"This is an area which has been dominated by a few larger players and this combination, alongside risk, regulation and demand has inhibited many lenders from entering the market."
And it’s not only lenders in the mortgage world who are realising its potential. Despite fears about the potential impact of Brexit and another independence referendum, Scotland has recently been tipped as a peer-to-peer lending hotspot.
So, what is behind this current trend?
Lending in Scotland is not too dissimilar from other areas of the UK, but there remain some differing practices and quirks in property law which need to be incorporated into propositions. In historical terms this is an area which has been dominated by a few larger players and this combination, alongside risk, regulation and demand has inhibited many lenders from entering the market.
When speaking to Scottish intermediaries, it soon became clear that it was a marketplace lacking in specialist residential lending options. And this has also been realised by more nimble and adaptable lenders who, through a mix of technological advances and strategic partnerships, have been able to extend certain sections of their offerings across the border.
Its potential was further outlined in recent commentary from Glasgow-based specialist finance provider Your Expert Group when it suggested that the number of Scots getting onto the property ladder in 2019 could rise by as much as a fifth, when compared to 2018. With homeownership levels expected to increase by such a margin it’s little wonder that an increasing number of lenders are casting their nets further afield.
When assessing the residential mortgage market, self-build is a particularly interesting area to focus on. Especially in the wake of the recent announcement from the Scottish government that a £4m fund has been opened to support people across the country looking to build their own homes. The fund has been launched following a successful pilot in the Highlands and is now open for applications. Loans are available for eligible urban and rural self-builders who are unable to access standard bank lending to support build completion, allowing access to a traditional mortgage which is used to repay the loan. The Highland Small Communities Housing Trust ran the pilot and will administer the fund on behalf of the Scottish government.
Self-build and custom-build represents a growing market on both sides of the border although this remains a sector which can often be a complex and onerous one without the right support network in place. This is one of the reasons why we launched our Self-Build Direct to Intermediaries offering earlier in the year which includes an online self-build hub, and this facility has been extended to Scottish intermediaries.
Opportunities will open-up for borrowers and intermediaries all over the country as lenders battle for market share across many sectors - including self-build - and look to make an impact in this relatively small but growing lending arena. 2019 will certainly be an interesting year for Scottish lending and one which intermediaries should be following closely.
