How a London property auction works
A traditional property auction is a sale where the fall of the gavel is the exchange of contracts. There is no chain, no gazumping and no chance to renegotiate after a survey. If you are the highest bidder when the hammer falls, you are legally bound to buy the lot on the terms in the legal pack, and you pay a deposit on the day.
Most London residential auctions now run online or as a live-streamed room with online, telephone and proxy bidding alongside. The large houses, such as Allsop, Savills and Auction House London, publish a catalogue three to four weeks before the sale. Lots are added, withdrawn and sold before the auction right up to the day, so the catalogue you read in week one is rarely the one that sells.
The usual timetable is simple. The catalogue goes live, the legal packs follow, block viewings are arranged, you register to bid with identity checks, the sale happens, and completion follows, usually 20 working days or 28 calendar days later. Each lot's special conditions can change that date, so check them.
The speed is the point. Sellers use auctions when they want certainty: probate estates, repossessions, housing associations selling void stock, landlords leaving the market and freeholders selling ground rents. That mix is why auctions throw up flats needing full refurbishment, short leases and houses ripe for conversion, the stock most open-market buyers cannot finance quickly.
Guide price, reserve and where the hammer usually lands
The guide price is the auctioneer's indication of where the seller's reserve sits. It is a marketing figure, not a valuation. The reserve is the confidential minimum the seller will accept, and the lot cannot sell below it. Industry guidance allows the reserve to sit up to 10% above a single-figure guide, and a guide range should not span more than 10%.
Guides are set to draw a crowd, and popular London lots regularly sell well above them. Our grading assumes the hammer lands 15% above the guide. That is a working assumption, not a forecast: some lots sell at the guide, and a well-located flat with conversion potential can go 40% or more over.
Watch for guide changes. A guide raised a week before the sale usually means the seller has had offers. A lot marked "sold prior" has been bought before the auction, often by someone who offered at or above the top of the guide with proof of funds and a solicitor ready to exchange.
Reading the legal pack
The legal pack is the seller's set of documents for the lot, and you are deemed to have read it whether you have or not. Download it as soon as it is published, and pay an auction solicitor to review it before you bid. Most will report on one lot for a few hundred pounds.
A typical pack contains:
- The title register and title plan from HM Land Registry, showing who owns the property and any restrictions, charges or covenants.
- Special conditions of sale: completion date, deposit, extra fees payable by the buyer and anything that overrides the standard auction conditions.
- For leaseholds, the lease itself, plus recent service charge accounts and replies from the managing agent if the seller has obtained them.
- Local authority and drainage searches, where provided. Many packs omit them, and you will need to commission your own.
- The Energy Performance Certificate, which also gives the floor area.
- Any tenancy agreements, planning permissions or building control certificates.
Read the special conditions first, because that is where costs hide: seller's search fees, the seller's legal costs, arrears of ground rent or service charge, and a buyer's premium charged as a percentage. Then read the addendum, which the auctioneer publishes and updates up to the start of the sale. Anything in the addendum binds you.
Restrictive covenants deserve particular care. A covenant that forbids alterations, or one that needs a landlord's or freeholder's consent that could be refused, can stop a conversion or refurbishment plan outright. A listed building brings its own consent regime. We treat both as reasons not to grade a lot as a development opportunity.
Leases, tenure and occupancy
Most London auction flats are leasehold. The number that matters is the unexpired term. Lenders generally want 70 to 85 years remaining, depending on the lender and the length of the loan, so a lease under about 80 years makes resale and refinancing harder and makes a lease extension more expensive, because marriage value is added to the premium.
The Leasehold and Freehold Reform Act 2024 includes changes to how extension premiums are calculated, including removing marriage value, but parts of it depend on further regulations. Check what is in force on the day you bid rather than relying on what the Act says it will do.
Share of freehold is usually the best leasehold position: you own part of the freehold company and can extend your own lease at little cost, though you will share decisions and costs with the other owners. Freehold houses avoid all of this, but check for flying freeholds, rights of way and shared drains on the title plan.
Occupancy decides how fast you can start work. A vacant lot can be refurbished from completion. A tenanted lot comes with the tenancy, and an assured or regulated tenant cannot simply be asked to leave. Auction Watch only grades vacant residential lots as development opportunities. Tenanted lots are shown with their facts but are not given a development grade.
Floor area: why size decides the numbers
Almost every number in an auction appraisal is a price per square foot multiplied by a floor area: the value after works, the build cost and therefore the profit. A flat that is 668 square feet rather than the 550 a quick glance suggests can be worth tens of thousands of pounds more after refurbishment, and so supports a higher bid.
Catalogues often leave the size out. The two reliable sources are the Energy Performance Certificate, which records total floor area in square metres, and the floorplan, which usually prints the gross internal area. One square metre is 10.764 square feet. Where they disagree, the floorplan is usually the more recent measurement; where neither exists, any estimate from neighbouring flats should be labelled as an estimate.
Check the EPC itself too. A rating of F or G means the property cannot lawfully be let on a new tenancy without improvements under the minimum energy efficiency standards, which affects a buy-to-let exit and adds to the build cost.
Working out your maximum bid
A maximum bid is worked backwards from the end value. Start with the gross development value: what the property will sell for once the work is done, judged from recent sales of similar-sized, similarly finished homes nearby. Take off the profit you need, the build cost, professional fees, finance, the costs of buying and selling and a contingency. What is left is the most you can pay at the hammer.
Our reports run two routes. A refurbishment keeps the existing layout, priced at about £80 per square foot, and needs 15% profit on the end value. A conversion turns a one-bedroom flat into two bedrooms, or splits a house, priced at £150 to £200 per square foot, and needs 20% profit because the risks, from planning to building control, are greater.
| Value after works (600 × £900) | £540,000 |
| Less profit (15% of value) | −£81,000 |
| Less build (600 × £80) | −£48,000 |
| Less fees, finance, buying and selling costs (about 8%) | −£43,200 |
| Available for the purchase, including SDLT and the buyer's fee | £367,800 |
Then stress-test it. Knock 10% off the end value and push the build cost to the top of its range. If the deal still makes at least 10% profit at your bid, that bid is your limit. Write it down before the auction and do not go past it in the room.
Costs on top of the hammer price
The hammer price is not what the property costs. Budget for these on top:
- Buyer's fee or administration charge, payable to the auctioneer on the day. Commonly £1,000 to £2,000 including VAT, but some houses charge a percentage of the price. It is in the catalogue terms.
- Any extra costs in the special conditions, such as the seller's search fees or legal costs.
- Stamp Duty Land Tax (see below).
- Your own solicitor, searches and Land Registry fee.
- Finance arrangement and exit fees, valuation and the lender's legal costs.
- Insurance from exchange. On most auction terms the risk passes to you when the hammer falls, not at completion.
Stamp Duty Land Tax in England is charged in bands on the price paid. Buying a residential property when you already own one, or buying through a company, usually means the higher rates for additional dwellings. Non-UK residents pay a further 2%. These are the residential rates in force:
| Part of the price | Main rate | Additional dwelling |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1,500,000 | 10% | 15% |
| Over £1,500,000 | 12% | 17% |
Rates as of 12 October 2026. They change at Budgets: check before you bid. Source: gov.uk.
SDLT is complicated at the edges: mixed-use property, multiple dwellings and company purchases over £500,000 each have their own rules. Ask your solicitor or accountant to confirm the figure before you bid.
Financing an auction purchase
You need 10% of the hammer price on the day as a deposit, often with a minimum of a few thousand pounds for cheaper lots, plus the buyer's fee. The balance is due at completion, usually 28 days later. Most residential mortgages cannot be arranged and drawn down in that time, especially for a property that needs work and may not be mortgageable in its current condition.
Bridging finance is the usual answer. A bridging lender will typically advance up to around 70 to 75% of the purchase price or value, can complete in days rather than weeks, and charges interest monthly plus arrangement and exit fees. Some will fund part of the works as well. The plan is to sell or refinance onto a mortgage once the property is habitable.
Get a decision in principle on the specific lot before the sale, with a valuation booked if the lender requires one. If finance falls through after the hammer, you still have to complete, and you will lose your deposit and may face a claim for the seller's losses if you cannot.
Surveys, viewings and building risk
Go to the viewing. Auctioneers usually run block viewings of 30 minutes to an hour, and the photographs in a catalogue are taken to sell. Look for damp, subsidence cracks, roof condition, the state of the communal parts and the windows, and whether the layout supports the plan you have in mind.
Commission a survey if the lot justifies it. A RICS Level 2 or Level 3 survey costs a few hundred pounds and has to be done before the auction, so you pay for it whether or not you win. For a conversion, ask a builder or architect to look at the space and the services: where a second bathroom can go, whether a new bedroom gets enough light, and whether the soil stack can be reached.
Check planning before you price a conversion. Many London boroughs need planning permission to split a house into flats or to add a dormer, and some areas have Article 4 directions that remove permitted development rights. Building regulations apply to almost all of it. The local authority planning register shows what has been approved or refused nearby.
Bidding on the day
Register to bid in advance. Auctioneers must carry out anti-money-laundering checks, so you will need photographic identification, proof of address and, for a company, details of its owners. Online auctions usually take card details for a hold or the deposit.
There are four ways to bid: in the room, online, by telephone with a member of the auctioneer's staff, or by proxy, where you leave a maximum and the auctioneer bids for you up to that figure. Telephone and proxy bids have to be arranged a few days ahead.
Decide your limit before you start and bid clearly. A lot that stalls below the reserve may be withdrawn or offered after the auction; if you were close, speak to the auctioneer afterwards. Remember that a lot can be withdrawn without notice, so do not spend more on surveys and legal reports than you can afford to lose across several lots.
Conditional auctions and buying before the sale
Some online sales use a conditional, or "modern method", format. The fall of the hammer is not exchange; instead you pay a non-refundable reservation fee, often several percent of the price, and have a set period, commonly 56 days, to exchange and complete. The fee is on top of the price. Treat it as part of the cost when you work out your bid.
You can also offer before the auction. Sellers will often accept a pre-auction offer at or above the top of the guide, on the auction terms, from a buyer who can exchange quickly. You will usually be asked to exchange within days, so have your solicitor and deposit ready before you offer.
After the gavel: completion and what can go wrong
Once the hammer falls you sign the memorandum of sale, or the online equivalent, and pay the deposit and fees. Insure the property from that moment. Your solicitor then raises any final enquiries, prepares the transfer and arranges for the balance to be paid on the completion date.
If you cannot complete on time, the seller can serve a notice to complete. If you still do not complete, you will usually lose the deposit and can be sued for the seller's losses, including any shortfall on a resale. This is why the finance, the legal pack and the bid limit all need to be settled before the sale, not after it.
Auction Watch is built to help with the first part: finding the lots that are worth that work. Every lot inside the M25 is listed for free with its facts and a rating, and the £8.49 report shows the bid limit, the comparables and the legal-pack checks for one lot. It is general information, not financial, legal or tax advice.
This guide is general information about how auctions in England usually work. It is not financial, legal or tax advice. Auction terms vary: always read the legal pack and take advice on the lot you are bidding for.