammer an immediate binding contract is formed, with completion taking place within as little as 28 days.
Why Buy Residential Property at Auction
There are any number of reasons why people may be drawn to buying a house at auction in relation to residential properties.
First and foremost would be a home to live in as a primary residence. This is ideal for people currently renting, who can potentially buy a home and have monthly mortgage payments that are actually less than the rent they are paying now.
Another reason may be as an investment property, where the home would be purchased, fixed up if necessary, and then rented out for the cash flow and potential price appreciation.
Alternatively, it may be purchased to "fix and flip" whereby the plan is to buy it well below market value (BMV), complete any necessary improvements quickly and cheaply, and flip it to a buyer at or near the market price.
Whatever the reason a buyer looks to purchase through house auctions, the opportunities can be very rewarding. Those buying a home will find themselves able to target properties priced to sell rather than sit in estate agents windows for months on end.
NEVER buy a property that you have not seen, however tempting the price may seem. Some properties are sold at auction for what appears to be a fraction of their true value. There is nearly always a reason for this and so doing your homework on the property prior to the auction is essential! You can print off our property viewing checklist to help you remember some of the key questions that you will need to ask.
There are many different types of properties that sell well at auction, and if you are searching for a residential property, then there is always a good cross section to be found, including:
Properties for Improvement
Properties in need of updating make ideal auction lots and are always in great demand from refurbishment specialists and from private buyers, keen to undertake a project for their own occupation or for resale. They also appeal to buy to let investors who carry out the improvements then retain them as part of a property portfolio.
Residential houses and flats with tenants in residence sell well at auction and are often popular lots. If you are already a landlord (or are thinking of starting your own property empire) and wish to expand your portfolio, then your local property auction could provide the answer. Vendors won't need to serve notice on their tenants, and rental income can continue to be received right up to completion. With interest rates set to remain low for the foreseeable future, residential investments yielding on average 7-8% remain a popular choice for investors seeking to achieve a sensible return on investment.
Remember, that buying a rental property ‘subject to tenancy’ – i.e. with a tenant and tenancy agreement already in place – can be beneficial for all parties involved. With no requirement to evict their tenant, the seller can continue to receive rental income right up until the point of sale. The tenant can remain in their home. And as the buyer, you can avoid the expense of marketing the property and start to benefit from rental income as soon as the sale is completed.
Sellers often use property auctions to dispose of tenanted properties, meaning that a buyer can often achieve a sizeable discount, as well as benefiting from a quick completion. In addition, many of the regulatory responsibilities – such as gas safety and energy performance certificates – are likely to have been taken care of, as might any improvement works the tenant has requested, potentially reducing the capital outlay required.
Some tips to help you with buying a tenanted property:
Be sure to check if the property is classed as an HMO (House in Multiple Occupation). Such properties are subject to additional regulation, which will become your responsibility upon purchase.
Be aware of the type of tenancy that you are taking on. If the tenant has occupied the property since before 15 January 1989, chances are that the tenancy will be protected, making it very difficult to evict the tenant or charge a market rent. A good way of checking if the rent is capped is the electronic fair rent register on the Valuation Office Agency website – search either by postcode or by area, year and tenancy type to find a record of all fair rents registered from 2003 onwards.
Always try to view the property, even if buying at auction; purchasing rental properties unseen is a recipe for disaster. You might also get a chance to have discussion with the tenant or tenants, who might be more open and honest about pertinent matters relating to the tenancy and the property.
There is another method of selling a tenanted property whereby the extant tenancy agreement will be terminated and the tenant required to leave before the sale goes through. This is known as ‘vacant possession on completion’.
It is important to know the tenants’ legal rights in this case. Even if the tenancy agreement is to come to an end, the tenant has the right to remain in the property exclusively and without interruption until a court order has been served – even if they are not paying rent or are violating another covenant of their tenancy.
This means, for example, that you will not be able to view the property unless the seller has given the tenant 24 hours’ notice and obtained their permission for you to do so.
Remember that the eviction procedure can be lengthy. It is best to wait until the property is vacant before completing a sale.
Houses in multiple occupation (HMO properties) and blocks of flats are sold at auction as valuable investments.
Houses of multiple occupation (or HMOs) are properties which three or more people are renting who are not from one 'household' (for example from a family), but they share facilities like the bathroom and kitchen. The property rental level can often determine the sale price, just as much as the building itself.
Property portfolios are also appearing more frequently at auction, from owners who simply want to cash in and take advantage of the ease of selling and swift transaction that the auction room brings. It is not uncommon for the portfolio to be offered in the first instance, as one lot, and if failing to sell, being divided and offered individually.
Some properties which would have been rented as one family home can be converted into multiple rooms with five or six tenants, bringing in a stronger return on investment, making it obvious why HMOs are quickly becoming the most attractive form of buy-to-let.
Deciding to pursue this type of investment requires a lot of background research, as well as careful thought and consideration. Some top tips to consider:
Location – think about the location of potential HMOs. Amenities, convenience stores and good transport links are all important for attracting tenants. Make sure there is demand in the area. In some popular locations, class 4, C4, or article 4 could be required because HMO’s may be saturating the area, this is more common in student areas where the percentage of house’s converted to HMO’s is higher than residential homes.
Work with your local council – if you are considering a purchasing a property for conversion, with the intention of turning it into a HMO, you will need to speak to your HMO officer at the local council and ask what their requirements are, such as fire safety policies and licencing (see next point).
Licensing – you will need to consider that, for larger HMOs, by law the property has to be licensed with the council. Larger HMOs are usually properties that have three or more storeys and five or more tenants using shared facilities. Licenses usually have to be renewed every five years and you can be fined up to £20,000 for renting out an unlicensed HMO, so make sure you talk to your local authority about what is required from you to avoid any nasty surprises. It's worth noting that some councils have introduced additional licensing schemes which extend licensing to a wider range of HMOs - not just the three storey ones. Make sure you know the rules in your area!
Budget – set out your budget from the start. HMOs have a great return on investment but you don’t want to spend over and beyond what you need to. Look at auction catalogues before you attend and know your limits. If it’s a conversion, get quotes from builders, also cost out things like furniture and fire safety equipment.
The obvious attraction in repossessed houses and flats is the low reserve, reflected in the guide price. It’s low because although the lender has a duty to sell at the best price, time is money, and they will want to recoup their funds as quickly as possible. Which means that you can buy cheap houses and other properties at a UK property auction. It’s possible to pick up repossessed or distressed sale properties with up to 30% off the market price at residential auctions. For those willing to put the work in, both on research and repairs, these can represent some of the best buys on the market.
Remember that 'Repossession' doesn’t always mean 'bargain'. It's essential to view other properties and research the area thoroughly, just as you would with any other new house. A few quick tips for you:
Carefully consider its transport links, employment levels in the areas and whether the schools are any good.
Confirm that the previous tenants have handed over the keys and the property is unoccupied. If the repossessed property was previously owned by a buy-to-let landlord, it is possible that the property may be resold with a tenant in place.
A small fly in the ointment is that when you move in, some services, such as gas and electricity, may have been cut off. Most energy companies will switch you back on for free, but phone lines usually have a charge.
Check your credit rating a few months after you’ve moved in, just to make sure your finances don’t get incorrectly mixed up with the previous owners'.
Keep an eye out for red debt collection letters addressed to the previous owners. Give the companies a call (if it's clear who has sent it) and let them know the previous owners have moved, in case they send bailiffs round.
The downside is these properties often need a refurb. At best, they might feel a bit unlived-in. At worst, the previous owner could have stripped out all fixtures and fittings before leaving.
Find a Property
If you’re looking for residential property for sale at auction, then UK Auction List can help. Over 150 companies hold property auctions every year in the UK, though most auctions are only advertised around 3-4 weeks in advance. Our property search service provides details on these forthcoming auctions. The properties that we display in our database are supplied directly by the UK auction houses allowing us to provide house hunters and property investors with a comprehensive list of current properties for auction throughout the whole of the UK.
By registering with us, you will have full access to auction dates and venues, auctioneer contact information, and detailed catalogue entries for all the properties in our database. In addition, we supply street view and Google map locations for each of the lots, and access to local area information, including council tax rates, school tables, crime rates and photos.
Countrywide Property Auctions
UK Auction List covers countrywide property auctions, however you can use our property search tool to specifically find residential property auctions only. Simply tick the following search criteria boxes: “Houses”, “Residential” and “Flats/Maisonettes” to display all the residential property for auction in the UK that we have in our property database. Moreover, if you’re interested in a particular location, you can select the region or county using the map on our homepage or the search tool to the left.
Residential property auctions London
There are between 8-10 residential property auctions in London every six or seven weeks. The number of lots offered depends on the auction house however it can range from 20-30 to in excess of 100. Although the auction houses are located in London, it is common for their catalogues to feature property from throughout the UK.
Outside of London, the main six cities to hold regular property auctions are: Manchester, Birmingham, Glasgow, Liverpool, Newcastle and Kent.
Residential property auctions in Manchester and the North
There are a number of large commercial and residential property auctioneers in the North, each holding around six property auctions every year and providing excellent coverage across the North West, Yorkshire, North East, the Midlands and Wales.
Property auctions in Birmingham, Leeds, Liverpool, Newcastle and Manchester attract a high volume of residential and commercial properties. Glasgow is fast becoming the next auction capital, with over 200 properties for auction across Scotland every six weeks.
Residential property auctions in Kent and the South East
Property for auction in Kent, Essex, Surrey, Sussex, and the South of England in general has increased significantly, and it is not unusual for there to be a high number of lots in our database for these regions. If you specifically want to buy a property in the South East of England, there are a number of large and reputable auctioneers based there, in addition to the nationwide auctioneers.
Private Property Sales through Auction
If you are considering selling your property at auction then the residential property auction sale follows the same process as any other property type. Basically when you have made the decision to sell your property, you will need to decide when, and which auction house to use.
Our Guide for Selling Property at Auction will answer all your questions and help you to understand what is involved and how it works. Remember the entire process, from instruction to exchange of contracts, can be achieved within as little as six to eight weeks. Committed sellers who price their property well should see it sold and with the benefit of competitive bidding, may achieve higher than the reserve price!
Do you want to sell residential property through an auction? If you would like one of our expert property auctioneers to help you, simply call us on 0845 053 6906 or complete our property enquiry form to request a free property valuation We only work with the best performing auctioneers around the UK, who have been selected due to their ability to perform professional property valuations and sell properties quickly and efficiently. We also combine their expertise with that of many professional and independent property agents countrywide to maximise exposure of your property.
Whether you want to buy or sell at a residential property auction you can normally expect the guide price to be around 80-85% of CMV (Current Market Value). You can also find great properties by looking at post-auction sales. A number of properties that go up for auction do not sell before or at the auction, so through some clever negotiation, you could land yourself a bargain.
Because buying at a residential property auction can be an intimidating experience, in addition to reading our Buying guide it is a good idea to attend an auction or two as an observer to familiarise yourself with the auction process. Also, take the time to find out what prices properties in the area have sold for, so you have a guide to the market value of the home you want.
Future Property Auctions
Register today to remain informed about upcoming and future property auctions in the UK. From just over 20 pence a day, you can have access to all forthcoming auction property details, auction date and venue information and full contact details to each of the auction houses in the UK. Check out the member benefits and register today!
Residential Property Auctions
If you still have any questions about residential property auctions contact us today and we’ll be happy to help!