Property investment UK can be highly rewarding as the property sector is considered a safe haven by investors. There are multiple advantages of property investment UK since it protects investors against inflation, low interest rates and ensures capital growth.
Property investment UK is one of the most attractive investment options in the world as the UK is one of the leading economies in the world. Although the property sector may be witnessing ups and downs over the past few years, property investment UK is usually a stable source of income.
If you are looking for property investment UK to buy a home, then there a number of ways to facilitate the purchase. Buying a house at an auction is one of them which is not only quick but a relatively straightforward way to buy a property. Auctions are a great way to avoid lengthy and uncertain buying procedures. However, you need to be careful because as the hammer falls, you are locked into paying.
Why buy property at auction?
Auctions are great for people looking for unusual properties with potential, and if no one else has noticed its potential, you have a great chance. Contrary to common belief, auctions are no more a territory of the experts with insider knowledge. The auction route is now preferred by small-time individual buyers as well, who want to avoid the traditional house buying chain. There is no uncertainty associated with the purchase process associated with the traditional method wherein the deal may fall through in the last minute. At an auction, the sale is agreed as soon as the hammer falls. Moreover, there is no chance of being gazumped or the estate agent keeping the details from you as it is a transparent process and you can see all the other bids as and when they are made.
The cost of buying at an auction
- An administrative fee needs to be paid to the auctioneer, which is typically between £200 and £300
- You’ll also have to pay your solicitor or conveyancer
- You will have to pay stamp duty
- You will have to pay the insurance costs after signing the contract
How to find an auction?
You need to contact the auction houses in the area where you plan to buy the property in. Then ask for a catalogue from the auctioneer and subscribe to their mailing list for any upcoming auctions. However, you need to act fast since there are usually four weeks between the publication of the auction catalogue and the auction.
Before the auction
Research the properties and auctioneers in the area where you plan to buy
Shortlist the properties you are interested in and then contact the auctioneer to arrange a viewing. Make sure to inspect the property and the neighbourhood in detail. Take along a builder or an architect to find out what needs to be done to improve the property according to your requirements and how much it is likely to cost. Be sure to resolve your queries with the auctioneer. You get some bargains for auction properties as they are often not well-kept, so you need to keep an open mind.
Guide price or advertised price
Don’t rely on the guide price or the advertised price. Compare the advertised price of the auction property with the prices of other properties on sale locally so that you have a realistic price in mind when you bid at the auction.
Moreover, the guide price may be lot lower than the price the property finally sells for. A rise in guide price before the auction is an indication that there is a lot of demand for the property. So, take note of that.
Getting familiar with the auction process
Visit a few auctions to know how they work and get yourself familiar with the auction process so that you do not lose out on an opportunity due to a lack of experience regarding the auction process.
Although the particulars may contain the key information, you may need a separate legal pack to access the full information. The legal pack includes the title deeds, local authority and environmental searches, fixtures-and-fittings list and a seller’s information form, plus any relevant leasehold information. Searches are often included in the legal documents, but if they are not, your solicitor should do that before the auction. Legal documents may vary from one property to another, so your solicitor should look over the legal pack for any loopholes as they may result in additional costs.
You may ask the auctioneers to keep you informed of any changes or amendments to the sale conditions. There have been instances when auction properties have been sold before the auction date. So, you can ask the auctioneer on the possibility of such an occurring.
Set your budget
Though auction properties may be cheaper than market value, you may need to spend on repairs as auction properties are usually not in a good condition. You should take into account the amount of money you may need for renovating the property and make it worth staying. You will need finances in place before bidding. You should know how much the deposit will be and have the deposit available with you before bidding. Make sure that you know the method of payment so that you can arrange for sufficient funds.
If you need a mortgage, get a mortgage in principle sorted before the auction so that it is ready as soon as you own the property. You need to pay 10 per cent as soon as the hammer falls, and the remaining 90 per cent within a month. In case you are not able to come up with the balance within the stipulated time period, you lose the deposit as well as the chance of buying the house.
You may also have to cover the costs of reselling the property and may even be charged interest on a daily basis until the property is sold. You may have to cover any shortfalls between the price you agreed and the final selling price.