The Rise of Bridging Finance

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It is estimated that the short-term bridging market is now worth an estimated £3 billion annually. This sector has seen sustained growth for a number of years now as it becomes a mainstream source of funding that can be arranged for an ever-growing number of purposes

In 2018 the North of England and Midlands continued to see increases in the number of people either entering the property market for the first time or growing existing property portfolios. The availability of large numbers of comparatively low value properties coupled with higher yields continue to make these areas popular hunting grounds for investors UK wide. At BFS we have seen this reflected in new business levels of 2018 and as we look forward to 2019, we have already a number of “ground up” development facilities pre-agreed ready for drawdown which will surely contribute to our revenue growth in 2019

Further south there has been continued pressure on property values and certainly within the M25, an issue which is not helped by continuing uncertainty over Brexit and how that may affect us here in the UK. Whilst we have lent money on a variety of projects in the south during 2018, the skill in this field is to be able to pick one’s way through a deal and ensure a robust and realistic exit is put in place before funds are advanced and whilst this is true of any bridging loan it has become more of a focal point for high value single assets as mortgage and buy-to-let criteria has continued to tighten up and sales have slowed

Throughout 2018 BFS have seen an increase in the numbers of repeat clients moving on to their next project and using our funds to help them achieve it. This demonstrates clearly that we have delivered a clear and cost-effective solution combined with speed and accuracy of service first time around. It is also clear that bridging finance is becoming much more “mainstream” as its number of uses increases. Costs are decreasing in line with this. 2019 promises to be yet another year where we see more and more ‘repeat users’ of our funding be that for bridging or for small/medium sized property developments.

On the subject of development, 2018 saw a continuation of the apathy shown to such schemes by the high street banks and larger lenders – particularly smaller schemes. BFS have seen a great number of deals in 2018 where clients are looking at building anything from a single house up to 10 units. We are often faced with a proposal that has been well thought out by an experienced professional team and we have a true appetite for getting these underway and funding through to completion. Early indications are that 2019 will continue to see a surge of such projects which could approach 20% of our applications in total.

As a nod to this, we are delighted to announce that in 2019 BFS will be holding a specialist development finance day. This event aims to give people an insight into managing their first bridging deal and improving their wider knowledge of the development finance process, whilst also giving the more experienced property developers access to specialist finance providers in the market.

One final area to note is where there have been a number of retired and low income applicants who have come to the market for short term funding looking to chain break and downsize their residential homes. They like the fact we can take a commercial view regardless of their current financial status and enable them to maybe downsize into a home they have had their eye on for some time. These homes are often more suitable for their circumstances and often need to be snapped up quickly as they are nearly always in the same area as where they live .

In summary, we are pleased that the short term market continues to assist clients and drive the UK economy using ever more cost effective and innovative funding solutions to help out a broad array of clients and projects.2018 demonstrated that to a large extent the UK property market continues to trade robustly when surrounded by economic and political uncertainty. Whilst this backdrop seems set to continue into 2019, our view is that sensible lending on viable projects will drive growth in the short term loan book of the UK further upwards.

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