Key Takeaways
- A 10% deposit is commonly required when buying a property at a traditional, unconditional UK auction.
- The deposit is generally calculated from the hammer price, not the property’s guide price.
- Some auction houses impose a minimum deposit, so the exact requirement can vary.
- The deposit is usually payable immediately after a successful bid, when contracts are exchanged.
- Your auction deposit is only part of the cash you may need. You may also need funds for buyer fees, legal costs, surveys, Stamp Duty Land Tax and finance costs.
- A 10% auction deposit is not necessarily the same as the total amount of cash you need to contribute to the purchase.
- If you are using a mortgage or bridging finance, you should have your finance strategy agreed before bidding.
- Always read the property’s legal pack and Special Conditions of Sale because they can change the deposit, fees and completion requirements.
How Much Deposit Do You Need for an Auction Property?
For a traditional property auction in England and Wales, the auction property deposit is commonly 10% of the final hammer price.
For example, if you successfully bid £250,000 for a London property, a 10% auction deposit would normally be:
£250,000 × 10% = £25,000
That £25,000 is generally payable immediately after the auctioneer accepts your winning bid.
However, you should not assume that every auction property requires exactly 10%. Some auction houses specify minimum deposits, while the Special Conditions of Sale can impose different requirements.
For example, Knight Frank states that its unconditional auction purchases require a 10% deposit subject to a £5,000 minimum, while Strettons currently states a 10% deposit subject to a £3,000 minimum.
This is why the answer to “how much deposit do I need for an auction property?” should always be based on the individual lot’s legal documentation rather than a general rule.
What Is an Auction Property Deposit?
An auction property deposit is the initial payment made by the successful bidder when contracts are exchanged following a successful auction purchase.
In a traditional unconditional auction, the fall of the hammer generally creates a legally binding contract. The buyer is then committed to completing the purchase according to the terms contained in the legal pack and Special Conditions of Sale.
The deposit provides security to the seller that the buyer intends and is able to complete.
The Royal Institution of Chartered Surveyors (RICS) recommends that prospective auction buyers carefully research the particulars, conditions of sale and legal pack and obtain appropriate professional advice before bidding.
This is particularly important because the deposit is not simply a reservation payment that you can expect to get back if you change your mind.
If you fail to complete in accordance with the contract, you may lose the deposit and could face further claims from the seller.
Is the Auction Deposit Always 10%?
No.
Although 10% is the common standard for a traditional UK property auction, the exact deposit requirement depends on the auctioneer and the individual property’s conditions.
Some auction houses specify:
- 10% of the hammer price
- 10% subject to a minimum amount
- A different percentage stated in the Special Conditions
- Additional payments required alongside the deposit
For example, Auction House says the deposit payable immediately after a successful purchase is normally 10% of the sale price, with a minimum amount for lower-value lots.
Strettons similarly states that successful bidders must provide a contractual deposit of 10% of the purchase price, subject to a minimum deposit.
The important point is this: never calculate your available auction budget using the assumption that every property has identical deposit terms.
Check the lot details and legal pack before you bid.
How Is the Auction Property Deposit Calculated?
The simplest calculation is:
Auction deposit = hammer price × deposit percentage
If the required deposit is 10%:
| Hammer Price | 10% Auction Deposit |
|---|---|
| £100,000 | £10,000 |
| £150,000 | £15,000 |
| £200,000 | £20,000 |
| £250,000 | £25,000 |
| £300,000 | £30,000 |
| £400,000 | £40,000 |
| £500,000 | £50,000 |
| £750,000 | £75,000 |
| £1,000,000 | £100,000 |
Remember that this is only the deposit.
It does not necessarily represent the total amount of cash you need to have available to complete the purchase.
Does the Deposit Come From the Guide Price?
No.
This is an important distinction for auction buyers.
The deposit is generally calculated using the actual purchase price, which is the amount at which the property is successfully sold, rather than the guide price.
Suppose a London property has:
- Guide price: £250,000
- Winning bid: £290,000
- Deposit requirement: 10%
Your deposit would normally be:
£290,000 × 10% = £29,000
It would not be £25,000 simply because the guide price was £250,000.
This is one reason you should calculate your maximum bid and cash requirement before entering the auction.
What Do You Need to Pay on Auction Day?
The deposit is only one of the potential payments you may have to make.
Depending on the auctioneer and property, you may need to have funds available for:
1. The auction deposit
Usually around 10% of the hammer price for a traditional auction, subject to the property’s specific terms.
2. Buyer’s fees
Some auction houses charge a buyer’s administration fee, buyer’s premium or similar charge.
For example, Savills currently states that its successful bidders pay a 10% deposit together with a buyer’s fee on the day.
3. Legal costs
You should budget for your solicitor or conveyancer to review the legal pack and deal with the purchase.
For an auction property, legal work needs to happen before you bid, not after you have already committed yourself.
4. Survey or valuation costs
Depending on the property and your intended finance, you may need a survey, valuation or other professional inspection.
5. Stamp Duty Land Tax
If the property is in England or Northern Ireland, you may have to pay Stamp Duty Land Tax (SDLT).
The amount depends on factors including the purchase price, whether you are a first-time buyer and whether the property will be an additional property. HMRC provides an SDLT calculator to help buyers estimate their liability.
6. Finance costs
If you are using bridging finance or another specialist auction finance solution, you may have arrangement fees, valuation fees, legal fees and interest to account for.
7. Refurbishment costs
If the property requires renovation, you may need substantial funds beyond the purchase price.
This is particularly relevant when buying properties that are unmortgageable in their current condition.
Example: How Much Cash Might You Need for a £250,000 Auction Property?
Consider a hypothetical London auction purchase with a winning bid of £250,000.
Your initial calculation might look like this:
10% auction deposit: £25,000
But your overall acquisition budget could also need to account for:
- Auctioneer’s buyer fee
- Solicitor’s fees
- Survey or valuation
- Searches and disbursements
- SDLT, if applicable
- Mortgage or bridging finance fees
- Interest
- Insurance
- Immediate repairs
- Refurbishment
- Other costs specified in the legal pack
So the question should not simply be:
“Do I have £25,000 for the deposit?”
The better question is:
“Do I have enough available capital and arranged finance to complete the entire purchase?”
That distinction can make the difference between a successful auction investment and a very expensive mistake.
Use an Auction Finance Calculator Before You Bid
If you want to estimate your wider cash requirement rather than just the 10% deposit, an auction finance calculator can be useful.
The Auction360 UK Auction Finance Calculator allows buyers to estimate the deposit, finance requirement, SDLT, lender and broker fees, legal costs and other completion costs.
For a London auction purchase, this can give you a much more realistic picture of the cash required before you decide how high you can bid.
You can also use the official HMRC Stamp Duty Land Tax calculator and guidance to check the SDLT position for your purchase.
Do You Need the Full 10% Deposit in Cash?
Usually, you need to have access to the deposit in an acceptable form of cleared funds by the time you bid.
The exact payment method varies between auction houses.
For example, Auction House says deposits usually need to be paid from cleared funds and advises buyers to check accepted payment methods before bidding.
This is why auction finance should be arranged before auction day.
Do not assume that winning the property first and sorting out the finance afterwards is a safe strategy.
Once you have won an unconditional auction lot, the contractual clock has started.
Can a Mortgage Cover the Auction Deposit?
Potentially, but you should distinguish between how the purchase is funded and how the deposit has to be paid at auction.
A traditional residential mortgage normally releases funds at completion. The auction deposit, however, is generally payable immediately when contracts are exchanged.
This creates a timing problem.
You might ultimately intend to fund 75% or 80% of the purchase price with a mortgage, but you still need to meet the auction’s immediate payment requirements.
This is one reason some auction buyers use bridging finance as their short-term funding solution and then refinance onto a conventional mortgage after completion.
The right approach depends on:
- The property’s condition
- Its mortgageability
- The purchase price
- Your available cash
- Your income and credit profile
- The lender’s criteria
- The auction completion deadline
- Your planned exit strategy
For a deeper explanation, see our guide:
Can You Get a Mortgage on an Auction Property?
Before bidding, you should have a realistic understanding of whether a mortgage can be arranged within the required timeframe.
Auction Deposit vs Mortgage Deposit: What’s the Difference?
The terms can be confusing.
A mortgage deposit is generally the portion of the property purchase price that you contribute yourself, with the mortgage covering the remainder.
An auction deposit is the payment required under the auction contract when you buy the property.
They can overlap financially, but they are not necessarily the same thing.
For example, imagine:
- Purchase price: £300,000
- Auction deposit: 10% = £30,000
- Mortgage eventually arranged: £225,000
The buyer may need to contribute more than the £30,000 auction deposit once other purchase costs and the final funding structure are taken into account.
This is particularly important where the mortgage lender’s valuation is below the purchase price.
What If the Mortgage Valuation Is Lower Than Your Auction Bid?
This is a major risk auction buyers should understand.
Suppose you successfully bid:
£300,000
You pay a:
£30,000 auction deposit
You then apply for a mortgage.
The lender values the property at:
£270,000
If the lender is willing to lend 75% of its valuation, the mortgage could be based on £270,000 rather than your £300,000 purchase price.
75% of £270,000 is:
£202,500
That leaves a much larger funding requirement than you may originally have expected.
The difference between the purchase price and the lender’s maximum advance would need to be covered from your own funds or another suitable source of finance.
This is why auction finance should be based on realistic numbers rather than simply assuming that a lender will finance the percentage of your winning bid that you have in mind.
What Happens to Your Deposit If You Cannot Complete?
This is one of the most important risks to understand before bidding.
If you win an unconditional auction property, you generally become contractually committed to completing the purchase.
If your finance subsequently falls through and you cannot complete, you may lose your deposit.
Depending on the contract, the seller may also have additional remedies.
Auction House guidance states that the deposit is payable immediately after the successful purchase, while auction conditions can provide consequences where the buyer fails to complete.
This is why you should never bid simply because you believe:
“I’ll sort the mortgage out after I win.”
The safer approach is to arrange your funding before you bid.
How Long Do You Have to Pay the Balance?
The completion deadline depends on the auction contract.
A period of around 20 to 28 business days is common for many traditional auctions, but you should never assume that a particular property will give you exactly 28 days.
Knight Frank, for example, states that its normal completion period for an unconditional sale is 20 business days, subject to the Special Conditions of Sale.
Other auction houses use different deadlines.
Some properties may have particularly short completion periods.
Therefore, always check:
Auction date → exchange → deposit → completion deadline
before you bid.
Your finance must work within that exact timetable.
What Is the Difference Between an Auction Deposit and a Reservation Fee?
Not every auction operates in exactly the same way.
Traditional unconditional auctions generally involve immediate exchange of contracts and a contractual deposit.
Other auction formats, including conditional or “modern method” auctions, can operate under different structures and may involve reservation fees rather than the traditional 10% deposit.
That distinction matters.
A buyer who assumes that every auction operates under identical terms could miscalculate the amount of money required.
Always identify the type of auction and read the specific terms for the lot.
London Property Auction Deposit: What Buyers Should Know
Buying at a London property auction can involve higher purchase prices and significant competition, making accurate financial planning particularly important.
Suppose you are targeting a London property with an estimated winning bid of £500,000.
At a 10% deposit:
£500,000 × 10% = £50,000
But your cash requirement does not necessarily stop at £50,000.
You may also need to account for:
- Buyer fees
- Solicitor’s fees
- SDLT
- Valuation
- Finance arrangement fees
- Bridging interest
- Insurance
- Immediate repairs
- Refurbishment
- Additional charges contained in the Special Conditions
RICS guidance highlights the importance of ensuring that additional charges are clearly disclosed so prospective buyers can calculate the full cost of the transaction.
For London buyers, this makes the legal pack and Special Conditions of Sale essential reading before bidding.
What Should You Check Before Paying an Auction Deposit?
Before you commit to an auction purchase, work through the following:
Check the deposit requirement
Confirm:
- Deposit percentage
- Minimum deposit
- Payment method
- Payment deadline
- Whether the deposit is subject to special conditions
Check buyer fees
Find out whether the auctioneer charges:
- Administration fees
- Buyer’s premium
- Reservation fees
- Other charges
Read the legal pack
Pay particular attention to:
- Special Conditions of Sale
- Title information
- Tenancies
- Restrictive covenants
- Charges
- Rights of way
- Planning matters
- Additional costs
- Completion deadline
RICS specifically recommends thorough research of the legal pack and sale conditions before bidding.
Check your finance
Know:
- How much you can borrow
- How quickly the lender can complete
- The maximum LTV
- The valuation requirements
- The lender’s property criteria
- The exit strategy if using bridging finance
Calculate your maximum bid
Your maximum bid should be based on the total economics of the purchase, not simply the amount you are prepared to pay for the property.
How Much Deposit Should You Have Before Going to Auction?
If you are planning to buy at a traditional auction where a 10% deposit is required, you should ideally have access to at least the expected deposit plus the other costs payable on or immediately after the auction.
For example, if your maximum bid is £300,000, you should not think:
“I need £30,000.”
Think instead:
“I need £30,000 for the deposit, plus enough additional funds for the auction fees and other immediate costs, with the remaining purchase price already covered by cash or pre-arranged finance.”
This is a much safer way to approach auction buying.
Can You Use Bridging Finance for an Auction Deposit?
In some circumstances, bridging finance can form part of the funding strategy for an auction purchase.
Bridging finance is designed to provide short-term property funding and can be particularly useful where the buyer needs to complete quickly and a conventional mortgage cannot meet the auction deadline.
However, the exact structure varies between lenders.
Some facilities may be structured to fund the acquisition in a way that accommodates the auction deposit, while others may require the borrower to contribute the deposit from their own resources.
You should therefore establish before bidding:
- How much the lender will advance.
- Whether the deposit can be incorporated into the funding structure.
- How much cash you must contribute.
- What valuation the lender will use.
- What fees apply.
- When the funds can be released.
- How the bridge will be repaid.
Do not assume that a lender will automatically fund the entire difference between your deposit and the purchase price.
Auction Finance vs Mortgage: Which Is Better for the Deposit?
There is no universal answer.
A conventional mortgage can potentially offer cheaper long-term borrowing, but the application and completion process may not fit the auction’s timetable.
Bridging finance can be faster and more flexible, particularly for properties requiring refurbishment or where the buyer needs a short-term solution.
A common strategy is:
Auction purchase → bridging finance → refurbishment or stabilisation → conventional mortgage refinance
The suitability of this strategy depends on the property, borrower and intended exit.
For a detailed comparison, read our guide to Auction Finance vs Mortgage.
The key is to decide how the purchase will be funded before you bid, rather than after the hammer falls.
A Simple Auction Property Deposit Formula
If you want a quick way to estimate the deposit:
Traditional auction deposit
Hammer price × deposit percentage = auction deposit
For a 10% deposit:
£350,000 × 10% = £35,000
Then calculate your wider cash requirement:
Auction deposit + buyer fees + legal costs + SDLT + finance costs + immediate works = initial cash requirement
The exact figures will vary by property and transaction.
Auction Property Deposit Checklist
Before bidding on an auction property, make sure you have:
- Confirmed the auction type.
- Checked the deposit percentage.
- Checked whether a minimum deposit applies.
- Confirmed the acceptable payment method.
- Confirmed the buyer’s fees.
- Read the legal pack.
- Had the legal pack reviewed by a solicitor where appropriate.
- Checked the Special Conditions of Sale.
- Calculated potential SDLT.
- Budgeted for legal and valuation costs.
- Confirmed your mortgage or auction finance strategy.
- Checked the lender’s maximum LTV.
- Considered a lower valuation scenario.
- Calculated refurbishment costs where applicable.
- Confirmed the completion deadline.
- Established your exit strategy if using bridging finance.
- Set a maximum bid and committed to sticking to it.
Frequently Asked Questions About Auction Property Deposits
How much deposit do I need for an auction property?
For a traditional unconditional property auction, the deposit is commonly 10% of the hammer price. However, auction houses can impose minimum deposits or different requirements, so always check the individual lot’s conditions.
Is a 10% auction deposit refundable?
Generally, the auction deposit forms part of the purchase price and is not something you should expect to recover simply because you change your mind. If you fail to complete under the contract, you may lose the deposit and potentially face additional claims.
Can I buy an auction property with a 5% deposit?
A 5% mortgage deposit and a 10% auction deposit are different concepts. A traditional auction may require a 10% contractual deposit even if your eventual mortgage funding would otherwise allow a lower equity contribution. The exact funding structure needs to be arranged before bidding.
Can a mortgage pay the auction deposit?
A conventional mortgage typically releases funds at completion, whereas the auction deposit is usually payable immediately after the successful bid. Some specialist finance structures may help provide the required funds, but this must be agreed with the lender in advance.
Do I need the whole deposit in cash?
You need to have access to the required deposit in a form accepted by the auctioneer and available within the required timeframe. Payment methods vary, so check the auctioneer’s instructions before auction day.
What happens if I cannot pay the auction deposit?
If you cannot provide the required deposit and fees after winning the property, the auctioneer may be able to re-offer the lot. You may also face contractual consequences. The exact position depends on the auction conditions.
Is the auction deposit based on the guide price?
Usually, the deposit is calculated from the actual hammer price, not the guide price. If you bid above the guide price, your deposit will normally increase accordingly.
How much cash do I need besides the auction deposit?
You may need additional funds for buyer fees, legal costs, valuation, SDLT, finance costs, insurance, refurbishment and other charges contained in the legal pack. The amount varies considerably by property and buyer.
Can I get a mortgage after winning an auction property?
Potentially, but timing is critical. Traditional auctions can require completion within a short contractual period, so you should not rely on starting a mortgage application after winning unless you have established that the lender can meet the deadline.
Should I arrange finance before bidding at auction?
Yes. If you need borrowing to complete the purchase, finance should be assessed and preferably agreed in principle before you bid. The consequences of winning without a viable funding strategy can be significant.
Final Thoughts: Don’t Confuse the Auction Deposit With Your Total Budget
Understanding the auction property deposit is one of the first steps towards buying successfully at auction.
For many traditional auctions, the starting point is straightforward:
10% of the hammer price.
But experienced auction buyers know that the deposit is only one part of the financial picture.
If you are bidding on a £300,000 property, thinking only about the £30,000 deposit can give you a dangerously incomplete view of the transaction.
You need to consider the deposit, fees, taxes, legal costs, finance, completion deadline and any refurbishment requirement before deciding how much you can afford to bid.
Most importantly, your maximum bid should be determined before you enter the auction.
If you are considering buying an auction property in London and need help understanding the mortgage or finance options available, speak to a specialist who can assess the transaction against the auction timetable and property circumstances.
Contact London Mortgage Broker to discuss your auction property finance requirements.
Related Guides
- Can You Get a Mortgage on an Auction Property? — Understand when conventional mortgage finance can work and when specialist finance may be more appropriate.
- Auction Finance vs Mortgage — Compare the speed, flexibility, costs and suitability of auction finance and conventional mortgages.
- Auction Finance Calculator — Estimate the deposit and wider cash requirement for an auction purchase.
Important: Auction conditions, deposit requirements, fees and completion deadlines vary by auctioneer and individual lot. This article is for general information and should not be treated as legal, tax or regulated financial advice. Always review the legal pack and Special Conditions of Sale and obtain appropriate professional advice before bidding.
