Misconceptions about bridging still abound, laments Steven Nicholas, chief executive at Tiuta plc
I’m always intrigued by how the mainstream press treats and reacts to the bridging sector. One suspects that the journalists and editors of most of the personal finance pages, particularly in the nationals, would feel a lot more comfortable giving bridging a wide berth. However, when you have a lender like ourselves turning up in the Top 30 UK lender lists and you have a particularly vibrant lending environment then it is difficult to ignore us completely.
For some lenders appearing in the national press pages may represent some kind of success and affirmation that they have somehow ‘made it’ but it does not particularly concern Tiuta given that our business comes through the intermediated market and we are fully paid up members of the club that says ‘intermediary advice is best’.
However, it is clearly important that the bridging market represents itself well in the broader, mainstream market and also that we are given a fair crack of the whip when it comes to reporting how we operate and who our products and finance are suitable for.
A recent piece in The Telegraph did a fairly good job of trying to understand what bridging is about and why our finance is increasingly in demand at present. It used as its base the West One release which talked about a £800 million bridging loan market this year and its suggestion that a lot of bridging funding was being used by buy-to-let landlords in order to bring properties to the private rental sector.
Nothing wrong with this of course however a few lines within the article jarred one was a reference to ‘specialist lenders’ (of which we are proud to be) which seemed to suggest that borrowers would have to ‘resort’ to using us. The implication being that we are somehow bridgers of last resort, behind the mainstream, high-street banks and that our pricing and fee-charging is beyond the norm. This is clearly not the case and the view falters considerably when you consider the lack of lending being carried out by the high-street entities, full stop, let alone in the bridging sector.
I am particularly adamant that we are not lenders of last resort in any market but particularly not in this current environment. Indeed, one could argue that we are now near the top of the list when it comes to potential funding solutions given that most companies, individuals, developers, landlords are now fully aware that their finance needs are not going to be met by the banks.
Another line suggested that specialists are also more likely to ‘add an exit penalty as well’ when I believe many a significant number of specialist lenders do not charge such a fee. Whenever I talk of exit strategies I am reminded of the song, ‘It’s not where you start but where you finish’ because in our kind of lending it is the exit which is ultra-important to us.
No question about it, we want the borrower to redeem and to redeem as quickly as possible, so it is simply not a priority for us to look to charge an exit fee. We want as few disincentives as possible standing in the way of the borrower redeeming the loan because we are of the opinion that the quicker we have that money repaid, the quicker we are able to offer further loans.
So while it is important that the bridging sector receives its fair share of mainstream coverage in order to support what we are doing and to ensure that as wide an audience as possible know about the potential funding solution, we should also try to ensure the misconceptions about the sector are also addressed.
