Help to Buy has provided less than half the funding for new homes in its first 14 months than alternative finance, according to the latest West One Bridging Index.
The scheme has so far delivered equity loans worth £941 million for the supply of new homes via the first phase of Help to Buy, since the scheme’s launch in April 2013.
However, over the same 14-month period, gross lending via the bridging loan industry has totalled £2.38 billion, West One said.
Duncan Kreeger, director of West One Loans, said: “New homes are the fundamental fuel of a healthy property market – so the government and Bank of England are right to highlight the dangerous squeeze in the supply of property.
“But there are other ways to supply new homes. We need to make far better use of the buildings we already have.
“Help to Buy has a critical role to play in kick-starting brand new building sites – yet ground-up development is only one part of the finance that property professionals need in order to supply raging demand.
“Thousands of under-loved and under-occupied properties are still left waiting for refurbishment or conversion. Property developers and potential landlords just need the right sort of finance to get these empty offices or dilapidated blocks of flats to a decent standard and on the market. Flexibility is king – and government schemes can only do so much.”
Over the 12 months ending 1st May, the bridging industry provided annual gross lending of £2.06 billion. This represents growth of 17.9% compared to the previous 12 months.
Recently, this growth appears to have moderated, West One said. Lending has grown at an average rate of 0.8% per month since 1st March – when industry gross lending totalled £2.02 billion.
If this latest expansion continues for a full 12 months it would represent an annualised rate of growth of 10.0%.
Kreeger said: “The bridging industry is still making hay – and the sun looks set to keep shining. Meteoric expansion in recent years is only the start of a new era. This reinvigorated industry has built a solid foundation for further growth.
“Certainly, as with all industries, such transformational progress must gradually steady. And bridging is already maturing, consolidating its enormous expansion.
“Bridging is not suffering from any of the latest challenges afflicting the mainstream mortgage market. While the high street gets the jitters as incomes struggle to keep up with house prices, the best bridging lenders are in the business of solving this problem. Our loans always aim to add value to property by actually increasing capacity in the right places. It’s a system that grows the pool of winnings, rather than just splitting the wealth of property in a different way.”
