So here we are in a new year. 2017 has arrived and, if your business is anything like ours, this is the time when you hit the ground running especially when you have a client base that is eager to get moving, or get building, or get renovating, or simply get on with their business. It’s perhaps no surprise that, after some time off – which gives us all time to think and plan ahead – this marketplace is not hanging about. Even if we might have anticipated a slight lull given the strong business levels we experienced throughout December.
Yes, as expected, the pre-Christmas period was incredibly busy for us in the bridging and development finance sectors, with clients looking to complete before everyone packed up and went home for a week (or so) of indulgence. Back at the start of December, I was adamant that brokers should scour their in-boxes for cases which could complete within that three (and a bit) week timescale, and given our own caseload it appeared that many heeded that advice. I do have to wonder if we will now have an adviser (and client) reappraisal of what is achievable in the last month of the year because it certainly wasn’t quiet, and there was no hint of a community being demob happy.
That said, we’re now into 2017 with a vengeance, and as with any new year there tends to be a renewed sharpness and focus on what needs to be done, what is achievable, and what the market might be bringing us in the coming months. On that latter point, there are some major moments to be aware of, but while I got the sense at the end of 2016 that pessimism might be winning the day, since the new year there appears to be an ‘it is what it is’ approach and ‘the sooner we get on with the job in hand, the better it will be for all of us’ mentality.
In the bridging market, major changes in other sectors appear to be opening the door for what might be achievable for clients in 2017. I fully anticipate the slowdown in the buy-to-let sector to provide a major opportunity for advisers/introducers in our marketplace. It’s a well-trodden argument but the ability to secure a buy-to-let loan has just been made much more difficult, and it’s not going to get any easier when further regulations are introduced in September this year.
Those landlord clients, who might well have anticipated an easy ride when it comes to financing or refinancing, are going to find a much changed environment in 2017, plus of course the forthcoming tax relief changes will also play a major part. The way the lenders interpret the changes required by the Prudential Regulation Authority (PRA) will be of great interest, because the ability to get a loan (or not) is going to be determined by how lenders now have to underwrite their loans. Advisers will know that when it comes to such rules, every lender will interpret them differently.
As an adviser you could well be dealing with a whole heap of frustration and therefore it seems highly likely that other options will need to be explored and actively pursued. One of those will perhaps be a second-charge buy-to-let, or you may have a client who needs a certain amount of time to get their financial house in order and therefore a bridging loan may be more appropriate. Or on development projects the obvious area to look at would be development finance. What we have here is a potential move away from standard buy-to-let remortgaging, and instead clients are likely to be much more inclined to view alternative finance options, especially when it gets them to where they want to be much more quickly.
However and here’s the big issue for advisers, what is your knowledge of the bridging or the development finance sectors? Would you, with confidence, know exactly which lender is going to accept your client, and on what product, with what rate? These are also competitive market places with significant numbers of lenders, who all operate differently. It’s one thing for an adviser to know exactly which lender is appropriate for your mainstream buy-to-let or development finance solution, but what about when it turns out they no longer fit the criteria and a bridging loan solution is more suitable? Can you be confident that you have the same degree of specialist knowledge across the bridging lender market as you do in the mainstream lender market?
Given you may well be seeing more of these types of cases, it makes perfect sense to link up with a specialist in their field; to use our expert specialist knowledge of this market to optimise the solution offered, to maintain that client communication, to be confident they’ll remain your client, and to know that client has exactly the right product for them (and you). In this area of the market, there’s little point in soldiering on, or as I like to call it, bumbling through. With speed often of the essence, best to go to those who do this 24/7 and use their expertise, while still securing all the income you would by going direct. Perhaps, when it’s put like that, you’ll be able to see the benefits for both you and your client.
Here’s to a very prosperous 2017 for all.
Jonathan Caplan is director of First 4 Bridging