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TODAY'S OTHER NEWS

Auction roundup – do auctions still have a long way to go?

This week, PIT looks at research that suggests auctions aren’t as popular as they seem. However, the latest news from SDL Property Auctions, Clive Emson and Allsop holds a strong argument, with each auctioneer reporting successful auction results for June, and anticipating an even stronger July.

Auctions account for less than 2% of house sales, study shows

While auctions speed up the transaction timeline, they’re still far from the preferred method for UK home sellers, research from HBB Solutions shows.

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Property auctions have been touted as a good solution to major delays in the buying process since the early days of the pandemic, providing a practical route to a quick sale.

Despite this, many sellers don’t seem to want to go down the auction route, with just 1.6% of homes going under the hammer.

HBB analysed the regional market to find most homes are going to auction in the North East (4.7%) and East Midlands (2.4%). Meanwhile, sellers are least auction-confident in London (1%) and the South East (1%).

Why are sellers put off auctions?

Auction rooms bring an element of speed to the selling process with buyers typically given one month from the hammer falling to complete the purchase. Still, there are some downsides which could explain why so few sellers are choosing the auction route.

First, auction homes often sell for less than their open market value which also tends to draw buyers with far lower budgets. So, while there is a chance that a bidding war will push the price up a bit, there’s just as good a chance that the home will sell for well below what the seller is hoping for, or even not sell at all. 

The seller is also the one who has to cover all of the auction costs and pay a percentage of the sale price, often around 2.5%, to the auction house. And another downside is that once the hammer falls, the seller cannot change their mind and back out like they can in the open market.

Speedy auction alternatives

HBB notes there are some alternatives to auctions that could see sellers sell their homes quickly.

The first option is to put your home on the open market as a ‘quick sale’ property. This means reducing the asking price under the proviso that a buyer can complete the purchase quickly.

The problem is that there is no guarantee that a suitable buyer will be found – many buyers are going to be entangled in a chain and very few are going to be able to pay cash for the purchase, thus impeding their ability to move swiftly. 

The only true way to guarantee a quick sale is to sell to a trusted and reliable quick sale company. These are businesses that will buy your home in the shortest possible time frame for a price that is usually 75%-80% of its current market value. Not only do you still achieve a respectable price, but the timeframe of your sale is often guaranteed, making it an ideal route for those with certain time restrictive criteria they need to meet. 

A useful method, but still a gamble

Chris Hodgkinson, managing director of HBB Solutions, says sellers have different priorities when selling. Some wish to secure the best price possible, while others want to sell quickly and cleanly.

“In such instances, the auction room is offered as a good alternative to the open market but stock levels remain so low that sellers clearly aren’t comfortable with this route, at least not yet. There are just too many variables, too many unknowns which combine to make auctions too much of a gamble.”

“A similar price can be achieved and guaranteed by using a quick sale company, but you’ve got to be sure to pick one that is genuine and trusted.”

He adds: “One negative trick of the trade is that some quick sale companies will offer a price, only to reduce it days before completing, knowing all too well that the seller is under pressure. So when it comes to using a quick sale company, reputation is key.”

“However, once you’ve found a reputable company, they will be able to guarantee the price they’ll pay and the timeframe in which they will complete your sale, leaving you free to plan your next move.”

Renovation opportunities in abundance at SDL Property Auctions

SDL Property Auctions has released the catalogue for its June National Property Auction, featuring a range of homes, apartments, commercial properties, land and more.

It says many of the 180 UK lots on offer would be suitable for the ‘perfect’ renovation project.

41 Derby Road in Belper, Derbyshire is a three-bedroomed, palisaded mid-terraced property which lies within yards of Belper town centre. In need of full renovation, the property retains some original features including Minton tiled floors and moulded coving. With a guide price of £88,000-plus, the lot is described as a “real opportunity to add value to a property, whether bought for residential purposes or to convert and let out.”

Also in Derbyshire is 212 Stenson Road, being offered for sale in partnership with Hannells. Set on a deep plot, the three-bedroomed property offers ‘vast redevelopment potential’. The original accommodation was built by using four train carriages, offering any future buyer the chance to work with a ‘truly unique property’. It is guided at £95,000-plus.

Meanwhile, 106 Station Road in Leicester could be ideal for those looking to dip their toes into the renovation world. Being offered for sale in partnership with Carlton Estates, the detached period residence requires modernisation and has a guide price of £225,000-plus.

A more ready-to-go investment opportunity is available in Birmingham at 13 York Road, which currently produces £38,000 per annum in income and has a guide price of £290,000-plus. The mixed-use property benefits from high footfall and consistent rental demand. The property comprises five units with ASTs let at £36,080pa, with potential to rent out additional commercial space for an extra £2,000pa.

To the North East in Durham is 13 Moore Terrace, which is being offered at a guide price of just £20,000-plus. The property is in need of full refurbishment, but features a lounge, kitchen, and bathroom as well as three bedrooms. With the property sitting on a corner plot, it has “vast potential once refurbished and would make a lovely family home or rental property for any landlord”.

Lastly, the site of the Dart Inn in Burton-on-Trent in Staffordshire, which has been subject to fire damage, now has planning permission for 11 residential dwellings. Full details of the planning outline can be found on the East Staffordshire Borough Council planning portal – number P/2021/00431. With a guide price of £420,000-plus, this could be a lucrative investment for any local developers.

Managing director and auctioneer Andrew Parker comments: “It’s great to be able to offer the chance to breathe new life into a development site, especially one such as this where the original building has experienced damage. It’ll be interesting to see where this gets to on auction day, and even more so to see what becomes of it in the coming months.”

The National Property Auction on Thursday June 30 will be live-streamed via the SDL Property Auctions with bids placed online, on the phone and by proxy. Bidding registrations must be submitted before midday on Wednesday June 29 by clicking here.

Clive Emson reveals Jubilee June results

A former care home in Kent went under the hammer for £1,052,000 in Clive Emson Auctioneers’ June auction.

One of the highlights of the catalogue, the 20-bedroom property at Barham, between Canterbury and Dover, sold for £151,000 above guide price.

It was among six lots from a 121-strong list in southern England that fetched above £600,000.

James Emson, managing director, comments: “Our buyers view bricks and mortar as investments that outperform the vagaries of the economy over the long term.”

“Bidding remained strong irrespective of the latest interest rate rise to a 13-year high of 1.25% and the current 9% inflation, at a 40-year high and forecast by the Bank of England to reach 11% by the autumn before dropping to just above 2% in 2024.”

He adds: “Investors run a slide rule over rental residential and commercial properties and see yields which, in some cases, outstrip inflation whilst providing capital growth in the years to come.

“For example, one of the lots bought returns nearly 12% gross, a healthy yield by any measure.”

A block of 13 flats on the Isle of Wight, let at £67,080 pa, fetched £859,000 against a guide price of £750,000-plus, a gross rental yield of 7.81%.

Let at £67,800 pa, a building comprising eight flats and three commercial units in Callington, Cornwall, sold for £666,000, a gross rental yield of 10.18%.

With potential to convert into residential use, a disused Victorian primary school in Lewes, East Sussex, was acquired for £632,000, which was £382,000 above the guide price with 25 bids.

Let at £73,500 pa, offices and a workshop property at Redruth, Cornwall, went for £617,000, a gross rental yield of 11.91%.

Agricultural barns over 36 acres of pasture at West Coker, Yeovil, Somerset, sold for £601,000.

Ex-public conveniences at Hadlow, Tonbridge, Kent, were acquired by a flushed bidder for £77,000, which was £27,000 above the guide.

Three former ecclesiastical buildings also went under the hammer:

  • Upchurch, Sittingbourne, Kent - £300,000 (lot 5)

  • Terling, Chelmsford, Essex - sold prior (lot 7)

  • Old Wives Lees, Canterbury, Kent - £266,000 (lot 111)

June’s auction listed 43 investments, 37 residential, 14 commercial, 12 development and 15 land lots, raising £20 million for clients, with a 75% success sales rate.

Clive Emson’s next online auction ends on July 28. Lot entries close on July 5 , with the digital catalogue available from July 9.

Allsop releases bumper commercial auction catalogue for July

Allsop, the UK auction house, has released its July commercial auction catalogue, featuring 136 lots with more than a quarter guided at or in excess of £1 million.

Lots on offer at the July auction include a mix of convenience retail, with both high street and roadside assets, as well as hospitality, pharmacy, industrial, residential, and medical investments across the UK.

The auction follows a busy six months for Allsop’s commercial auction team, which sold 280 lots in the first half of the year, raising £220 million and with an average success rate of 91%.

Highlights of the upcoming auction include:

  • Lot 13 – Romsey – a petrol filling station on the A36 let to the Co-op with annual 2% rental increases, guided at £2.55 million-plus (GIY 6.86%)

  • Lot 16 – Bromsgrove – a convenience store let to the Co-op until 2030 plus two flats and a car park, guided at £1.3 million-plus (GIY 6.38%)

  • Lot 20 - Lydney – an attractive vacant freehold country house hotel and land set over eight acres, guided at £2.2 million

  • Lot 28 – Elland – a large town centre shop let to the Co-op (sublet to B&M) until 2035 with annual RPI linked reviews, guided at £3 million-plus (GIY 7.21%)

  • Lot 40 – Earls Court – four single-storey shops with development potential above, guided at £3.75 million-plus (GIY 7.01%)

George Walker, partner and auctioneer at Allsop, comments: “With private investors remaining extremely busy expanding their property portfolios in the first half of the year, we’re delighted to release another prime catalogue that boasts numerous opportunities across a range of commercial property types.”

“This catalogue presents a wide variety of assets, from the ever-popular roadside investments to development opportunities in London. Investors looking to deploy their cash quickly and effectively, especially as the summer break approaches, will likely be out in force.”

Allsop’s July auction will take place online on July 13.

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