Auction Finance for Property Investor’s Reactions to New Local Authority Legislation

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Property investors tend to react to legislative changes. Depending on one’s circumstance, these changes may create challenges for borrowers, or opportunities. One recent update may lead to an uptick in auction activity.

Since 2^nd December 2024, local authorities have had the power to let out empty high street properties via auctions without their owner’s consent. Landlords who own high street premises that have been vacant for 12 months, or at least 366 days in the last 24 months, could be forced to take action.

Rather than deal with this potentially costly outcome, some landlords may try and get ahead of the state entirely. With local authorities looming, some owners could be tempted to get their underutilised properties in the auction houses themselves to offload them as quickly as possible. This could create opportunities for expanding commercial property investors.

Less-than-ideal options

The opportunities may not come easy though. Buyers will need to be ready to complete on their auction purchases within 28 days, which doesn’t leave much room for the unexpected. Added to this is the fact that much of the stock coming to the auction market may be in a debilitated state.

Empty commercial properties are at particular risk of theft and vandalism, antisocial behaviour, arson, and more. Given just how many empty stores there are in our high streets, chances are much of what’s available to invest in will need to be upgraded and revitalised.

Fortunately, we have a specific product designed for this very scenario. Our Auction Bridging Finance can be issued within an auction house’s tight timeframes. To ensure this, we’d look into the borrower’s details to make sure everything was accounted for.

To start with, we’d make sure the borrower had all their financial affairs in order, which would reassure us that we could deliver funding within the timeframes involved. This could minimise the chances of unexpected challenges emerging to derail the deal.

We could then turn our attention to the state of the underlying property itself. Often, the properties found at auction are in a less-than-ideal condition.

If this would be the case here, we could provide funding for the initial purchase (or bid) and then set additional funding aside for a refurbishment. We’d seek to get a valuation of the property post-refurbishment, which would allow us to fully assess the exit strategy involved.

Taking advantage of a rebounding market

We, and our brokers and borrowers, need to be ready for a wave of commercial activity in 2025 and beyond. After a few years of struggle, the commercial property market is starting to recover, and offer potential.

Recent data shows that landlords have been purchasing more commercial properties over the last year or so, and there is momentum behind converting commercial properties into residential assets.

We can facilitate these strategies and more at Market Financial Solutions, and we’re ready for however busy the auction market gets over the coming months.