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Regardless of whether you enter a commercial property auction as a buyer or seller, it can feel like a fast-paced and high-stakes venture.
For sellers, it’s a chance to attract motivated buyers and achieve a swift sale. Meanwhile, buyers are offered an opportunity to secure attractive investments or premises at competitive prices.
At T G Baynes, our team provide clear and practical legal guidance to clients at every stage of the commercial property auction process. Whether you're buying or selling commercial property in the UK, we’ll help you avoid costly surprises and feel confident about the path ahead.
In this blog, our experts answer common questions about buying and selling commercial property at auction, including what to expect before, during and after the hammer falls.
What is a commercial property?
Commercial property refers to premises or land that is used for business or investment purposes. These include shops, restaurants, industrial units, warehouses, office buildings and mixed-use properties. Unlike residential properties, they are governed by more complex tax and planning rules, and transactions typically involve more negotiation.
Whether you’re buying commercial property for investment or selling a long-held asset, our legal professionals at T G Baynes can guide you through the process. We also provide specialist acquisition and disposal services to protect your interests at every turn.
How do I prepare my property for sale at an auction?
If you're considering selling a commercial property at auction, preparation is key to attracting the right buyers and achieving the best sale price.
Here are the core steps involved:
• Instruct a solicitor early: A specialist commercial property solicitor can prepare the legal pack, which must be ready before the auction. This pack usually includes title deeds, leases (if applicable), planning documents, energy performance certificates, and any relevant warranties.
• Obtain a valuation: A realistic guide price helps generate interest and avoid unsold properties at auction.
• Address any legal issues: Resolve disputes, boundary concerns, or unauthorised uses that might deter bidders.
• Work with the auctioneer: Choose an auction house with a proven record for similar property types and discuss the reserve price (the minimum you’ll accept).
Preparing thoroughly increases your chances of success and reduces the risk of you having to deal with an unsold auction commercial property.
What do I need to do once my commercial property is sold?
Once the gavel falls, contracts are legally exchanged, and both parties are bound to complete the transaction, usually within 20 working days. The buyer pays a deposit, often 10% of the purchase price, on the day of the auction.
Your solicitor will then progress the sale through to completion, managing legal formalities such as the transfer of title, disbursements, apportionments, and ensuring you receive the remaining funds.
Selling at auction requires quick turnaround times, so it's crucial to have legal and financial processes in place to move promptly after the sale.
How much does it cost to sell a commercial property at auction?
The cost of selling commercial property in the UK at auction varies but generally includes:
• Auctioneer fees: Typically 1.5% to 3% of the final sale price, plus VAT.
• Legal fees: Costs for preparing the legal pack and post-sale conveyancing.
• Marketing charges: Optional extras for increased exposure, such as brochure upgrades or targeted advertising.
Disbursements, such as official copies from the Land Registry and planning documents, also add to the cost. While these expenses may seem significant, selling at auction can provide a quicker and more certain route to completion, especially compared to private treaty sales.
It's essential to budget for all associated fees before proceeding, meaning an expert solicitor should be consulted.
What happens if my commercial property doesn't sell at auction?
If your property goes through the auction without selling, either due to a lack of bids or not meeting the reserve price, it is classed as unsold auction commercial property. However, this doesn’t mean the opportunity is lost. Many properties are sold in the days following the auction through post-auction negotiations.
Your auctioneer may continue to market the property or list it in future auctions. Alternatively, you can move to a private sale. In some cases, revisiting your pricing strategy or updating the legal pack can make the property more appealing to prospective buyers.
How to prepare for buying a commercial property at auction
If you’re interested in purchasing commercial property at auction, the key to success is preparation.
Start by registering with reputable auction houses and reviewing their upcoming catalogues. Visit the properties you’re interested in and carefully consider the condition, location, lease terms (if let), and planning restrictions.
It’s vital to have a solicitor review the legal pack in advance to check for any red flags, including restrictive covenants, missing planning permissions or repair liabilities. You’ll also need to arrange your funding well in advance. Unlike traditional purchases, there’s no timing flexibility, meaning that completion must occur within the deadline, or penalties apply.
Can I make an offer on a commercial property before it goes to auction?
Yes, in most cases, sellers are open to offers before the auction takes place. If you spot a desirable lot in the catalogue, you can contact the auctioneer or seller’s solicitor to submit a pre-auction offer, which must typically be strong enough to tempt the seller to take the property out of the auction.
Time is of the essence in this scenario. You’ll need to move quickly with legal due diligence and have your financing in place. If accepted, contracts are exchanged in the usual way, with the same financial and legal obligations as an auction-day sale.
What happens if I don't complete the purchase after auction?
Winning a lot at a commercial property auction in the UK creates a legally binding contract. If you fail to complete the purchase within the specified timeframe, you risk losing your 10% deposit and may be liable for damages.
The seller can also pursue you for any losses resulting from a resale of the property at a lower price, which is why it's crucial to be fully prepared before entering a bid. Ensuring you have reviewed the legal pack, inspected the property, and confirmed your funding before auction day helps prevent legal complications and financial loss.
Contact our commercial property acquisition & disposal solicitors today
For specialist advice on buying or selling commercial property at auction, please contact our solicitors in Orpington, Dartford or Bexleyheath. Complete our simple enquiry form or give us a call on 020 8301 7777, and one of our team will be in touch promptly to support your next commercial property transaction.