It has long been the case at a public property auction that anyone could walk into the room, totally unprepared, completely unknown and put a hand up to bid. To some that does seem bizarre.
I remember offering a valuable apartment in Cadogan Place, Knightsbridge, London. As I was about to knock it down for £2.95m, a well dressed man wandered casually through the double doors at the back of the hall. He had his nose in our catalogue. I was on the third call for final bids as he raised his hand and called £3m. After asking him if he knew what he was doing, I knocked the lot down to him. He was visiting from the Middle East and was on his way back to his room from breakfast. It was a completely impulsive buy. He transferred his deposit that day and completed on time.
“I was on the third call for final bids as he raised his hand and called £3m.”
The occasions when buyers have defaulted have been rare. The fall of the hammer has bound the parties who, in almost every case, have a bona fide intention of fulfilling their respective obligations. At Allsop, registered bidding arrangements were, until recently, only made where there was an identifiable risk that we would have some trouble – for example an aggrieved dispossessed owner who was intent on frustrating the process. Due to anti-money laundering requirements, this has now changed.
To give them their full name, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 require us to undertake extensive verification checks. The regulations require agents and auctioneers to carry out these checks before entering into a business relationship. Obviously this relationship will come about upon the acceptance of instructions from a vendor client. However, the regulations also impact the auctioneer’s relationship with the purchaser. Since the introduction of these regulations, Allsop has required the buyer to produce evidence of identity on the fall of the hammer. If the buyer and bidder are different, both must be verified and the bidder must produce evidence of authority to represent the buyer. Proof of source of funds is also required.
“For those who wish to bid at our sales today, pre-registration is compulsory.”
The RICS, and the wider auction industry, had initially interpreted the regulations to mean that a business relationship between auctioneer and buyer was concluded upon the fall of the hammer. However, government has recently clarified the position and advised that the auctioneer forms a separate business relationship with every bidder as soon as a new bid is accepted. Consequently, it follows that compliance with the anti-money laundering regulations must be achieved through a pre-registration process that incorporates the required checks.
For those who wish to bid at our sales today, pre-registration is compulsory. Our website provides full details of the required steps and enables the process to be completed easily online. So if you’re thinking of buying a £3m apartment after breakfast, you will now have to make arrangements first.