Buyer's premium
A buyer's premium is the fee a winning bidder pays the auctioneer on top of the hammer price at a property auction. At the major UK residential auctioneers it is 1.2% to 1.5% of the hammer price with a minimum of about £1,500, and it is usually accompanied by a separate administration fee of £900 to £1,200. It is payable on the day, alongside the 10% deposit, and it is stated in the auction's terms and in each lot's legal pack.
What it is for
The premium funds the auctioneer's costs of marketing and running the sale, which is why sellers at traditional auction pay a lower commission than through an estate agent. It is separate from any fee the seller has agreed to pass to the buyer through the special conditions of sale, which can include the seller's legal fees and search costs and can add several thousand pounds to a lot; both appear in the legal pack, and neither appears in the guide price.
Modern method
Under the modern method of auction the buyer's premium is replaced by a reservation fee, typically 4.2% of the price including VAT with a minimum of about £6,000, which is paid on winning, is non-refundable and does not count towards the purchase price.
Tax and accounting
The premium is paid to the auctioneer, not the seller, so it is not part of the consideration for stamp duty land tax; confirm the position with your conveyancer where a seller's fee is passed through the special conditions, because that can be treated differently. For a landlord, the premium and admin fee are costs of acquiring the property and form part of its base cost for capital gains, not a deduction against rent; log them against the property in August's expense tracking with the completion statement so the figure is there on sale.
Working it into a maximum bid
On a £150,000 lot at a 1.2% premium with a £1,200 admin fee, the fees are £3,000 before SDLT, legal costs and any bridging; run the surcharge through the stamp duty calculator and set the maximum bid before the room opens. Which houses charge what, and the all-in cost of a typical lot, are in the best property auction houses for landlords; the bidding process is in buying property at auction.
From working with landlords who buy at auction, the fee that surprises them is rarely the premium, which is published; it is the seller's costs passed through the special conditions, which are not.
Last reviewed: September 2026.
