Barnard Marcus raised £4.6m from its 165-lot residential auction at the Hyde Park Hotel, SW1, on February 11. It scored a success rate of only 71%, however.
“It was a new venue for us so it was a bit of a strange atmosphere,” said auctioneer Chris Glenn. “The stock that let us down was the assured shorthold tenancies.”
Glenn added: “Vendors were setting reserves based on income value and yield rather than the capital value of the bricks and mortar and they were slightly disappointed as they struggled to reach the reserves in the room.”
For example, the vendor of lot 20 – a double-fronted house in Queens Park, NW6 which is divided into seven bed-sits – set his reserve at £214,000 based on the total rental income of £22,776 pa. The highest bid, however, was only £210,500.
This shows that buyers are including management and service costs in what they are willing to pay, said Glenn. “Vendors aren’t allowing for management, maintenance and dilapidations on multi-let properties.”
However, interest from owner-occupiers and small investors was stronger than ever. “It’s like the 1980s. People are buying in expectation of prices increasing,” said Glenn.
Many lots sold at significantly above reserve, and Glenn sees the recovery in prices spreading out from the fashionable centres where it started. “I think the market is still going to go up,” he said.
