"Development exit gained in popularity as a by-product of Covid but it now seems to be more of an established, standard product across the bridging space."
FR: You’ve been with business for almost a year now. What have been your highlights?
Since joining Hampshire Trust Bank’s bridging channel I’ve been struck by how good my colleagues are. I can honestly say they are some of the most hard-working people I’ve had the privilege to work with over the course of my career.
Now the channel is evolving, everyone’s hard work is paying dividends, which provides me with great satisfaction. The ‘one team’ ethos is very strong and resonates across all parts of HTB, ensuring that cases progress quickly even when they straddle multiple lending teams.
FR: Where do you see opportunities in today’s market for property investors?
The market continues to be a turbulent and challenging place for investors to operate in. Inflation remains high and has been a leading driver for the numerous base rate hikes from the Bank of England. However, there are opportunities for those investors with surplus cash or low-geared assets as they will be able to capitalise on the possible ‘fire sale’ that we may well see in the market over the coming 12 months caused by some amateur property investors exiting the market.
These will likely consist of a variety of residential investments but all will create more opportunities for HMO, MUFB and semi-commercial conversions, providing more yields for investors.
FR: How do you want HTB to stand out from the competition?
As a relatively new provider in the bridging market, my goal has been for HTB to be one of the consistent ‘go to’ lenders in the market for bridging by the end of 2023 and I believe we’re firmly on track to achieve this. I want us to be known for having a ‘hands on’ approach and being commercially-minded on a case-by case-basis – always looking to find a solution for our key partners in order to provide the right outcomes for their clients.
FR: What trends are you seeing in applications?
Currently we are seeing a large amount of development exit transactions, both for multiple units as well as houses. Development exit gained in popularity as a by-product of Covid but it now seems to be more of an established, standard product across the bridging space.
We are also receiving a high number of MUFB and HMO cases, whether for a purchase with the intent to convert (with the correct planning gain) or with the correct permissions already in place. We’re particularly seeing such applications around university towns.
HMOs and MUFBs are currently seen as a way for investors to inject higher yields into their portfolios.
I expect semi-commercial development to remain popular in the near- to medium-term future, because it appeals to those clients looking for higher yield opportunities, as well as offering potential tax advantages.
We saw an increase in the number of distressed property assets coming onto the market at the beginning of the year, with a commensurate rise in auction purchases. With the outlook for the UK economy not particularly improving I can see demand for auction finance remaining strong into next year at the very least.
FR: HTB has been building its bridging operation over the past year. What are its plans for the future? Can we expect more new hires?
The growth of our loan book has already surpassed our expectations at this early stage of our evolution, but we still want to continue on that trajectory. That said, we are always focussed on ensuring we lend on the correct transactions: those with the right asset and from the right customer.
From the outset I have been confident that our operation will grow organically in the areas that are required. I’m a firm believer in making sure that we hire the right people in the right position; those who not only understand and are good at their role but can also embrace the culture of the business. We’re certainly not being pressured to put ‘bums on seats’ for the sake of it.
FR: What do you think is the outlook for the bridging market for 2024?
We’re still in a time of great uncertainty due to the serious, interconnected issues the country is facing (cost of living, inflation, high borrowing rates) and so casualties should be expected with some providers having to exit either temporarily or permanently. That said, going into 2024 I believe the market will start to correct itself and rates will start to stabilise (around 5%) but long gone are the days of exceptionally low rates.
The bridging market looks set to remain strong during the rest of the 2023 and into 2024, as the supply and demand problem (lots of demand but a lack of supply) remains the same.
The opportunities to acquire property quickly and at a lower price will be more attractive than ever to professional investors, and bridging finance is the proven solution to helping them achieve this.