Despite an unusual year, the UK property auction sector has strengthened its transition from an alternative option to a mainstream choice by a wide range of buyers and sellers across the UK.
Looking back at what has been a challenging year for a variety of property asset classes, most notably the buy-to-let sector following the 3% surcharge this April, the property auctions sector has enjoyed continuous growth which has provided a degree of stability through periods of uncertainty.
Why property auctions are popular
There has been clear evidence this year that demand for residential investments at auction hasn’t dropped away like many pundits previously suggested. Property auctions have proved popular across the investment spectrum, from high-value residential and mixed-use investment land sites, to the first and second-time buyer markets. An influx of landlords, and first-time buyers have entered auction rooms this year as the benefits of the process are clear.
Property auctions are recognised as a secure, and fast way to either sell a property on the market or find your dream home. The process is straightforward: an immediate exchange of contracts takes place inside the auction room, with all terms and conditions provided, as well as an agreed completion date; a contract is binding from the moment the gavel hits the block. The transparent system is particularly popular for those living in, or looking for, highly-competitive property areas where homes are snapped up quickly, and gazumping cases are frequent.
Funding options from lenders have also broadened. There are now examples of mortgage offers being issues within as little as two weeks from application, and selected lenders are waiving application fees. This has led to an influx of first-time buyers at auction, with mortgages in place ready for a quick transaction.
Others, who have previously struggled to sell in the property market, are acquiring funds to refurbish properties to sell at auction. This, again, has broadened the mix of auction buyers, from those buying to live, to investors and traders.
All this doesn’t mean to say that those selling at auction should compromise on price in exchange for greater transparency and speed. The majority of auction lots are high-value, attractive properties and sites which often sell above the asking price as a result of strong demand in the market.
What makes a property suitable for auction?
The suggestion that only poor-quality lots are put up for auction simply isn’t the case. Properties of all shapes and sizes, old and new are suitable for auction. In fact, the scope for what does well at auction can be broader than the national residential market.
For example, private buyers and buy-to-let investors often look for properties that are in need of improvement. These lots tend to sell quickly and are easier to buy and sell.
A key reason why selling at auction is an attractive proposition for landlords is the ease of transitioning the property to another owner. Tenanted properties at auction are common because landlords don’t have to serve notice to existing tenants, they can simply place the property for sale and collect rental income up until the completion handover date.
Other favourable qualities are versatility, which is why mixed-use developments fare well at auction; and convenience, which benefits commercial lots such as garages and offices.
Austin Gray Auction House Sussex team expect the property climate to favour auctions into 2017 and beyond. Click here to view current lots and upcoming auction dates in the South East.