A number of regions across the UK have seen
an increase in bridging activity, according to leading figures in the sector.
In this sense, how has the
bridging market in certain locations changed and developed over the years?
Bridging
& Commercial spoke to lenders and
brokers from a selection of regions across the UK to find out how their part of
the market was faring and what they expected to see from it in the future.
North West
Richard Showman, head of lending
at Mint Bridging, claimed that the number of lenders in Manchester’s city
centre following the crash had declined, however, in the past five years, there
had definitely been a strong rebound in the North West and the market was
“flourishing.”
He added that the success
of the Northern Powerhouse had led to an increase in
renewal and development lending, which had generated tremendous opportunities
for the short-term finance sector.
“Pending that the economy
continues to prosper with
our new prime minister, we’re confident that the North will keep
attracting investors looking to develop their portfolio.
“You only need to look at the
Manchester skyline to assess the [prospects] that will come from development
opportunities, already echoed in many of the North West’s cities and
towns.
“This tends to naturally have a
trickle-down effect, whereby smaller investors then jump on the bandwagon and
look to expand their property collection in the thriving region.”
Scott Marshall, managing director
at Roma Finance, added that regeneration was a key strategic aim for many North
West towns.
“This has led to an increase [in]
the number of renovation projects across the region, and lenders have benefited
from this increased activity in a favourable and growing market.
“Although we're seeing landlords
consolidate their portfolios, there is still a huge demand from
developers to capitalise on the booming job market in the North West as young
professionals seek high-quality rental accommodation and HMOs.
“The opportunities within the
student accommodation sector also remain healthy as the number of students in
the North West remains high.”
Nick Jones, head of specialist
distribution at Together, explained: “We’ve seen more investment in the North
West in the past decade at the same time as bridging finance has become
increasingly popular with property investors looking to expand their portfolios
and maximise yields.
“Buyers from London and the South
East, where prices are historically high, have been attracted to the North
West, where house prices tend to be lower, but where the rental sector remains
strong and return on investment remains higher.
“Now, we are finding that because
of an increased investor appetite, more lenders and brokers are focusing their
efforts on winning business in the North West.”
North East
(including Yorkshire and the Humber)
Andrew Mackenzie, managing
director at One Stop Business Finance, claimed that while the North East
bridging market had grown, the supply had increased more than the demand for
vanilla bridging loans.
“Our view is that the completion
of the Brexit exercise (no deal or not) will kick start the housing market
again.
“…There are more lenders in the
region than ever … [those] who know what they are doing will make decent
returns.
“We expect others to fail in the
medium term.”
Midlands
“The stability of house prices in
the Midlands vs the South East, which
has been more effected by Brexit, has seen many lenders with a
traditionally South East focus open up to the Midlands,” claimed Jack Coombs,
director at Aspen Bridging.
“Overall, the market has become
more competitive, giving customers a better access to products and driving
professionalism among those lenders and brokers based in the Midlands.
“The biggest growth here will be
from the brokers who previously had an RMC [residential mortgage contract]
focus and have now broadened their horizons in response to the growth of the
specialist finance sector.”
Harriet Smith, head of bridging
finance at Crystal Specialist Finance, added: “Bridging outside of London has
taken off over the last few years as investors realise that there are
opportunities outside of the capital.
“Obviously, the North West has
long been a bridging hub, but now we are seeing more lenders have a presence in
the Midlands in the form of offices or BDMs, as those with the traditional
South East/M25 presence stretch their reach to follow demand.”
London
“Not only has the London market
hit a ceiling, where price is concerned, but also with regard to returns where
investors look to create and add value to an asset,” explained Gavin Seaholme,
head of sales at Shawbrook Commercial Property.
“While the need for bridging
finance is fairly static, more customers are looking at creating value with the
combination of bridging and development finance, holding stock rather than
selling.
“Investors are starting to move
this money out of the capital and explore regional opportunities within
emerging markets, such as Birmingham.
“Capital growth on assets will
always perform better in this region but, depending on the investors’ strategy,
yields will become squeezed unless investors look around for more diverse
security types.”
Richard Deacon, sales director at
Masthaven, added: “The London bridging market is always quite a volatile one as
it is intrinsically linked with the London housing market, which, if you’ll
forgive me for being a bit dull, absolutely fascinates me.
“Whether it is the
multi-million-pound super apartments for the well-heeled, or the more common
family homes that proliferate the country’s capital — every lender is at the
mercy of a market that can sometimes resemble trading on the stock
exchange.
“There are microcosms of
geographical areas that are skyrocketing in value, [while] others are in a long
winter slumber.
“Given the sheer volumes of
transactions, there will always be a healthy number of bridging transactions
within the M25, but the values given and perceived can differ daily.”
South East
“…Most of our bridging is [in
the] South East, so we have undoubtably seen an increase in both regulated and
unregulated lending in recent years,” stated Phil Jay, director at Complete FS.
“The drop in rates over these
years due to greater lender competition has made bridging more accessible.
“There’s been more willingness
[from] regulated brokers to understand bridging, so this has led to more
business.
“We have certainly seen more
investor appetite this year, ranging from the first-time investor/developer to
the more experienced.
“Availability of funds with the
bridging lenders has meant these loans are more accessible and competitive.”
East of
England
"There are certainly more
players in the market, but what we see is that even experienced property
developers struggle to fund their projects," saidRoxana
Mohammadian-Molina, chief strategy officer at Blend Network.
"The barrier to entry in the
bridging market is relatively low, so we have seen more players enter the
market, but as soon as you have a non-vanilla, quirky deal outside large towns,
then there is less appetite for lending.
"Our own in-house research
and third-party research suggests the region is poised for strong growth on the
back of solid fundamentals."
Scotland
Nathan Ellis-Calcott, director of
specialist lending at Your Expert Group, claimed that the change in the
Scottish bridging market in recent years had been nothing short of
dramatic.
“In fact, it’s fair to say that
the market in 2019 is almost unrecognisable from what it was in 2016.
“There are more lenders, more
products, better rates and more broker knowledge on the ground.
“The professionalism, choice and
knowledge that have been the norm in the South of England for the best part of
a decade have now made it north of the border.
“Expect more growth, and lots of
it.
“While the market has developed
considerably in the past few years, it is still evolving in Scotland and there
is plenty of scope for further expansion.
“Again, expect to see more
investors, more lenders and more brokers, and for the whole sector to mature
considerably from an infrastructure point of view.
“It’s an exciting time to work in
specialist lending in Scotland.
“There’s a real buzz up here.”
Northern
Ireland
“Bridging and alternative funders
have always featured in the Northern Ireland market, however, it is really only
in the last four or five years that this style of finance has come to the fore
as a consistent alternative to traditional sources of finance,” added Shane
Donnelly, director of Northern Ireland at Ortus Secured Finance.
“A key factor in this development
has been the limited appetite of clearing banks to support asset-backed
borrowers.
“Our own experience in Northern
Ireland has been excellent with growing awareness and demand for our products
prompting our decision at the start of this year to establish an office and
team dedicated to the region.
“Northern Ireland clearly faces a
number of challenges in the near future, including the eventual outcome of
Brexit negotiations and the resumption of our devolved government.
“Notwithstanding those
challenges, I fully expect the bridging market will continue to grow as brokers
and borrowers become more aware of their options.”
Wales
“Given the growing nature of the
economy, it remains clear that alternative lenders are filling the gap left by
the high street banks, who continue to show a lack of desire to lend outside
the ‘hot city’ locations,” said Jon Preston, sales director at Signature
Private Finance.
“For us, this lack of interest
from certain lenders to do business in less obvious property hotspots, like
Wales and Scotland, is helping drive our growth strategy.
“It’s important to realise the
broker market is well established and strong in England and Wales, yet is less
well developed in Scotland.
“We are now seeing businesses in
the professional services sector recognising the opportunities to make money
afforded by collaborating with alternative lenders.”
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