Anyone who has read my book Property Auctions: Repossessions, Bankruptcies and Bargain Properties will note that I started the story in 2008. This is not when I started investing in property, but it is when I became interested in distressed assets.
I was in our house in Cyprus watching TV, CNBC to be precise, an American business channel. I saw the Dow Jones Industrial Average and NASDAQ tanking and the start of the Credit Crunch and Financial Crisis of 2008. Banks went bankrupt very quickly and investors exited real estate markets worldwide. This had a substantial negative impact on our property development in Cyprus, but at the same time it presented an opportunity back in the UK.
Distressed Assets …
As Warren Buffett famously said, ‘Be fearful when others are greedy and be greedy when others are fearful.’ We established Distressed Assets and searched the market for outstanding deals.
I was at an Allsop auction in London and in a very large hotel room, which would normally be full with standing room only. Post Credit Crunch, the room was almost empty apart from a few people, and I was able to pick up a freehold block of two apartments in Liverpool for just £20,000. This was a period of maximum pessimism, which also represents maximum opportunity.
Today, there are certain parallels with 2008. The situation is not as dire as then, not as acute, but there is pessimism surrounding the market and sentiment is negative. We are seeing some outstanding opportunities in the distressed assets market, particularly at auction but also off-market – principally people who reside overseas wishing to sell their properties in the UK at substantial discounts to market value.
Value at Property Auctions …
We have concluded some outstanding property investment deals recently. By way of an example, I completed the purchase of a property this week which sold at auction for £14,000 – no that is not a typo!
The property is in excellent condition and the market rent will be £7,000 per annum as it is currently under rented. I have reproduced the completion statement (see image) simply because the numbers defy logic, and anyone who reads my book will see I have reproduced some completion statements to provide evidence of the prices we have paid.
Buyers’ Market in 2025 …
Next year, 2025, looks very similar to 2024, with increasing opportunities for the astute property investor. As always, I would direct you towards property auctions and genuine off-market deals, as that is where the value lies. You should be aiming for solid double-digit yields, particularly outside London. As with most auction property, you will have in-built equity.
Do not be the amateur property investor who buys property only at the top of the market; be the professional who buys when the market is weak.
The property market in the UK, adjusted for inflation, always goes up; just Google it and you will see lots of graphs with trendlines pointing firmly upwards. This will not change. There is an imbalance in the market between supply and demand which forces both rents and values up over time. We are now moving into a trend of lower interest rates, with the Bank of England having recently reduced base rates by twenty-five basis points to 4.75%. It is anticipated that base rates by the end of 2025 will have a three in front of the number. Lower interest rates support real estate prices.
Renters Rights Bill …
Nothing in the Renters Rights Bill concerns me as a property investor, landlord and the owner of a lettings and property management company. Most of the proposals we should be actioning already, such as immediately reacting to repairs, mould and other health and safety issues within our tenanted properties. For most of us, it will not have any impact whatsoever. Regarding the removal of Section 21, those of us who have robust referencing procedures are not overly concerned; indeed, in many cases, the risk can be underwritten with insurance. The key to problem tenants, is to root them out at the start and therefore do not try to cut corners referencing and pay for the best systems on the market.
Outlook for 2025 …
In conclusion, I am looking forward to a very strong buyers’ market in 2025. If seized, these opportunities will increase your financial security, whether your goal is to grow your portfolio and cash flow to retire, pay school fees, supplement your income, or achieve a better work-life balance.
I hope to see many of you at the Property Investor Show on 11/12 April 2025, when we can discuss these matters in more detail. You’ll find me at Stand no 10 – close to the main entrance. Meanwhile, feel free to drop me an email
Dominic Farrell