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By Scott Hendry

Director of Auction Relationships, Together


Top Tips when Buying a Property at Auction

With the housing market showing little sign of a slowdown, interest in auction properties also signals a busy year ahead. Here's my top tips on aspects to consider when buying a property at auction.

1. Chose the right kind of property - We often find investors buying ‘fixer-upper’ homes at auction to do them up before selling or renting them out. Properties that are in a particularly poor state of repair may be deemed ‘uninhabitable’, for example, if the property lacks a working kitchen or bathroom, has structural problems or has previously been affected by subsidence. However, these types of properties can be picked up for a discount at auction and, if the buyer is willing to put in the effort – and upfront costs - to bring them up to habitable standard, they can make decent profits from selling them or renting them out to tenants.



2. Make sure it’s a good investment - For those bidding at auction for buy-to-let properties, it’s critical they consider how to best maximise their rental yields. They should take into consideration factors such as the general area, schools, social amenities and transport links, while being mindful of the future capital growth of their chosen property.

Commonly, holiday lets may also make a good investment, given the boom in staycations over the past few years, particularly during Covid-related lockdowns. The tax rules are more favourable for short-term holiday lets, compared to traditional buy-to-let, and we are seeing a lot of interest in providing finance within this sector from potential investors.


3. Conduct your own research - Research is vitally important for anyone buying at auction and their first task should be to read and fully understand the legal pack which comes with each property lot. This contains documents relating to the property and is prepared by the seller’s conveyancer. Investors need to make sure they’ve read the small print, as it’s often in these sections where surprises – such as special conditions of sale, covenants, restrictions and rights of access – are noted. Prospective buyers can request the legal pack in advance and ask their conveyancer to check it out as well.

4. Secure your financing - It's essential auction buyers arrange their finance in advance to work out exactly what they can afford to bid, and what it’ll cost. Usually, buyers have 28 days to complete the purchase and pay the balance they owe. However, rapid completions are not unheard-of and may mean they have far less time to get their finances in place. 

The most commonly-used auction finance is a bridging loan, which lasts up to 12 months. Borrowers only repay the interest each month, and repay the initial sum borrowed (plus any fees) as a lump sum. This can be helpful if they need time to arrange long-term finance further down the road.


At Together, we’ve been providing specialist auction finance for over 16 years. We’ve seen all sorts of properties appear in the catalogue over this time and have an open mind about the circumstances when we’re happy to lend – whether it’s an unusual property, is in a state of disrepair or you’ve got a very tight deadline. 

Here’s where a securing a bridging loan against the property for up to 12 months might be useful. This would allow you to complete the work they need to do and exit the short-term loan by selling the property – with investors expecting returns of up to 20 per cent on the most successful renovations.

Scott Hendry is director of auction relationships at the specialist lender, Together *

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  • Trevor Cooper

    Bridging loans are unheard of now, unless you want to pay ridiculous interest rates.

  • icon

    Best tip - don't buy a property at auction.


    Why ? 2 out of 3 of my own homes came out of the auction room and very nearly all of my rental properties

  • icon

    I have bought both ways. I first purchased at Auction in 1973, 2 Auction purchased that year but not always either. Some years later I was interested in a house by private Treaty but was having second thoughts so went to an Auction that came up. Auction was mad that day for problem properties mostly so I left got on the train to the Sales Agents and bought by private treaty. So you make your choice and weigh up the suitability of a particular property to you.


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