growing numbers of buyers turning to property auctions

With the property market cooling off, the property auction sector is proving to be a great opportunity for buyers to take advantage of lower prices and increased choice. According to Auction House UK, there was a 20% increase in the number of properties sold between January and August 2023 compared to the same period in 2022.

Furthermore, Essential Information Group (EIG) recorded a 51.5% annual rise in residential lots and a 17.3% increase in commercial lots available in August. While there are regional fluctuations in terms of choice, the South-East Home Counties and the North-West had the most lots available in England and Wales in August. The North-West is home to several auction hotspots, such as Manchester, Liverpool, Chester, Preston and Sheffield, which all have high demand for housing from both professionals and students. East Anglia saw the biggest increase in lots available, with a 43% rise from 265 in August 2022 to 279 this year.


benefits of buying property at auction

If you are looking for a quick and secure way to purchase investment property, then buying at auction could be the perfect option. Not only is the process significantly faster than buying through an agent (typically 28 days), but you can also be sure that you won’t be “gazumped” once the auction is complete. You can also benefit from contributing smaller deposits of around 10% and on average, properties purchased at auction tend to be sold at about 85% and 90% of their market value, giving you the opportunity to make great returns through renovations. And with the shift to online property auctions due to the pandemic, it’s now easier than ever for those with little auction experience to get involved.


how to secure funds

However, some property investors wanting to take advantage of these opportunities can often face barriers when it comes to raising funds. Either they are unable to get a BTL mortgage because the property requires major work, or they find it virtually impossible to secure a BTL mortgage in the tight 28-day time frame due to lengthy application processes.

If you’re considering buying a property at auction, auction finance could be the perfect solution for you to secure the property quickly and easily. One of the main benefits of auction finance is the speed at which funds can be delivered. Where the BTL mortgage process may take several months, MT Finance is often able to make lending decisions within hours of your initial enquiry so funds can be released in less than two weeks.

We can even provide auction finance if the property requires major work – traditional mortgage lenders won’t lend on an uninhabitable property, but if the property is wind and watertight, we just focus on the open market value of the asset and your future plans for it.

For example, we recently assisted a client who submitted the winning bid on an unoccupied residential property. It had a value of £177,000 and they needed £115,000 to complete the purchase. However, the property was subject to a prohibition order which restricted anyone from living there due to safety concerns, meaning no high street lender was willing to finance the purchase.

As soon as we received the enquiry we got to work and in just 10 working days, we released a £115,000 first charge loan at 65% loan-to-value over a 12-month term. Due to the prohibition order, we also included a stipulation that the property must be made habitable before the end of the 12-month term. Our ability to deliver funds in only 10 working days meant that the client didn’t lose the auction property or their deposit. Once the works are complete and their investment property is habitable, they will sell it at a substantial profit, allowing them to repay our loan. If this happens in less than the 12-month term, as with all our loans, they won’t be penalised for early repayment or exit.


bid with confidence

We have designed our auction finance product so that you can bid with confidence. Loans are available from £50,000 to £10,000,000 and we offer up to 70% loan-to-value on residential, commercial, and semi-commercial property. Terms are available from one to 24 months and there are no exit fees or early repayment charges should you choose to repay your loan early.

We will also work closely with you to ensure you go into an auction fully prepared and at a competitive advantage over others. If you have identified a target property and set yourself a maximum level you are willing to pay, we can review your loan options at an early stage, prior to the auction, and provide you with no-obligation terms. You can then go into the auction room and bid with confidence, knowing your funds will be delivered in time for the 28-day completion and with minimum fuss.

If you’re interested in finding out more about auction finance, call us on 0203 051 2331 or submit a quick enquiry and a member of our team will be in touch with you shortly.

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