The demise of the Great British High Street is gathering pace. There was a time when a top name was a gold-plated covenant and the valuation of retail property was simple. That’s no longer the case, as old-established names like BHS and Woolworths have disappeared from the scene. Surviving retailers like Marks & Spencer, New Look and House of Fraser are closing stores across the nation. The same applies to restaurants like Prezzo, for example. Banks are also closing branches and even Oxfam is planning to close some charity shops. The abandoned car park of Toys R Us in Tilling Road, Brent Cross, North London has become a huge fly tipping site.

This phenomenon has also affected small independent stores. Corner shops have been hit by the proliferation of mini-supermarkets owned by the major chains. The small shop with flats above, once a guaranteed income provider is no longer an investment of choice.

The convenience and speed of home deliveries has played a large part in this change. 85% of UK consumers aged 18 or over already shop on the internet. According to Conlumino/Webloyalty, 31% of high street stores will close by 2020. The Javelin Group predicts that 34% of retail sales will grow to 34% by 2020. The likes of Deliveroo and Just Eat are transforming the take-away market, giving customers who are time-poor and cash-rich greater and greater choice.

How will this affect the market? A sign of the times is the appearance of Amazon lockers in branches of Morrisons, as they hope to piggyback on on-line sales. Chain stores may get smaller as the bulk of stock will be available on a click and collect basis. Some individual stores may survive if they offer customers something to make the “shopping experience” more exciting. But large department stores may go the way of the dinosaurs and new uses will need to be found to fill the empty buildings. Possibly there may be a new wave of permitted development, allowing upper floors to be changed to apartments or hotels. They could also provide cheaper office space in areas where public transport connections are good.

House prices, too, will be affected. Whereas proximity to shopping was once a major factor, in some cases speed of internet connections may be more important. With technology making working from home become more prevalent, people may be happier to move to more remote areas with limited local shopping, but housing is more affordable as they can use the internet for shopping. Fewer homes were sold in London last year than anywhere else in England and Wales, according to an analysis of Land Registry data by Knight Frank. Prices are moving upwards in the North of England and Scotland.

Working at home gives the freedom for people to move where housing is more affordable and where state schools may both be better and less difficult to get into.

Anne Ashworth, Property and Personal Finance Editor of The Times has said than an unexpected side-effect of the slump in property transactions in London (sales in February were down 23% over a year) has been a rise in the popularity of the rental second home used for holidays and weekends; as well as getting a feel of what it would be like to live out of a major city.

In underwriting and risk assessment, access to information is easier, making informed decisions more likely. In this respect, experience and artificial intelligence can work hand-in-hand to produce the best result. Availability of credit reference and fraud prevention systems can likewise help to prevent costly errors.

It’s a new world of wonders out there and e-commerce and digital information is growing daily. Consumers are more and more likely to make decisions and access information on mobile devices. Unfortunately, there is also a new breed of digital criminals whose nefarious skills become ever greater.

Lenders should be aware of both the opportunities and problems this presents and embrace the new age with confidence.

Benson Hersch, CEO of the ASTL

A version of this article appeared in the July edition of Mortgage Introducer

 

In Q1 2018, members of the ASTL lent £386.1 million worth of development loans, of which £242.2 million were categorised as bridging. This further highlights the crucial role of the short-term lending market in supporting the property development sector in the UK

Property development bridging loans are an extremely useful method of obtaining short term finance in order to either secure a property or refurbish with the intention of adding value. These development loans exclude what is generally termed “light refurbishment”, such as the addition or renovation of bathrooms, kitchens and conservatories as these generally do not require planning permission or extensive structural changes.

Q1 2018 revealed a 22% increase in bridging development loans since the previous quarter, highlighting the growing trend for property developers to rely on short term lending solutions.

Benson Hersch, CEO of the ASTL says: "The role of small and medium building firms are seen as crucial in helping solve the housing crisis but access to finance still remains their toughest barrier to overcome. Whilst SME building firms continue to be locked out of mainstream channels, they will increasingly rely on different sources of finance such as short-term funding solutions. These alternative forms of finance are providing a solution and allowing small developers to play their part in housing delivery.”

Press Release – Tuesday 3rd July 2018

ASTL quarterly results show continued strength

Figures compiled by the ASTL’s auditors from its bridging lender members for Q1 2018 have exceeded the outstanding figures for Q4 2017, when for the first-time quarterly completions exceeded £1 billion. Annual completions are now close to £3.8 billion

The value of loans written for the quarter ending 31 March 2018 revealed an increase of 1.5% compared to the previous quarter. Annual completions rose by 29.9%. In comparison to the same quarter last year, the value of loans written in the quarter has increased by 32.5%.

Total loan books are continuing to climb, with a rise of 13.1% compared to Q4 2017. Compared to the end of Q1 2017, the value of loan books has risen by 35.6%, to £4.2 billion. All figures highlight the current strength of the ASTL’s bridging lender members.

The pace of increases in applications reversed recent declines and increased by 28.9% compared to a decrease of 11% in Q4 2017. On an annualised basis, applications are up by 23.2%, making up a total of £19.7 billion. Although applications do tend to be unreliable indicators and are dependent on how many lenders are offered the same deals, this is still a staggeringly large figure.

Benson Hersch, CEO of the ASTL says: “Our figures highlight the fact that the bridging finance industry is in good shape and is ready and willing to meet the challenges and opportunities of today’s market.”

"The bridging sector is now a well-established part of the property finance market and, barring any black swans, should continue to grow.”

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

Press Release, Wednesday 23rd May, 2018

Oblix Capital, a specialist short term lender, has joined The Association of Short Term Lenders (ASTL) as a new associate member. Membership of the ASTL now stands at 35 lender members and 29 associate members respectively.

Oblix Capital is a London based firm, specialising in bridging and development finance. Led by a team of experienced real estate professionals, Oblix Capital provides financial support for both commercial and residential properties throughout England and Wales. Oblix Capital offers a diverse funding base, providing financial flexibility and transparency to borrowers.

Andy Reid, Sales Director, Oblix Capital comments: “Oblix has experienced rapid growth since being founded in 2014 and we see our membership to the Association of Short Term Lenders as our commitment to provide the industry with the high-quality service it deserves.”

Benson Hersch, Chief Executive of the ASTL added: “The wealth of knowledge and insight Oblix Capital offers provides a strong addition to our growing membership at the ASTL. Their transparency and direct approach is an asset to the sector.”

To find out more about the ASTL please visit: www.theastl.org

 

Press Release: Tuesday, 26 June, 2018

 

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

  1. GVA joins the ASTL
  2. Bridging lenders are positive about the future
  3. Property development boost – ASTL members lend £319m to developers in Q4 2017
  4. David Rubin & Partners Ltd joins the ASTL