ARE property auctions a viable alternative to Landlords in the current economic climate?
According to a new survey, just over a third of people in the industry would recommend that vendors consider auctioning their properties. Regionally, responses were varied with between 57 and 71 per cent of the respondents (predominantly) in the south of England saying they would recommend auctioning properties as an alternative to the traditional selling route. In the South West, North West and North of England less than 25 per cent of said they would recommend an auction to people looking to sell their home. People were also asked if over the past six months they had noticed an increase in properties going to auction. Nationally, just under 40 per cent said that they had seen an increase with Wales reporting the greatest rise, followed by East Anglia and Greater London.
The North and North West regions reported that auctions were up by around a third compared to figures six months ago. Of those who had seen a rise in the number of properties in their area that went to auction, 46 per cent said it had been an increase of less than 10 per cent.
As far as Landlords are concerned buying at auction can not only avoid last minute hitches but also offers some bargain properties to add to their buy to let portfolio. When the auction ends and the hammer falls, the contract is legal and binding and the person purchasing has to pay a 10 per cent deposit with the balance of the payment usually due within 28 days.
This avoids the uncertain waters of buying and selling property in the traditional way and also greatly reduces the chances of the seller pulling out.
As the continued squeeze of the credit crunch and the current economic climate bite, more Landlords are seeing the auction route as a way to get themselves reduced price properties in a faster manner than the traditional estate agent route. The lower a Landlord can get a property for the better their chances of maintaing a margin between monthly cost and rental yield as the financial climate worsens and margins reduce due to simple supply and demand economics.
We expect the auction route to grow over the next few months as the rental market continues to flourish in face of ever decreasing supply of mortage arrangements.
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