With less than a week to go before Christmas, most people are worrying about what presents they still have to buy and what not to say at their annual Christmas works do.
Property investors on the other hand – they LOVE the festive period as it signals a time when most of the house buying public are looking the other way – which means we may get a chance to bag a Festive property bargain…
So I like to enter into the Christmas spirit and write my (property) wish list to Santa…and given (hopefully) most bidders will be too busy gorging themselves on mince pies and mulled wine to be bothered about buying property at auction, I set out on a grand auction viewing mission to try and bag some treats for my proverbial stocking.
And the month of December has been the equivalent of a property auction advent calendar with every day me opening the door (and the day) to another potential property from a short lease penthouse apartment in Marble Arch, to tenanted flats in Fulham and Maida Vale, slumlord former crack dens in Camberwell to a derelict house, a newly built house, a tiny studio in Chelsea and a house in Stevenage.
It has been a veritable festive feast of auction properties!
After all was seen and done – I decided I would opt for the low hassle option: I would bid for the new build property. A 3 bedroom semi-detached house in London which just needed some cleaning and clearing and then would be ready to rent in 24 hours.
The guide was temptingly low: £180k
The monthly rental was enticingly high: £1800 pcm
Who am I kidding – this is a property being sold at auction. When will I learn?!
What appears to be too good to be true – ALWAYS is!
So the guide was low…and I knew I was willing to pay a lot more – so I felt I was in with a chance and downloaded the legal papers to start checking the background.
It appeared to have NHBC paperwork and so I called NHBC to double check this. No – it didn’t, the NHBC paperwork was actually created by someone “inventive with a typewriter and tippex” I was informed.
That should have been enough to set the alarm bells ringing and for me to move onto a different option.
But I was determined not to be put off so quickly.
OK, so it now turned out the property which was approx 2-3 years old didn’t have a structural warranty (which means you cannot get lending as all properties less than 10 years old must have a structural warranty for a mortgage lender to lend) but I thought maybe we could get another warranty in place for a completed house. Admittedly, as I was soon to learn, this would take several weeks, would be subject to survey and would cost several thousand pounds – plus it could only be applied for by the owner of the property.
This “low hassle” option was becoming increasingly “high hassle” and high risk!
And I was really starting to wonder – maybe I should just get on with some Christmas shopping.
But I’d come this far – and I could see the *twinkle* of a Christmas bauble…
Which soon turned out to be the glaring flood light of a hugely risky property purchase: the new build house had been built on land which was yet to registered with a new title – and which breached Southwark council’s restrictive covenants – which specified the land could NOT be built on. So while the property may have had planning permission and building regulation from Southwark council – the title for the land stipulated it was NOT to be built on.
Now I’m all for quantifying risk – but this starts to get decidedly like gambling
The best case: Southwark council don’t blink an eye and allow you to register the land and the property.
The worst case: Southwark council don’t allow you to register the land and property and sue you for breach of covenant meaning you don’t get to own any land or property BUT you do get the added luxury of being sued for the pleasure of potentially trying to own the property and parting with a lot of money.
Maybe it was the incessant Christmas tunes blaring from the radio – or the aroma of the mulled wine. 24 hours before auction I decided – I’ll stick to the “no hassle” option, threw out the property auction catalogue and picked up the Argos catalogue instead!