Do you need assistance? Call us on 02033 558 785
Opal Auctions is fast, simple and most importantly secure!

Auction review of the year – what has 2020 meant for landlords?

Auction review of the year – what has 2020 meant for landlords?
Jan 26 , 2021

One of the major property-related consequences of the pandemic has been the soaring popularity of auctions, which were able to continue even during the first national lockdown as auction houses across the country were geared up for remote ways of working.

This year it’s estimated that nearly 40% more property by value has been sold at auction, in comparison to 2019, with auction houses throughout the UK generating record business against the backdrop of a global pandemic.

The transparency, speed, efficiency and flexibility offered by auctions – when contrasted with the traditional route of buying and selling a property, which has faced more delays than usual due to coronavirus – has led to a surge in the number of buyers and sellers opting for an alternative approach.

Here, we outline how auctions have been useful for landlords in the last 12 months, too.

A fast, transparent way to buy and sell

The popularity of auctions has been growing for a number of years now – according to figures from the Essential Information Group, there was a 20% rise in the number of auction sales in 2019, with the value of property sold increasing by almost 30% - but it has been supercharged by the pandemic, which has changed the way we work, live and socialise, as well as how we buy and sell homes.

Overnight, remote solutions needed to be sought. People wanted clarity and certainty in an otherwise highly uncertain world. Auctions offered that to buyers and sellers, as well as providing the immediacy and speed of transactions many required as they reconsidered their lifestyles or living arrangements.

Auctions provide the ability to bid 24/7, fixed timescales, offers from around the world, security and efficiency. The turnaround time from marketing a property through to it being sold is condensed considerably through the auction model, shaking off any issues with delays, chains breaking down, gazumping and gazundering, or a whole host of other legal issues involved with a traditional purchase/sale.

With a traditional online auction, there is a 28-day exchange period from the fall of the electronic hammer, while completion is typically set for 14 days later. Through traditional means, you’d be very lucky to have a sale go through as quickly as that. Funds can be in your account within 42 days if you’re selling at auction – virtually unheard of via the traditional route – while for buyers there is an online platform that values speed, clarity and security with fixed timeframes for completion, secure transactions, and minimum fees.

Like any system, it’s not fool-proof or failsafe, but it does increase your chances of buying or selling a home in a much more streamlined, efficient manner.

Taking advantage of the stamp duty holiday

The stamp duty holiday announced in July by the Chancellor Rishi Sunak, as part of his summer economic statement, also applied to buy-to-let landlords.

A sector of the market which had regularly been hit with new taxes or tax disincentives in recent years – from the 3% stamp duty surcharge and the phasing out of mortgage interest tax relief, to the Tenant Fees Act and changes to the Wear & Tear Allowance – was finally given something to cheer, benefitting from the same stamp duty savings as all other buyers.

For some, this meant savings of £10,00 and upwards when buying a first rental property or expanding an existing portfolio. While the 3% surcharge was still owed, it was owed on the first £500,000 of a property, rather than staircasing up in increments as is normally the case, which meant considerable tax savings for landlords, too.

However, given the surge in demand brought about by the stamp duty holiday – which helped to sustain the property boom triggered by the end of the first lockdown – severe pressure has been placed on the machinery and personnel involved with pushing transactions through. Conveyancers, estate agents, lenders and surveyors have all struggled to cope with the sheer volume of demand, and this is only likely to get worse as the holiday’s end point (March 31 2021) nears.

Auction has again been the beneficiary of this, as its rapid turnaround times has appealed to those – including landlords – looking to make certain that they take advantage of the savings on offer. Equally, as the deadline gets closer, auction offers the best opportunity for landlords to still benefit from the stamp duty holiday, as purchases/sales can be worked through the system in a much speedier fashion.

While traditional buyers are being advised to act immediately if they want to have the best possible chance of beating the deadline, those buying and selling at auction may be able to leave it a little longer to complete – although the advice is still to act sooner rather than later just in case. For sellers, there is no guarantee your home will sell in time, or for the best possible price. Meanwhile, buyers may lose out in the bidding process for the home they had their heart set on, or the home they were looking to bid on may be withdrawn for one reason or another.

So, it’s still best to act with relative haste, but with the auction process landlords can rest assured that they have a better chance of pushing through a sale, even if it’s later in the day.

Buying or selling with sitting tenants

Evictions have been near impossible for most landlords since March, with an effective ban on repossessions for the best part of nine months. And that is going to continue until January 25 at least, as a result of the evictions truce between the government and bailiffs over the Christmas period.

Even once eviction cases start to be heard again in court, it is likely to be a long, slow process as there is a considerable backlog of cases to work through, while the notice period landlords give to tenants – except in the most serious cases – is now considerably longer.

With this in mind, landlords looking to sell up have been advised to do so with tenants still in place, negating the need to go through the eviction process.

Meanwhile, for landlords and investors looking to expand their portfolio, there has been encouragement to buy with sitting tenants for the immediate income and extra security this provides.

It’s always better to have tenants in place than not, to swerve damaging void periods, and it’s also the case that if a landlord is happy to sell with tenants in place, they are likely to be good, reliable tenants. Otherwise, the landlord wouldn’t be willing to pass them on as part of the package.

To discover more about how we can help you to buy or sell at auctions, with benefits such as 0% selling fees and a 28-day exchange, get in contact with us today.

You can also click here for details on our upcoming online auctions.