There has been a noticeable increase in the number of properties being sold by receivers.
A receiver is an independent third-party appointed by lenders who want to enforce their security over a property in order to be repaid.
This creates opportunities but also dangers for buyers.
The receiver has a duty to achieve the best price possible at that particular time. However, they also want a swift transaction, so this often means that you can acquire a property at a lower price.
In today’s prime central London property market, where there are a lot of properties available and fewer buyers, the receivers will be wary of turning down offers that they may otherwise have rejected and would almost certainly be rejected by the borrower, i.e. the legal owner of the property (The receivers duty is to the lender who will be focussed on getting back all of the loan or as much as possible).
There are occasionally instances where the receivers may have a large number of properties to sell in the same area which creates really fantastic opportunities. For example, I inspected a property in prime central London a few weeks ago which had been purchased last year for £4.65m and was being offered for just over £3.5m.
However, this doesn’t mean that every receivership sale is an opportunity. Just because something is cheap doesn’t make it good value. In the example above, the apartment was in a great building and popular address.
Unfortunately, most receivership sales involve properties that are substandard which is why they are often difficult to sell. Of course, if you can rectify the issues by reconfiguring and/or refurbishing a property, then it may be worth buying. But if it’s in a bad building, average address or has a poor layout that can’t be altered, then you should steer clear.
As always, it is essential that you remain patient and selective, but you must be in a position to move swiftly. So you will need to have a good property solicitor who not only specialises in prime central London property but is also used to handling receivership sales and a surveyor who is highly experienced.
This is especially true because the information available on the property will be less expansive than if you were buying directly from the owner. So, you will need an experienced team who will know what to look for and where to find it.
Have you come across any receivership opportunities in your search, and if so, what concerns you most about them?
