August 17, 2015
The dust has fully settled after the General Election and the property market has been allowed to go about its business unaffected by some of the complexities that a Labour win may have introduced to the equation. Personal politics aside, a Conservative victory was one that the majority of the financial services and housing sectors were hoping for, although the comprehensive nature of the election win took many – not least the pollsters – by surprise.
But while a Tory triumph pleased many of the industry’s key stakeholders – and a clear outcome banished the uncertainty that had been hanging over parts of the market in one fell swoop – now isn’t the time for resting on laurels and letting complacency seep in. This is especially important when it comes to addressing the housing supply shortage that has plagued the UK for decades now, with housebuilding starts trending generally downward since the beginning of the 1970s.
Two Tory policies that are likely to be front and centre of the Government’s housing agenda are Right to Buy and the intention to build more than 200,000 starter homes for first-time buyers that will be sold at a discount to those under 40. While these are both admirable gestures that will help more people realise their home ownership aspirations, it’s important that we don’t avoid the wider issue by focussing on particular sections of society. A healthy housing market needs activity at all levels and unless there are suitable properties for second steppers and other movers to progress on to, then we risk a logjam further down the chain.
A drum I’ve long banged is that while new homes are vital, making the most of what we already have is equally important. There are currently more than 600,000 empty properties in the UK, a third of which are long-term vacant dwellings (that is, unoccupied for more than six months). Reintroducing these to the housing stock would represent a year’s worth of ‘supply’ in one hit. Bridging finance is of particular use in refurbishing such properties as while traditional lenders will baulk at lending on properties they deem uninhabitable (ie no running water, central heating, kitchen/bathroom), bridging lenders look instead at the property’s current value, allowing potential buyers to get access and make the property habitable. This common-sense, can-do approach helps get the ball rolling and is just one area where short-term finance providers outflank their mainstream counterparts.
The bridging sector proved to be a useful resource during the downturn for many developers and businesses unable to access finance elsewhere and the ambitious housebuilding targets set by the current government are just one reason why I don’t expect this demand to disappear now the country is back on a more even keel. It truly can be a sector for all seasons in supporting the economy during its better moments - not just riding to the rescue when the chips are down. We certainly haven’t witnessed any slowdown in demand since the UK’s prospects began to improve and, if anything, the reputation forged during the tougher times means that borrowers know they have a reliable option when seeking short-term funding.
Borrowers that come to us know that we will consider cases that may have been dismissed by high street lenders for not fitting within their box-ticking checklists and that we assess each transaction on its individual merits. This common-sense approach to underwriting means that we are able to take a wider perspective on why an application should complete and are not waylaid at the first sign of an obstacle. In many situations speed is an important factor and our strong relationship with legal and surveying partners means we can get cases completed in days if needs be, a level of service that is rarely available from mainstream lenders.
As we head into summer and the UK’s prospects look rosier than they have done in some time, there is every reason to be optimistic that the bridging sector will continue to bloom. It is time for the government to seriously address the housing shortage and there are signs that it is beginning to do this, with the emergency Budget scheduled for July likely to be another important staging post in terms of Conservative intentions for the coming year and beyond. Having helped the country weather the storm, the bridging industry deserves to play a solid supporting the role now that the sun is peaking out from behind the clouds.