Buy-To-Let Boosts Auction
February 2007

In 2006, Sutton Kersh experienced a 20% rise in the totals raised from their auctions compared with 2005 with sales totalling in excess of £37 million.

"A large proportion of this increase can be attributed to the significant rise in the number of failed buy-to-let commercial and residential properties which are now being offered for sale at auction," maintains director James Kersh.

The residential buy-to-let market has generated significant investment in the private rented sector. Despite this, according to the Council of Mortgage lenders, buy-to-lets still only account for a small proportion of the mortgage market at just over 8%.

Kersh believes that the growth of commercial and residential buy-to-lets at auction appears to be a result of sellers recognising the benefits of offering these properties at auction.

"The sellers of buy-to-lets are generally highly motivated to achieve the best possible price and to complete a relatively quick sale. Throughout 2006, buy-to-let properties offered in the auction room attracted fierce competition with investors considering the current market to be a strong climate within which to invest.

Kersh adds: "There has been a wealth of stock on offer, plenty of motivated sellers and relatively low interest rates."

In 2007 the strong presence of buy-to-let at auction is expected to remain.

Sutton Kersh's February auction taking place at the Marriott Hotel City Centre on Thursday February 22nd at 12 noon includes a prime example of what's on offer:

Lot 1 at 34-36 Renshaw Street and 24 Newington, L1 is an attractive freehold City Centre retail investment, currently producing £26,060 with an ERV of £28,960 pa. The property with a guide price of £500,000 is let on the ground floor and basement to Max Spielman and a hot food operator. The upper floors are let on an individual room basis to various tenants.

A portfolio of 8 lots featuring properties let to Sayers will also go into the auction ring and are already attracting strong attention indicating that investors still have a healthy appetite for buy-to-let investments.

Kersh also believes that in 2007, "the number of repossessions on Merseyside, the wider region and the UK as a whole is likely to be a factor in the type of lots being offered at auction.

"In addition, first time buyers may find it increasingly difficult to become owner-occupiers, and rental accommodation will remain the only option.

"Further, with statistics claiming that there are an additional 500 people coming in to the UK each day, the increasing number of people from the likes of the new EU countries is also likely to contribute to the strong demand for rented accommodation.....both boosting the buy to let market.

"Over recent years rental growth has broadly tracked earnings growth and, provided that the supply of rental accommodation continues to grow at current levels, this is likely to continue in Liverpool," says Kersh.

"If this steady growth is maintained into 2007 and the demand, as predicted, remains strong then buy-to-lets will undoubtedly continue to be considered as attractive investments and will maintain a strong presence amongst our auction lots."