A focus on Bridging Finance Solutions: Adam Powell, Head of Business Development at The Property Finance Collective looks at what the future holds for this important short-term lending option.
There is evidence to suggest that 2021 has shown Bridging Finance solutions to be a progressively appealing option for borrowers – A view supported by a Bridging Trends report published in April’s ‘Bridging & Commercial’, which ‘shows how bridging finance continues to be an increasingly attractive proposition to buyers who are looking to save their delayed property purchases’, citing ‘chain breaks’ as the main reason.
Adam also believes this to be the case, commenting:
“It’s been evident through-out this year that delays caused by the uncertainty over the last 18 months have led to an increased demand for a number of bridging products. It’s a trend which has been reflected in the number of enquiries and transactions we have received or completed throughout the year, accounting for roughly one third of our business.”
The latest Government statistical analysis sheds light on other reasons for rising uncertainty which may create a “Bridging boost” around current forestalling activity, i.e. property transactions having to complete earlier to take advantage of government housing policy (In this case, the stamp duty holiday). HMRC data shows that in July 2021, their were 73,740 seasonly adjusted residential transactions in the UK, higher than the same time in 2020, but lower than June 2021.
Time will of course tell, but Adam believes:
“Though this is just a snapshot in time, it is perhaps an indicator of buyer interest waining a little as the September extension deadline approaches. The knock on affect could be significant, where buyers worried about completing in time, consider a bridging loan, and the short-term benefits they can provide.
There are also increasing signs that Lenders are taking heed of these changing market dynamics . Adam continues:
“As a specialist finance broker working with developers and property investors, our own experience has reflected this scenario, with bridging lenders responding with innovative product design, and niche offerings, coupled with rate cuts. It’s a response driven by delayed development projects and property sales, creating a focus on bridging solutions as development loans approach the end of their term. So when developers and investors have been looking for fast alternative solutions, product flexibility has been crucial, along with tailored support, particularly as markets reopen and adjust. We anticipate that throughout the rest of this year and moving forward into 2022, Bridging Finance in its various guises (e.g., Development Exit Bridging, Re-Bridging and Finish & Exit Bridging) will increasingly become an important short-term solution that developers and investors will rely on more and more.