Bridging Finance Solutions is one of the UK’s key specialist finance lenders which is enjoying significant growth in the Midlands. BFS’s Regional Business Development Manager, Keith Litherland, reflects on the issues dominating the bridging sector in the Midlands since joining the company earlier this year.
The main demand in the Midlands is for refurbishment finance on reasonably priced properties that are in need of renovation and then sold on or refinanced as part of a buy-to-let portfolio, highlighting a sustained optimism from landlords. This is closely followed by development finance where we have seen a huge rise in demand to build on smaller plots containing 1 – 7 properties and the conversion of existing properties including pubs, offices and commercial units to residential accommodation.
BFS are working predominantly with brokers across the Midlands who are keen to get involved in the development market – the housing shortage is certainly creating a high demand, with an average loan size at around £335,000. Auctions present strong opportunities for clients looking to acquire reasonably priced properties to buy and refurbish. We have also seen more direct activity with new buyers looking to get on the housing ladder, although the inexperienced buyers tend to find success bidding on their third or fourth auction, as they become more focused on the right property.
This quarter BFS have looked at a range of deals including the purchase of a dilapidated farmhouse with several acres in the Herefordshire area. The property had been on the market for some time and needed full refurbishment but was considered un-mortgageable in its current condition, thus the need to bridge. The property was to then be purchased and refurbished over 12 months with funds being released as the value was enhanced – once complete the property is to be marketed as a fully renovated country property.
From this, we also considered a proposal to lend on an unencumbered property in the South Midlands where the client was looking to raise capital to buy his business premises and consolidate other finances. The business use put the loan outside many lenders criteria, particularly as the client was to sell the house to repay the loan. Therefore the client was able to secure his business premises, and by consolidating other finances, improve the cash flow position.
Several applicants are amending planning permission to increase their return. For example, a recent project in the East Midlands required a change to planning from two luxury houses into nine apartments which added an additional £1million to the GDV and improved wider profitability.
It’s safe to say that the market is buoyant and there is more demand for fewer properties. Buyers are looking at properties that are less straightforward with regards financing and that is where a bridge offers the perfect solution to secure the property in the short term.