The Contrarian Property Investor: Finding Opportunites With AI
The Contrarian Property Investor: Finding Opportunites With AI
World events and pressure in the bond markets, particularly here in the UK, have created difficulties in the economy and real estate market. Recent rises in gilt yields were another reminder of that. In my view, these developments are accelerating the conditions I was already expecting for the UK property market.
We have a subdued housing market, with asking prices under pressure, while rents continue to rise. Rightmove reported a 2% fall in new seller asking prices in August. Its September figures show a 0.7% monthly recovery, although asking prices remain 0.8% below a year ago. Meanwhile, the latest ONS figures show UK private rents up 3.8% over the year to August. The picture varies by area, but there are opportunities in that combination.
Some of those opportunities are in properties we might have disregarded for years. Leasehold flats, in particular.
I am currently purchasing a leasehold property where my figures show a projected 37% net yield.
Yes, 37%.
On the basis of that annual net return on the total capital invested, the payback period is approximately two years and eight months. In other words, if the projected income and costs hold, the net rental income would recover the money spent on the property within that period.
We have identified several possibilities in various auction catalogues around the country, including leasehold flats with guide prices around one third of what their original purchasers paid.
This is where AI does the heavy lifting for you.
Now, I am certainly not saying that every one of these properties represents an opportunity. The original purchase price might have been excessive, and a low guide price tells you very little on its own. What matters is the property’s value today, the income it can produce and the full cost of owning it.
The due diligence on leasehold properties can be extensive. Lease length, ground rent, service charges, major works and Section 20 notices, letting restrictions and the ability to finance or resell all need proper investigation. To be honest, some of this is beyond what I would expect a novice auction investor to tackle without experienced help and a knowledgeable solicitor.
There is also reform on the horizon.
The proposed Commonhold and Leasehold Reform Bill includes measures intended to strengthen leaseholders’ rights, cap ground rents and make conversion to commonhold easier in England and Wales. These changes could improve ownership, but they are proposals rather than benefits we can already rely on.
A purchase needs to work under the rules and costs that apply today.
Whatever your thinking has been up until now, it is worth looking again. The market is changing, and there may be opportunities in places you previously ruled out. As ever, it depends on your strategy, which you must nail before you start.
You need the precision of a sniper, to use a military analogy.
We’ll be covering how to identify and assess these opportunities, including the practical use of AI, at our Property Auctions and Distressed Assets Workshop in London and live online on Saturday 17 October 2026.
Dominic Farrell
