Property auction glossary
The jargon made simple: To help you understand the new terms used around auction sales this is a simple glossary of common terms with an explanation behind each one.
Some auctions use a paddle bidding system where bidders register to bid at the start of the sale and are given a paddle with their buyer’s number on it. If one wants to bid one holds up one’s paddle.
Per Annum Exclusive, this means that the yearly rent quoted does not include any other costs, such as business rates, service charge, insurance, utility costs, etc. All these costs are payable in addition to the yearly rent.
In order to enforce the terms of a lease a ground rent must be set, but in the past many leases had tiny ground rents so in some cases freeholders stipulated that the rent should, instead of money, be a ‘peppercorn’ (as used in pepper grinders) to save them the trouble of collecting the money. In theory the freeholder could still demand the peppercorn but in effect it means there's no ground rent to pay.
Ground rent is still charged by landlords, and is a condition of most leases. Ground rent is usually a small amount, typically £50 to £300 a year. If the amount is very small, or notional, it may be described as a ‘peppercorn rent’.
Planning Applications And Consents
As part of your due diligence it is wise to check the appropriate planning consents are in place for any property you are interested in. Plus, if any changes have been made to the property, ensure these have the required permissions or regulation approval.
If you wish to place a pre-auction offer you will need to speak to a member of the auction team who can explain the process. The vendor can consider offers prior to the live auction, but this is at their discretion.
Some but not all auctions require bidders to register in advance in order to bid.
Previews Or Exhibitions
A viewing of the property held in advance of the auction. Pre-auction viewings are open to the public and may be attended at no charge.
If you want to try and buy a property in advance of the auction it is possible to put in an offer in writing via the auctioneer before the auction date.
The sale of a property at a price agreed by the seller and the buyer or their agents.
Proof Of Funding
Usually in the form of a letter or bank statement, providing proof that the funds to purchase are available and ready to be used.
The auctioneers can undertake bidding on behalf of buyers unable to attend the auction in person. The buyers must contact the auction house prior to the auction to obtain an official, proxy bidding form. This must then be returned to the auction house with a deposit cheque within the time specified by the auctioneers. The buyer writes the maximum amount they will bid to on the form and the auctioneers will bid on behalf of the buyer, up to, but not beyond, the stated price.