Lack of summer slowdown offers opportunities for advisers

Speak to anyone in the bridging market, and you’ll hear a similar story. Most firms, whether they are advisers or lenders, had record-breaking months in June.

Related topics:  Special Features
Luke Egan | Pink Pig Loans
18th August 2021
Luke Egan Pink Pig
"We’re not quite seeing the frenzied activity levels of June, but equally we are a long way from the usual drop in caseloads that typically accompany the summer holidays."

It’s not a huge surprise - just as the regular mortgage market saw swarms of buyers trying to get their purchases across the line before the stamp duty holiday deadline, so too did bridging firms see all sorts of investors looking to add to their portfolios by making use of bridging loans.

Indeed, the nimbleness of the bridging market meant that it was perhaps easier to clinch those deals through a short-term loan than by relying on the creaky processes employed by some mainstream lenders.

This is borne out by figures from the Association of Short-Term Lenders (ASTL). It found that bridging applications in the first quarter of 2021 totalled £7.49bn, up by a striking 25.5% on the same period in 2020.

But what’s really interesting is that the slowdown in the market since that deadline hasn’t really happened. Sure, we’re not quite seeing the frenzied activity levels of June, but equally we are a long way from the usual drop in caseloads that typically accompany the summer holidays.

There are all sorts of reasons for activity remaining so strong during what is traditionally a quiet time for the bridging sector. For example, there’s no doubt that the permitted development situation has played a part.

Certain permitted development rights covering the change of commercial properties like offices and shops into residential property concluded at the end of July, and we saw no shortage of buyers moving in order to beat that particular deadline.

The prospect of a second (partial) stamp duty holiday deadline at the end of September is also prompting investors to get moving and try to purchase new additions to their portfolios. But there is the health of the property market generally too - the prolonged periods people have spent at home have caused many people to reconsider what they want from their home, and consider different areas and different types of property.

Investors are well placed to take advantage of that changing appetite for owner-occupiers and tenants alike.

More growth ahead

Many brokers are only too aware of just how bright the future appears to be for the bridging market too. When Shawbrook Bank polled advisers last month on which area of the market they expected to see the strongest growth in the second half of 2021, bridging came top on 26%, ahead of the likes of semi-commercial and buy-to-let.

When you consider the bridging market already had a notably strong first-half of 2021, it’s clear that momentum is really building behind this area of the lending market as more brokers and their clients become attuned to the benefits a bridging loan can provide for their investing strategy.

The demand seen across the bridging market at the moment is hugely encouraging. It shows real confidence among the nation’s property investors that they can see the potential from adding to their portfolios or simply selling on properties for a profit following some light improvements.

What’s more, with the second stamp duty holiday deadline not far away, there’s no reason to expect that demand won’t do anything but increase up until that point.

Picking the right partners

The bridging market can provide real opportunities for advisers who perhaps ordinarily don’t deal with short-term loans. The demand is clearly there from clients but identifying the right lenders can be far from straightforward if it’s an area of the market you rarely look at.

That’s why partnering with a specialist can prove invaluable. Rather than turn away those enquiries, you can help those clients find the finance they need for their purchases, safe in the knowledge the client will be advised and treated professionally, while you also enjoy an additional revenue stream.

The bridging market is continuing to grow and strengthen; proactive advisers can benefit from this, even if they don’t feel able to provide the necessary advice themselves.

 

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