Property Auctions: Higher Rates, Higher Taxes, Better Opportunities?
With Dominic Farrell · Episode published 12 November 2026
What do higher borrowing costs, landlord tax and weaker market sentiment mean for property auction buyers? Dominic Farrell explores the opportunities—and the numbers that need to work before you commit.
The opportunity—and the discipline
- Weaker auction results and seller motivation can create room to negotiate.
- A lower purchase price can improve gross yield if achievable rent holds up.
- Higher interest rates and landlord tax still need to be included in the appraisal.
- Test higher borrowing costs, flat rents, empty periods and refinancing delays together.
Full episode script
The script accompanying Episode 11, with links to the reports and practical resources discussed. Market figures and policy proposals are presented as at 12 November 2026.
Welcome back
Hello, and welcome back to The Property Auctions Podcast. I'm Dominic Farrell, author of Property Auctions: Repossessions, Bankruptcies and Bargain Properties, and founder of Distressed Assets.
It's been a little while. The last episode was at the end of September. I've been busy working with some of my mentees, and I've also been overseas with my family for half term.
That time with the family is important. In real estate, or any other industry, it's very easy to get so caught up in the work that you lose sight of the reason you're doing it. There's always another property to look at, another conversation to have, another problem that needs your attention.
For me, part of the purpose of building a business and investing in property is having the freedom to spend time with my family. I want to enjoy that along the way. Whatever your own reason for investing, it's worth keeping it in mind when you're deciding what to take on.
Now, while I've been away from the podcast, quite a lot has happened. We've had the Budget, a rise in the Bank of England base rate, and more evidence of a market where buyers are being selective. We've also produced our UK property auction and housing market reports, which bring the figures together.
And two releases on 12 November have made this episode particularly timely. The latest survey of estate agents points to a weaker housing outlook, while the economy as a whole has grown more strongly. I want to explain why that combination interests me as a distressed asset investor, and how I would approach the opportunities it may create.
What the auction results tell us
Let's start with the auction market. In earlier episodes, we discussed a gap between what sellers expected and what buyers were willing to pay. The September figures in our UK Property Auction Market Report give us more evidence of that resistance. You can find all of our UK property auction market reports on the Distressed Assets website.
According to Essential Information Group, 4,903 lots were offered across the UK and 3,230 sold. The reported sale rate was 65.9 per cent, compared with 71.4 per cent in September last year. Approximately one in three offered lots had no recorded sale in those figures.
Those figures cover residential and commercial property. They describe September activity and EIG's reported sales, rather than a count solely of properties sold live under the hammer. More lots were offered than a year earlier, but fewer sold.
For me, that is a reason to look closely at the unsold lists. Find out which properties remain available, why they failed to sell, and whether the owner's expectations have changed. An unrealistic reserve, for instance, may create an opening for negotiation.
A seller who needs certainty may consider an offer they rejected before the auction. Some owners can wait. Others have a deadline, a debt to settle or another reason to complete. Understanding that position helps you decide how to approach them. You must understand the psychology of the seller.
I would also look at guide price reductions before auction. You can sometimes reach a sensible agreement early, provided the property and the terms have been properly assessed. A disciplined buyer who can complete has something useful to offer a motivated seller.
Weaker sentiment and pressure on rents
The new RICS survey strengthens that overall assessment. Its October measure of sales expectations for the year ahead fell to minus 17, the weakest reading since July 2023. The corresponding measure for price expectations also fell to minus 17.
These are survey balances showing the difference between respondents expecting increases and decreases. However, minus 17 is not a prediction that house prices will fall by 17 per cent.
At the same time, RICS reported rising tenant demand and fewer new landlord instructions. Expectations for rent growth over the next three months were the strongest since early 2024.
That combination is what interests me. A buyer looking only at gloomy sales headlines may decide to stay out of the market. I want to investigate whether that hesitation allows us to acquire an income producing asset at a better price.
If we can negotiate a lower purchase price while the property's achievable rent holds up or increases, the gross yield improves. That can give us a more attractive starting position and more room to absorb costs.
We already have evidence of rising rents. The latest ONS figures showed private rents up 3.8 per cent in the year to September, while annual house price growth had slowed to 0.9 per cent in August. The measures cover different periods and different properties, so the local evidence still needs checking.
I see this as a potentially favourable combination for acquisition. Sellers may be facing a difficult market, while demand for suitable rental homes remains. Our task is to find the individual properties where that combination exists and agree a price that makes financial sense. In other words, where the numbers stack up.
Stronger growth and the interest rate outlook
The other release on 12 November was the GDP estimate. The ONS said the UK economy grew by 0.7 per cent in the third quarter, from July to September. That followed growth of 0.5 per cent in the second quarter and 0.6 per cent in the first.
Services drove most of the increase. The ONS also highlighted strength in computer programming and other industries that may be linked to artificial intelligence, or AI. That is useful evidence of how the economy is changing, although it doesn't give us a precise figure for AI's contribution.
Meanwhile, construction output fell by 0.7 per cent over the quarter. So a growing economy and a difficult property market can exist at the same time. The headline GDP figure doesn't tell you how every sector, household or property owner is doing.
Stronger growth can also add to the pressure on the Bank of England to keep rates higher, or raise them further, when inflation is already a concern. Interest rates aren't decided from GDP alone. The Bank also has to judge inflation, wages and how much the economy can produce without driving prices up.
My reading is that this gives investors another reason to be cautious about building a purchase around imminent rate cuts. The Financial Times also reports that markets expect further increases through the end of 2027. Those expectations can change. I would prepare for higher borrowing costs and make sure the acquisition price allows for them.
Higher rates and sensitivity analysis
On 5 November, the Bank of England increased Bank Rate from 3.75 per cent to 4 per cent. It also projected inflation reaching around 5 per cent by the middle of next year. That inflation figure is a forecast.
Higher rates can create a short term advantage when negotiating a purchase. Borrowing becomes harder to justify for some buyers, competition can weaken, and owners who need to sell may have to accept less. That's the acquisition opportunity.
But the borrowing cost follows us after completion. We need to distinguish the benefit of buying at a lower price from the cost of financing the property. An existing fixed mortgage has its agreed terms, while a tracker or future refinancing can expose you to a different rate.
This is why sensitivity analysis matters. I would first run the acquisition at the actual finance terms available, including the fees. Then I would test higher interest rates, perhaps one and two percentage points above the initial rate, with my broker helping to judge appropriate scenarios.
I would also test flat rent, a longer empty period and higher repair costs. If refurbishment is involved, allow for an overrun. If the plan depends on refinancing, test a lower valuation, a smaller loan and a delay in receiving it.
Test difficult conditions together. Higher interest costs can arrive while a property is empty and a refurbishment is running late. You need to know how much cash that would require and whether you have it available.
I want to understand where the purchase stops working before I commit. That informs my maximum offer, the borrowing I take on and the reserve I retain. The price needs to compensate me for the risks I can reasonably identify.
The Budget and landlord tax
The Budget adds another pressure, particularly for landlords who own property personally. The government has announced proposed property income tax rates of 24 per cent, 44 per cent and 49 per cent from April 2027 for affected individuals in England, Wales and Northern Ireland. Scotland has separate income tax arrangements.
The previous Budget had already announced a two percentage point increase for April 2027. This Budget proposes a further two points. Together, that would put the rates four percentage points above the current main rates.
These are proposals for the next tax year, with legislation to follow. A landlord holding property through a limited company has a different tax position. Speak to your accountant about the effect on your own circumstances, particularly before changing an ownership structure.
My view is that the combined pressure of tax, finance and management may encourage some owners to sell. A landlord with little borrowing can be in a very different position from someone refinancing a heavily mortgaged portfolio, so the reasons for selling will vary.
A sale to another landlord doesn't automatically remove a home from the rented sector. And a higher tax bill doesn't mean the local market will support whatever rent the owner needs to cover it.
For us as buyers, the useful question is whether we can acquire that property on terms that work under our own costs and circumstances. The seller's decision to leave may create an opportunity. We still need to buy well.
The parallel with 2008 to 2012
This brings me back to the contrarian approach we discussed in the last episode. I experienced the financial crisis and the difficult years that followed it. That period shaped my approach to distressed assets and the way I look at sellers who need to act in an uncertain market.
The parallel I see today is in confidence and motivation. When the outlook is uncomfortable, some buyers step back. Owners who need to sell still have decisions to make. A buyer with the knowledge, funding and patience to investigate can sometimes agree terms that would be much harder to obtain in a confident market.
In my view, this could be the best buying period for distressed property since the years from 2008 to 2012. That's my investment judgement about the opportunities developing. Each cycle is different, and the strength of that judgement has to be tested against the properties and prices actually available.
What attracts me is the possibility of acquiring suitable assets more cheaply while rental demand supports the income. If we can establish a reliable income at a lower entry price and manage the property well, that purchase can benefit us for years.
I don't need to identify the exact bottom of the market. I need a price that leaves enough room for the costs. If the seller will agree it, I can consider proceeding. If they won't, I can keep looking.
So the negative sentiment makes me more interested in investigating purchases. I would be checking unsold lots, speaking to agents about motivated sellers and reviewing the legal and physical condition of each property. The latest news gives me a reason to pay closer attention, with the numbers determining what I am prepared to buy.
I've covered that research process in my article on AI property auction due diligence, and in the podcast episodes on reading an auction legal pack using AI and spotting a fake bargain using AI. The facts still need checking, and the legal position needs a solicitor's review.
Keeping the purpose in view
That brings me back to the family trip I mentioned at the beginning. When you're deciding whether a property is right for you, think about what you want the investment to do for your life.
You may be building an income for retirement. You may want more freedom over your working week, or something to pass on to your children. Those aims can lead to quite different decisions about how much you borrow, how much work you take on and how quickly you try to grow.
I enjoy the business and I enjoy working with my mentees. I also value being able to go away with my family or take an afternoon off to watch my children play rugby or perform in a concert. Keeping both in view helps me think about what is worth my time. That's as relevant in real estate as it is in any other industry.
The latest UK housing market and property auction reports are available on the Distressed Assets website if you want to explore the figures we've discussed. Each report identifies the periods covered, so you can see what the data is actually telling you.
You'll also find details of our property mentorship and property auction courses in London and LIVE online at distressedassets.co.uk.
I'm Dominic Farrell. Thank you for listening to The Property Auctions Podcast. It's good to be back, and I'll speak to you again soon.
Sources and references
The data periods differ between releases. These notes identify the period, source and relevant qualifications behind the episode.
1. Auction activity for September 2026
EIG reported 4,903 lots offered, 3,230 sold and a 65.9 per cent sale rate, against 71.4 per cent a year earlier. Includes residential and commercial property. Figures are reported sales and should not be described as a separately verified live hammer clearance rate.
2. UK house prices and private rents
ONS release dated 21 October 2026. House prices rose 0.9 per cent annually to August; private rents rose 3.8 per cent annually to September. These figures are provisional and cover different observation periods.
3. Bank Rate and the inflation outlook
Bank of England decision published 5 November 2026. Bank Rate increased from 3.75 to 4 per cent on an eight to one vote. Inflation projected to reach around 5 per cent by mid 2027. This is a forecast, not an observed inflation rate.
4. Property income tax proposals
HMRC policy paper published 29 October 2026. Proposed rates of 24, 44 and 49 per cent from the 2027 to 2028 tax year for affected individuals in England, Wales and Northern Ireland. Legislation to be introduced in the Finance Bill. Company taxation and Scotland require separate consideration.
5. The additional two percentage points announced in Budget 2026
Budget 2026 adds two percentage points to the two point increase previously announced for April 2027. The cumulative rise against the current main rates would therefore be four percentage points.
6. Previous episode
Episode 10, The Contrarian Property Investor, was published on 27 September 2026.
7. RICS October survey published on 12 November 2026
Sales and price expectations balances were both minus 17. Tenant demand improved, landlord instructions declined and rent expectations strengthened. Balances measure the breadth of opinions, not percentage price changes. RICS methodology says headline readings cover England and Wales; Scotland and Northern Ireland are reported separately.
8. ONS first GDP estimate for the third quarter
Released 12 November 2026. Real GDP rose 0.7 per cent in Q3 after 0.5 per cent in Q2 and 0.6 per cent in Q1. Services grew 0.9 per cent and construction fell 0.7 per cent. These are quarterly changes; the first estimate may be revised.
9. ONS evidence relating to AI and computer programming
The September GDP release discusses strength in industries that may be related to AI, including computer programming. It does not quantify AI as a share of overall GDP growth.
10. Financial Times reporting on 12 November 2026
Financial Times reporting on market expectations of further Bank Rate increases through the end of 2027. Market pricing can change and is not a Bank of England commitment.
The comparison with 2008–2012 and assessment of acquisition opportunities are Dominic Farrell’s investment views. Future rent growth and rate changes are uncertain; sensitivity scenarios are illustrative tests.
Further reading and listening
Explore the research and practical guidance discussed in this episode.
AI and auction due diligence
How to Read an Auction Legal Pack Using AI. Listen to the episode on using AI for an initial review of the documents.
Spotting a Fake Bargain at Auction Using AI. Listen to the episode on testing apparent bargains against the evidence.
AI Property Auction Due Diligence. Read about the process from a viewing to a proposed offer before auction.
Buying well at auction
How to Set Your Maximum Bid at a Property Auction. Work through the costs, risks and return required before bidding.
The Contrarian Property Investor. Revisit the previous episode on investing when sentiment is weak.
Property auctions. Explore the acquisition route and the opportunities it can offer.
The property auctions book
Property Auctions book. Read about Property Auctions: Repossessions, Bankruptcies and Bargain Properties.
UK market reports
Market reports: September 2026 UK Property Auction Market Report and November 2026 UK Housing Market Report.
About Dominic Farrell
Dominic Farrell is a property investor, author, property mentor and founder of Distressed Assets. He hosts The Property Auctions Podcast and is the author of Property Auctions: Repossessions, Bankruptcies and Bargain Properties. His work brings together property acquisition, due diligence and practical investment judgement.
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Dominic Farrell is the founder of Distressed Assets and the author of Property Auctions: Repossessions, Bankruptcies and Bargain Properties, the UK's number one bestselling book on property auctions, now in its fourth edition (2026). Our property auction courses are led by Dominic Farrell, with legal training from property and construction solicitor Claire Farrell, and mortgage and bridging finance guidance from Josh Lee.
dominic@distressedassets.co.uk
www.distressedassets.co.uk
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