Investment
Bridging lending in the UK reached new record in 2015
Gross annual bridging lending in the UK broke through the £3.5 billion barrier in 2015, equating to £13.9 million worth of transactions every working day, new research shows. The data from the latest West One Bridging index also shows that the bridging sector is now expanding significantly faster than the mainstream mortgage market, which only grew 8% in the whole of last year according to the Council of Mortgage Lenders. But despite the growth, the bridging sector is still only worth approximately 1.5% of the traditional mortgage sector which was valued at £220 billion in 2015, meaning there is plenty of scope for further expansion. The index report suggests that the growth in short term finance is part of a five year trend, which began with economic recovery, post-recession. The current housing crisis has led to demand for properties easily outstripping supply, with house prices rising 6.7% in 2015, according to the ONS. A significant component of the housing crisis has been the shortage of land available for development especially in London and the South East due to current greenfield restrictions. This has driven redevelopment and conversions of any available properties in the capital with permitted development rights. These projects often require short term financing during conversion. However high street mortgage lenders have been reluctant to increase their short-term and commercial lending after the recession. While commercial property prices have increased 21% since their trough in 2013, bank lending to property firms is still only around £135 billion, just over half its value in 2009 according to MSCI. The bridging sector has been able to grow due to flexible underwriting that considers cases on an individual basis and a greater appetite for lending on commercial projects than that exhibited by the high street banks, the report says. There has also been a significant growth in the number of properties sold at auction in 2015, supporting the upswing in bridging. In the last two years alone, the total value of properties sold at auction has risen by approximately £800 million. Buyers will typically turn to bridging if they need to raise capital for their purchase as high street banks are unwilling to lend for auction purchases. The report points out that incoming regulation from the European Union’s Mortgage Credit Directive (MCD) should help lift future growth. The new rules mean that some bridging loans will now be regulated by the Financial Conduct Authority, namely those which are secured on an individual’s home or are not predominantly for business purposes. It explains that these will fall under the new MCD led rules, as will certain buy to let related finance particularly the new category of consumer buy to let loans. As more bridging products become regulated, the sector’s reputation will be enhanced, with more demand from FCA regulated brokers. Also, the new rules should encourage lenders to remain responsible, while also… Continue reading
Almost half of home owners in London putting selling plans on hold due to EU vote
Almost half of home owners in London intend to put any plans they have to buy or sell on hold under after the referendum in June on the future of the UK in the European Union. A survey has found that 47% will not get involved until after the vote and Bishop’s move, which commissioned the poll, believes that uncertainty over the outcome of the EU referendum is likely to slow London’s housing market in the coming months. In the poll 20% of Londoners said whether the UK stays or leaves the EU would not play any part in their decision to put their house on the market, and a further 32% said they weren’t sure. But 30% of home owners in London also believe that leaving the EU would actually strengthen the value of their home compared to 13% who believe that leaving the EU will not have an impact at all on the value of their home. Just13% in the neighbouring South East region said that an ‘out’ vote would add value to their property. The survey also discovered a significant proportion of younger generations would prefer to wait for the outcome of the EU vote. Some 46% of those aged 16 to 24 and 43% of those aged 24 to 35 said they intend to wait for the outcome of the vote compared to 16% of those aged between 45 to 54 and just 9% of those aged 55 and above. With almost half of London home owners willing to wait until after the EU referendum, in contrast just 11% in the East of England, 14% in the North East, and 15% in Yorkshire and the Humber claimed that they would prefer to wait until after the EU referendum to sell their property. ‘This paints a picture of the both the attitude towards the EU referendum amongst London homeowners and also their approach towards the price of property in the capital. It’s actually a very similar situation we found in Scotland during its 2014 independence referendum,’ said Chris Marshall, sales and marketing director at Bishop’s Move. ‘Significant policy decisions can severely impact the UK housing market and our own research last year also found almost a quarter of those looking to buy and sell a property delayed their move by one to four months in order to wait for the outcome of the General Election,’ he pointed out. ‘However, whilst these results point to a slowdown in the build-up to June, we fully anticipate business to resume as usual, particularly when the school holidays arrive and everyone wants to get their moves completed during the break,’ he added. Continue reading
Slow start to the year for property prices and rents in UAE
Residential property prices and rents have fallen in Dubai at the start of 2016, with the latest index figures indicating a falling or stagnant market. Overall property prices rose just 0.09% in January and were down 9.6% year on year, according to the data from the latest ReidIn index. A breakdown of the figures shows that apartment prices fell 0.19% month on month and 9.7% year on year while villa prices increased 1.23% but are down 8.9% year on year. Overall property rental values fell by 1.57% and were down 5.3% year on year. Apartment rents fell 1.67% month on month and 5.2% year on year while villa rents were down 0.9% month on month and 5.9% year on year. In neighbouring Abu Dhabi Residential the property markets are also more or less stagnant with the overall property price index up by 0.62% month on month and by 0.1% year on year. Apartment prices increased 0.89% month on month but were down 2.6% year on year while villa prices increased 0.13% month on month and 3.1% year on year. The rental market in Abu Dhabi was slightly more buoyant and values increased by 2.11% in January compared to December but are down 1.8% compared to January 2015. A breakdown of the figures show that apartment rents increased 2.3 month on month but were down 0.9% year on year while villa rents increased 1.86% month on month but were down 1.6% year on year. Continue reading
