The UK property market has faced a series of challenges recently, influenced by factors like last year’s mini-Budget, unpredictable inflation, and the Bank of England’s interest rate hikes. These changes have led to increased mortgage rates and a cooling of property prices, following an extended period of significant growth.
Karen Noye, a mortgage expert at Quilter, highlights the chaos in the mortgage market, noting a substantial 3% interest rate increase since the mini-Budget announcement. This rise has placed considerable pressure on homeowners, especially those with high mortgage commitments, pushing them towards selling their properties.
Landlords, particularly, have felt the pinch. Marc von Grundherr, from Benham and Reeves, points out that increasing mortgage rates and government policies have eroded potential profits, prompting a scale-down in property portfolios.
These market conditions have created a sense of urgency among sellers fearing a more significant downturn. However, there’s a divide in market outlook; some anticipate a moderate price reduction, while others prefer to err on the side of caution, opting to sell sooner rather than risk further market declines.
Exploring Quick-Sale Firms: A Word of Caution
In a hurry to sell? “Quick-sale” firms promise a rapid sale, often within a week, but at a reduced price—typically around 75-80% of the market value. While expedient, this option requires careful consideration due to the potential for substantial financial loss.
Chris Hodgkinson of HBB Solutions warns against unscrupulous practices within this unregulated sector. Some firms are known to reduce their offer just before completion, exploiting the seller’s urgency. It’s crucial to choose a reputable company, preferably one affiliated with the National Association of Property Buyers, ensuring an additional layer of consumer protection through the Property Ombudsman.
Before committing, obtain an independent property valuation and compare offers from multiple companies. Remember, a genuine firm won’t request upfront fees for a valuation.
Considering the Auction Route
Property auctions offer another avenue for quick sales, attracting a diverse pool of buyers. Contracts are exchanged immediately, and sales often complete within 28 days.
Jeremy Leaf, a former RICS residential chairman, and Chris Williams, a property solicitor, acknowledge the growing popularity of auctions amidst the current market challenges. Auctions are particularly appealing for landlords burdened by increased costs and regulatory demands, seeking swift transactions.
Auction companies are experiencing heightened activity, with Auction House recording a 20% increase in sales in 2023 compared to the previous year. The trend is similar across other firms, indicating a growing trust in this method among a broad spectrum of sellers.
Auctions offer transparency, open-market competition, and the possibility of a complete sale within two months of listing. However, not all properties are suitable for auction. Sellers should heed advice from auctioneers and set competitive guide and reserve prices to attract maximum interest.
Camilla Fellas Arnold, who sold an inherited property via auction, appreciated the process’s efficiency, despite receiving a slightly lower sale price. The speed and hassle-free experience outweighed her concerns about achieving the maximum market value.
Modern Method of Auction: A Digital Shift
The “modern method of auction” (MMoA) is a newer, more accessible approach, allowing online property purchases over 30 days, with a 56-day completion timeframe. Jamie Cooke of iamsold notes a 40% increase in properties sold this way, emphasizing its effectiveness in challenging market conditions.
Unlike traditional auctions, MMoA is open to buyers with mortgages, not just cash buyers, broadening the potential buyer pool. This method is gaining momentum as vendors seek quicker, more reliable alternatives to open market sales.
Making an Informed Decision
In summary, the volatile state of the UK property market has led many to explore faster selling options. While quick-sale firms and various auction methods offer solutions, they come with caveats. Sellers must diligently assess these routes, considering their financial implications and the credibility of the firms involved. Ultimately, the best choice varies based on individual circumstances, financial needs, and market dynamics. It’s crucial to seek professional advice and conduct thorough research before proceeding with any sale.