Answers · UK 2025/26
What extra costs do you pay when buying a property at auction in the UK?
Buying at auction involves a buyer's premium of typically 3-5% plus VAT on top of the hammer price, plus SDLT, legal fees, and survey costs. You must complete (usually within 28 days), so bridging finance is often needed. Budget for at least 8-12% above the hammer price to cover all acquisition costs.
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Buying at auction can be an effective way to acquire property at competitive prices, but the cost structure differs significantly from a standard purchase -- and the speed of completion means you must have your finances and due diligence in place before you bid. **Buyer's premium** Most auction houses charge the buyer a **buyer's premium** on top of the hammer price: - Typically **3-5% + VAT** (so 3.6-6% inclusive of 20% VAT) - Some charge a fixed minimum fee (e.g. £1,500 + VAT) - This is non-negotiable and due immediately on the fall of the hammer - Example: Hammer price £200,000; 4% + VAT buyer premium = **£9,600** extra **Stamp Duty Land Tax (SDLT)** SDLT applies in exactly the same way as a normal purchase -- calculated on the total price you pay (hammer price plus any additional consideration): - 0% on first £125,000 - 2% on £125,001-£250,000 - 5% on £250,001-£925,000 - Plus 3% surcharge if this is an additional property **Legal fees** You typically need to: - **Review the legal pack before bidding** -- instruct a solicitor or conveyancer to check the pack (typically £200-£500) - Pay full conveyancing fees after exchange (typically £1,000-£2,000) - Note: there is no "cooling off" -- exchange happens at the fall of the hammer **Survey** You should arrange a survey **before** the auction, not after. You risk losing the survey cost if you do not win, but buying without a survey on an auction property (often sold due to defects) is a significant risk: - Homebuyer report: £500-£900 - Full structural survey: £900-£1,500+ **Bridging finance** Most auctions require completion within **28 days** -- too fast for a standard mortgage. Bridging loans fill the gap: - Monthly interest: typically 0.5-1.5%/month - Arrangement fees: typically 1-2% of loan - Exit fee: sometimes 1% - Legal and valuation fees **Total cost summary (example)** Hammer price: £200,000 Buyer's premium (4% + VAT): £9,600 SDLT (additional property): £12,500 Survey: £700 Legal fees: £1,500 Bridging finance (1 month): £2,500 **Total: ~£226,800 (13.4% over hammer price)**
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.