AUC­TIONS

The Jewish Chronicle - - FRONT PAGE - BY CHAR­LIE JACOBY

THE BIG story in auc­tions is the pos­si­ble April 1 hike in stamp duty. A 3 per cent rise for se­cond homes i s go­ing to hit the auc­tions mar­ket hard, be­cause sale­rooms are the nat­u­ral habi­tat of the buy-to-let in­vestor. While pre­vi­ous years’ auc­tion press has been dom­i­nated by large lots and mighty pur­chases, this story is all about the lit­tle guy: pur­chasers of res­i­den­tial lots worth £100,000-£500,000. And it ig­nores any­one with a prop­erty port­fo­lio. The cur­rent pre­dic­tion is that the hike will not af­fect land­lords of 15 prop­er­ties or more.

In the short term, fear of this stamp duty in­crease is boost­ing sales, as both buy­ers and sellers work hard to beat the pos­si­ble April 1 dead­line. Even though the hike is not con­firmed — it is sub­ject to a con­sul­ta­tion which ex­pires in Fe­bru­ary — the mar­ket is hedg­ing against a pos­si­ble tax rise.

“It is dif­fi­cult to say the real im­pact of this ex­tra 3 per cent,” says Jonathan Ross of Bar­nett Ross. “The hype from agents is that you have to get in be­fore April or you will pay the ex­tra 3 per cent. I think it will hope­fully mean a flurry of in­struc­tions be­fore April. How­ever, I am not happy about ex­tra stamp duty. At this level you are now push­ing out a high per­cent­age of the mar­ket. The govern­ment is do­ing its best to sti­fle buy-to-let.”

At All­sop’s Oc­to­ber sale, it of­fered a va­cant three-bed­room flat in Lon­don SW18, on be­half of the Min­istry of Jus­tice. It had a guide price of £400,000plus but failed to sell. In De­cem­ber, it was re-of­fered at £375,000-plus and was knocked down for £450,000.

All­sop auc­tion­eer Gary Mur­phy says: “We sensed that the buoy­ancy in the room in De­cem­ber re­flected buy­ers’ ea­ger­ness to in­vest be­fore the 3 per cent stamp duty hike. No doubt this will be re­flected in prices paid in the new fi­nan­cial year. We are ad­vis­ing clients to take ad­van­tage of our Fe­bru­ary auc­tion.”

Sav­ills has added a date to its auc­tions cal­en­dar to cater for pre-hike de­mand. It has sales on both Fe­bru­ary 16 and March 2.

Auc­tion­eer Chris Cole­man-Smith (who has booked a hol­i­day for April) says: “It will be in­ter­est­ing to see how the mar­ket pans out af­ter April.” He still ex­pects 2016 to be a good year for prop­erty auc­tions.

James McHugh of McHugh & Co con­firms he is see­ing a lot of stock com­ing to the mar­ket from peo­ple want­ing to sell be­fore April 1. “Es­pe­cially peo­ple hold­ing buy-to-let in­vest­ments, circa £250,000,” he says.

This flurry of ac­tiv­ity comes af­ter a good year for both res­i­den­tial and com­mer­cial auc­tion­eers.

“The past 12 months have shown some tremen­dous prices achieved at auc­tion, mainly due to a lack of good stock com­ing on to the mar­ket, so when some­thing does come on, there are sev­eral bid­ders,” says Mr Ross. “That’s es­pe­cially on the com­mer­cial scene.

“The res­i­den­tial mar­ket has had its fluc­tu­a­tions, but in north Lon­don it seems to have been un­abated. De­mand is out­strip­ping sup­ply.”

The only ma­jor is­sue in 2015 for the res­i­den­tial mar­ket was a slow­down in buy­ers from China and Rus­sia.

All­sop closed 2015 with a £68.4 mil­lion sale, bring­ing the amount raised through the firm’s res­i­den­tial auc­tions, in the room and on­line, to £457 mil­lion for the year. Its De­cem­ber cat­a­logue was mainly larger lots, of which 13 sold for more than £1 mil­lion, con­tribut­ing £33.235 mil­lion to the to­tal.

Mr Mur­phy says: “The room wasn’t as crowded as pre­vi­ous sales this year but there was def­i­nitely a de­ter­mi­na­tion to buy. Many bid­ders re­ported that they were find­ing prices very steamy across all prop­erty types. And this wasn’t just Lon­don. Pro­vin­cial and re­gional lo­ca­tions are on the rise as buy­ers look for value out­side the cap­i­tal.”

Lot 185, a 0.378-acre site in Le­ices­ter, proves the point. On a busy road and with no plan­ning per­mis­sions, the site was sold on be­half of Metropoli­tan Hous­ing Trust for £700,000, from a guide of £500,000. The largest lot to be sold un­der the ham­mer was a free­hold 11,700 sq ft of­fice build­ing in Leather­head, on 0.67 acres with per­mit­ted de­vel­op­ment rights for res­i­den­tial. It went for £2.9 mil­lion.

Barry Shaw, a part­ner at City of Lon­don law firm Solomon Tay­lor & Shaw, agrees that 2015 ended with suc­cess­ful auc­tion sales and prices higher than ex­pected.

“There is still short­age of stock, so that should keep prices up,” he says. “There is a predilec­tion for prop­er­ties which can be con­verted to res­i­den­tial use. Buy­ers are mainly those who don’t need re­course to bor­row­ings, as ob­tain­ing bank fi­nance is still ex­tremely slow and painful.”

Sav­ills’ De­cem­ber 14 auc­tion of 159 lots was no­table for the sale of va­cant free­hold res­i­den­tial prop­er­ties and land. Among the more than 1,000 lots within the M25 was a 0.44-acre piece of land in Kingston-upon-Thames, Sur­rey, sold by Thames Wa­ter. The rec­tan­gu­lar site, over­grown with grass and wood­land, had de­vel­op­ment po­ten­tial, sub­ject to plan­ning con­sent. Guided at £300,000, it made £1.25 mil­lion.

“That is a prime ex­am­ple of us­ing auc­tions in­stead of pri­vate treaty,” says Mr Cole­man-Smith. “A pri­vate-treaty agent might have put it on at £500,000 or £600,000 and it would have sold at that level. The un­der­bid­der on this lot bought an­other one in Kingston. They were both de­ter­mined bid­ders.”

An­drews & Robert­son ended 2015 on a high, with a sale boast­ing 85 per cent suc­cess. It raised more than £15 mil­lion from 76 lots, bring­ing the to­tal for the year to £110 mil­lion, a 27 per cent in­crease over last year, with an av­er­age suc­cess rate of 88 per cent.

The top lot was a sub­stan­tial free­hold three-floor de­tached build­ing ar­ranged as four self­con­tained flats and four garages, in Black­heath, SE3. Guided at £1.2 mil­lion, it at­tracted strong bid­ding, achiev­ing £1.4 mil­lion. In ad­di­tion, a port­fo­lio of six prop­er­ties in Barns­ley sold for £132,000. An­drews & Robert­son auc­tion­eer Robin Cripp says: “It was a busy sale room and com­pet­i­tive bid­ding for lots within the M25 and in other well-lo­cated towns saw prices pushed well above the guides.”

Auc­tion House Lon­don’s record for 2015 was £129 mil­lion-worth of sales and na­tional awards. The Ne­go­tia­tor mag­a­zine de­clared the group Res­i­den­tial Auc­tion House of the Year and Best Fran­chise in early Novem­ber, fol­lowed by an­other Best Fran­chise ti­tle and Auc­tion Agency of the Year at the Es­tate Agency of the Year Awards in De­cem­ber.

The Auc­tion House group also hit its land­mark 3,000th-lot-sold fig­ure for a se­cond year run­ning. Auc­tion­eer An­drew Bin­stock says: “We’re de­lighted with the na­tional ac­co­lades for the brand, as well as our re­cent sales suc­cess. Our to­tal sales are up this year from last by 37 per cent.” It achieved an 87 per cent suc­cess rate at its De­cem­ber 9 auc­tion. Bid­ding was brisk, with

buy ers and sellers want­ing to ex­change ahead of the hol­i­days. A high­light was a two-bed­room first-floor flat in Sur­rey. Guided at £155,000, it sold for £202,000. Also in Sur­rey, an end-of-ter­race house with three bed­rooms sold for £340,000 from a start­ing guide price of £275,000 and in Ley­ton­stone, East Lon­don, a three-storey Vic­to­rian prop­erty in a pa­rade of shops sold for £154,000 from a bid­ding start of £115,000. Plan­ning per­mis­sion is al­ready in place to change part of the shop into a stu­dio flat.

Mr Bin­stock says: “Prop­erty in a good po­si­tion and at the right price will al­ways at­tract buy­ers but where we come in is to se­cure the best price, of­ten well above the guide price and re­serve ac­cept­able to the seller.”

Lambert Smith Hamp­ton’s last sale of 2015 raised just over £10 mil­lion with a suc­cess rate of 84 per cent. The team held five sales, rais­ing £60 mil­lion — up 25 per cent on last year, with an av­er­age suc­cess rate the same as last year, at 89 per cent.

For Philip Water­field at Stret­tons, it was lack of sup­ply in Lon­don and the Home Coun­ties that re­sulted in huge de­mand for prop­er­ties and ex­cel­lent prices be­ing achieved.

The firm’s May sale be­came an early op­por­tu­nity for new “pen­sion­ers” able to draw down a tax-free lump sum and keen to in­vest in prop­erty. Buyer ap­petite re­mained healthy into Septem­ber, with res­i­den­tial yields av­er­ag­ing a lit­tle un­der 5.5 per cent. High­est price at Stret­tons’ Septem­ber sale was £1.31 mil­lion for a mixed com­mer­cial/res­i­den­tial in­vest­ment in Hox­ton, N1, plus an­other flat in the block, sold sep­a­rately for £390,000, a to­tal of £1.7 mil­lion.

Stret­tons’ Novem­ber sale saw the high­est re­al­i­sa­tion of the year — close to £13 mil­lion from an 83 per cent suc­cess rate, with high­est price of the day be­ing £1.75 mil­lion for an in­dus­trial es­tate in Da­gen­ham. This showed a 6 per cent re­turn, fol­lowed by just over £1 mil­lion for five flats in a con­verted house in Tot­ten­ham, Lon­don N17, pro­duc­ing £38,000, a 3.5 per cent re­turn.

Of the more un­usual lots, a se­ries of small out­houses in Ful­ham SW6 with po­ten­tial for a va­ri­ety of uses, sold at prices from £8,000 to £20,000 and a for­mer me­mo­rial hall in Brain­tree, Es­sex with plan­ning for four flats sold for £250,000.

In Stret­tons’ De­cem­ber sale, it made £1.75 mil­lion for a va­cant free­hold house in Spi­tal­fields, Lon­don E1, and £650,000 for a for­mer bar in Strat­ford, E15, guided at £550,000-£555,000.

The most un­usual lot of the day was an in­come-pro­duc­ing boat­yard and part va­cant land fronting the Grand

Union Canal in Bed­ford­shire, sold for £220,000 against a guide of £175,000£180,000.

“Last year, de­mand out­stripped sup­ply to cre­ate a highly com­pet­i­tive mar­ket and, as Stret­tons cel­e­brates its 85th birth­day in 2016, we look for­ward to con­tin­ued de­mand in the mar­ket,” says Mr Water­field. “We are also an­tic­i­pat­ing a sea change in the buy-to-let mar­ket, as a re­vised taxa- tion struc­ture kicks in and we may all need to brace our­selves for in­ter­est rate changes later in the year.”

In the pure com­mer­cial mar­ket, there were big bid­ding bat­tles at All­sop’s fi­nal com­mer­cial auc­tion for 2015. This saw £60.5 mil­lion sold at a suc­cess rate of 86 per cent, which puts All­sop Com­mer­cial’s fi­nal fig­ures for the year at £445.1 mil­lion, at a suc­cess rate of 90 per cent, the strong­est end of year suc­cess rate for a decade.

Strong com­pe­ti­tion in the room saw many sales ex­ceed guide prices. A free­hold of­fice in­vest­ment in New Malden, south west Lon­don, let on a short lease, sold at £3.75 mil­lion (£266 per sq ft) off a guide of £2.5 to £2.7 mil­lion. There were more than 30 bid­ders for this lot, de­spite its hav­ing been on the mar­ket through pri­vate treaty for over a year.

“The auc­tion mar­ket­ing gen­er­ated new in­ter­est — and gen­uine com­pe­ti­tion un­locked sig­nif­i­cant gains for the ven­dor,” says All­sop’s Dun­can Moir.

“The strength of de­mand is very clear. The lack of qual­ity in­come in this low in­ter­est-rate cli­mate is putting a pre­mium on to the bet­ter in­vest­ments.

“For ex­am­ple, a free­hold Kwik Fit in Sheer­ness was of­fered, which had sold at auc­tion in early 2015 at 6.25 per cent. Com­pe­ti­tion in the room pushed this to 5.6 per cent, an im­prove­ment over a pe­riod of only 10 months.”

All­sop’s new­est auc­tion­eer, Will Clough, made his de­but in De­cem­ber. His open­ing lot was a shop in­vest­ment in Ch­ester-Le-Street, sold for £600,000.

Acui­tus’s fi­nal auc­tion of the year demon­strated the con­tin­ued growth in in­vestor de­mand as £45.033 mil­lion of as­sets sold, at a suc­cess rate of 88 per cent. Auc­tion­eer Richard Auterac says: “In­vestors were out in force and had an ap­petite for all the sec­tors across a wide geo­graphic spread. The prop­er­ties in the main are from port­fo­lio break-ups, re­ceiver­ships and as­set ra­tio­nal­i­sa­tions by in­vest­ment in­sti­tu­tions and funds sell­ing their smaller prop­er­ties.

“Th­ese are be­ing snapped up by the grow­ing vol­ume of pri­vate in­vestors who recog­nise the con­ve­nience of hav­ing a wide choice of in­vest­ments in one cat­a­logue.”

A packed room and con­certed bid­ding high­lighted the depth of in­ter­est in com­mer­cial prop­erty by pri­vate buy­ers. Of the 57 lots sold, 15 went for more than £1 mil­lion and the av­er­age yield achieved was 7.5 per cent. De­mand for Lon­don prop­er­ties re­mained strong.

Auterac ex­pects this mo­men­tum to con­tinue, say­ing: “Sellers are in­creas­ingly favour­ing our multi-chan­nel auc­tions, which are demon­strat­ing their abil­ity to har­ness huge amounts of pri­vate equity openly and quickly.”

De­spite the froth — cre­ated partly by stamp-duty fears — there is more of a sense of bust be­hind us than boom in front of us. Buy­ers grav­i­tate to­wards “safe” prop­er­ties.

“In com­mer­cial, lots with good covenants are still pop­u­lar,” says Mr McHugh. “If peo­ple have got money in the bank, they would rather have it in bricks and mor­tar. If you have a few £100,000s in the bank, you get a re­turn if you buy a prop­erty. And you get ap­pre­ci­a­tion as the value of prop­erty goes up.”

Site with plan­ning per­mis­sion in Grange Road, Lon­don SE1. Guide price £4.5 mil­lion in Bar­net Ross’s sale

Sut­ton Wind­mill, near Nor­wich, site in­clud­ing listed wind­mill, re­serve below £250,000 in Bar­net Ross’s sale

Cole­manSmith: ‘auc­tions beat pri­vate treaty’

Top: Listed manor, Stroud (guide £750,000+), sold by All­sop at £765,000. Above: Crouch End flats (guide £1.2m+) sold by McHugh at £1.87m

Free­hold ground rent in­vest­ment in Lon­don NW6. Six flats, one with valu­able re­ver­sion, in McHugh & Co’s Fe­bru­ary 25 sale

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