In last month’s article, we discussed the evolving dynamics of the UK property auction market, highlighting the rise of “patient capital” as a dominant force, with wealthy investors having leveraged economic downturns to acquire valuable assets. We observed that while the number of auction lots had increased, sales had dropped, signalling opportunities for discerning investors. Additionally, we noted the unexpected liquidation of Home REIT and emphasised the resulting auction opportunities, while also mentioning the growth of auction houses like Allsop, Savills or Auction House London, amongst others.

This month, I’d like to focus on more immediate opportunities available to property investors. Not everyone has patient capital required to hold for 5-10 years or longer. Some people are looking to make quicker profits by adding value or turning properties around in a short period of time. What opportunities should one be on the lookout for in order to narrow down the search amongst the rising number of properties in the auction catalogues? Here is a selection of opportunities that we think would work best and potential risks involved with them.

Permitted Developments
By far one of the most interesting opportunities are commercial properties that have a permitted development angle for a residential conversion. Those can allow for doubling or tripling the value of the property in a relatively short period of time.

Risks:
◆ Sometimes getting permitted development applications through is not as easy and quick as it seems. One should be concerned with proving the actual use of the property and whether it falls within the requirements of the legislation.
◆ Minimum space standards and light issues can sometimes reduce the number of units for conversion.
◆ It is a little bit more difficult to sell properties with a development angle later on as buyers are wary of the less predictable development costs.