Bridging – the North South Divide, August 2020

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Bridging Finance Solutions’ Head of Sales, John Hardman, reflects on the trends and changes in the bridging market during Covid-19 with a focus on the great North-South divide…

“In general terms, I believe that the biggest impact of Covid-19 has been on the choice of lenders available in this market. Undoubtedly the number has reduced and there has been a hardening of appetite in the market for certain deals.

“Looking at major differentiators in the North and South, I would say key areas are deal size and loan purpose. From the Midlands downwards, we are seeing more ground-up development enquiries and these have been typically over £1m in value. Whilst we have developed a niche for smaller developments, this has, in turn, led to larger more complex enquiries and we now have some great schemes underway, all sanctioned during the last four months.

“Moving further North, there are now more opportunists looking to bridge on auction or purchase dilapidated properties where the intention is to refurbish and sell on or retain as part of a long term investment. Capital values at the lower end remain suppressed and represent good value for those with a keen eye and a vision for the finished article.

“As was the case pre-pandemic, the majority of interest overall remains focused on ground-up development and part-finished schemes. The latter has definitely been on the increase, so much so that we have seen some projects that are too highly geared for us to become involved, buyer beware! On the flip side, we have completed a number of deals where clients have suffered delays by way of lockdown and have simply run out of time with their lender and need a boost of capital to complete

“Overall, confidence in the residential property market is slowly but surely returning. Many long term lenders have re-engaged with the market, particularly secondary and Buy To Let lenders who have also started to edge up LTV’s. This, in turn, drives the confidence for us as a short term lender because we often rely on the long term market for repayment at the end of a bridge/development loan.”

John concluded: “We remain in uncertain times, however with reductions in stamp duty, lower interest rates and a general returning appetite for residential houses and developments, we are seeing positive signs across the country. The North and South continue to present challenges and opportunities largely based around geography and demographic, whilst fewer lenders have opened up the bridging market to new opportunities changing the business model for the ones who have stuck it out including ourselves .”

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