"Building on what was a remarkably robust 2021, buoyed by changing consumer behaviour, supportive government stimulus and a low interest rate environment, expectations are high for 2022."
The research found that there is significant capacity amongst brokers for more business, with just 14% saying that they had turned away more bridging cases in the last 12 months compared with 57% who could place more.
Despite 74% of brokers believing that Permitted Development will enable them to arrange more bridging cases, borrowers have been slow to embrace the 2021 changes to PD rights. Nearly three quarters of brokers said that either less than 25% of their landlord clients (43%), or none (26%), have asked for them to arrange bridging finance relating to PD. Over half of respondents (54%) cited a lack of suitable properties as the main obstacle for this lack of demand, followed by fluctuating valuations and access to finance.
The survey also reveals that lenders are continuing to exercise caution, with 60% of brokers citing the placement of higher LTV cases as their biggest challenge, followed by securing finance for foreign nationals (37%).
For borrowers and brokers new to the market, how interest is calculated/repayment terms is the most confusing area (49%), followed by the legal process (39%) and the application process (32%).
Nick Hilton, managing director of Glenhawk, commented: “Building on what was a remarkably robust 2021, buoyed by changing consumer behaviour, supportive government stimulus and a low interest rate environment, expectations are high for 2022. These findings align with the exceptionally high levels of enquiries we have generated so far this year, with the market opportunity as Covid-19 fades into the distance set to grow considerably this year.
“At the same time, there remain challenges, noticeably the continued need for lenders to simplify and increase transparency for the borrower process, whilst more highly leveraged schemes will remain out of favour, especially if recent global events take on a more urgent focus. Furthermore, despite the welcome changes to Permitted Development last year and optimism about its potential, huge swathes of the market remain unaware of the opportunity, so there is a signficant education piece to be undertaken in the coming months.”