BTL investors buying property at auction were ‘cautiously optimistic’ last year

Auctions are a great way to acquire property competitively, with a wide range of great investment deals often going under the hammer, illustrated by new data revealing that buy-to-let landlords acquiring property under the hammer continue to achieve high yields on Assured Short Hold Tenancies.

The analysis, based on yields of tenanted rental properties presented in Allsop auctions, reveals that an average yield on Assured Short Hold Tenancies of 8.95% was achieved in 2017.

Yields in London on average rose from 5.34% in 2016 to 6.04% in 2017, which could be attributed to higher rents in London and lower capital costs.

Demand from overseas investors remained strong, thanks in part to the weakening of sterling last year, a result of the UK’s decision to leave the EU.

In 2017, Allsop Residential Auctions raised a total of £425m, achieving a success rate of 79%, as plenty of investors, including buy-to-let landlords, snapped up properties under the hammer. 

In total 1,222 residential lots were sold by Allsop with an average value of £348,000.

Gary Murphy, partner and auctioneer, commented: “Investors in 2017 remained active and cautiously optimistic in the auction room. As a result, we raised a similar total to 2016, proving that appetite exists for the right stock, sensitively priced.

“This year, buy-to-let investors face further hurdles with the tapering of tax relief and tougher lending criteria applied to portfolios of four or more properties. We may see the smaller investor look to disinvest, whilst others will adjust their portfolios and seek value in the regions. Prices will continue their correction, particularly in London and the South East, where they are likely to remain static.

“2018 will not be without its challenges but there will be opportunities.”

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