Home auction sales are sparking a disproportionately high number of disputes, the Property Ombudsman warns.
Last year, auction sales comprised of around 2 per cent of residential property sales across Britain.
Yet auction sale problems accounted for 9 per cent of residential sales complaints and 5 per cent of all complaints received by TPO in 2025.
Last year, TPO received 300 complaints relating to property auctions, with 68 per cent lodged by buyers or prospective buyers.
For sellers, an auction can provide a quicker route to sale and a clearer timescale than trying to sell a property via an estate agent.
For buyers, auctions can offer properties with investment potential or needing extensive works carried out. Auctions can also be a hotbed for more unusual properties.
But TPO said its casework suggested many buyers approached property with ‘an incomplete understanding of the risks involved’.
The speed of the process, the level of consumer understanding required, the role of legal packs, and the financial consequences of withdrawing can all create ‘significant scope’ for disputes, TPO said in its latest Property Auctions report.
Disputes: Auction sales spark a disproportionately high number of disputes, according to The Property Ombudsman
Reservation fee woes
When a property auction ends, the winning bidder must pay a non-refundable ‘reservation fee’. This is on top of the agreed sale price.
TPO said auction reservation fees were a major source of disputes, particularly where buyers believed the fee would be applied towards the purchase price or was refundable if the transaction did not proceed.
TPO wants auction firms to treat reservation fees as a high-risk consumer issue.
It wants businesses to provide ‘clear written and verbal explanations before taking payment and move from simply making legal packs available to ensuring that key risks are properly highlighted’.
Modern method of auction confusion
Another problematic area flagged by TPO was ‘confusion’ around the modern method of auction.
In a conditional auction, often referred to as the modern method of auction, a successful bidder does not usually exchange contracts immediately.
Instead, they typically enter into a reservation agreement and pay a reservation fee, with an agreed period of time allowed for legal work, mortgage arrangements and progression to exchange and completion.
TPO said the modern method of auction can create ‘misunderstanding’ where buyers or sellers do not appreciate how the process works, what fees are payable, when commitment arises, or what happens if the transaction does not complete.
Meanwhile, in a traditional or unconditional auction, a successful bid normally results in an immediate exchange of contracts. The buyer is usually required to pay a deposit at that point and complete the purchase within a set time.
The report also highlighted complaints centred on auction houses providing inaccurate marketing information, incomplete legal packs, unclear processes and a lack of clarity over fees.
Lesley Horton, chief property ombudsman, said: ‘While auction transactions account for only a small proportion of the wider residential sales market, complaints about auction sales represented a disproportionate share of the sales cases brought to us
‘This suggests that, while auctions can work well when managed transparently and competently, they can also expose consumers to particular risks where the process is not clearly understood or where key information is not provided at the right time.’
She added: ‘Buyers must carry out appropriate checks before bidding or reserving a property, but businesses also have a responsibility to communicate fairly, clearly and transparently. The point of financial or legal commitment must be made impossible to miss.’
TPO has urged auction firms to make clear which type of auction is being used, when legal and financial commitments begin, what fees are payable and what happens if a sale falls through.
TPO added: ‘Auction cases reaching an Ombudsman decision were supported 31 per cent of the time vs 67 per cent for non-auction sales — reflecting the stronger “buyer beware” expectation, while still emphasising businesses’ duty to communicate fairly and clearly.’
Buying a property at auction: what to know
An auction is a method of sale in which a property is marketed for a defined period and then offered for bidding, either in person, online, or through a hybrid process.
The highest bid may result in either an immediate binding commitment to purchase, or a conditional agreement subject to further steps.
Auctions are one area where good deals still come up. Properties sold this way can, in some cases, be substantially cheaper than on the open market.
However, properties sold in this way often – though not always – come with added complexities for the buyer.
It is therefore important to do as much research as possible before buying any property at auction.
Where possible, always visit the property in person before the auction and do as much due diligence as you can.
Thoroughly inspect the property and it its surrounding neighbourhood.
Consider taking a builder or handyman with you to find out what you may need to do to the property, and how much it is likely to cost. If you have any questions, do not be afraid to ask the auctioneer.
Buying a house at auction without having a survey done first could end up being a costly mistake.
Read legal documents for the property carefully and, when possible, get advice from a solicitor before heading to the auction.
Sometimes, the legal pack includes ‘special conditions’ that mean you might also be liable to pay an additional fee to a sales agent.
Before submitting any bids, always check what sort of price similar properties in the area have sold for.
And when it comes to bidding, only bid what you can realistically afford. Factor in extra administration, buyer premium fees and legal costs.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: ‘Properties sold at auction can often be transparent, with all the information you need to make an informed decision, but there are others, which are more difficult to sell for whatever reason, so the fullest possible investigation beforehand is essential.
‘Auction packs can be short of information but buyers really need to know that they are going in with their eyes open and won’t regret their actions afterwards.
‘A good surveyor and solicitor familiar with what happens at auction are also essential to a successful outcome.’