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Auction Finance

Auction watch: March 2021

After a particularly busy February, there was a possibility that March – with its anticipated Stamp Duty holiday cut-off date – could have proven a quiet month in auction rooms across the country. But the Chancellor’s Budget early in the month saw an extension of the deadline and the possibility that property investors could still save a pretty penny on their next purchase.

Mr Sunak’s announcement of the creation of a number of ‘freeports’ across the country particularly caught our interest, as each typically creates tens of thousands of jobs and huge investment in development. With the possibility of several new ‘boom towns’ across the country – often in relatively deprived coastal areas that have seen their industries suffer in recent decades – there may be opportunities for investors to acquire property relatively cheaply, before any boom begins in earnest.

The Budget announcement revealed eight Freeport locations in England, and confirmed negotiations are underway regarding the creation of others in Wales and Scotland. So this month, we’ve focused on six properties in confirmed Freeport locations – and taken an educated guess at where we think there’ll be one in Wales.

Humber
60 Kings Road, Immingham, Lincolnshire

The towns and cities around the Humber estuary provide something of an embarrassment of riches for investors to choose from, with property routinely being offered as shockingly affordable prices.

We spotted properties in Hull and Grimsby that we could happily have written about, but instead have chosen this one in Immingham. The Humber Freeport area will likely cover the ports at Hull, Grimsby and Immingham, which collectively form the busiest port in the UK.

Kings Road is immediately adjacent to the docks and this three-bed, pebble-dashed terrace was offered with a guide price of just £10,000. There’s no pictures of the inside but the description bodes well, with gas-fired central heating and uPVC windows helping it to achieve an acceptable ‘D’ EPC rating.

That was enough to hook interest from bidders, with the hammer ultimately falling at £46,000.

Liverpool City Region
1-3 Crosby Road South, Waterloo, Liverpool

For something completely different now, we head to Liverpool – or more specifically, Waterloo.

A short walk from Anthony Gormley’s ‘Another Place’ art installation on Crosby Beach, Waterloo is a popular commuter suburb and the location of this grand detached property, which was previously home to an accountancy firm. Guided at £730,000+, it offered the big-fish investor the chance to think bigger still.

We think that razing it to the ground would be a crying shame, with its period charm very much in-keeping with nearby properties on Crosby Road. But the large plot does give the buyer the option to build a number of new homes (subject to planning), which could subsidise the cost of converting this characterful property to a dozen or so flats – once they’ve stripped out all the office equipment and fluorescent lighting, that is.

We’ll wait to see what the new owner decides to do; they decided not to risk the competition of the auction room, and agreed a sale before auction day.

Plymouth
53 Wolsdon Street, Plymouth

Situated less than a mile from the University of Plymouth and Plymouth station in one direction, and the marina and port in another, what this Wolsdon Street property lacks in outside space it more than makes up for in location.

Previously a number of bedsits, its current condition is reflected in its £125,000 guide price. It needs some serious investment, but the ace up its sleeve is the derelict property to the rear.

Wolsdon Street has the potential for conversion to a number of flats – we think perhaps five judging from the floorplans, assuming they were all one-bed – and that’s before the current derelict property is factored in; that could be treated as a small coach-house style property with its own entrance at the rear.

There’s lots of work needed, with new windows, reconfiguration and probably some attention needed on the roof. So let’s hope the winning bidder – who paid £137,500 – has money in the bank.

Solent
Roman Landing, 35-37 St. Mary’s Place, Southampton

Staying on the South Coast, the Solent Freeport will encompass both the ports at Southampton and Portsmouth. One of the likely knock-on effects of investment in the region is an increase in demand for supporting services – things like accountancy, legal and marketing services.

All of those need office space, which is why we wanted to include this five-storey office block close to Southampton city centre. Three of five floors are already let out, providing an almost 10% yield based on the £1.4m guide price – which could subsidise the cost of a new owner-occupier taking up the lowermost two floors. That significant guide price could perhaps explain why it was, unusually, offered with six-week completion (rather than the usual four).

Situated between Southampton F.C.’s St. Mary’s Stadium and the main shopping area, it’s also located close to lots of student accommodation – so this could potentially have a second life as a residential property, should the new owner instead prefer that avenue.

That impressive yield clearly caught someone’s eye; it was sold prior to the auction taking place.

East Midlands Airport
32 Laurel Close, Mountsorrel, Leicestershire

When you hear ‘Freeport’, you perhaps think of seaports rather than not airports. But East Midlands Airport’s central location means it’s already one of the UK’s biggest cargo hubs, and so it’s been chosen as England’s only inland Freeport.

This recently-renovated property in Mountsorrel, 14 miles to the south, has a remarkably similar finish to the detached house next door – and a reveals that until recently, there was no detached house next door… just a large garden.

The listing reveals that the property is believed to be of non-standard construction, which can limit your ability to secure a mortgage with some lenders (although Together will often consider properties of this type).

Currently rented on an AST at £695/month, and with bids failing to reach the £100,000 reserve, it’ll be re-entered at a future auction. Considering the vendor bought it in early 2019 for £102,500, it’s clear that they saw their opportunity in the new home next door instead.

Teesside
28 Fulbeck Road, Middlesbrough, North Yorkshire

The Teesside Freeport will centre on the existing Teesport facility, in the mouth of the Tees and roughly equidistant between Middlesbrough and Redcar. This well cared-for mid-terrace property looks solid but dated, so this could make a manageable first investment for the budding developer.

It pays to do your research though, as this property proves buying at auction doesn’t guarantee a bargain. A quick search on local prices reveals that house prices on Fulbeck Road still haven’t recovered to their 2008 peak, and nothing has sold for more than £80,000 in over 10 years.

So the guide price of £72,500 – which doesn’t take into account auction and legal fees, or interest on any finance you take – seemed ambitious to us; the any potential buyer will perhaps need to think of this more as a long-term investment than a quick flip.

Swansea Bay – our wildcard
24 Caswell House, Mariners Quay, Port Talbot

Freeports enable raw materials to be imported, processed for manufacturing and then exported again, all without incurring tariffs – so are particularly beneficial if your area has a large manufacturing sector.

Which is why we think Swansea Bay – and more specifically Port Talbot – could win the race in Wales. It’s famously home to a huge steelworkers that has been threatened with closure for years, on the basis of cheaper competition from the Far East; so establishing a Freeport could go some way to addressing that problem.

Although it’s up against stiff competition from Newport, Cardiff and Milford Haven, we believe its proximity to the M4 and existing railway connections for the steelworks could put it in pole position – although we’ll wait to see if the Welsh Government agrees.

This two-bedroomed penthouse apartment on Mariners Quay, built in 2004, overlooks the beach but now looks a little dated on the inside. We can’t figure out what it sold for when new (we suspect an investor bought it and a number of other flats as a bundle), but with a guide price of just £60,000, this still looked like it might be a canny investment.

Aspiring bidders will have to wait their chance, though – the lot was withdrawn.


On the lookout for auction property?

If you’ve already successfully bid on a property and need to finance your purchase, here’s where you can read more about our auction finance options.

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