Are we at a stage where it's worth looking again at investing in the purchase of houses for renovation/reselling?

I sat in on a property auction at the end of April this year. Most properties (mainly houses, cottages, smallholdings and pubs) did sell (ie, reached or exceeded reserve) except pubs, which remained unloved unless suited to immediate conversion, but nobody was bidding strongly above the published guide prices. The room was packed (about 125 people), but quite a few of those who were registered to bid (ie were holding a numbered card) held back from doing so.

I'm not quite ready to be buying anything myself, but I have viewed a few places in the past few weeks, and will probably be sitting in on an auction coming up at the end of the month, just to get a further feel for how things are going as we head into autumn.

On my patch (southwest Wales) the agent most heavily involved in auctions is John Francis - and it will be one of their two auctions (at Carmarthen on Sep 30 or Swansea on Oct 1) that I'll be attending. (Or maybe both). There's about 15 properties listed so far at each. The agent's website for these auctions is www.johnfrancis.co.uk/auctionnew.htm

I've viewed the 65k semi in Cardigan (selling at Carmarthen) and the 50k detached one at Brynamman (selling at Swansea) - and it's that latter one which seems to have the greatest potential markup margin, so I shall probably be seeing how that one does - though it's not in the right locality for me - I'm going to be looking to buy somewhere around the central english/welsh borders next spring/summer. Does anyone here have any guidance on which agents to check out for auctions in that area? And any info on particular properties suitable for renovation there?

I will post the outcome of these two auctions on my patch, just out of interest - to see how things went compared with whatever guide prices appear in their catalogue.

Let us know of investment opportunities at other upcoming auctions, and how they pan out over the coming months.

Allsop Residential's two day September sale (14th and 16th) at London's Cumberland Hotel has raised 38m (78%).

This was the first auction after the summer recess and there is no doubt that the correction that we witnessed at our July sales (43m and 83%) heralded tougher times ahead. The market has weakened further.

We are increasingly noticing a difference in buyer sentiment to lots in the South-East and those in the regions. We have historically held two day sales, one day offering regional stock, the other concentrating on London and the home counties. The recession has brought with it a flight to quality as debt-starved investors shun risk and stick to the safer locations.

This was evidenced by a strong attendance at our 16th September sale when 232 South-East lots were offered and 207 were sold. 28m was raised and 89% achieved.

Lenders have continued to show forbearance towards borrowers struggling to service mortgage debt. This is particularly true of the partly nationalised institutions for whom large scale repossessions would cause political embarrassment. Many have opted for the fixed charge receivership route to recovery. The appointment of a Receiver leaves the mortgagor in possession whilst offering a fast track route to market to the lender. Our in- house insolvency team now specialises in such a service and is one of the firm's busiest departments. We see this continuing for some years to come.

In summary, the following points are worthy of note from the sales:

. Less well located investment stock will only attract interest at high double digit yields. This reflects the risk of a difficult sale in the event of vacant possession. (Lot 50 AST Middlesborough 21%, Lot 95 AST Prestwich 16%)

. Better regional locations show lower returns. Buyers need to have confidence in vacant possession values and a sustainable owner-occupier market. (Lot 75 Tenancy Stockport 4.28%, Lot 105 AST Wetherby 5.7%)

. The regions, particularly the North-East and North-West conurbations, are increasingly weaker. Market confidence is being eroded by proposed public sector cuts.

. The traditional investment market in London and the South-East remains strong with no perceptible variation on results from our May and July sales. (Lot 276 AST Lauderdale Mansions, Maida Vale, London W2 7.4%)

. 100% of all regulated tenancy investments sold.

. The ground rent market is still showing great resilience. 79 investments sold from a total of 80 offered.

. Vacant homes in good areas remain particularly saleable.

. All sites with planning permission or potential for residential development were sold. This sector of the market showed early signs of correction around 18 months ago. We therefore attribute this success to vendors adopting a more realistic approach to pricing based upon recent market evidence.

Average Yield Analysis Summary:

Assured Shorthold Tenancies 8.8%
Assured Tenancies 5.3%
Regulated Tenancies 5.0%
Ground Rents over 80 years 6.0% (16.7 YP)

One for you Jeff.

202 Westbourne Park Road, Notting Hill, London W11 1EP

A Freehold HMO Residential Investment Opportunity comprising:


15 Self-Contained Studio Flats

Total Current Rent Reserved 215,280 (including bills)

Refurbished to a high specification in 2006

Subject to 15 Assured Shorthold Tenancies

Total Estimated Rental Value 235,000 (including bills)

Shared Laundry Facilities
Sky TV, Broadband and Video Entry Systems provided within each flat

Offers invited in excess of 2,500,000, subject to contract

If I had 2.5m I would be sitting with my feet up somewhere warm

Recent Andrews & Robertson auction only sold 57% of lots offered. Auction prices seem to be softening further and I bought a couple of properties recently to let out. There is currently a shortage of rental properties and rents are increasing month on month.

Jeff - its quite amazing how quickly the rental market has turned - a friend of mine recently took over 2 months to find a 2 bedroom flat in the Bexley/Sidcup area. The last time he had to renew was 2 years ago, and at that time, he said the agents were falling over themselves to show him potentail rentals.

I advertised a flat in Dartford on Gumtree to see what the interest might be and I had 25 inquiries.

He has ended up near Dennis's - hardly ideal as his daughter (who lives with him) has to commute. The current market is a culmination of sevaral factors I guess - there are an awful lot of new flats being built in the Sidup area - so it should be interesting to see the take up when they are completed.

Landlords push out first-time buyers: Banks STILL refuse youngsters loans
By Lauren Thompson

A perfect storm is sweeping the property market, putting homes out of the reach of first-time buyers and into the hands of buy-to-let investors.

The tempting deals offered by banks have seen landlords cashing in and snapping up properties which would be ideal for first-time buyers.

There was a 25 per cent increase in the number of mortgages (including remortgages) taken out by landlords between January and March this year, compared with the same period in 2010. Of this, there was a 15 per cent surge in the number of house purchases.

A tale of two buyers: Landlords Catherine and Martin Hull (left) are thriving in the current market, while hopeful first-time buying Stephanie Polsky (right) continues to struggle to find a mortgage
At the same time, there was a 17 per cent fall in the number of first-time buyers taking out loans, according to figures by the Council of Mortgage Lenders (CML).

There are now 486 different mortgages for landlords to choose from, but just 270 for typical first-time buyers with a 10 per cent deposit, according to financial data provider Moneyfacts.

Melanie Bien, director at mortgage broker Private Finance, says: Canny landlords are cashing in on a perfect storm of rising rents, falling mortgage rates and stagnant property prices. For landlords, the future is bright.

Unfortunately, the same cant be said for first-time buyers struggling to save a deposit.

First-time buyers vs landlords - they can't compete

First-time buyers, who have little deposit and small incomes, cannot compete against landlords who usually have large cash sums to put down as deposits for houses.

Landlords can also offset mortgage interest payments against the tax they would pay on their rental income, saving them further money.

CML figures show 7,200 fewer mortgages were granted to first-time buyers in the first three months of 2011, compared with the same period in 2010.
In the same period, the number of mortgages granted to landlords grew by 5,600 of this, the number of loans for new purchases increased by 2,000.

The CML says, overall, there are still double the amount of first-time buyers than landlords. But this does not reflect the sheer number of first-time buyers shut out of the market.

With average house prices down by 3 per cent since their peak in 2008, and prices still falling in many regions, first-time buyers are seen as a risk by many banks.

As they usually have only small deposits, they are more likely to suffer negative equity when prices drop. Many first-time buyers are also on low incomes, so they use a large portion of their take-home pay on mortgage repayments.

THE THRIVING LANDLORDS
Catherine Hull, 48, gave up her blood technician job last year to become a landlord.

Mrs Hull, pictured with her husband Martin, 49, who owns a haulage company, has made tens of thousands of pounds after buying four cheap properties in Grimsby and Cleethorpes, doing them up and renting them or selling them.

She says: There are lots of good opportunities for landlords. Rents are rising and you can increase the value of the property if you choose the house carefully.

One of the Hulls recent investments was bought for 45,000 in March, with a two-year fixed rate at The Mortgage Works at 4.19 per cent.

They had a deposit of 13,050, so their interest-only mortgage payments are 112 per month. It is now on sale for 80,000.

THE FIRST-TIME BUYER
Stephanie Polsky, 36, will have to save a deposit of 45,000 to buy a home in London.

Dr. Stephanie Polsky
Dr Polsky is one of thousands of young professionals stuck renting, because prices in the capital are so expensive. She lives with three friends in Southfields, south-west London, and pays 650 per month rent.

She says: I know I will need to move farther out where its cheaper, so I was looking three miles from here. But even a one-bedroom flat costs 250,000.

Dr Polsky, an academic director at a study-abroad organisation, was told by her bank that she would be better off with a 20 per cent deposit so she could qualify for a lower interest rate.

I need to save 45,000 in total. Its a long and frustrating process.
And rents are rising, helping landlords
The glut of potential buyers unable to get on the housing ladder is causing a boom for landlords. Average rents hit a record high in June, surging beyond the 700 per month barrier for the first time ever, according to lettings agency group LSL Property Services.

Landlords in London are getting an average of 1,006 per month from tenants.

David Newnes, estate agency managing director of LSL, says: Tenant demand continues to reach ever higher peaks and there simply isnt enough rental property coming on to the market to match it. Weve had five successive months of rent rises, but there is no sign of a let-up any time soon.
Big deposits - the barrier to entry

While rising rents are great for landlords, it makes it even harder for first-time buyers to save enough for a deposit. Youngsters need at least a 10 per cent deposit to get a mortgage, or 25 per cent to benefit from cheap deals. And while property prices have fallen, they are still relatively high.

A typical first-time buyer has a deposit of around 25,000 20 per cent of their propertys value, according to the CML. This would take seven years to save if you put away a massive 300 per month.

New buyers must also have an excellent credit record and enough income to pass strict affordability tests.

David Hollingworth, mortgage adviser at broker London & Country, says: Even if you are able to save a big deposit, it may still be difficult to get a mortgage.

First-time buyers are often subject to more stringent lending criteria, so if they have moved a lot or have missed credit card payments, for example, it can be a problem.
What's happening to mortgages?

Rates are also high. Those with a 25 per cent deposit can fix for two years with Yorkshire BS at 2.99 per cent. The best fix for a 10 per cent deposit is 4.39 per cent with Chelsea BS. Monthly repayments on a 150,000 mortgage would be 711 and 824 respectively.

So dire is the situation that housing minister Grant Schapps has stepped in, offering government equity loans and urging banks to offer mates mortgages, where groups of friends can club together to buy. But while banks are still unwilling to lend to first-time buyers, many have slashed the cost of deals for landlords to attract business.

Last week, The Mortgage Works, Nationwides buy-to-let arm, reduced rates. And Mortgage Trust has launched 18 new buy-to-let products for those with at least 25 per cent equity.

Skipton BS has also reduced rates, with its two-year buy-to-let fixed rate at 3.99 per cent with a 995 fee for landlords with a 40 per cent deposit. Interest-only payments would be 499.

An average two-year fixed rate on a buy-to-let deal for those with a 25 per cent deposit is 5.03 per cent. Repayments on an interest-only basis would be 629, and this expense is tax deductable.

The average fixed rate for first-time buyers with a 10 per cent deposit is 5.72 per cent, according to Moneyfacts. So a buyer with a 150,000 repayment mortgage would pay a whopping 941 a month.

A spokeswoman for trade body the Council of Mortgage Lenders says:
The reduction in first-time buyers can be attributed far more to ongoing deposit constraints than to displacement by buy-to-let landlords.

Yesterdays Bernard Marcus auction. Of the 115 lots offered in the room only 55% sold.

Auction Date Thursday, 28 July 2011
Venue Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA
Start Time 11:00
Lots Offered 143
Lots Sold Prior 28
Lots Sold in Room 64
Total Lots Sold 94
Percent Sold 66%
Total Raised 13,159,495

1000's of properties available at auctions this month. I will be at the Barnard Marcus auction on Monday where I have my eye on a couple of lots.

Mann Countrywide auction today in London

29 lots offered

4 Sold Prior
8 Withdrawn Prior
7 Sold
10 Unsold

It still amazes me the number of new builds happening in the suburbs atm. I hope these developers have got their sums right!

It doesnt amaze me that they are building them, but it does amaze me that people are still buying them off plan.

Development near me has 30% sold off plan.
The Mill, Bexley

jeff - I know the site - plenty in Sidcup also, but no additional infrastructure to cope.

Many good properties re possesed etc don't even hit the public market. All UK bank's and building society's have well off property investors with large cash waiting.

I used to deal in this market and with branch managers getting a bung, joe public does not get a look in.

I was interested in a lot in the Countrywide auction but was not able to view so gave it a miss. It was guided at 65-70,000. It was unsold with the last bid being 54,000 and is now available for 55,000. A cottage in the same terrace, same size, is available on the open market at 130-150,000.

Auction Property

Open Market Property

Not an area I know - would you be looking to sell it on or rent? Do you know the post code or road name?

I went to a wedding recently very close by. There is a power station nearby and they have a steady supply of renters in the area.

I might take a look Saturday

On 27th August, I sent off for the 'Legals' on:

Allsop's Auction: 15th September 2011 - Lots: 82, 83, 84, 85 and 86

The auction is on 15th September and as of today, 7th September, I've not heard a peep. Something possibly stinks with them.

Important Tip: Don't buy property at auction until you've had the legalities checked out by a professional. You might find yourself involved in a contract to buy a property with an auctioneer, where the property has defective title.

The flats above, may well have a covenant in their leases, which cannot be adhered to and the seller, ie, the bank, may not be able to sell the buyer the full title but only the part thereof.

I see from my checks that they originally sold for around 185k each. I also noticed that one is currently for sale with an Estate Agent (Connells), complete with a brand new kitchen and priced at 135k.

As of the present time, the original developer has still not completed the ground works outside of the flats and the ground is still rough.

I've had nothing since the email dated 20th July.

I always read the legals and in the past have paid for a solicitor to check if I am unsure of something.

I am looking to buy one of two ex local authority flats at the Barnard Marcus auction on Monday.

The legals for the Isle of grain house were only available yesterday for the sale today.

I meant I've heard nothing from Allsops since the preliminary date. Assuming they were built when the lease was granted in November 2006, they took a while to sell as new builds?

Lot 281 (Bromley) doesn't look bad - guided at 40-60k most recent similar sold 215k November 2010.

Looks too cheap to be true

Could be a structural problem with Lot 281 Bromley

It looks to have a very nasty settlement crack to the rendering on the front wall, don't you think?

Look to the LHS just above the arch.

I doubt its settlement - they are mainly 30s built. More likely A window or doors have been replaced/installed behind that hedge and either no lintel put in - or more likely, it wasn't supported properly during installation. The latter is quite common with so called expert double glazing installers who fail to support bays properly when replacing a lower bay window.

You could be right Exec. Looks to be on a slope as well. If it cost 50k to fix and you bought it for 50k it might still be a good buy

Looks quite nice across the road from it on Google's StreetView.

"If it cost 50k to fix and you bought it for 50k it might still be a good buy"

I was just thinking that, Jeffmack. The 'you' meaning you and not me, though. ;-)

Help me find a 'doer-upper' near Poole/Bournemouth to earn some money on.

Something priced around not much more than circa 200k to buy, or preferably even less. A sea view would be appreciated too but probably a bit much to ask.

Results from Mustbesold.com auction on 6th Sept.

Lots Offered 68
Lots Sold Prior 11
Lots Sold in Room 21
Lots sold after 2
Lots unsold 34
Total Lots Sold 34
Percent Sold 50%

There are always properties at auction in Bournmouth.

I use eigroup.co.uk, you can search by location but you can not get the auction details unless you subscibe (300 pa) You need to do some detective work to find the auctioneer

Dorset Auction Properties

http://www.edwardmellor.co.uk/auction/catalogue/

Auction is Sept 13.

Doc - if you are looking for property in Bournemouth, you should be aware of this it may affect the resale value :-))

Was at the Barnard Marcus auction today and it was clear that for all lots the guide prices were well below the reserves. The difference was far in excess that any catalogue I have seen before. When I arrived the room was very full, but as every property went though, mostly unsold, even though the last bid was well in excess of the guide it set the tone for the sale. The room quickly started to empty and by lot 50 (of 176) the room was only half full. The auction assistants were running around trying to complete deals after bidding finished by asking for the under bidders best offers. I would say that only 35% was sold in the room.

I bid on two that made in excess of the guide but were unsold, and one I bid to 83,000 and it was sold for 84,000

Results from the Barnard Marcus auction. They list 90 lots sold in the room, but many of those were unsold at the fall of the hammer and tied up afterwards.

Auction Date Monday, 12 September 2011
Venue Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA
Start Time 11:00
Lots Offered 174
Lots Sold Prior 20
Lots Sold in Room 90
Total Lots Sold 110
Percent Sold 64%
Total Raised 14,989,500

I once employed an auctioneer to run an auction for me to sell about 80 sets of upholstery items (eg, 3-piece suites, 2-piece suites, etc) in a large out of town industrial unit.

At his suggestion we joined forces with a 'carpet and rug specialist' to make the event even bigger. And further at this suggestion, after setting my reserves for every item, I agreed to use some of 'his people' to bump up the bidding. The benefit was mutual: higher prices for me, higher commissions for him. As to whether these guys came with the carpet people, I don't know and I didn't ask.

Anything that got knocked down to one of these guys, well, guess what happened?

Correct. The 'buyer' never actually appeared in front of the auction administrator at the end of the auction, so as to pay the monies owing, get a receipt and be able to collect the goods. The buyer was a 'no show' and although initially registered, was simply not pursued by the auctioneer.

I presume they would merely be used again as 'part time off the books' contacts for a future auction. I guessed that they did actually work for the carpet specialist. There were about half a dozen of them doing the bidding according to my recollection.

Rather interestingly, the auctioneer did not approach me for some 'cash' to remunerate these people for turning up for the day and as to where and how he got his money from to do so himself, well, I don't know. Perhaps they had the odd item quickly knocked down to them, if it was one that hadn't been given any reserve price? Whatever. My best guess on it was that they were 'associates' of the carpet businessman.

I still believe myself that the auctioneers still use insiders to bid up the items being sold even to this day. As to how these people originate onto the scene, I can only guess. Whether they are employed by the sellers I can only guess at too. However, proving all of this is a very difficult thing to do. You wouldn't get any information on this from the mortgage department of the big banks who have re-possessed the property being sold in the auction and if the property isn't sold, then the auctioneer just draws his basic fee from his client and says, "Well, at least we tried."

Being an insider in 'the auction game' is a very fruitful and lucrative professional hobby for lots of people, I'm sure.

From the recent Allsop auction held in London.

Property Type........Lots Offered Lots Sold.....% Success...Yield......Av. Lot Size
Regulated ................11..............9...............81.8............4.1.......152,000
Assured Shorthold......69.............64............. 92.8.............8.75.....135,680
Assured.....................1...............1.............100.............10.2.........92,000
Ground Rents (80 yrs+)14............14.............100..............5.6..........30,479
Sites with PP............. 6..............4...............66.7.............-...........495,000
Sites without PP..........7..............7..............100...............-..........146.429

Andrews and Robertson Auction
Auction Date: Thursday, 22 September 2011
Venue: Grand Connaught Rooms, Great Queen Street, London, WC2B 5DA
Start Time: 11:00
Lots Offered: 118

Result
Lots Offered: 118
Percent Sold: 55%
Total Raised: 11,552,450

Third Irish Sale Takes Allsop Space Total to Over 40m


UK-Irish auction partnership Allsop Space held its third successful sale of Irish property at the Shelbourne Hotel, Dublin last week raising almost 10m from the sale of 84% of 67 lots offered. This brings the newly formed company's sales receipts since April to over 40m with an overall success rate of 92%.

The composition of the catalogue was less reliant upon distressed stock with a greater proportion of lots being offered on behalf of private sellers. A total of six Irish lenders were represented along with various fixed charge receivers and administrators. Lots ranged from residential investments in Dublin to vacant houses in rural locations. Commercial properties offered included vacant pubs and industrial investments, mixed use buildings and a partly let garage site for redevelopment.



Commenting on the sale, auctioneer and director, Gary Murphy, stated:

"This result demonstrates a continuing and, we hope, a sustainable demand for Irish property. The evidence gathered at the auction established that only 14% of successful buyers were using borrowed money. The majority were cash purchasers."

The auctioneers reported a broad international interest in the event with buyers registered from Australia, Luxembourg, Gibraltar and the UK. The mix of buyer was equally varied. 57% of lots went to buy-to-let investors, 29% to owner occupiers and 11% were sold for development.

Ha, just got that as well

UK House Prices Treading Water - Nationwide

I am looking at this property - Ditton, Kent

It was sold as a new build in Feb 2008 for 189,000. It has been for sale with Ward Partners for 154,950 and is now going to auction with a guide price of 100,000

Looks interesting. I don't know what aylesford is like these days, but I used to go to the Little Gem - the smallest pub in Kent.

Recent Allsop auction results.

.

Harman Healy Auction today was a poor result

Auction Date Wednesday, 7 December 2011
Venue Kensington Town Hall, Hornton Street, London, W8 7NX
Start Time 12:00
Lots Offered 76
Lots Sold Prior 20
Lots Sold in Room 21
Total Lots Sold 41
Percent Sold 54%
Total Raised 3,531,751


Date Lots Offered Percent Sold Total Raised
7 December 2011 76 54% 3,531,751
3 November 2011 61 74% 2,787,501
6 October 2011 81 67% 5,449,950
11 August 2011 71 81% 6,447,360
7 July 2011 50 84% 4,851,800

Wednesday, April 04, 2012
Allsop auction - amazing yields

Amazing residential yields were generated in the latest residential auction held by Allsop last week. Of the 32 Assured Shorthold Tenanted properties sold the average yield worked out at a massive 11%.

Inside the M25 that was 6.82% whilst outside the M25 sales hit a stonking 13.3% yield.

Who says there is not value out there in the residential investment market. Mind you one problem. You need to be able to access finance.

No wonga no property. It's that simple.

Top Ten Buy to Let Hotspots

Interesting Jeff - amazing to think how different Southwark is since I was a kid.

When I come in to London by train you see all the new apartments going up alongside the rail lines around the St James Road area. I tried to buy an ex council flat at auction on the Neckinger Estate but it went for more than I wanted to pay.

I used to live on Silwood Estate, now all gone and rebuilt with new flats.

I haven't been over that way since the 1970's - but I used to go to a tropical fish shop and a pie and mash shop in Southwark Park road.

I drove down the Old Kent road about 10 years ago and couldn't believe how much it had changed - but I guess that's true of a lot of older areas.

I used to go to same tropical fish shop, might still be there.

Something like Pacific Aquaria - an old boy, "Alf" used to be the owner?