Bridging Introducer: Turning negatives in to positives
Kit Thompson is director of bridging and development finance at Brightstar
Happy New Year to you all. If like me you over-indulged with food and alcohol over the festive period, you will welcome the opportunity to get back to the office and make an attempt at maintaining a slightly healthier lifestyle (at least until the end of January anyway).
Personally, I for one, was actually quite happy to see the back of 2016 – not that it was a bad year for business, far from it. However, a year where in June, Britain voted to leave the European Union, prompting David Cameron to resign as PM, and the Conservatives voted in the second ever female PM in Theresa May.
Couple this with stamp duty and interest rate relief changes to unsettle UK property investors further. Meanwhile across the ‘big pond’ billionaire business tycoon Donald Trump shocked the world by beating the Democrats and securing the #1 seat in the race for The White House for the Republicans as the new President of the USA.
Has the World gone mad? We saw tragic terror attacks in Belgium, France and Germany, not to mention the ongoing conflicts in Turkey and Syria. 2016 will also be known as the year of the celebrity death, with David Bowie, Prince, Rick Parfitt of legendry Rockers ‘Quo’ and George Michael amongst others leaving us in untimely deaths. I’m still shedding tears over Carrie Fisher.Rumours were they rushed David Jason to a safe-house and bubbled-wrapped him for safety to make sure he survived.
So what can we expect in 2017 – well the initial fears of Brexit have so far proved to be just that.. fears, although until Article 50 is triggered we will have to continue to watch this space. The economy remains in good shape and a national shortage of new housing stock continues to drive forward demand despite the shock Brexit vote in the summer. Latest Bridging Trends show growth in each Quarter of 2016, indicating that the sector remains in rude health and still growing.
I have touched on it before in the November’s edition of Bridging Introducer, but the number of bridging loans not being repaid on time and therefore requiring a re-bridge has definitely increased. The main reason being properties failing to sell within the year.
This is more likely to effect the top end of the market where an extended marketing period is required in order to sell, but some borrowers are just unlucky, with purchasers pulling-out just prior to redemption of the loan being due.
I expect we will see more of this in 2017 and there needs to be more lenders willing to look at re-bridging borrowers who find themselves in this situation, so that they are able to get a good deal second time around as well. Currently there are very few lenders (especially in the FCA regulated bridging space) who are happy to consider a rebridge and sometimes lenders find themselves with the only lender that will consider and this is often at higher rates than may have been available first time round.
Of course, the circumstances surrounding why the bridge did not repay on time and why they need to bridge again need to be considered. Personally, it would make sense for the regulator to relax the rules around bridging terms, so that lenders are able to offer longer than 12-month terms initially to regulated borrowers, to avoid the additional fees that come with changing lender, which often run in to thousands. Those property at the higher end of the market or are perhaps more unique, are likely to require extended marketing periods to sell for the right price.
So despite all of 2016’s turbulence, my outlook for 2017 has actually never been more positive. The short-term sector remains awash with cash to lend. Competition amongst lenders has driven down prices to an all-time low and the sector has never been as fair, compliant and transparent as it is now. Product innovation is at the forefront of the sector and there are ample opportunities out there… so go get ‘em! Have a great 2017!