The bridging and short term property finance sector experienced a period of steady and controlled growth during 2013, with year on year growth of 39.1% to 31 December 2013 reported by the ASTL. This growth has continued throughout the first quarter of 2014 with monthly developments in the sector being reported by the Association of Bridging Professionals (AOBP) in their Monthly Market Reviews.
The substantial growth recorded in the bridging sector has been accompanied by a heightened level of buying activity and competition within the property sector, which only appears to be increasing. In the first two months of 2014, HMRC recorded 189,460 (173,550 residential, 15,910 non-residential) property transactions across the UK, a significant increase from the 140,370 (126,260 residential, 14,110 non-residential) reported for the same period in 2013. It is evident from these statistics that not only have the number of property transactions increased, but also that the growth of the sector appears to be accelerating.
Many property investors continue to seek new investment opportunities to enhance their existing portfolio. The bridging sector continues to play a pivotal role in assisting property professionals in securing property, through the provision of the short term, project facilitating capital that is often required to secure investment property. Bridging finance enables property transactions to take place whilst long term re-mortgage finance can be arranged.
Bridgebank Capital has seen the level of new business from property investors benefitting from investment opportunities increasing month on month, and we anticipate that these deals will further increase in the coming months.
Many of the high street lenders with distressed portfolios are now offering deeply discounted settlement deals. Property entrepreneurs are increasingly being provided with the opportunity to reduce their liabilities by negotiating a ‘debt forgiveness’ settlement with their bank. Bridging finance plays a pivotal role in these cases, and can provide the ‘lump sum’ required to settle the agreement, whilst also allowing the borrower sufficient time to refinance the bridging loan.
Whilst ‘debt forgiveness’ is providing significant flexibility for property professionals to reduce what they owe, investors are now also able to secure deeply discounted property from those institutional lenders with distressed portfolios on their books. The use of bridging finance can assist those investors who wish to extend their portfolios through the purchase of distressed property, allowing them to secure the investment quickly whilst identifying a long term mortgage provider. Alternatively, investors can secure the property and carry out any required refurbishment works prior to selling the property at a return.
Overall, it is evident that both the bridging and property sectors continue to grow with no signs of relent. Bridging continues to play a valuable role within the property sector, with new opportunities continuing to be exploited by those wishing to extend their portfolio. It is envisaged that both the property and bridging sectors will continue to support and develop one another’s ongoing growth.
Steve Woods is head of sales at Bridgebank Capital