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Strategies to combat rising costs

This blog feature has been written by Bamboo Auctions.

Over recent months, Bamboo Auctions has been working with a number of organisations as part of a campaign to introduce its landlord members to the benefits of online auctions.

We believe that auctions are a highly efficient method of sale, but remain heavily underused. Through technology and by increasing consumer awareness of the benefits of auctions, we are aiming to encourage more vendors to sell by online action.

As part of our campaign, we are also working to make more landlords aware of section 24 of the Finance (No.2) Act 2015. It is in this capacity that we met the team at RITA4Rent.

The provision, which, unless overturned as a result of the judicial review led by Chris Cooper and Steve Bolton, will come into effect in April 2017. Rita4Rent can advise you further about the implications of Section 24, but in short, Section 24 will mean that landlords will no longer be able to offset mortgage payments against rental profits before calculating the tax payable to HMRC.

Shawbrook Bank recently carried out some interesting research showing that 40% of landlords were not aware of Section 24. We believe that prudent landlords should plan for changing markets; in particular landlords should start thinking about a strategy in the event that section 24 is not overturned and does come into effect.

With that in mind, here are a few suggested strategies to protect against rising costs:
1. Increase rent;
2. Use a limited company structure as part of buying and holding property;
3. Remortgage to reduce repayments;
4. Deleverage by selling properties;
5. Reinvest in higher yielding properties.

The team at RITA4Rent can assist you with tax advice relating to all the options above. Shawbrook Bank’s survey suggested that around 14% of landlords are planning on selling property to counter the effects of rising costs and Bamboo can certainly help if you decide to follow suit. Our technology and network of auction partners mean that wherever your property is in the UK, you will be able to benefit from local auction expertise, with national online exposure. All auctions are online, so you can sell properties whenever suits you, rather than having to wait for a specific auction date.

Selling by auction is no longer the method of last resort. Instead, properties regularly sell for more than the seller’s original asking price. Coupled with the fact that exchange occurs immediately, both buyers and sellers have great certainty in what is a highly efficient way to transact property.

Online auctions make this efficient method of sale more convenient and accessible for buyers and more flexible and empowering for vendors. Vendors can choose when their property sells and buyers can bid from anywhere, anytime.

The job of the auctioneer is to price a property to interest multiple buyers and encourage competition over the property. For that reason, the price of a property in auction increases with every offer. Compare that to private treaty, where prices are often negotiated downwards by a buyer. In other words, don’t be disheartened if an auctioneer gives you a price that appears to be much lower than you expected — you can set a reserve below which you are under no obligation to sell, and the price is designed to get buyers interested, achieve the actual market value of the property and actually sell your property without the hassle and cost of lengthy conveyancing and the risk of a sale falling through.

For more information on how to sell your property by online auction, contact Bamboo Auctions by clicking here. For a limited time, we’re offering sellers the opportunity to sell by online auction with no entry fees.

This blog feature has been written by Bamboo Auctions.