Over the last twelve months, we have seen a growing number of investors and developers utilise bridging finance to finance their property investments.
The finance market is well-equipped to deal with complex situations and has developed many specialist products to help find the perfect solution for any individual requiring flexibility.
Growing in popularity due to the relaxation of planning laws is the conversion of commercial properties to residential properties. As a solution to the increasing demand for housing and the closure of many businesses due to the pandemic, these conversions are providing great investment opportunities for developers. The deregulation has resulted in a far simpler and more cost-effective planning approval process, leading to many investors and developers cashing in on this new method of creating housing.
Not only are developers benefiting, but towns and cities are experiencing much-needed regeneration after the devastating effect of the pandemic on the UK economy.
The COVID lockdowns led to many businesses being forced to trade online, creating a situation where shops and other business premises were left vacant. The most affected have most definitely been the hospitality industry as well as retail and small businesses. With a huge proportion of the population being forced to work from home, the need for work premises has been greatly reduced. Business structures have changed, with many employers allowing their staff to continue to work from home on a full-time or part-time basis, thereby negating the need for workspace.
The conversion of commercial to residential is somewhat reviving the high street and attracting people back to cities and towns, particularly the young looking to get their foot onto the property market and enjoy the benefits of living in a city.
The advantage of commercial property is that it is often situated in prime locations with excellent access to bars, restaurants, transport links, job opportunities, and other attractive amenities. Many commercial buildings are on the market at extremely competitive prices; therefore, securing a good deal for a developer can lead to a very lucrative investment with the potential to generate significant capital growth.
When it comes to funding, developers and investors are turning to bridging finance. In direct reaction, many lenders are now offering specialised bridging loans in order to meet this new demand.
The most important factor for developers and investors to consider is to make sure they have properly been advised and had prior approval before they commit to the project. Once this has been done, bridging finance can then be utilised to secure the required funds to ensure the project reaches full completion.
A bridging loan is short-term finance that can be arranged quite quickly, often within days, so that buyers can take advantage of access to funds in a timely fashion.