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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.
Bridging Mortgage
Within the formal written offer of a bridging loan, the loan is often referred to as a mortgage. The reason for this is that there are many similarities that occur between the two, and in essence, they are basically the same thing.
Bridging loans are secured as a charge on commercial and residential property or land within the UK in the same manner as a mortgage.
Some of the main differences, however, are:
- Bridging loans can be obtained without the requirement to make monthly payments, whereas with a standard mortgage, monthly payments are always required (this does not include an equity release mortgage, which is available only to those over 55). The less stringent income requirements allow bridging loans to be taken by clients who, for whatever reason, cannot show or prove the income needed to make monthly payments. Possible reasons for this lack of income proof could be because the clients are retired and are in the trap of being cash-poor but asset-rich, the client is self-employed but without proper proof of income, the client has a minimum income, but the reason for the bridging loan will put them in a better financial situation, etc.
- The maximum term of a regulated bridging loan is 12 months (18 months for an unregulated loan), whereas with a mortgage, the standard minimum term is usually 5 years.
- Credit blips can be acceptable for bridging finance, provided a suitable exit route is proved, whereas only very minimal adverse credit is acceptable for mortgage finance, and only with a very small selection of lenders.
- Mortgages are virtually always taken on a 1st charge basis and on one property, whereas bridging finance is much more flexible and can be attained as either a 1st, 2nd, or 3rd charge and on multiple properties if required.
- Bridging finance, in certain circumstances, can be used for the purchase or refinance of partly completed and/or defective properties as well as land with or without planning, whereas a mortgage, with the exception of niche products such as self-build mortgages, is virtually always used for the purchase or refinance of fully habitable properties, which include those having kitchens and bathrooms.
- Bridging finance is often used for a wider range of loan sizes, starting at L10,000 and with no limits, and also for a much wider range of uses and scenarios.
The main consideration of any lender before allowing a client to take out a bridging loan is how the money will be repaid. Only if lenders are fully satisfied that the exit route is genuine and plausible will they allow a loan to commence.
Development Finance – Bridgingloans.co.uk have the experience
The last six months have seen a marked upturn in lenders’ willingness to fund property development deals, from small refurbishment projects to multi-million-pound new-build developments. At Bridgingloans.co.uk, we have been able to take full advantage of this volume increase due to our expertise in the marketplace.
Recently completed deals have highlighted just what issues can arise:
- On a small barn development, it was found at the 11th hour that the client’s insurance did not cover her for the full risks involved, and the lender would not draw the funds.
Solution: We introduced our specialist development insurance broker, who quickly assessed the problem and provided the cover required in a timely manner to enable drawdown.
- During the valuation stage of a mill purchase in the North of England, the valuer identified a potential environmental risk and (quite rightly) requested a specialist report. The client looked around and obtained quotes in excess of L2,000.
Solution: Through our network of specialists, we quickly identified the most appropriate local environmental specialist who completed the report in less than 10 days and at a fraction of the costs previously quoted.
- We were approached by a local property developer who wanted to reinstate the build of a site mothballed back in 2008. His issue was that his existing bank was on the verge of appointing receivers due to the dormant position on the site.
Solution: BridgingLoans.co.uk were able to source a lender who agreed to both the take-out of the bank and provide the development finance and funding required. In addition, we maintained constant contact with the existing bank, which ensured the receivership was put on hold, which allowed the refinancing to take place.
In each case above, the ability to quickly identify and resolve the issues enabled the loan process to continue and lead to the completion of the case.
Through the experience of the team, we can quickly resolve the majority of issues that invariably happen during any development deal and reassure the clients that we can help overcome the problems. For both first-time and experienced developers, this added value makes ukpropertyfinance.co.uk the ideal choice.