GETTING on the property ladder can seem impossible – but what if we told you there’s a way to buy a home for just £5k?
Here, property pros exclusively reveal how you can buy a home for nearly £250k LESS than the average house price.
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The average house price is £269,079, according to the latest figures from the Land Registry.
You usually need to squirrel together enough money for a 10% deposit, which means savers typically need to raise a huge £27,000 to be in a position to buy.
It’s no wonder, then, that home ownership remains a dream for many, but you can get on the ladder without breaking the bank by buying at auction.
A property auction is where buyers can bid for a property and, sometimes, get it for a steal.
We’ve spotted some going for just £5k.
But beware… it may seem like a bargain but chances are the property will need a lot of work, so you’ll need a pile of cash ready to do it up.
Sellers usually list properties at auction if they want to sell up quickly, or there are issues with the home they don’t want to fix.
Purchasing a property at auction is exciting, fast, and becoming an increasingly popular way of buying.
Some 4,500 properties went to auction in July alone, according to the auction house group Essential Information Group.
But it’s important to do your research before raising your hand in the air – and there are three golden rules to follow. Here’s your complete guide to buying at an auction.
Rule 1 – bring a builder for a viewing
Finding auction properties is relatively easy.
Many are listed on popular property websites such as Rightmove or Zoopla, and auction houses also list their own lots.
Auctions may be held in person or online, and the one you choose depends on the experience you want.
With online auctions, some are an eBay-style bidding system, while others will have a live auctioneer streamed to budding buyers.
Regardless of the auction format, the first thing to do is to go and view the property.
It sounds obvious, but many people don’t do it. Properties are usually marketed three or four weeks ahead of the auction, so there is time to go for a look.
Ideally, go with a builder or surveyor who can spot any major issues.
This is really important because if you buy a property that is riddled with problems, it can quickly become a cash drain to fix.
Renovation costs have increased significantly in recent years, as have labour and materials costs.
Ruban Selvanayagam, co-director of the auction house Property Solvers, says tools such as ChatGPT can offer a basic guide on how much issues can cost to fix, but it will ultimately depend on your plans and costs in your local area.
However, costs can easily hit tens, or even hundreds, of thousands of pounds, depending on the condition of the property.
It’s also essential to build a contingency of 10-15% into your budget for any unexpected costs.
Ruban says: “A lot of auction properties – although not all – have issues, and sometimes structural problems, that need to be dealt with.
“Understanding those issues and the costs involved in fixing them is key.”
‘I bought a property at auction for £50k – my top tips to avoid an auction disaster’
BOBBY Nanua loves the rush of buying a property at auction – he has bought 30 of them over nearly two decades.
The 45-year-old bought his first property at auction in 2007 – which was a building in Derby containing four flats for £160,000.
He was inspired by programmes like Homes Under The Hammer, and wanted to give bidding a go himself.
“But I was a bit naive and learned a lot from that first one,” says Bobby.
He spent £100,000 refurbishing the flats, and now rents them out.
The cheapest property he has ever bought was a two-bed flat, also in Derby, for £50,000.
He usually buys near his home town of Derby, where he knows a lot about the local property market and how much houses and flats will sell for.
His top tip is to always read the legal pack.
“Sometimes people sell at auction because there is a problem. I’ve seen in the searches in the pack before that a property has had flood issues and so will steer clear,” says Bobby.
Set a budget and stick to it, is his other key piece of advice: “Don’t get carried away. It’s easy to say, it’s only another five thousand pounds, but that becomes ten then 20.”
Rule 2 – Read ALL the small print before you bid
It’s really important to read ALL the small print before you bid for a property.
You should get a free legal pack for each property, which includes critical information about any issues and the title deeds.
You should get a solicitor to read the legal pack too to help you decode any jargon. This may cost several hundred pounds, but could potentially save you thousands if there are problems within.
David Sandeman, from the auction house EI Group says: “I once saw someone buy a plot of land for £1,000, but they hadn’t read the legal pack and so did not know it outlined another £15,000 in fees that the buyer was liable for.
Once you’re clued up about any fees, and you’re happy to take on renovating the property, then you can bid.
Make sure you have registered, and bring your ID. Do your research on the local market and check how much similar properties have recently sold for – and keep this front of mind while you are bidding, so you can keep to a budget.
Andy Thompson, auctions director at SGL Auctions, recommends taking someone with you to help you keep a level head on the day.
One common pitfall is assuming that the “guide price” listed in the auction brochure is an accurate estimate of what the property is worth or will sell for.
David says: “This is actually only an indication of the reserve price (the minimum amount the seller will accept), and it is subject to change. You need to do your own research on what the property is worth.”
Rule 3 – Remember the golden number 28
The moment the gavel falls, the property is yours.
Unlike a normal property sale, which can take months, an auction is immediate.
You will need to pay a 10% deposit on the day and any fees to the auction house (which vary but can be several thousand pounds), and then be prepared to complete the purchase within 28 days.
That is a hard deadline, and there can be significant penalties if you miss it. The penalties will vary between auction houses, so read the T&Cs, but usually you’ll lose your 10% deposit.
Watch out for anything that might stop you from getting a mortgage on the property.
For example, if it is of unconventional construction, such as a pre-fab building, it will have restrictions in the deeds or boundary issues.
Pre-fab buildings are also known as flat-pack homes, and are built in sections in a factory and can be put up super easily on site.
Quirky buildings, such as old churches, may be appealing but can be more expensive to renovate and harder to mortgage.
Ruban says: “Auctions are a good place to find properties.
“If you’re willing to put the groundwork in, understand what you are looking for and set your parameters, you can find some really good deals at competitive prices.”
How to pay for your renovations?
THE gavel has gone down and you are now the proud owner of a new home… what now?
If you’re buying from an auction, it’s likely that the property you’re buying will need some, or a lot, of work.
This can be pricey, and there are different ways to fund the work. Here’s all your money options.
Savings
Cash in the bank is the simplest way to cover the costs of renovating a home for those who have been saving hard.
Make sure your money is in an high interest easy-access account, where there are no penalties for withdrawals.
However, with renovations costing tens of thousands of pounds, this can be really difficult to squirrel away enough money.
Bridging loan
This is a commonly used method of finance for those buying at auction.
This is because the 28 day window to complete is too short to arrange a mortgage, or because it might not be possible to get one if the property has significant structural issues.
Bridging loans aim to cover the finance gap for a short period, usually 12 months, at which point you repay the loan either by selling the property or making sufficient improvements to get a standard mortgage.
Credit card
Only for the very disciplined: you could get a 0% credit card to fund your renovation spending.
These cards charge no interest for a set period, so as long as you clear the balance within that time frame, you won’t be charged extra on your borrowing.
But don’t choose this route if you’ve got a history of not paying your bills on time, or there could be hefty penalties.
Green mortgage
Some mortgage lenders offer cheaper rates or cashback for those who plan to improve the energy efficiency rating of a property.
This might be by installing double glazing or new insulation. Usually the work must be carried out within a certain period, say 18 months, to qualify.
Empty homes grant
If the house you’re buying has been empty for a long time, you could be eligible for funding from the local council to help cover the cost of bringing it back up to scratch.
The amount you get will vary and the grants are not available everywhere, so check first.
Watch out for any specific criteria – you might need to live in the property for a minimum period of time once the work is complete, for example, so it won’t suit those looking for a quick sale.
Four properties YOU can buy for as little as £5k
Want to bag a bargain? Here are five properties for sale NOW listed on Zoopla.
Two-bed flat, Peterlee, County Durham, £5,000
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This two-bed flat in Peterlee, near Sunderland, is going for the bargain guide price of £5,000 via auction.
The auction is being held on Wednesday, 24 September.
There is on-street parking and a paved rear yard.
Be warned – an internal inspection of the property hasn’t been undertaken due to access restrictions, so you’ll need to rely on just the legal pack to decide whether to bid, so it could be a big risk.
It means there could be unknown issues – so be prepared to take on a major doer-upper in the worst-case scenario.
Ask the auctioneer, Under The Hammer, for a legal pack.
One-bed flat, Bradford, £5,000
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With a guide price of £5,000, this one-bed flat in Bradford could be yours if you’re the lucky bidder.
The online auction starts on Tuesday, 23 September. It means you have limited time to book a viewing, so act fast.
Located a stone’s throw away from the city centre, the property also has double glazing and an intercom.
There’s also an ensuite. Judging by the pictures of the property, it could do with some TLC.
Remember to ask the auctioneer or Auction Agent for a legal pack.
Three-bed house, Hartlepool, £9,000
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This three-bed house in Hartlepool is big enough for the whole family, and is going for a guide price of £9,000.
There’s also on-street parking and a rear yard.
Be warned – no internal inspection of the property has been held because of access restrictions.
That means that any number of issues could be wrong with the property – bid with extreme caution.
The auction is on Wednesday, 24 September.
Ask the auctioneer, Under The Hammer, for a legal pack.
One-bed flat, Norfolk, £5,000
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This stunning brick apartment in Norfolk has bags of potential – could it be your first home?
It’s located near King’s Lynn town centre and contains a living room, kitchen, one bedroom, and a bathroom.
The auction is being held on Tuesday, 16 September – so hurry to book a viewing beforehand.
As always, it’s vital to read the legal pack, which you can request from Auction House South Yorkshire.
What are the shortcuts to getting on the property ladder
There are a number of ways you can accelerate your path to becoming a homeowner.
If your parents are lucky enough to have savings then they might be willing to give you some cash to put towards a deposit.
The Bank of Mum and Dad has handed down a huge £9.6 billion in 2024 – up from £9.4 billion, according to estate agent Savills.
Parents can still help, even if they don’t have cash to spare.
They can list their income on the mortgage to boost the amount their child can borrow on a guarantor mortgage.
Your savings or home will be used as collateral against your child’s mortgage application.
Push your savings further by opening a Lifetime Isa.
These are generous tax-free savings accounts designed for first-time buyers or those saving for retirement.
The government boosts your savings by an extra 25 per cent.
You can put in £4,000 a year, which means a maximum bonus of £1,000 per year.
Some lenders offer no-deposit mortgages, also known as 100 per cent track record mortgages.
These are controversial – partly because they were seen to fuel the 2008 financial crisis – but also because they often have higher rates and there is a much higher chance of you falling into negative equity.