Property Auctions
Marc Da Silva unearths some of the best property deals available during the last month at auctions in Lancashire, Nottingham, Lincolnshire and Cumbria.
There has been renewed confidence in the property auction market in recent years, with more investors viewing auctions as an effective way of buying and selling properties, particularly in the residential sector.
The latest figures from property auction analysts Essential Information Group shows that there were 2,156 residential lots up for sale in the first half (H1) of 2011, up 7% on the corresponding period last year, with 8,904 lots sold, representing a 9% year-on-year increase. The percentage of lots sold at auction in H1 2011 was, on average, a rather healthy 73.2%, up from 62.8% in 2008.
Lancashire
A total of 39 out of 42 lots - 93% - were sold at Auction House Lancashire’s recent auction at Preston North End football club in Preston, including two properties prior to the sale, raising a total of almost £3.7 million.
Company auctioneer Oliver Adams said that he was delighted with the sale as it was the third time this year that Auction House Lancashire had achieved a success rate of in excess of 90%.
He commented: “This was a very good auction, packed with active property investors. This was the fourth auction we’ve held this year, with all but one, selling over 90% of the lots available.”
Lot 21: A block of 18 luxury flats on Eagle Street in Accrington, Lancashire, BB5, receiving a gross rental income of £101,000 per year, sold for £1 million prior to the auction and above the guide price of £950,000.
“Several potential buyers made bids for this lot over the guide price and it made financial sense to accept the offer prior to auction on this occasion,” said Adams. “This sale shows that many people still believe that property represents a sustainable investment, despite little help in lending by high street banks.”
Lot 40: A two-bedroom flat on St. Andrews Road South, Lytham St. Annes, Lancashire, FY8, was the highest yielding property sold on the day, after being sold for £45,000, representing an annual rental return of 12.7%. Adams added: “Investors buying low value homes in Lancashire which offer very little room for capital growth, generally expect to receive an annual rental return of between 10% and 15%.”
Nottingham
Nottingham auctioneers Heb saw around 300 people pack into Nottingham Gateway Hotel for its auction, marking its busiest auction for two years, helping the firm to sell 86% of the lots on offer, raising £1.1 million in the process. Heb partner and auctioneer Matt Hilton said "There was a real buzz in the auction room with sale prices achieving approximately 12% above the published guide prices.
We were expecting a busy day following strong interest and increased viewing figures prior to the sale however the amount of people turning up on the day did catch us by surprise.”
Lot 5: Located on Alfreton Road, Nottingham, NG7, is a three floor freehold terrace building arranged as a ground floor shop with a three bedroom flat situated above, producing an annual rental income of £14,460 per year, was sold for £96,000, representing a 15.25% gross rental return.
Lot 18: A tenanted three-bedroom detached house on Porchster Road , Nottingham, NG3, with an unmodernised workshop to the rear, was sold on behalf of receivers. Significant interest had been shown prior to the auction and a number of interested parties drove the price to £141,000 against a guide price of £100,000, yielding a gross annual rental return of 5%.
“This just goes to prove that auctions can work extremely well for the right property often achieving more than traditionally private treaty sales,” Hilton added. The true value in lot lies in the workshop’s development potential. Planning consent, which expired last year, was issued for the construction of a three bedroom house. Similar consent would provide the new owner with plenty of room for capital gains.
Lincolnshire
Despite a reasonably quiet auction room with around 160 people in attendance, Drewery & Wheeldon raised £832,000 at their auction held at the Gainsborough Golf Club, on the back of an 87% success rate.
“We were delighted to sell 13 of the 15 lots available,” said Mark Thompson, the auctioneer on the day. “Our high success rate is reflective of a buoyant property auction market. The same couldn’t be said for the traditional private treaty market.”
Lot 2: A two bedroom mid terrace house on Stanley Street, Gainsborough, Lincolnshire, DN21, which is producing an annual rental income of £3,600, sold for £29,000, yielding a gross rental return of 12.41%.
Lot 14: An unoccupied three-bedroom terrace house on Drake Street , Gainsborough, DN21, fetched £39,000. Thompson notes that the property needs upgrading, but believes that this sort of property would achieve a rental return of up to 10%, given the location it is in.
Cumbria
Auction House Cumbria raised £1.8 million on the back of a 79% success rate after selling 25 of the 32 properties available at Carlise Racecourse, which pleased auctioneer Colin West.
West commented: “We were all a bit nervous ahead of this auction, due to the recent dip in the financial markets, but thankfully we had the right lots, being offered at the right price, mainly because most vendors are being realistic with expectations when it comes to selling their properties at auction.”
Lot 8: Located in Earle Street, Barrow-in-Furness, Cumbria , LA14, is a two-bedroom mid-terrace house which sold for £31,000. West estimates that the new proprietor would need to spend around £10,000 on renovating the home, but projects an achievable gross annual rental yield of approximately 12% post work.
West said: “The price achieved for this property was good for the vendor and good for the purchaser, as there is generally strong rental demand in Barrow.”
Lot 35: A substantial unmodernised detached house on Foxhouses Road, Whitehaven, Cumbria , CA28, which is arranged as six self-contained flats, received a lot of interest, according to West. Following a number of bids, the lot was eventually sold for £130,000, which was £31,000 above the £99,000 guide price.
The auctioneer estimates that the new owner will need to spend around £80,000 on improving the existing condition of the flats, but believes this should provide the landlord with £2,400 per month in rent when all flats are occupied, representing a potential gross annual return of around 13.7%.
West said that he had noticed a rise in end-users buying homes at auction, mainly because of heightened media coverage, led by BBC television show Homes Under the Hammer. However, he estimated that at least 80% of active purchasers are buying strictly for investment purposes.
