Property experts are seeing rising interest from auction bidders who are keen to beat the January VAT rise.

The 2.5% rise in the standard rate VAT taking it to up to 20% comes into force on 4th January 2011 which is expected to generate more than £13.4 billion a year more revenue for the Treasury.

VAT is payable on adviser’s costs including legal fees, surveys and conveyancing fees as well as for search fees and refurbishment costs. As a result, many investors are considering buying now to reduce costs.

As well as beating the VAT rise, it appears that many buy to let investors are making the most of a ten year high in achieved rents and snapping up property bargains

Chris Baguley, director at lending specialist Auction Finance Limited, said: “We’re seeing a spike in interest from bidders keen to boost their portfolios with bargains at auction and to furnish their properties ahead of the January increase. The VAT increase was one of the most controversial elements of the Budget and investors are keen to minimise the impact. It’s a particularly good time to buy as demand for rental property has rocketed and beating the VAT rise could save vast amounts of money.

“Many investors plan to furnish their property prior to let, and buying now will mean cheaper furniture and electrical items. Retailers have been hit hard by the recession and are already working to slim margins. This means it’s likely the tax rise will be passed directly onto the consumer in January.

“The rise will be an additional and unwelcome cost for investors keen to take advantage of increased tenant demand. UK rents hit a record high in September, standing at an average of £689 per month and this figure surpasses the data seen in August 2008, which was the previous market peak,” concluded Baguley.