Auctions are set to be awash with properties formerly owned by landlords due to high interest rates driving investors out of the market, according to Simon Nosworthy, head of residential conveyancing at Osbornes Law.
Some 38% of all lots were former buy-to-lets according to My Auction, indicating that more landlords are selling up.
Nosworthy said: “Historically when mortgage rates rise some homeowners default on their mortgage and then these properties are generally sold at auction by the banks.
“As a result, we could well see an increase in the number of properties being sold at auction, in addition to landlords selling their housing stock in this way.”
However he cautioned that there are several factors buyers need to consider before purchasing a property at auction.
He added: “You need to be prepared and also realise that while it is still possible to get a bargain it is much harder these days as most people have cottoned to the fact that this could be a place to potentially find a cheap property.
“Auctions are also a lot more accessible as since Covid they are online now. This means you get a lot more people potentially attending as you don’t need to stand in a room on a rainy Wednesday afternoon to take part and so more interest and potentially more bidders leading to increasing prices being paid.
“The big question is how are you going to finance the purchase as you will need everything in place before you bid. If you are using a mortgage you need to have your agreement in principle in place and have a 10% deposit to pay on the day.
“It’s worth viewing the property you have your eye on beforehand and taking an expert with you such as a surveyor and then also signing up a solicitor to go through the paperwork in the legal pack before the auction to make sure everything is watertight.
“It’s advisable not to be taken in by the guide price – these are often low to entice bidders, but the final price is often much higher. Finally, you will need to take along photographic ID and proof of residence.”
With auctions you won’t be able to conduct a survey, so there’s a risk there could be structural or repair problem with the property that could cost you a lot to fix.
If you are buying at auction with a mortgage your lender will require a valuation once you have paid the deposit to ensure the house is worth what you are paying for it and that the property is in a liveable condition.
