National Auction Review 2016
Introduction I am pleased to report that despite 2016 being a bit of a rollercoaster year, our final results have shown another successful year during which we have offered some 1,842 lots from the rostrum, making us again the leading London Residential Auctioneer, both offering more lots and selling more lots than any other London Residential Auctioneer. We retain this market leading position with a market share of 23.4% of lots offered, meaning yet again we bring to market nearly 1 in 4 lots offered in the capital. The capital value of our total sales for the year stood at 258.3m with the average price per lot sold also up on 2015. It has been widely reported that the beginning of the year saw a surge of activity with buyers keen to complete purchases before 1st April and avoid the 3% stamp duty surcharge on 2nd property purchases. Indeed our first two sales of the year recorded some 327 sales with a total capital value of 65.8m. Whilst there was some downturn post April 1st, our next two sales still delivered a further 280 sales with capital value of 54.4m. Brexit uncertainties came into play for our June sale and the following auctions saw some caution from buyers and a contraction in sale volumes was recorded. I am pleased to see that for sales in the latterpart of the year the corner has been turned and that overall we posted a year with an increase in lots offered and increased capital raised. Top sale of the year was a portfolio of properties in North London which was sold prior to the May auction to a private investor for 6.8m. This was just one of the many transactions in the year to break the 1m barrier. Continued growth in tough market conditions We continue to represent a varied client spectrum including private individuals, Banks and Asset Managers and an increased portfolio of Public Sector Bodies including Housing Associations and Local and Regional Authorities for whom we act. As the market settles into the new Brexit environment which has dumbfounded many of the gloom-mongers, I can look forward to 2017 with confidence. We expect to be again the only London Auctioneer to offer a full schedule of 10 auctions in the year with our first sale scheduled for 6th February. Christopher J. O. Glenn Divisional Managing Director, Barnard Marcus Auctions 3
Results 1,842 Lots offered 1,362 Lots sold 23.4% Market Share Market share Volume of lots offered by London residential auctioneers Barnard Marcus 23.4% Athawes 1% MS Auctions 1% Philip Arnold Auctions 1% Lansdown Property Auctions 2% Network Auctions 2% Strettons 3% Lambert Smith Hampton 3% Harman Healy 3% McHugh & Co 4% Countrywide London 4% 258m Capital raised Andrews & Robertson 6% Auction House London 7% Allsop Residential 20% Savills 18% In 2016 we sold more lots than any other London Residential Auctioneer 4 Data Source: The Essential Information Group 11.01.2017
National Auctioneers 2016 Regional Analysis Barnard Marcus are the leading brand within Sequence Auctions, holding 10 National Auctions in Central London offering a broad mix of property for investment and occupation 2016 Investment Yields Region Lots offered Lots sold Average Sale Price Region Lots offered Lots sold Average Sale Price Lots offered Lots sold Yield Greater London 396 313 394,637 East 27 18 146,857 Assured Tenancies 359 232 6.08% SE Home Counties 608 459 178,333 North East 125 83 45,110 Ground Rents 24 21 1.84% East Midlands 43 34 125,941 North West 234 161 71,613 Regulated Tenancies 4 2 4.83% West Midlands 64 52 85,282 North 44 30 28,844 Total 387 255 Yorkshire & The Humber 171 128 48,998 Scotland 5 2 65,000 South West Wales 57 31 63 40 180,838 80,529 Ireland Total 5 5 1,842 1,362 187,312 76,125 In 2017 we will hold 10 Auction Sales from our Central London locations 5
Economic/Market Update As we entered the year, The Prime Minister s negotiations with our EU partners had yet to develop and the market was dominated with The Chancellor s autumn statement in which an additional stamp duty charge on 2nd home purchases of 3% had been revealed and was set to take effect from 1st April. Would-be buy-to-let investors were anxious to avoid this at all costs. With the average price of buy-to-let properties in our auctions in 2015 being 140,000 the increased stamp duty was adding 4,200 to the average purchase cost. Indeed for our most expensive property in this sector sold in 2015 for 920,000 this would have added some 27,600 to the stamp duty cost. Some 77 properties in this sector were sold in the first two auctions of the year compared with only 42 in the following two auctions. The market was undoubtedly unsettled by the June referendum and ultimate Brexit vote and this knocked confidence throughout all sectors of the property market. Transaction volumes fell despite the overall economic performance in the months following the vote remaining positive. Land Registry figures for the period ending September 2016 showed UK house price inflation broadly flat at 7.66% compared with 6.81% in November 2015. Monthly sales volume peaked in March at 133,951 transactions up from 98,159 in November 2016 and after a sharp fall to 58,145 in April rose to 84,705 in July. (Transaction volume data is always reported behind price data as registrations can take a few months to be completed). London continued to outperform the market with annual price inflation at 10.9% but the leading region was the east of England which recorded inflation at 12.12% for the month ending September 2016. The North East recorded a more static environment with prices rising by just 1.55%. Property Investment yields for the year on our sales were 6.08% for standard buy-to-let properties with Assured Shorthold Tenancies, compared with 6.71% for 2015. Bank base rates were lowered further in August to just 0.25% following which all major banks further slashed investment returns. With such low cash investment returns property remains a natural choice for the investor seeking quality yields. 6 Data Source: HM Land Registry The Council of Mortgage Lenders (CML)
2016 Auction Highlights LOT 7 FEBRUARY AUCTION Freehold investment property in Rotherhithe Guide 950,000 LOT 52 FEBRUARY AUCTION Freehold Building in Manor Park E12 Guide 900,000 LOT 97 FEBRUARY AUCTION Building with development potential in Gillingham sold for Kent & Medway NHS Trust Guide 365,000 LOT 12 MARCH AUCTION Vacant Freehold Semi- Detached house with potential in Muswell Hill, N10 Guide 560,000 LOT 48 MARCH AUCTION Freehold HMO with 10 letting rooms producing 73,560pa Guide 975,000 LOT 30A MAY AUCTION Portfolio of 5 Properties in North West London Guide 5,200,000 Sold for 1,165,000 Sold for 1,040,000 Sold for 650,000 Sold for 885,000 Sold for 1,300,000 Sold for 6,800,000 LOT 64 MAY AUCTION Substantial building arranged as 25 Bedsits in North Kent Guide 450,000 LOT 6 SEPT AUCTION Leasehold flat in Mayfair W1 sold for Mountview Estates plc Guide 400,000 LOT 7 OCTOBER AUCTION Freehold Terraced House in Fulham sold for Receivers Guide 1,000,000 LOT 15 OCTOBER AUCTION Vacant unmodernised Terraced House in Harrow Guide 250,000 LOT 38 OCTOBER AUCTION Freehold Terraced House in Whetstone, N20 Guide 550,000 LOT 50 NOVEMBER AUCTION Mixed investment property in Reading producing 132,036 pa Guide 1,575,000 Sold for 710,000 Sold for 450,000 Sold for 1,410,000 Sold for 342,000 Sold for 626,000 Sold for 1,600,000 7
Our Service Barnard Marcus Auctions are part of Sequence (UK) and together with our regional Auction Rooms in Southampton, Norwich, Derby and Leeds have brought over 2,720 lots to the Rostrum this year and have raised over 338.3m for our clients. We are part of and supported by The Connells Group, one the largest and most profitable and diverse property services groups in the UK. Our group functions provide a wide range of expertise from Land and Planning advice, Property Rentals and Management, Corporate Asset Management, Legal and Mortgage services together with a large survey and valuation function. Our Group Estate Agency network extends to some 578 trading branches throughout England, Wales and Scotland. It is through this national coverage that we are able to provide the unique blend of a national auctioneer, backed up with sound local marketplace knowledge. We consistently strive to bring a wide range of purchase opportunities for buyers and obtain best price of our sales. At Barnard Marcus, we believe that experience and consistency are at the heart of delivering best service. That s why we work hard to employ and retain the most experienced property professionals and those with credible experience and track record. Our key team members alone provide a grand total of over 220 years industry experience. Indeed the average service duration of members of our key team is some 16 years. We seek to make full use of modern innovations and we are delighted to announce a new web offering which is planned for launch later this year. As the largest London based provider of residential auction lots to the UK market, whether you are an experienced property investor, a private or corporate seller, or just starting out in property investment Barnard Marcus have a bespoke service to suit your needs in 2017. 8
Award Winning Agency Barnard Marcus is celebrating after picking up an award at the annual Estate Agency of the Year Awards, held in association with The Sunday Times and The Times. Barnard Marcus s parent company Sequence is part of the award winning Connells Group who picked up Gold in the National Estate Agency of the Year category. The winners were presented with their award by celebrated film and TV actor and Spandau Ballet bassist Martin Kemp, with renowned journalist, author and newsreader Penny Smith acting as compere. The award judges report said that Connells Group is respected in the industry... and a great all-round company operating to a successful formula but always with one eye on innovation. The Group s commitment to its people was also highlighted with the judges commenting that the board empowers their team offering a defined career path and rewards to retain the best people - they enjoy unrivalled retention. Excellence for customers was also congratulated with mystery shopping results deemed excellent and the level of service offered is great... aided by the contact centre and software. The panel was also impressed with the number of new branches opening on the high street. We are very proud to have been awarded Gold and to be recognised as part of the number one estate agency group in the UK, says Chris Glenn, Divisional Managing Director at Barnard Marcus Auctions. This accolade confirms our position as market leader and is testament to the dedication and hard work of our staff who constantly strive to provide an outstanding customer service and who ensure our success. Award winners were decided following a rigorous and thorough judging process by a panel of industry experts who assessed initial entry submissions before conducting an extensive review of the entrants, which included telephone interviews and mystery shopping exercises. The whole of the judging process was overseen by The Property Ombudsman, Katrina Sporle, as Chairperson of Judges, alongside David Mackie, President of the NAEA who acted as Arbiter. Now in its thirteenth year as a dedicated competition, these awards have become widely recognised as the most prestigious and difficult to win. This award follows Connells Group s success at the Lettings Agency of the Year Awards, held in association with The Sunday Times and The Times in June, picking up Gold in the National Lettings Agency of the Year category. 9
Public Sector Focus 2016 Has been a strong year for Barnard Marcus having added a number of new Public Sector clients to our list of regular sellers. Whether it be Local/District Authorities, Housing Associations or NHS trust, these sellers continue to recognise the benefits of sale by auction, in delivering best price in a transparent manner. Under the direction of Brian Grante, a fully qualified Chartered Surveyor with over 20 years experience at Barnard Marcus, we continue to deliver outstanding results in the sector. In 2016 we achieved sale success rate of some 81%, delivering sales prices well over expectations and reserve prices. Receivership Business Brian Grante MRICS Director of Public Sector Sales The Repossession Market Receivership business remains a key element of our service at Barnard Marcus. We act for a great number of Receivers and with over 25 years experience in the sector, we have a full understanding of the requirements, fiduciary duties and place our emphasis on achieving best price whilst offering an effective and seamless first class process in any auction disposal. With over 220 Receivers practising in the UK this is expected to continue to be an important part of our business in the years to come. In 2016 we sold an increased number of lots offered on behalf of receivers. Amongst many successes, our November Auction included an outstanding case in Fulham where vacant possession was only obtained the day prior to auction and a sale was concluded under the gavel for 1,410,000 off a guide of 1,000,000. James Paterson Operations Manager Despite continued low interest rates and improved employment numbers, it is inevitable some borrowers fall into arrears where the position can only be addressed through repossession. We are delighted to continue to work with all the major UK Asset managers representing banks and building societies selling those properties that cannot, or have not sold through High Street Estate Agents. Once again this year whilst these properties have a keen following from the speculative investor, we continue to deliver on price, on occasion selling for more than previous asking prices quoted, whilst reporting an overall sales success rate of 81%. 10 Meghan Mamo Corporate Sales Manager
Public Sector Sales 77% 58% 61% Lots Offered Lots Sold Capital Raised Receivership Sales 5% Number of Instructions 10% Number of Clients 7% Sales Price to Guide Price Repossession Sales 20% Average Sale Price 3% Success Rate 2% Sales Price Vs Last Asking Price 11
A Guide to Buying and Selling at Auction Only a few years back, the world of property auctions was shrouded in such mystery that only seasoned property professionals became involved. The advent of property related programmes broadcast on television, has demystified much of the process and opened up the exciting world of property at auctions to a much wider audience. Figures at Barnard Marcus show that the majority of buyers are those that we have not dealt with before and come from a much wider pool of domestic buyers or those seeking to enter the property investment market to seek better return than more traditional methods provide. Selling at Auction Auction provides a valuable alternative to sale by private treaty sales, where sellers are looking to both maximise price and sell within a clearly defined time frame. The period between instructing us and exchange of contracts is typically 3-4 weeks, and with a success rate of around 75% of properties offered, Barnard Marcus provide a highly effective and fast route to sale. We provide an opinion on price and will suggest the guide price at which the property be marketed, and the reserve price, (the figure below which the property will not be sold). As soon as you confirm instructions to enter your property we recommend you instruct your solicitor as they will need to prepare the legal documentation which is made available to prospective bidders throughout the marketing period. We will generally arrange for conducted viewings of the property (if empty) so you will need to arrange for us to hold keys. If you are still living at the property or it is otherwise occupied will we discuss the most appropriate viewing arrangements with you. We will prepare the auction catalogue and send you a proof for you to check and approve. It is important to check very carefully any documentation we provide. In contrast to High Street Estate Agencies, our marketing is national rather than local, and our auctions are promoted to our active list extending to nearly 150,000 names. We advertise in Local and London media, and properties are displayed on all main national property portals. You do not need to attend the auction personally, we will handle everything for you on the day. Our team of experienced auctioneers will obtain the best bid at or in excess of the reserve price on the day and sign all paperwork on your behalf. Buying at Auction Buying at auction differs from the normal Estate Agency approach, where an offer is submitted, negotiated upon and a price finalised. Solicitors are then instructed and the legal conveyancing undertaken all leading to an exchange of contracts some weeks later. At auction you bid, and if you make the winning bid you become the purchaser with contracts legally exchanged upon the fall of the gavel. The average lot in our auction takes just 2-3 minutes to sell, so the process is in stark contrast to the private treaty method! This needn t alarm buyers, it just means that all the due diligence work, checking out the property, arranging a survey and finance (if needed) and all legal aspects needs to be done in advance of the auction day. With an average of some 200 lots in our auctions, each sale provides a wide spectrum of property throughout the UK. Sellers in our auctions are committed vendors, and are chain free! The property descriptions appear in the catalogue, together with the legal pack of documents including the land registry documentation and other legal information which is available online for buyers and their solicitors to inspect. Our catalogues are released around 2½ weeks before the auction, so speed is essential to complete all relevant enquiries prior to bidding. The legal pack will contain a document entitled Special Conditions of Sale, which will set out more specifically the terms of the contract into which the buyer enters, and is an important document to check. We encourage buyers to inspect all this documentation and inspect properties where possible to ensure there are no doubts prior to bidding. Finally it is important to emphasise that at auction if successful you become legally bound to buy and pay the normal deposit of 10% (or other as specified) on the day, and have access to funds to complete by the specified date. After the auction we will send all contract documentation to your solicitors so that they may handle the completion on your behalf. 12
Growing client base and choice of property Barnard Marcus offer one of the widest selections of property available for sale under one roof. Many existing and new clients are experiencing the added benefits we offer as a national auctioneer with a chain of agency offices offering truly national strength with local knowledge. Just a few examples of clients we have acted for recently include: 13
What we can do for you If you are looking to sell and have not yet considered auction as a potential route to sale, why not call a member of our team for a free, no obligation discussion and appraisal. Auctions offer a valuable alternative route to sale for those wishing to maximise price within a defined timescale. Typical properties suitable for sale by auction include, but are not limited to: Vacant property with potential for improvement or development LPA Receivership cases Repossessions Properties with legal or condition issues Regulated tenancy investments Assured tenancy investments Ground rent investments Sites with or without planning permission Probate cases Commercial Property (vacant or for investment) Property portfolios High demand locations where demand outstrips supply To find out what we can do for you call 020 8741 9990 now! 14
Meet some of the team Christopher J. O. Glenn Divisional Managing Director chris.glenn@barnardmarcus.co.uk 32 Years Industry Experience Brian Grante Sales Manager/Auctioneer brian.grante@barnardmarcus.co.uk 20 Years Industry Experience James Paterson Operations Manager james.paterson@barnardmarcus.co.uk 18 Years Industry Experience Matthew Rosenz Client Relationship Manager matthew.rosenz@barnardmarcus.co.uk 39 Years Industry Experience Sharon Chandler Contracts Manager sharon.chandler@barnardmarcus.co.uk 36 Years Industry Experience Richard Vango Negotiator richard.vango@barnardmarcus.co.uk 18 Years Industry Experience Max Ferrari Negotiator max.ferrari@barnardmarcus.co.uk 21 Years Industry Experience Nathan Greaves Negotiator nathan.greaves@barnardmarcus.co.uk 12 Years Industry Experience Meghan Mamo Corporate Sales Manager meghan.mamo@barnardmarcus.co.uk 7 Years Industry Experience Thomas Mason Negotiator thomas.mason@barnardmarcus.co.uk 4 Years Industry Experience Lucia Pincott PA to Divisional Managing Director lucia.pincott@barnardmarcus.co.uk 8 Years Industry Experience Kimberley Heath Accounts Manager kimberley.heath@barnardmarcus.co.uk 18 Years Industry Experience Milana Abromikas Administration milana.abromikas@barnardmarcus.co.uk 5 Years Industry Experience Billie-Jo Stanley Corporate Sales Administrator billie-jo.stanley@barnardmarcus.co.uk 4 Years Industry Experience Sheila Naughton Telephonist sheila.naughton@barnardmarcus.co.uk 6 Years Industry Experience Where experience counts 15
Forthcoming auction dates Auction date Monday 6th February Monday 13th March Monday 10th April Tuesday 16th May Tuesday 20th June Tuesday 25th July Monday 11th September Tuesday 10th October Tuesday 14th November Monday 18th December Closing date for instructions 13th January 17th February 17th March 21st April 26th May 30th June 18th August 15th September 20th October 24th November Contact our auctions team on: 020 8741 9990 Sovereign House, 361 King Street, Hammersmith, London W6 9NA auctions.hammersmith@sequencehome.co.uk www.barnardmarcusauctions.co.uk Follow us on @Barnard Marcus Au