When an organisation or investor is looking to liquidate its assets and raise capital, an auction platform can be an effective route to market. Not only is the selling process at auction easier and often quicker, but the competitive nature of an auction environment helps to drive the price up, delivering the best return for the vendor.
We are increasingly noticing that housing associations looking to liquidate property assets are turning to the auction room. They are doing so for the speed and certainty of a sale, the transparency of the process and last, but not least, to achieve the best price.
Following large transfers of social housing stock from the public sector over the past twenty years, housing associations (HA’s) are now the major provider of social housing in the UK.
HA’s are private, not-for-profit bodies set up to provide low-cost housing for people in need of a home and are regulated by the state. There are over 1,600 of them in operation across the country, a growing number of which are raising revenue from the sale of existing assets to plough back into redevelopment, acquiring new homes or improving and maintaining their existing housing stock.
With Government funding for local services, including social housing, having been dramatically cut over the last 10 years, many are seeing the rent generated from new housing stock and investments or the sale of old stock, as a way to continue to provide social homes for those most in need.
For quite some time, there has been an air of awkwardness when speaking about HA’s shifting and moving their assets, with widely reported public objection about HA’s selling at auction. However, the sale of these assets, usually old buildings in high-value areas, allows funds to be re-deployed to provide more and better new homes for social rent and regenerate new communities. Furthermore, the new properties are less costly to manage, enabling HA’s to allocate more funding for new homes.
To deliver this effectively, achieving the best price for the sale of existing assets is essential. Here, the multi-channel platform of Allsop’s auctions plays an integral role. Today’s advancements in sophisticated technology enable traditional ballroom auctions to offer remote and in-room bidding, via online, proxy and telephone bidding. These multiple channels offer the greatest number of buyers the opportunity to bid, helping to create competition and drive the price of the asset.
Using this competitive multi-channel method Allsop sold over 150 properties last year for around 50 different housing associations, resulting in £30m of sales.
In 2017, Allsop achieved £1.4m under the hammer on behalf of a HA for a 1,300 sq ft property, featuring a picturesque Cornish coastline view, after it was listed for just £600,000. The then-empty three-bedroom house offered a reception room, two shower rooms and a kitchen, and potential for additional accommodation in the basement.
As the market continues to remain a challenging and demanding environment, Allsop is expecting to see more entities such as housing associations, coming to the auction room to competitively and fairly, dispose of assets.
