I hosted a talk by Gary Murphy of auctioneers ALLSOP at the recent ALEP conference on 10th October 2016.
The topics that we were discussing was whether the fact that the tenants have served an acceptance and nomination notice under the provisions of the Landlord and Tenant Act 1987 has an impact on the to price achieved at auction. This being in a situation where the landlord has served a notice indicating a that the property will go to auction in accordance with Section 5B of the Landlord and Tenant Act 1987.
Perhaps unsurprisingly, the results of Gary’s anecdotal poll of auction clients reveals that large number will not bid in such a situation leading to slightly depressed prices in the room.
Gary has written an article that has now appeared in the Estates Gazette (see scan below).
This caused me to wonder on two counts. Firstly, is not worth bidding on such lots as a buyer? After all, if the tenants do not proceed then you would be buying at a discount and, secondly, as tenant isn’t this a golden opportunity – after all, is if the property is sold then chances are you will be buying slightly below market value.
There are a number of Barriers to the tenants succeeding in practice – firstly, they may need to be very organized (ready to complete in 28 days) and if there are lots of flats this may be hard / impossible to achieve. Also it can be hard to motivate people when the valuation outcomes are uncertain (remember no-one has put a number on the proposed price – unlike a under section 5A of the Landlord and Tenant Act 1987) – However, in the right circumstances auction disposals following a notice under Section 5B of the Landlord and Tenant Act 1987 present a significant opportunity.