By, Charlie Jacoby
3 min read
ByCharlie Jacoby, Charlie Jacoby
Simon Parker, of Savills' commercial auctions department, reports a remarkable (by last year's standards) 88 per cent on-the-day success rate in its £7.8 million sale."We sold a lot for housing associations and a number sold well in excess of guide prices - some up to 50 per cent in excess," he says.
Among lots to go were the Reef 'n' Beef building in Eastbourne. Offered under instruction from Places for People, this virtually freehold restaurant investment comprises the ground floor and basement of a former cinema building. The property totals 2,762 sq ft (259 sq m) and is let to a restaurant and bar. It currently generates a net rent of £22,000 per annum and went on a new 999-year lease for £228,000.
Savills also sold a freehold investment in Fulham, south-west London at £690,000, against a guide of £300,000-£330,000. "Guide prices were very realistic and things sold fairly well," says Mr Parker. "It's still a difficult market and you have to get your guide price and reserve right. But there is money.
"Lots under £1 million were finding purchasers - many of them selling to new buyers. It was interesting to see local buyers and cash-rich property companies buying. Regular buyers were being outbid by local interests. There was a lot of talk saying funding is still difficult."
Online property seller Zoopla has an innovative quasi-auctions service. Househunters can search properties at Zoopla.co.uk/auctions, arrange viewings with the agents and then place online bids in a live four-day auction. Successful bidders exchange contracts online. Online auctions take place regularly, running from Thursday to Sunday.
In the commercial sector, Jones Lang LaSalle's May 27 auction will be held by its usual team - but they won't be called Jones Lang LaSalle. Richard Auterac, Peter Cunliffe and Charlie Powter are setting up on their own. JLL is "fully supportive" of the venture and will continue to use its auction services and to list Messrs Auterac, Cunliffe and Powter as auctions contacts at its Hanover Square HQ.
v red-carpet rostrum
Andrew Binstock, the Sutton Kersh Binstock auctioneer, took a phone call from an events company, asking if he would do an auction for a big charity at the Dorchester Hotel. He says: "It turned out to be a full blown red-carpet charity gala night attended by loads of celebs and hosted by Eva Longoria Parker (Desperate Housewives) for Make a Wish Foundation UK & Eva's Heroes. I hated every second of it, obviously."
v please re-lease me
We are sitting on a property timebomb that dates from the 1970s, warns Geneviève Mariner, head of enfranchisement and leasehold reform at Strettons Chartered Surveyors. The leases on thousands of flats are becoming worryingly short. If they are not renewed, these properties will see a huge drop in value and it will be hard to secure mortgages on them.
"The big growth in sales of long leases of flats in the late 1970s and early 1980s has created this situation," says Ms Mariner. "Typically, leases were for 99 years, so many now have less than 80 years left. While the flat is in your ownership, this makes little difference, but problems arise if you want to sell or re-mortgage. Purchasers prefer longer lease terms and many mortgage lenders are reluctant to lend on less that 70 years unexpired."
Leaseholders can pay to extend their leases by 90 years under the Leasehold Reform Housing and Urban Development Act, 1993. "Many flat owners see this as an unnecessary expense that they can put off, but once the lease gets below 80 years, costs for renewal start to ramp up sharply; it may even get to the stage where some owners cannot afford to renew," says Ms Mariner.
"If you are dealing with a lease extension of a flat in London worth, say, £250,000, with 81 years remaining, it is likely that the premium will be between £3,000 and £6,000. In the average case, the costs for your valuer and solicitor are likely to be in the region of £2,500 and the landlord's costs, which you also have to pay, could be £1,500. Although the costs would be pretty similar to extend a lease for a property with, say, 65 years unexpired on the lease, the premium you would pay could jump to £19,000-£24,000."