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SHORT TERM PROPERTY FINANCE MARKET

The short-term property/bridging market continues to grow in terms of the number of players and the number of applications being presented to them.

The Association of Short Term Lenders (ASTL) revealed that in Quarter 1 of 2019 the number of applications increased in number by 6.9% compared to the same quarter in the previous year and increased in value by 13.6% reaching more than £5.96bn. The actual number of completions in the quarter was down but the ASTL expect that the number of completions in quarter 2 will be higher due to the higher value of applications being seen.

There are over 100 funders in the property space providing finance for all manner of property deals. On the short term/bridging side, the number of new players has really impacted the pricing. Previously bridging was pretty expensive and came with a host of add-on fees but whilst some still try to charge some of these, the pricing has on average I would say come down by c50% over the past 10 years. There is so much more competition in this part of the market now and more of a reason why clients should look to experts who can find them the right funding deal at the right price on the right terms.

Short-term and bridging finance will always be more expensive than traditional funding so it is important that the client has an exit strategy and knows how long the funding will be required and how it will be repaid. Otherwise it can become an expensive form of funding. Not all funders worry about the exit strategy, but the client should, and their advisors should ensure this is discussed. The Exit is a key part of our assessment with our clients.

 

 

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