Review of Northern Bridging Finance Market Q1 2019

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Over the last quarter, there has undoubtedly been an increase in property developers electing to retain properties at the end of a refurbishment project rather than selling on. This may be a sign that additional costs such as the 3% stamp duty surcharge are a turn off for investors.

As such, investors are choosing to re-finance with BFS onto a BTL mortgage and take the yield and long term capital appreciation that this typically brings.

From the Midlands upwards and across the North of England, there is a much greater potential to follow this route as acquisition costs are much lower and there is far more traditional small landlord stock such as small terraced houses and small semi-detached houses.

Given the higher level of capital growth associated with property located in the south, there is an increased level of buyers who want to make the purchase, improve the property and then sell on in a market that has long enjoyed higher rates of growth than other parts of the UK. The lower yields make it more unattractive to retain in certain parts of the south also which lends itself to sale rather than retention at the end of a bridge.

In terms of Brexit and the possible impact this will have on our sector, central London is probably the only place that is particularly nervous on this. Regardless of your position on Brexit, leave or remain, the facts are that large blue chip companies and merchant banks electing to relocate parts of their workforce will undoubtedly have a direct effect on high-value flats and apartments in central London.

The wider picture remains very unclear, as indeed does Brexit itself! However, the property sector has remained relatively stable over a prolonged period which could help negate any short term liquidity issues. Our opinion at BFS has always been that sensible lending levels and commercially astute decisions on property advances lead to a strong book of satisfied clients.

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