Continuing to boom

The UK Government has decided that it’s time to “fix our broken housing market” and the latest response to the housing white paper consultation illustrates its determination to do so. In January, the Department for Communities and Local Government became the Ministry of Housing, Communities and Local Government headed up by the Rt Hon Sajid Javid, who has been very positive in setting out their objectives.

Chancellor Philip Hammond announced in November’s Budget that he would create new policies and commit the necessary funding to ensure the UK builds 300,000 new homes a year by the middle of the 2020s. The current run rate is less than 200,000, and has only just got anywhere near that level. In the recent Spring Statement, more initiatives were mentioned.

With demand for UK property outweighing current supply, the Government needs to embrace creative solutions to ensure more homes are added to the market. Theresa May recently hit out at house-builders to “do their duty” and placed further pressure on them to complete their projects and build on landbanks. As a result, this has allowed for a boom in the development finance sector as the specialist market continues to grow.

As the Government places blame on developers for the nation’s chronic housing shortage, it’s important to remember that alternative finance sources can offer property developers and investors tailored solutions to meet the specific needs of each project. As part of these proposed reforms, the Government should look to increasing market awareness of these funding products.

Members of the Association of Short Term Lenders are increasingly providing development funding in addition to their light refurbishment funding products. In Q4 2017, our members lent £319.4 million worth of development loans, highlighting the growing trend for property developers to rely on short term lending solutions.

The housing crisis continues to be high on the government’s agenda and Sajid Javid highlighted last year that he wanted to do more to support SME building firms. Increasingly these small developers are relying on short term funding solutions, because traditional forms of finance are often not available to them. Recent research by Worldpay showed that of 1,000 small business owners, almost one in three reported difficulties in securing business loans from banks, potentially halting their expansion plans altogether.

Alternative finance holds the key to funding expansion for many British small businesses, as access to funds from traditional lenders remains restricted, they need to be aware that alternative forms of finance are available and are providing solutions.

Benson Hersch, CEO of the ASTL

A version of this article appeared in the April edition of Business Moneyfacts

Bridging lenders are positive about the future

The latest sentiment survey from the ASTL reveals that members continue to be confident about both the sector and their own businesses, and that this positivity has grown since last quarter.

The majority (78%) of members expect their business turnover to grow, with two thirds (63%) expecting the same of the bridging finance sector as a whole. In addition, they are very positive about the prospects of providing short term finance to SME housebuilders – 93% believe this is a growth area.

However, members are slightly less sanguine about the long-term future prospects of the UK economy, positivity has decreased from 50% in December 2017 to 43%. No less than 52% are unsure and only 11% are negative. This is likely due to the protracted nature of the Brexit negotiations combined with the rise in inflation which in turn is likely to lead to higher interest rates.

Members are split about the direction of property prices, with 52% expecting slight growth and 48% expecting prices to fall. They are lukewarm about the potential impact of the Spring Statement, with 48% neutral and 19% negative.

The ASTL positivity index, made up of a number of factors, continues its steady growth from mid-last year:

 

Benson Hersch, CEO of the ASTL, says “Whilst I remain cautious about future prospects for the UK in a very uncertain world, in which the economic climate can change overnight, members are confident that they will continue to prosper. The use of bridging as a financial tool, both for property transactions and for other business purposes is now well-established.”

 

Press Release April 2018

GVA joins the ASTL

GVA, a leading UK real estate firm, has joined The Association of Short Term Lenders (ASTL) as a new associate member. GVA is the third associate member to join the ASTL in 2018. Membership of the ASTL now stands at 34 full members and 30 associate members.

GVA offers the country’s leading and most diverse real estate advisory service. Headquartered in London and with a network of 12 offices throughout the UK, GVA advises private businesses and the public sector on the whole real estate lifecycle, from strategy and planning, through to delivery and management.

Nathan Pask, Senior Director, GVA comments “The ASTL represents dynamic organisations that need commercial advice quickly. We already provide residential development appraisals and investment advice to ASTL lenders through our UK office network. Associate membership will strengthen our relationships and understanding of members needs in this exciting growth market.”

Benson Hersch, Chief Executive of the ASTL “The property industry insight, knowledge and experience that GVA offers is a valuable asset to ASTL members and we are delighted that they are joining our growing membership.”

Press Release: Friday, 27 April, 2018

Property development boost – ASTL members lend £319m to developers in Q4 2017

In Q4 2017, members of the ASTL lent £319.4 million worth of development loans, of which £197.8 million were categorised as bridging. This trend highlights the growing trend for property developers to rely on short term lending solutions.

These development loans exclude what is generally termed “light refurbishment”, such as addition or renovation of bathrooms, kitchens and conservatories as these generally do not require planning permission or extensive structural changes.

Overall, Q4 2017 was a strong period for bridging lenders with an 19.6% increase on the previous quarter and for the first-time completions exceeded £1 billion highlighting the increasing use of alternative sources of finance. With annual completions exceeding £3.5 billion, it is clear that business is booming for ASTL members.

Benson Hersch, CEO of the ASTL says: “The housing crisis continues to be high on the government’s agenda and Sajid Javid highlighted last year that he wanted to do more to support SME building firms. Increasingly these small developers are relying on short term funding solutions, because traditional forms of finance are often not available to them.

"Such a trend demonstrates how alternative forms of finance are providing the solutions where the Government and the banking industry should be and could be bridging the gap.”

These figures are taken from the responses from ASTL members, which include most of the key lenders in the bridging market

Press Release: Tuesday, 20 March, 2018