The amount of investors looking at properties outside of the ‘traditional’ residential buy-to-let is continuing to grow, with many wanting mortgages on an array of properties including stand-alone commercial units and shops with residential upper floors. In these situations, the value of specialist knowledge is key; it is about having access to the right resources and knowing which solution is the most suitable and beneficial for the individual client.
A commercial boost
With demand for specialist assistance continuing on a strong upward trajectory, it is no surprise that the profile of the commercial lending sector is also growing in prominence. Although I do not think we will see a revolution next year, I believe the evolution of commercial lending will continue. Existing firms will continue to expand and diversify their loan books and more and more funders will look to enter the market in order to fill the specific niches that are not currently being serviced by existing lenders.
Although many lenders are being set stiffer lending targets for next year, it is likely that the credit constrains will slowly begin to loosen as the institutions battle for position in the competitive lending landscape.
Specialism leads the way
As the number of lenders increase, so will the variety of products. This is particularly good news for experienced and well-connected intermediaries who become even more crucial to ensuring the best possible outcomes for the client.
As lenders start to compete for market share, the engagement with intermediaries will likely deepen. Therefore, as the effects of regulation continue to be felt throughout the commercial lending sector, the reassuring hand of the authorised and competent intermediary will undoubtedly be strengthened even further.
A fresh approach
More and more lender partners who are offering competitively priced commercial loans, are expanding their offering by opening up access to new lines of funding which, in turn, has increased the liquidity in the market.
Government initiatives such as the permitted development rights help to open up more opportunities for lenders to lend and developers to access the finance they require and, although this measure was set to expire in May 2016, the rights have recently been made permanent. This means developers who have already gained approval for residential use under the existing ruling have three years to complete the change of use, extending the date of completion to May 2019.
With more entrepreneurial developers looking to benefit from this change, we will likely see a steady rise in lenders offering competitively priced commercial loans. Again this will provide even more opportunities for commercial and development finance applications in 2016 and beyond, particularly where finance is still to be arranged.
In pursuit of the future
It is clear that commercial finance can add to an intermediary’s client base and income, so they should consider taking the expert advice that is available in order to enhance their overall business offering. Although the commercial lending market has endured some lean times in preceding years, demand in the intermediary sector is growing significantly, and although the road ahead is a challenging one, a greater appetite for lending means it is also one of opportunity.
Robert Collins is director of the commercial division at Brightstar Financial