0116 402 7982
UK Property Finance Announce Full Support of the FCA’s Attitude towards Dealing with Unregulated Finance Brokers
Britain’s leading choice for alternative intelligent finance seeks clampdown on negligent lenders
Unregulated finance brokers who are currently offering inappropriate funding solutions for those in genuine need of responsibly sourced products are finally about to face serious action from the Financial Conduct Authority, a firm decision that the team at UK Property Finance believe is sorely overdue while echoing the sentiments vocalised by the FCA in their recently issued statements.
According to the FCA, many of the mortgages and secured loan products offered to borrowers by unregulated lenders have led to a growing number of both residential and commercial customers facing complete ruin. As a direct reaction to this unprincipled lending practice, the FCA is now advising all potential borrowers to exercise a significantly increased level of precaution when dealing with the brokers and lenders that they are considering applying to for finance.
If you have been offered property finance or borrowed advice from a lender that is not an FCA-regulated body, then it is almost certainly in your best interests not to proceed.
Unregulated lenders should be avoided at all costs
“A large percentage of the problems we have witnessed in the industry, from the crash of 2008 onward, have been caused by regulated brokers participating in activities that are outside the’regulatory perimeter’. However, our resources are limited, and it is therefore essential that we use them as effectively as possible to maximise our impact. If our objectives are endangered by unregulated bodies, then we shall be forced to operate outside the perimeter wherever necessary.” FCA (Financial Conduct Authority)
When it comes to identifying the main root of the problems faced by the financing sector, the FCA is quick and forthcoming to cast the finger of blame directly on those who are involved in unscrupulous lending practices. Each time a borrower decides to work alongside an unregulated finance provider that is not committed to offering a level of service that is completely above board and delivered with assiduousness, a serious and unnecessary risk becomes almost inevitable.
Although a high degree of caution is recommended for those looking for cheap mortgages and other secured borrowing products, it has become increasingly apparent that many are not following the warning. With this in mind, UK Property Finance has advised that if you are going to deal with a broker offering greater levels of convenience than a high-street lender, then you should only do business with an FCA-authorised and regulated broker, regardless of the service or product required.
A dramatic increase in bridging loan popularity
Bridging loans are unique and easily accessible financial products that are suitable for those in need of short-term funds that are to be paid back in either a closed or open timeframe. The team at UK Property Finance has noticed a large and widespread increase in the number of bridging loan applications they have processed over the last few years, with business going from strength to strength. Offering fast and uncomplicated access to exclusive funding that banks and high street lenders are unable to provide, bridging loans are the perfect choice for landlords, developers, and property investors from all backgrounds and in every part of the UK.
Bridging Loan worth £6.2m Arranged for Experienced Residential Developer
Recently, we were approached by a business introducer who was trying to raise funds for an experienced Scottish property developer who, in turn, was struggling to find a competitive short-term finance deal so that he could realise a lucrative build development project.
The developer had already purchased the land and had also been given the green light in terms of planning permission, yet he found himself unable to obtain the additional (and not insignificant) funds needed to finance the building itself.
Owing to the vast scale of the project and the high loan-to-cost ratio, many bridging lenders were unwilling to consider the application, especially as an existing bridging loan, which was used to purchase the land, was nearing the redemption stage.
This meant that the developer faced the highly probabilistic reality of having to sell the land to a competitor in order to honour his existing financial commitments.
The initial request was for a finance package that was to be rolled out in three stages. However, we decided that it would be better to restructure the application so that every aspect of the development funding was combined into a single package.
In order to make the prospect more appealing to our exclusive panel of investors, our team devised a new application that focused on the number of off-plan flats that had already been sold, the level of interest shown by other prospective buyers, and the borrower’s high level of commitment and existing investment in the project.
We also took steps to show how the costs would reduce as the various stages of the build were completed.
Our efforts paid off, and within just two weeks, we managed to secure a loan amount of £6.21 million, which meant that the project could go ahead without any delay or further complications.
The investor we sourced for our client offered a revolving facility for the full £6.21 million amount, which was approximately 65% to 70% of the gross development value. This covered the full cost of the initial construction phase, which delivered 48 high-quality luxury flats within the first 10 months.
The interest charges and administrative fees were subsequently rolled up and added to the overall cost of the loan.
As the build progressed, the developer had the option of refinancing the original deal in order to take advantage of a cheaper rate once the first stage of development was complete.
Any finances owed to the lender are paid back by means of pre-sales and completed sales, and these funds are then made available to the borrower again in order to finance the end stages of the project.
“When most other bridging specialists were telling me my borrowing options were practically non-existent, UK Property Finance defied my negative expectations and found an appropriate funding solution that was fast, flexible, and realistically affordable. Although we still have another 8 months left before the project is complete, the end goal is now firmly in sight, and the remaining flats, many of which we have already sold, are almost finished.” – Our satisfied property developer client has asked to remain anonymous.
We are glad to report that both the lender and the client are extremely happy with the solution that we devised!
To find out more about our services as a provider of unique bridging loan solutions, please use the contact form provided on this website. Alternatively, speak to us directly on 0116 402 7982.
Development Finance In Greater Need As Two Thirds Of Adults Prefer Brand-New Properties
It’s becoming clear that, as far as the average would-be home buyer in the UK is concerned, one type of property takes precedence over all others. We’re not talking about the size, shape, or specification of the property either, but rather the all-important matter of whether it’s new. While it may not necessarily be within the financial means of all home buyers, it seems that new-build properties represent the properties of choice for the vast majority.
According to the results of a new survey carried out by the Skipton Building Society, two in every three home buyers prefer the idea of moving into a brand-new property. Along with this, 38% of respondents said that they would love to have their new home built from scratch to their own specifications, if money wasn’t an issue.
When quizzed further on their reasons, more than half of those who favour new-build properties cited their primary explanation as being able to decorate and personalise the place to their own tastes prior to moving in. Interestingly, around 45% stated that they would not even consider a property that was more than 46 years old, while over 20% said that they would be far less likely to buy a property if they knew that a person had died in it at any time.
Speaking on behalf of Skipton Building Society, communications manager Rebecca Willey talked of the reasons why new homes seem to be appealing to more would-be buyers than ever before.
“It seems it’s not just the unexpected costs associated with buying an older home that is scaring the nation; a fear of ghosts, mysterious property pasts, and even dead pets buried in the garden are enough to put people off buying an older house,” she said.
“While it may spook some, purchasing an older property full of historical charm is a real treat for others.”
“However, it’s not hard to see why so many people want a new-build home, as they provide an opportunity to create the home of your dreams without the hard work and baggage from previous owners.”
For those on the business end of the spectrum, such demand paints a picture of a golden era for those working in property development. Demand for high-quality new-build properties of an affordable nature is accelerating at a previously unseen pace, all across the United Kingdom. For many developers, simple financial restrictions or challenges in sourcing capital at the opportune moment can stand in the way of what could be an incredible opportunity.
The team at ukpropertyfinance.co.uk specialises in intelligent, affordable, and immediate financial solutions for all property development purposes. By removing the complications and red tape associated with major banks and lenders, gaining access to essential funding when and where it is needed has never been easier.
Promising Yields Prompt A New Wave of Interest in Property Investment
In an era where most savings accounts are offering consumers impossibly low rates of interest, more people than ever before are looking into alternative savings and investment options. On the plus side, the lowest interest rates in recent history are opening up endless possibilities for those with an interest in property investment. What’s more, demand on a national basis is allowing property investors to generate extremely healthy returns, far above and beyond those of most conventional savings and investment options.
Bridgingloans.co.uk is one of the UK’s leading service providers, helping to fund these investment opportunities with specialist funding solutions.
Up and down the country, recent months have seen a significant spike in interest from investors in the purchase of quality property inventory for the purposes of residential lettings. Particularly in areas of the country where purchasing a property simply isn’t a realistic possibility for most, demand for quality rental properties is nothing short of explosive.
“Residential property is still in high demand, with lettings at an all-time high,” commented Russell Martin, managing director of Finance 4 Business.
“Especially in [the] South East of England, it is extremely difficult for first-time buyers to get on the property ladder.”
“Taking advantage of the low-interest rates on offer, investors can let out property, producing higher yields than those of bonds and property funds.”
Traditionally, while property investment may have represented an attractive prospect, many have found themselves out of the running for financial reasons. In many instances, conventional banks and lenders are of very limited value when it comes to buy-to-let property investment. Complicated loans with binding long-term agreements, excessive delays, and enormous rates of interest have made the buy-to-let market difficult for most to access.
However, the rise in alternative financial solutions specifically tailored for such purposes is allowing more interested investors than ever before to gain access to the market and take home potentially impressive returns.
“With many new lenders, financing opportunities, and products for prime and adverse investors, liquidity is not such a major issue,” Martin continued.
“Investors are far more savvy following the financial crisis; therefore, they can manage a portfolio better than before.”
“Many see property as a way of making good returns; hence, you are seeing a wave of new investors in this sector.”
While property investment and letting aren’t suitable courses of action for everyone, there are thousands up and down the country for whom this approach to investment could represent an ideal secondary revenue stream. And of course, for those already in the property letting game with a growing portfolio, there has never been a better time to consider expanding further.
The current low interest rates are expected to remain for the immediate future, though they will certainly not be around forever. As such, those interested in taking advantage of this golden era for property investment are advised to do so sooner rather than later.
The team here at UK Property Finance can help advise on the most affordable and accessible financial solutions for your needs; we’re waiting to take your call.
UK Property Finance welcomes a new addition to our development team
UK Property Finance is delighted to announce an expansion to our development team, with a new team member having recently joined us.
A former advisor from Lloyds Bank, Luke Hosea, has recently joined our rapidly growing team and brings with him a wealth of expertise and insight into the sector.
He is joining the company to expand our development finance projects. He has a strong background in the finance market, having worked in the industry since leaving school. Luke has spent a year travelling in the United States of America and Australia, which he found thoroughly enjoyable and an experience of a lifetime.
He now wishes to further his career within the finance industry, which has been his main vocational interest throughout his school years and travel experience. He has sound experience in the business-to-business finance sector and is a great new member of our development team.
We wish him all the best in his time here at UK Property Finance.
Tax Changes and Brexit Could Devastate Buy-To-Let Market
According to the chairman of the Conveyancing Association, the effects of the recent Brexit result, along with the government’s decision to introduce new anti-landlord tax policies, could easily produce some serious negative consequences in the buy-to-Let marketplace.
Of course, the full effects of the Brexit result remain to be seen, but the government’s decision to clamp down on tax relief for buy-to-let mortgages while introducing a 3% rise in stamp duty tax has already convinced a number of landlords to turn their backs on new property investments.
In terms of the figures, a recent report by the Council of Mortgage Lenders showed that the amount of money borrowed by landlords had fallen by over a fifth when looking at the year-on-year results for July.
When asked about the current situation, the Conveyancing Association chairman, Eddie Goldsmith, had the following to say:
“I think many would agree that it’s been rather more than a traditional, seasonal drop-off over the summer, the impact of the stamp duty changes for additional properties has been sizeable, and we’ve seen considerable falls in buy-to-let purchase activity, although remortgaging has improved.”
Although much of the damage has already been done, Goldsmith concluded that, although the chances were slim, the housing market could easily be brought back to life if the government decided to reverse these new buy-to-let tax policies in the autumn.
All is not doom and gloom
On a more positive note, the CEO of www.reallymoving.com, the highly successful conveyancing comparison website, had the following to say:
“The impact of Brexit on the UK conveyancing market was quite dramatic in the short term, but it now appears to be back to normal.”
He additionally stated that although the average number of transactions had fallen by ten percent on a national level and by almost thirty percent in London, prices now seem to have stabilised.
Light at the end of the tunnel
So what can be done if we want to see an improvement in the number of landlords investing in buy-to-let properties?
Eddie Goldsmith says that a white paper is soon to be published that will detail new ways of tempting landlords back into the market. By encouraging lenders to cut back on the amount of red tape that borrowers face while reducing the number of queries involved with each transaction, the cost and delay associated with borrowing could be reduced significantly.
Bridging Finance Is Gaining Popularity
The Association of Short-Term Lenders has just released a report that shows a sustained upward trend in the number of bridging loans issued in the last quarter.
In the period leading up to March 31, 2016, ASTL members provided their clients with over £2.7 billion in bridging finance products, and this amount is expected to increase again in the coming months. In terms of percentages, this represents a 16% rise in the amount borrowed compared to the period ending March 31, 2015.
According to Benson Hersch, ASTL chief executive, bridging finance is now a highly established niche product that is going from strength to strength, even though the economy itself is still a cause for concern for many business owners. The main reason for this is the high level of uncertainty following the results of the referendum in June, the effects of which have yet to be seen in the marketplace.
To quote Mr Hersch, “As applications begin to pick up over the next quarter, despite some negative factors, the need for bridging finance is likely to continue to grow, and our members are well-placed to take advantage of opportunities.”
As an added boost to the bridging loan industry, the actual value of bridging loan applications has also increased from the previous year by just over a fifth. However, the overall value of the loan book has experienced a small dip of around 4% when looking at annual trends. This provides a good indication that the loans themselves are being paid off at a higher rate.
With more and more banks and other high-street lenders tightening up their borrowing requirements, it seems that bridging loans are gaining serious ground as a genuine way forward for those in search of short-term finance as a means of providing growth.
Unlike traditional mortgage products and most other loan types, bridging finance is much more flexible and widely available. Bridging loans can even be sourced for clients who have experienced bad credit problems and for those who are unable to provide proof of income.
£3.5 Million Re-Bridge from UK Property Finance
A client with a number of London-based properties in his real estate portfolio recently approached us for bridging finance in order to fund the purchase of a large office building in the Birmingham area, which he planned to refurbish before selling on for a considerable profit. In order to get the lowest interest rate on the loan, our client managed to raise £3 million using his residential flats in the capital as collateral. Around 8 months into the bridging loan, with 15 weeks to go before the end of the loan term was reached, we called the client to check that everything was on track, which is when we discovered that the agreed exit strategy had fallen through owing to unforeseen circumstances.
As leading bridging loan experts, we set about sourcing an alternative finance plan, which our client could use to settle the outstanding debt plus the associated borrowing fees. The London-based flats that the client had used as security were in a prime location, and with rates being an important aspect of the refinancing solution, we knew exactly who to approach for the required funds.
Within less than a week, we were able to source a new 12-month loan with low borrowing rates and a value of £3.4 million, which solved all of our client’s problems at once while affording him sufficient time to repay the new debt while completing the sale of his recently refurbished commercial property. Both the lender and client were highly satisfied with the new terms, and our client made the profit he was looking for without losing the properties that he provided as security in the first place.
UK Property Finance has a long-standing relationship with many property investors and excellent customer feedback from our clients as a whole. We pride ourselves on only offering the very best levels of service, and we achieve this through the commitment of our staff and the high standard of lenders with whom we choose to work.
UK Property Finance is a “whole of market,” directly FCA-authorised and regulated master finance broker specialising in bridging loans, development finance, and commercial finance. Our “Whole of Market” broker status enables us to source bridging loans and development loans from any lender in the market, enabling us to provide the very best rates.