Buying & Affordability
How do property auctions work in the UK?
UK property auctions run in two formats. Traditional (unconditional) auctions exchange contracts the moment the hammer falls: the buyer pays a 10% deposit on the day and completes within 28 days. The price is binding and there is no cooling-off period. This format suits cash buyers and experienced investors.
The Modern Method of Auction (also called conditional auction) gives the winning bidder 28 days to exchange and a further 28 days to complete, paying a non-refundable reservation fee (commonly 4.2% inc VAT, often paid by the buyer on top of the price). It accommodates mortgage buyers but is more expensive overall.
Either way, do searches, survey and legal review before bidding — the legal pack is published by the auctioneer in advance. The RICS publishes guidance on auction due diligence. Bidders should set a hard ceiling and stick to it.
What this means in practice
A two-bed terrace in Nottingham NG7 listed at Auction House East Midlands with a guide of £90,000. Bidder costs before auction day: £350 legal pack review by their solicitor, £400 RICS Level 2 survey, £180 auction registration. Hammer falls at £108,000. Buyer immediately pays £10,800 deposit plus £1,500 + VAT auctioneer admin fee, signs the memorandum of contract, and has 28 days to complete. Failing to complete forfeits the deposit and exposes the buyer to claim for any shortfall on resale — a typical loss of £15,000–£25,000 on a property at this price band.
Related questions
Are auction guide prices accurate?
The guide price is the auctioneer's lowest expected sale price, not a valuation. Reserve prices (the seller's minimum acceptable figure) are confidential but cannot exceed 110% of the guide. Properties routinely sell 20–40% above guide where competitive bidding develops, especially on probate properties priced low to attract attention. Treat the guide as a marketing tool: research recent comparables on Price Paid Data for the same postcode and property type before setting your ceiling.
Can I get a mortgage on an auction property?
Possible but tight. Traditional auction completion in 28 days is achievable if the lender has issued a binding mortgage offer before bidding and the property is mortgageable (no missing kitchen or bathroom, no structural defects, no short lease under 70 years, no non-standard construction without specialist cover). Many auction lots fail one criterion. Specialist auction-finance bridges complete in 5–10 days at 0.7–1.2% per month, intended to be remortgaged onto a standard product within six months.
Related reading
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