Why consistency is crucial as activity levels increase

Jaxon Stevens, sales director at Tuscan Capital, explains why it's worth considering lender capacity during the recent surge in activity levels, which can translate into issues for individual cases.

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Jaxon Stevens | Tuscan Capital
28th June 2024
Jaxon Stevens Tuscan
"Recent conversations with brokers have made clear this is a big concern at the moment, with inconsistent service leaving clients in the lurch."

The activity levels in the market lately have been really striking. It’s not just Tuscan seeing this spike in interest from investors either, but the bridging sector as a whole, and that’s borne out by stats from the recently renamed Bridging and Development Lender Association (BDLA).

Its most recent data found loan books in the first quarter of the year hit a new record high at £8.1 billion, while applications in particular are up sharply from the previous three months.

It bodes well for the industry that investors are so keen to do business, having spotted potential opportunities to do more with the nation’s housing stock. After the rollercoaster nature of the last few years, there’s a real confidence among these borrowers who want to crack on with their plans.

Why trust matters

However, it’s worth considering capacity. This sector has seen an influx of new lenders in recent years, a trend that I welcome as competition is great for pushing us all to raise our game and innovate.

Yet we know from our conversations with brokers that not all lenders are equipped to deal with the higher activity levels we are seeing currently. It may be down to funding lines which limit how much they can take on, or simply the infrastructure behind them that isn’t set up for a greater quantity of cases.

This can translate into issues for individual cases. Time is always of the essence when it comes to bridging; these investors want to be able to kick on with their projects as soon as possible, get started on the refurbishment work needed to get the property up to scratch. But if the lender is unable to live up to its promises, that can mean substantial delays, and potentially the need for the broker to move the case to a new lender, which can have another knock-on effect on timeframes.

Recent conversations with brokers have made clear this is a big concern at the moment, with inconsistent service leaving clients in the lurch.

It’s why it’s so crucial for brokers to pinpoint lenders they can trust, the ones who can be relied upon to deliver the required funding on the promised timeframe, irrespective of how busy they are. Consistency and predictability really is worth its weight in gold - if brokers know they and their client will receive a consistently high level of service, and funds delivered in a timely manner, then they are going to keep coming back for case after case.

Grasping the nettle

It’s also important to note that we are in the midst of a General Election campaign – as I write we are just under two weeks away from polling day - with the prospect of a change in Government seeming highly likely if we are to believe the opinion polls.

Addressing the nation’s housing shortage should be a priority, and while in recent days at least, we have seen housing more actively discussed as it has moved towards the top of the agenda, it’s also obvious that the proof of the pudding will be in the eating. We have heard a lot about targets and ambitions before, and about the ways and means by which we improve the supply of housing. And, let’s be frank, a lot of the noise has not translated into moving the dial when it comes to improving the number of new homes, or moving existing property into a habitable state.

There are all sorts of different ways in which this may be addressed, but I would pay particular attention to permitted development. The extension of these rights recently is a really positive move, since it makes it far more straightforward for developers to not only convert a single property into two flats but also to turn commercial properties into residential ones.

Commercial to residential conversions are likely to catch the eye of greater numbers of investors, and these could play a real role in delivering the housing the nation so badly needs, so it’s important in my view that any new Government focuses on keeping such conversions as straightforward as possible.

It’s vital for any new administration to really grasp the nettle when it comes to housing and push forward measures which will make it easier to deliver a greater number of homes for would-be buyers and tenants. But the reality is that making more of the properties we already have will also make a real difference to housing levels, alongside encouraging greater numbers of new buildings, and permitted development should play a central role.

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