Why auction success rates are falling

Hi there,

This is Chubby Wallet. The newsletter that teaches you how to profit from property trends before they go mainstream..

Here's what’s in store..

• General market update

• Auction success rates are falling

• Changes to UK commercial property market incoming

• John Christodoulou: From a studio flat to a £B real estate portfolio

The UK housing market in July 2025 is like a steady ship sailing through choppy waters—resilient, with growing buyer confidence and smoother lending conditions, but facing headwinds from economic wobbles. 

It’s a market with cautious optimism, offering opportunities for those ready to navigate it.

House prices: modest growth ahead

House prices are poised for gentle growth..

Halifax anticipates modest increases in the second half of 2025, supported by improved lending and buyer activity, though no specific figures are provided.

• Outlook: Steady price growth expected, fueled by more transactions.

• Context: Rising wages and lower rates ease affordability slightly.

Economic backdrop: mixed signals

The economy is sending mixed messages, May’s GDP dipped 0.1%, missing the 0.1% growth expectation, dragged down by construction (-0.6%) and production (-0.9%).

However, a strong revision to March’s GDP (from 0.2% to 0.4%) and a 0.7% annual growth rate show resilience.

• Sector performance: Services up 0.1%, with information and communication strong; financial and insurance sectors lagged.

• Construction split: Housebuilding and new work (up 0.6%) propped up the industry, while repair and maintenance fell 2.1%.

Bond yields: rising pressures

Gilt and swap yields are climbing, despite expectations that weaker growth would cool them.

This rise, linked to US tariff concerns impacting UK markets, could pressure mortgage rates.

• Yield changes: 5-year yields rose from 3.982% to 4.051%; 30-year yields from 5.343% to 5.437%.

• Mortgage rates: Best 5-year fixed limited company no-fee rate at ~5.45%.

• Implication: Higher yields may limit rate reductions, affecting affordability.

Lending dynamics: buyer-friendly shift

Easing mortgage conditions are opening doors, Halifax’s support for 3,000 additional borrowers suggests lenders are relaxing criteria, potentially driving a 10% transaction boost.

However, the Bank of England’s refusal to lift the 15% cap on high loan-to-income (LTI) lending (above 4.5x income) i.e Only 15% of all new mortgages from a bank can be above this level - most must be smaller relative to income.

For customers earning £30,000/year - banks shouldn’t be offering too many loans above £135000 to keep a lid on riskier loans.

• Dynamic: More approvals fuel demand, supporting prices.

• Constraint: High-LTI cap limits aggressive lending.

Economic conditions: balancing act

According to propenomix, the economy’s mixed performance—May’s GDP dip coupled with steady annual growth—creates a cautious backdrop.

Housebuilding’s strength is a bright spot, supporting supply, but weak sectors like construction maintenance and production could hit confidence.

• Impact: Housebuilding bolsters supply; economic softness may temper buyer enthusiasm.

• Context: Annual GDP growth of 0.7% supports modest market stability.

What’s next for 2025?

Modest price growth is likely in the second half of 2025, per Halifax, driven by rising transactions and easier lending.

However, risks like higher gilt yields or economic recession could limit gains.

First time buyers can leverage improved mortgage access, while sellers should price competitively to attract interest.

Investors might find opportunities in high-yield bonds or rental markets if demand holds.

• Opportunities: Buyers benefit from lending ease; investors eye high-yield bonds.

• Risks: Rising yields or GDP weakness could slow momentum.

Buyers should seize lending opportunities, sellers need sharp pricing, and investors can explore high-yield options up North.

2025 offers a stable path forward—less a race, more a steady voyage.

The UK auction market in 2025 is a quieter marketplace with picky buyers.

Residential auctions hold steady, while commercial sales lag, and regional differences drive opportunities.

Using the EIG auction data, here’s a snapshot of trends, drivers, and what’s next.

Overall activity

June 2025 saw a softer market: lots offered fell 1.6% to 2,962, lots sold dropped 6.3% to 1,993, and the success rate dipped to 67.3% from 70.7%.

Total funds raised declined 9.0% to £389.2M.

• Key stats: Lots sold down 6.3%; success rate at 67.3%.

• Impact: Buyer caution drives selective bidding.

Residential auctions

Residential auctions remain stable, with lots offered up 0.4% to 2,651 and funds raised up 0.8% to £331.1M, despite a 4.1% drop in lots sold to 1,788. •

• Key stats: Funds raised up 0.8%; success rate at 67.4%.

• Takeaway: Steady demand, but buyers are choosy

Commercial auctions

Commercial auctions struggled in June, with lots offered down 15.7% to 311, lots sold down 21.8% to 205, and funds raised down 41.3% to £58.2M.

• Key stats: Funds raised fell 41.3%; success rate at 65.9%.

• Takeaway: Weak demand, but bargains may emerge.

Regional performance

The East Midlands, Wales, and North-West Home Counties saw strong growth in sales and funds raised.

London and the South-East lagged, especially in commercial auctions.

• Strong regions: East Midlands (funds up 17.5%), Wales (up 12.5%)

• Weak regions: London (funds down 12.6%), South-East (down 6.6%).

Outlook for 2025

The auction market should stay steady, with residential auctions leading and commercial sales offering bargains in regions like Wales.

Buyer caution and economic uncertainty may keep success rates low.

Buyers should seek value; sellers must price to attract demand.

• Opportunities: Residential deals in strong regions; commercial bargains.

• Risks: Economic weakness may limit bidding.

• Advice: Buyers, target undervalued assets; sellers, price to compete

Two major legislative changes are reshaping UK property: the Renters' Rights Bill and a surprise ban on Upward Only Rent Reviews (UORRs). is under consideration

These reforms are driving landlords between sectors and rebalancing market dynamics.

New tenant rights

The Renters right bill transforms renters relationships:

• End of Section 21: No more "no-fault" evictions—landlords need valid reasons and court approval

• Rolling tenancies: Fixed terms replaced with flexible arrangements

• Higher standards: Decent Homes Standard with fines up to £40,000 for breaches

• Rent controls: Annual increases via Section 13, challengeable at tribunal

Market Impact:

• 57,000 properties removed from rental market (May 2024-2025)

• 20% rent increases in some areas due to reduced supply

• Landlord exodus: Many selling rather than face new compliance burdens

The commercial surprise - UORR ban incoming

Hidden in the English Devolution Bill: a ban on Upward Only Rent Reviews, ending 70 years of guaranteed income protection.

What UORRs do:

• Ensure commercial rents never decrease at review

• Provide income certainty for investors

• Underpin property valuations and financing

Impact of Ban:

• Income instability: Rents can now fall during downturns

• Valuation risk: Properties may lose value without upward-only protection

• Investor uncertainty: Pension funds and institutions reassessing positions

The migration paradox

Residential landlords fleeing to commercial property just as the government removes commercial property's key attraction.

Why Residential Landlords Are Moving:

• Stricter regulations and higher compliance costs

• Complex eviction processes and court delays

• Reduced profitability from tenant protections

Why commercial now looks risky:

• UORR ban removes income stability

• Potential valuation declines

• Market uncertainty around new lease structures

What’s the government trying to achieve?

Residential: Secure tenancies, better housing standards, fair access

Commercial: Revive high streets, support small businesses, reduce vacancies

However, Government must maintain investment incentives while protecting tenants—push too hard and supply shrinks, hurting those reforms aim to help.

Industry Response

• Social media: Legal firms express shock at lack of UORR consultation

• NRLA concerns: Stress need for court efficiency and transition time

• Property professionals: Warn of potential "price corrections"

Real Impact

• Tenants: Gain security but face reduced rental options

• Residential landlords: Choose between compliance costs or sector exit

• Commercial investors: Face portfolio revaluations and financing risks

Key opportunities

Residential:

• Quality landlords benefit as poor operators exit

• Professional management becomes competitive advantage

Commercial:

• Flexible landlords attract tenants seeking fair terms

• Higher occupancy through market-responsive pricing

Residential landlords should study commercial opportunities and understand lease complexity

Commercial landlords engage with consultations, develop flexible leasing strategies

John Christodoulou arrived in London from Cyprus with modest means and no prior experience in property.

His first step into real estate was buying a small studio flat in London—a practical investment that marked the start of his journey.

This early choice demonstrated his willingness to start small, focus, and build long term.

The big break

He purchased a modest London studio flat in the 1990s—more than just a place to live, it was his entry into a competitive and challenging market.

That small but strategic investment became his foothold, which he used to carefully build a growing property portfolio over time.

It was a first step that laid the foundation for bigger opportunities ahead.

Scaling with discipline

John didn’t chase quick wins or flashy deals...

Through Janus Holdings, he built a diversified portfolio of residential properties and hotels, often focusing on undervalued or overlooked assets.

His growth was steady, disciplined, and strategic—building brick by brick rather than sprinting for big scores.

Challenges faced

Economic downturns, regulatory hurdles, and managing a large but largely private empire created challenges.

John kept out of the spotlight, focusing on steady progress.

Lessons for investors

• Begin with what you can manage and grow steadily from there.

• Patience and discipline outperform rushing or hype.

• Staying low-profile can be a strategic advantage.

John’s journey from buying a single London studio to building a billion pound property empire shows that success in this industry is a long game.

That's it for this week folks. Each week we'll cover strategies, updates and insights to help you succeed in real estate. We love this stuff!

If you Have questions or just want to chat, We want to hear it.

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