"Bridging lenders stepped in to help investors and landlords when term lenders lost their appetite last year and, despite buy-to-let providers having largely returned to the fold, bridging is still strong"
The past month has been a strong one for Alternative Bridging and I’ve been happy to hear much the same from brokers. For us, April was a very steady month across all regions and in all areas of the business and May is progressing in the same vein.
It’s a relief that lending markets have finally settled down after the turmoil which began in the second half of 2022. Of course, bridging lenders stepped in to help investors and landlords when term lenders lost their appetite last year and, despite buy-to-let providers having largely returned to the fold, bridging is still strong.
Regulated bridging In fact, we’re finding demand for all areas of bridging. From a regulated point of view, we’re seeing lots of demand from customers who need to move quickly in chain break situations. Brokers have been helping clients who have had their chains collapse and so feared that they would miss out on their next home.
By using a regulated bridging loan, clients can effectively become a cash buyer, detach themselves from the broken chain and still be on track to make the purchase.
In addition, the purchaser can also attempt to negotiate a better price on the property as they have speed and certainty on their side; these cost savings could even cover the costs of the bridging loan.
Business finance Another area where we have seen lots of activity is with the provision of finance to the business community, freeing up capital for new contracts. With lenders such as Alternative Bridging, cases can complete in four weeks; compare that with high street lenders who could still be reading the paperwork after that time!
We have long recognised the importance of addressing opportunity costs for businesses by providing solutions to help them move quickly.
A case in point is our Alternative Overdraft, which many businesses are using. It is a flexible loan facility which can be drawn upon whenever required, offering borrowers the opportunity to draw, repay or reduce funds when they are needed. There is no need for expensive setting-up charges each time a loan is needed and can be secured by a first or second charge on a residential or commercial property.
Development movement After a prolonged period of challenges for developers, we’re finally seeing positivity in their area of the market. Properties are moving and we're not seeing down valuations as we were six months ago. This means that, while development exit products are still in demand in order to finish off delayed projects, developers are at less of a standstill and are planning for new schemes.
That said, it's worth remembering that lenders are still looking for realistic and multiple exit strategies as the market is not back to how it was in 2019 (and is unlikely to be any time soon).
We’re also seeing plenty of interest in regulated development finance. This is when at least 40% of the property being developed is to be used as, or in connection with, the primary dwelling of the borrower. For example, when developing a property in the garden or grounds of a residential home, in order to sell one on while living in the other. As the majority of short-term lenders are not FCA regulated, the ones who are, such as Alternative Bridging, are starting to see some real traction with regulated development finance.
Bridging fundamentals Demand for unregulated bridging finance continues to be in fine health, as the rental market remains strong and properties are still being bought and sold at auction in good numbers. These also mean that financing for refurbishment is consistently being sought (and provided), especially with new rules for Energy Performance Certificates (EPCs) of rental properties still looking likely to come into force in 2025.
Of course, demand for bridging finance products is all well and good but as a lender it means nothing if you can’t back that up with excellent service. At Alternative Bridging we take the view that personal service is the only service. Technology can help a business but bridging will always require people; applications are always different and so our experienced staff assess each one and continually work out ways to get things done by taking a flexible approach.
Equally, personal service means brokers will be in constant dialogue with our underwriters and BDMs to ensure cases progress as quickly as possible. Service is at the top of our agenda and we thrive on developing long-standing relationships with brokers.
