November 10, 2017
It had been just over a month since our last visit to a property auction, we had high hopes for a day of education, networking and being amongst the hustle and excitement of the auction room. We were glad to be back at Marriott Regent’s Park hotel with our partner; Auction House London.
The day began with a morning coffee/networking event - a perfect opportunity to connect with new and familiar faces, as well as learning from respected speakers from within the property and auction industry.
Richard Obahor – Property Developer and Investor (Purple Premium Ltd)
An Overview of Property Auctions with Tips & Tricks.
Starting the morning off with some great energy was Richard Obahor; a property entrepreneur and rising star, with over 14 years of experience in the industry. Originally from Nigeria, he made his mark in the industry as an acquisition agent. With humble foundations, he has refinanced with equity in his first property purchase, and continued to refinance and repurchase, thus enabling him to create a strong portfolio in just short of 2 years.
Richard’s presentation discussed reasoning behind property investment, investment strategies as well as key steps to a successful auction process.
Richard re-iterated his belief that to be successful at property investment, profit should be made from day one. He said this could only be achieved by being careful to purchase "the right property" which will make you profit; this could be done by purchasing the property below market value.
Ranjan Bhattacharya – Property Developer and Investor (Host of Baker Street Property Meet)
An Overview of Changes in the Summer to Tax & Regulation.
Ranjan, a well-known and revered character in the property sector broke down the major changes to property investment.
“The changes you need to make to survive and thrive the next five years in property.”
In order to "transfer" personally owned property to a limited company, these properties must be legally sold to the limited company. Therefore Ranjan, believes the following four key points must must be taken into consideration:
Capital Gains Tax implications:
HMRC have updated their Tax Manuals earlier in 2017, to reduce ambiguity of what is defined as a property business. Refer to HMRC Tax Manuals for their latest guidance.
the auction begins
At 11.45am preparations were made for the auction to begin and the room started to fill up with what became an excellent turnout; many were forced to stand around the room due to the number of attendees.
Lot 5 - Roof space in Tottenham with planning permission to erect three self-contained flats. (1 x 1 bedroom and 2 x 2 bedroom). Each flat to be held upon a new 125-year lease upon completion.
Guide Price: £275,000+, Sold for: £286,000
‘The most intriguing’
Lot 18 - A unique plot of land in Surrey with 959 years unexpired on the leasehold. 1.5 acres and doesn’t require planning permission due to Part 7 Forestry buildings and operations general permitted development order 1995.
The land has multiple opportunities of potential which include a dwelling, outbuilding or recreational use.
Interesting fact: this land has been authorised by Surrey police for shooting activities with up to a 0.234 calibre rifle.
Guide Price: £30,000+, Sold for: £35,000
‘The opportunity not to be missed’
Lot 50 - A fully let student investment comprising two converted buildings internally arrange to provide 27 student letting rooms. Producing £115,700 per annum in Nottingham.
This property is situated in a prime location for students; 400 yards to Nottingham Trent University and its Student Union. Furthermore, as this property is “on campus” it would have a continuous supply of students readily available to let to.
Currently all 27 rooms have been let generating £115,700 per annum.
This property also has the potential for future residential development.
Guide Price: £900,000+, Selling Price: £1.1million. These results providing the new investor an annual yield of 10.52%.
Overall the auction delivered improvements in statistics compared to results in previous months. The total raised over the last few auctions has remained consistent with sales just over £15 million for each auction since July. These results show positive signs of growth taking into consideration the numerous changes to tax and regulation which had created uncertainty and ambiguity in the property investment sector.
The total raised at auction has remained steady throughout the summer. October, and previous auctions have been higher volume, lower value. A likely contributing factor is that falls in property prices especially in the high-end central London market, may have meant fewer higher value lots being brought to auction.
Are these property owners holding back in selling these properties, knowing that with in the current climate, they would not make figures that they would have originally expected.
A sale rate of 74% in October shows potential signs of recovery after a fall between April & September. Whilst the traditionally slower summer season will be a contributing factor to this, there are several other reasons that may have caused both the decline and recovery.
are there any reasons for the improvement in sale rate?
April 2017 onwards showed a decline in sale rate. Brexit Article 50 being officially triggered would have had a large part to play in this. Changes in tax and regulation also caused uncertainty and the need for the market to learn and adapt.
New and stricter Buy-to-let lending rules which came into effect in September contributed to further ambiguity within the market.
Nevertheless, October has seen a positive change in directoin. This could be driven by factors like:
At this time, it is difficult to provide a conclusive reasoning behind the improvement in sales rate or whether this is just a one-off. Results from Auction House London's December auctions may provide us with stronger evidence and analysis to the current property auction market.
What we do know is that there is still clearly interest in property auction investment with a fantastic turnout in the October Auction. This auction also attracted a number of new potential buyers who attended in order to learn, witness an auction, and prepare for their first auction purchase, suggesting continued future interest as well.
For more information on how else you can prepare for property auctions, this blog is for you.