As fury rages over mortgage lenders evicting the tenants from repossessed buy-to-let properties, auction firms report that many of the investors snapping up these bargain-priced homes would be happy for reliable, rent-paying tenants to stay in occupation.
“Lenders might get a better price for repossessed homes if they let tenants stay because landlord-buyers would have a rental income from day one,” says Paul Mooney of Savills. “The last thing a landlord wants is an empty house with no rent coming in.”
Repossessions now dominate auctions, accounting for more than 60 per cent of properties sold. Cheap guide prices have rekindled investors’ appetites.
‘It’s standing room only as auction sales return to levels of two years ago’
The “sales rate” of all lots sold at auctions during the first quarter of 2009 was 74 per cent, almost back to the level of two years ago, says auctions analyst Essential Information Group.
At London auctions, the figure was higher — at 80.3 per cent — driven by investors returning to the market. It is now “standing room only” as buyers choose to put their money in bricks and mortar instead of shares or low-interest savings accounts.
April auctions include the UK debut of REDC, an American company that deals exclusively in repo properties. REDC is breaking with UK tradition by having no “starting bids” and charging buyers 10 per cent of the sale price.
Normally in the UK, it is sellers who pay a fee, typically two per cent. UK auction firms claim REDC’s charging structure will encourage lower bids and result in sellers not getting “best price”. This has implications for repossessed borrowers because they are liable for any losses suffered by lenders.
REDC’s London auction takes place at ExCeL, Docklands on 5 April. To see the catalogue of UK properties, visit www.auctiontoday.co.uk.
New-build Spanish apartments go under the hammer at the Andrews & Robertson auction on 6 April. These “distress sale” homes at the Residencia Golf Benalmedena on the Costa del Sol are being off-loaded by the developer and come with a “Safe Buying” accreditation guarantee. Guide prices from less than £150,000.
Ballyfinboy Castle in County Tiperary, Ireland, is the auction’s most eye-catching property. Set in 2.5 acres and overlooking a river, the freehold castle has been uninhabited since 1840 — and is therefore an almost total wreck. The reserve price (minimum accepted) is £100,000.
Properties at Andrews and Robertson’s February auction sold on average for 27 per cent above the quoted guide price.