Specialist Lending

Stamp duty holiday fuels bridging activity in Q2

Rozi Jones
|
29th July 2021
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"Any previous pandemic worries seem to have been put to one side with the stamp duty holiday deadline creating a frenzy of activity."

The bridging market continued to stabilise in Q2 as buyers rushed to complete before the stamp duty deadline, according to the latest Bridging Trends data.

The bridging loan market held steady in the second quarter at £146.52 million, a nominal percentage on the previous quarter (£144.51m), contributors reported. However, regulated bridging loans transacted by contributors dipped in Q2 – falling from 47.7% to 41.6%.

First charge bridging loan applications soared in the second quarter, motivated by the desire to take advantage of the full stamp duty holiday. They accounted for 90% of total market volume in Q2, up from 77.8% in Q1.

Funding the purchase of an investment property returned as the most popular use for bridging finance in the second quarter, at 24% of all contributor transactions – up from 19% in Q1. A traditional chain break was the second most popular use of bridging finance at 20% of transactions.

Bridging loan application processing times reduced significantly as brokers, lenders, surveyors, and solicitor firms all battled to complete property deals before the stamp duty holiday started to taper off. The average completion time on a bridging loan application in the second quarter reduced to 47 days, from a record 53 days in the first quarter. This is the lowest figure recorded since Q2 2019 (44 days).

Chris Whitney, head of specialist lending at Enness, commented: “It looks like we have reached quite a stable platform over the last two quarters. Any previous pandemic worries seem to have been put to one side with the stamp duty holiday deadline creating a frenzy of activity. The higher level of investment purchases shows confidence in the UK property market is strong.

“I am slightly surprised that lending volumes weren’t higher. The market certainly felt very busy as we struggled to get valuers out in a timely manner due to volumes and many a solicitor was having to burn the midnight oil to keep up with demand.

“Nice to see the time it takes to draw a loan heading in the right direction albeit was that again stamp duty deadline linked? It will be interesting to see where that is at in the next quarter.”

Matthew Corker, operations director at Knowledge Bank, said: “We've seen a dramatic rise in searches across our bridging section throughout this quarter. 'Regulated bridging' has consistently appeared as one of the most searched terms on our system throughout 2021, holding the top spot in April, May and June, likely due to buyers wanting to secure their onward purchase before the end of the stamp duty holiday.

“Interestingly, we've also seen a general rise in search numbers in more traditional bridging categories, suggesting that the usual summer lull may not be as pronounced this year.”

Gareth Lewis, commercial director at MT Finance, added: “As purchases would have been at the top of people’s minds due to the stamp duty saving, it’s no surprise to see that first-charge lending has significantly increased its share of transactional volumes. It will be interesting to see if this percentage decreases in the coming months as consumers look to raise finance out of existing properties to fund further property acquisitions or businesses.”

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