Bridging could assist with rush to complete before new SDLT deadline
The extended stamp duty deadline is expected to galvanise additional interest in bridging, according to Vic Jannels, chief executive of The Association of Short Term Lenders.
The average time it takes to sell a property has now risen to 295 days, as outlined by GetAgent.
As a result, it is believed bridging will help to ease the pressure on mainstream lenders and allow people to complete transactions ahead of the extended deadline.
Jannels said: “There are likely to be customers, who were unable to meet the first deadline, who will look to bridging to help ensure they hit the next one.
“Generally, a number of the term mortgage lenders are running well behind on service, while most of bridging lenders are still able to move quickly as long as their clients deliver the obligatory documentation in a timely manner.”
Jannels went on to say that while there have been stories of the average time to reach a bridging completion increasing, he does not believe this should distract intermediaries from the fact that, bridging lending can complete in just a matter of days.
This is provided that supporting information is supplied upfront and valuations and conveyancing are lined up correctly.
Chris Oatway, director of LDNfinance also believes that due to the increased transaction levels, he expects more bridging finance to be required.
However, Oatway said: “I am not sure to what level this will be directly linked to the deadline date.
“If it looks like a transaction will take longer to complete, I think it is more likely that a purchaser will try to negotiate on the purchase price rather than switch their funding strategy to bridging finance due to the additional costs.”
Jannels went on to say that at the ASTL, they have worked together with other trade associations to call for a change to the hard deadline that was originally scheduled for 31 March.
He added: “It has been clear for some time the number of transactions being processed through the system has put every business involved in the process under immense pressure and that many transactions would not hit the original deadline.”
The consequence of this would have been many transactions falling through and many customers liable to bigger tax bills than they had planned for.
Jannels outlined that the extension of the full relief until the end of June will be positive news for transactions currently in the system and the inclusion of partial relief until the end of September will prevent a significant cliff edge as we faced in March.
Although Jannels noted that the maximum potential saving drop from £15,000 to £2,500 at the start of July, therefore he outlined the risk of a second another rush to beat the deadline at the end of June.
Looking to the rising use of bridging, Oatway explained that there is a “buzz” within the market at the moment and transaction levels have begun to increase.
He said: “With a renewed appetite to lend and a positive outlook in regard to the economy and liquidity remains as high as ever, I can only see the industry going from strength to strength.
“Property will always be a great inflation hedge – as well as being free from capital gains tax – and so, with the overall increased desire for outside space, we continue to expect transaction levels to remain high for the year ahead.”