For buyers looking for a slice of the UK property market, auctions offer the opportunity to invest beyond traditional bricks and mortar house purchases. From ground rents and garages to unusual buildings and properties with life tenants, there are plenty of ways to access the property market in addition to owning a home. For first-time auction buyers, read how to buy a property at auction.
The appeal of alternative property investments varies dramatically depending on the type of asset an investor is looking for. While ground rents and garages can offer regular income, properties with a life tenant in situ, unusual buildings and land often have greater potential long-term gains.
Ground rents are well-liked auction lots, offering investors a low barrier to entry with good potential returns. Buying a ground rent gives the owner the freehold of a property, receiving regular payments from leaseholders. These have become increasingly sought after over the last ten years, enabling buyers to access parts of the UK property market for a fraction of the price of a house.
Garages have also proved popular with property investors, often making headlines for achieving incredibly high prices in prime central London. But garages do still offer good potential returns. In city and town locations where many properties do not come with off-street parking and for those close to good public transport links, garages can be let out for thousands of pounds each year. Meanwhile, blocks of garages or those with parcels of land can make good development sites subject to planning consents.
Properties with a life tenant
For cash buyers focused on capital growth rather than rental yields, properties with lifetime tenants often offer an attractive investment opportunity. Occupied properties can sell for up to 50 per cent less than equivalent vacant properties, giving substantial scope for value growth. The tenant will cover all associated bills and is responsible for maintaining the property to a good standard and once vacant all rights return to the owner. Properties with regulated tenancies offer similar long-term investment potential.
Former pumping stations, water towers, nuclear bunkers, public toilets and alleyways have all been in our auction brochures over the years. Investors can stand to make considerable gains by taking on the weird and wonderful, either by converting unusual properties into a more traditional commercial or residential offering, or taking a long term view and waiting for capital growth.