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Bridging opportunities in 2018

Despite the doom and gloom predictions following the Brexit referendum, the UK economy has demonstrated its resilience by continuing to attract private investment across both alternative and traditional sectors.

The bridging sector has benefited from this strong performance – gross annual lending totalled £4.6bn in Q3 2017, and more than half of brokers are positive about the outlook for the sector in 2018.

By offering investors the chance to overcome mortgage delays and potential gazumping, the bridging market remains an important source of finance for those seeking to take advantage of property investment in a market abound with opportunities.

The rise in bridging activities comes amid figures released by UK Finance in January 2018, which showed that 36,115 mortgages were approved in December 2017, the weakest level since April 2013.

The data led Samuel Tombs, chief UK economist at Pantheon Macroeconomics, to remark how traditional home loans were “falling off a cliff”. Against this significant trend, the steady rise in bridging loan volumes can be expected to continue.

Looking beyond industry statistics, there are two other factors that will determine how the bridging market will perform in 2018. The first is investor confidence – namely, their confidence and willingness to invest capital in UK-based assets.

The second is the underlying performance of the property industry, measured through the volume of transactions, house price growth and the level of market demand across both the country’s commercial and residential markets.

A high-performance property market supported by a confident investor community will likely have a positive effect for bridging providers. Industry figures suggest 2018 will be a year full of opportunities for the bridging sector, projecting its appeal to both investors and borrowers.

An investor survey among more than 2,000 UK adults by Market Financial Solutions (MFS) at the beginning of the year revealed that 77% of investors are not concerned by the long-term impact of Brexit of their investment strategy, while 63% consider property a safe and secure asset in the current market.

What’s more, with average UK house prices still creeping up and the volume of commercial property investment likely to exceed £50bn this year, the determining factors are clearly in favour for bridging.

Outside of London, cities such as Manchester, Liverpool, Leeds and Birmingham are offering fantastic opportunities; bridging ensures buyers are able to act quickly on their property investment intentions, allowing them to avoid stringent lending regulations imposed by high street institutions.

Source: Mortgage Introducer

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What makes for a great bridging lender?

Bridging finance is a specialist form of short-term lending designed to assist homeowners in securing their dream home, construct new builds and buy land.

As it grows in popularity, more and more brokers are interested in offering it to their customers. But bridging isn’t a simple product, so it’s crucial brokers do their homework before entering this new space.

Over the past few years, bridging loans have moved into the mainstream as a way for people to secure short-term lending to meet a range of everyday needs. However, it is still a specialist, complex product and any broker thinking of incorporating bridging into their portfolio should choose their preferred lender carefully. Here, I give an overview of bridging finance and four things to tick off when you choose who to work with.

Bridging finance

A bridging loan is a form of short-term finance that – as the name suggests – helps borrowers bridge the gap, typically between the sale of something and the purchase of a new thing, such as selling a house and buying a new one, although it is often used for other reasons, as explained below.

Usually, though, bridging finance is often centred around a time window or a deadline. Generally speaking, the customer needs to raise finance quickly so they do not miss out on something – a dream home, for example.

In the wake of the credit crunch, some mainstream banks tightened up their lending criteria, meaning many people found themselves unable to source lending finance from high street names. This gave rise to a number of alternative lenders who directly specialise in bridging.

What people use bridging finance for

• buying a new home before the sale of their current one
• building a house, moving into it and selling their old house (to pay the loan back)
• buying land and building property – either to move into or sell.

Benefits of a bridging loan

• Speed – taking a bridging loan to buy a new property prior to the sale of the current one can be much faster than arranging a mortgage
• Need – bridging loans offer fast access to cash, which is crucial when a payment deadline needs to be met
• Flexibility – bridging lenders often specialise in supporting people with impaired credit, short work histories etc.

What should you look for in a bridging lender?

Speed and precision

As mentioned above, a key bridging USP is that they offer the customer swift access to finance. This is essential if they are, for example, to pay for a house in a very short space of time. So look for a bridging lender with a track record in delivering cases quickly. However, it’s important to note that speed should not be conflated with rushing a case through. The key is to find a lender that can offer a quick turnaround, but doesn’t sacrifice on diligence.

Experience in the industry

As a short-term financing solution, bridging finance is a form of specialist lending. It’s important, then, to work with a lender that knows bridging like the back of their hand – look for lenders with some years of experience or who’ve secured awards for their bridging work. These lenders will know the ins and outs of the industry much more than a traditional lender or a new entrant. Expert underwriters are crucial too – these guys help drive the cases through.

Focus on transparency

In a volatile economic world, honesty holds strong currency. Bridging finance is more complex than, say, a personal loan, so seek out a lender with a strong transparency-first approach. This means being open and honest about fees and charges, yes, but also things like complaints policies, how they assess deals, whether they’re directly funded etc. Openness builds trust, which leads me nicely on to my next point.

Relationship focused

In my experience, some of the most successful bridging deals come off because the parties involved are used to working with each other. They know how each other operate, the kinds of processes they use and the approach they take. This familiarity often results in an excellent result for the customer. If you meet with a lender and can see yourselves working together for a long time, they might just be the one for you.

Source: Bridging and Commercial

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Bridging lending crashes through the £3bn mark

Annual bridging lending completions rose by 24.6% to over £3.5bn in 2017, ASTL figures show.

Bridging completions for ASTL members in the fourth quarter of 2017 exceeded £1bn, an increase of 31.7%.

Benson Hersch, chief executive of the ASTL said: “Our figures highlight that, despite ongoing concerns relating to Brexit and the property sector, the bridging finance industry remains in good shape and is ready and willing to meet the challenges that 2018 may bring.

“The bridging sector continues to provide a vital role in the economy by offering customers access to the capital they need in a responsible and sustainable way.   It continues to be an important part of the alternative finance market.”

The size of members’ loan books is also healthy. Total loan books are continuing to climb, with a rise of 4.6% compared to Q3 2017. Compared to the end of Q4 2016, the value of loan books has risen by 12.9%, to £3.7bn.

These figures are taken from the responses from ASTL members, which include most of the key lenders in the bridging market.

Source: Mortgage Introducer

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Does the market need more second charge bridging lenders?

A recent survey has found that the market is currently split over whether there is a need for more second charge bridging lenders.

The poll conducted by Bridging & Commercial saw 53% of respondents agree there needed to be more second charge bridging lenders, while the remaining 47% believed that the market didn’t.

The latest Bridging Trends report for Q4 2017 revealed that second charge bridging lending had increased for the third consecutive quarter.

Meanwhile, the report found that first charge bridging – although still significantly higher than second charge bridging (80.3% to 19.7%) – had fallen in terms of share when compared to Q3 2017 figures (82% to 18%).

Will more lenders move into the second charge bridging market?

“The industry tends to be split between those that fully understand, advise and have a history of lending in the second charge bridging sector, and those that don’t,” said Richard Tugwell, group intermediary director at Together.

“Lenders who don’t are more likely to label this kind of specialist lending as only for sub-prime customers.

“In reality – and along with other types of specialist lending – second charge bridging loans are proving an increasingly popular alternative, as the high street becomes more reluctant to lend in certain situations.”

James Bloom, managing director of short-term lending at Masthaven, believed there could be new entrants to the market: “…Competition is likely to increase over the coming year, as more lenders take advantage of relatively low-cost funding and face a growing need to get further funds placed into the market.

“However, this certainly doesn’t mean there isn’t room for further competition, particularly if a lender can enter the market with an innovative or more cost-effective proposition that really draws attention from customers.”

Daryl Norkett, senior sales at Shawbrook Commercial, added: “There are a large number of borrowers in the market looking to protect existing low interest rate mortgages, so the market potential is evident.

“There are still a number of first charge bridging lenders who aren’t offering second charge bridging, and this would be a natural next step in the evolution of those lenders product ranges – so more products are a likely future development.”

Jon Salisbury, managing director at Ortus Secured Finance, said: “I suspect we will see more lenders providing second charge loans as they compete for a share of this crowded market.

“The test will be whether they bring something new or offer more of the same.”

Avamore Capital is a bridging lender which doesn’t offer second charge products.

It said it wasn’t planning to enter that market, with Zuhair Mirza, principal at Avamore Capital, adding: “We’re not active in the second charge loan market, but the impression we get is there has been some price competition in that segment too, which would imply the market isn’t short of lenders for the existing products being offered.”

Paresh Raja, CEO of Market Financial Solutions, pointed out that institutionally funded bridging lenders typically preferred not to do second charges, but those who had more autonomy on funds could take a view and be more flexible.

“Risks include high LTVs, [with] unsuccessful projects, therefore, there is not much room for margin of error, especially for second charges.

“However, property prices have risen significantly over the years, therefore, there is a great opportunity to tap into the equity without breaking the mortgage deal and at the same time security is significantly backed up.

“This makes it more appetising to offer second charges.”

What do brokers think?

Chris Whitney, senior broker at Enness Commercial, felt that, from a broker’s perspective, there could never be too many lenders.

“…In theory, it drives competition and innovation, albeit time consuming for brokers to stay updated with all of them, so they can be sure they are giving clients [the] best advice.”

Chris Fairfax, managing director at Positive Lending, added: “The second charge bridging market is well-serviced, but rates have not fallen proportionately to reductions in first charge bridging and often LTVs are typically 5-10% lower than first charge.

“It would assume the split opinion is based on the assumption [that] any new lenders would not improve product, risk or pricing.

“All would welcome a new entrant if they genuinely add some value above [and] beyond what is currently available.”

Jo Breeden, managing director at Crystal Specialist Finance, felt second charge bridging was still a limited market, however, it was questionable just how much demand there was for this business type.

“What products do exist are now ERC free, offer cheaper rates and may be less risky and thus more suitable for clients.

“Lenders entering just because they see it as a profitable market may struggle, however, lenders that feel that [they] can add value – either as first or second charge – are the ones that will get business and improve the outcome for customers.

“But as always, it simply has [to] be the correct choice for the applicant based on what is available, and there are some excellent products in the market.”

Source: Bridging and Commercial

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Bridging lending up 10% to £534m as regulated sector strengthens

The bridging sector continued its recent growth with a 10% uplift last year as the regulated market continued to approach parity with the unregulated side.

According to the Bridging Trends report, bridging loan volume rose to £534.1m in 2017, up from £482.6m in 2016 and £432.5m in 2015.

The second and third quarters of the year were the strongest – with £150.7m completed in Q2 the highest overall.

Regulated activity rose to 46% of the market, up from 44% in 2016 and 36.6% in 2015, with regulated activity outperforming unregulated loans for the first time in Q1.

Average loan-to-value (LTV) levels dropped to 46.6% in 2017, down from 49% in 2016, while average monthly interest rates remained consistent throughout the year at 0.83%, down from 0.85% in 2016 and 0.91% in 2015.

Demand for bridging loans for refurbishments and auction purchases rose, although mortgage delays were again the most popular reason at 29% of all lending down from 34% of activity.

The data is collected from bridging lender MTF and brokers Brightstar Financial, Enness, Positive Lending and SPF Short Term Finance (SPF), to offer a general snapshot of the UK bridging finance industry as a whole.

The trend towards bridging for financing property refurbishment drew particular attention.

Popular route

Enness Commercial senior broker Chris Whitney (pictured) noted that this was a popular route to avoid hefty stamp duty costs and stagnation in the London property market.

“Many more clients have been buying cheaper or outdated properties and using second charge bridging finance to update them before refinancing onto a residential product,” he said.

“Likewise, we’ve seen numerous clients look to raise money against their properties who do not want to refinance altogether. As such, they’re using regulated bridges as second charges against their property, in order to keep their attractive first charge mortgage while securing the extra funds they need.”

Brightstar director of short term lending and development Kit Thompson echoed this, adding: “Our business has seen a large increase in bridging for property refurbishment, with an increase in Permitted Development Right (PDR) schemes and change of use projects.

“Almost all of our non-regulated bridging loans here at Brightstar involved some element of refurbishment, whether just light refurbs or those projects involving change of use and planning consent.”

Thompson noted, however, that regulated bridging deals Brightstar conducted rarely involved refurbishment.

Trends to watch

MTF director Joshua Elash added the data showed bridging finance was increasingly a mainstream financial solution.

“It is interesting to note what appears to be a direct correlation between the data reported and the macro-economic and regulatory changes which have impacted upon the market.

“We have, for example, in this annual reporting cycle, seen regulated bridging finance lending outstrip unregulated bridging finance for the first time. This follows on from the implementation of the mortgage credit directive and the consequential introduction of a new class of regulated consumer buy to let lending.

“Equally we are interested to note that again for the first time since reporting began, refurbishment to existing investment property was the most popular reason for borrowing during Q2 of last year.

“As we look ahead to the year 2018 we are interested to see how these two trends in particular pan out,” he added.

Source: Mortgage Solutions

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Bridging Loans – A source of quick capital

Sometimes, it can be difficult to get a regular loan, especially if you need capital fast. Traditional lenders and financial institutions have a lot of red tape involved in a loan process. Bridging loan cuts away the bottleneck and significantly reduces the time it takes to get much needed financing.

Bridging loan allows you to take advantage of opportunities without having to face the tedious loan application process adopted by most lenders.

In essence, bridging loan provides a way of obtaining short term financing for your project while working towards a more long term alternative. Bridging loans are invaluable especially when you need to purchase a property or equipment that would otherwise not be possible.

Even though bridging loans are commonly used to purchase property, this short term interest only loan can provide a breathing space for you to handle other projects while exploring other sources of funding.

Here are just a few reasons to use bridging loans

Short processing period

Property investors know that delay means losing out. As much as you wish it were possible, a property in the market won’t wait for you to raise the needed funds. There are lots of other investors with access to quick cash who will grab the property from under your nose. With bridging loan, you don’t have to wait for your mortgage to be approved while watching helplessly as a wealthy investor snaps up your dream property. Instead you can immediately raise the money for your new property and worry about selling off the old one later.

Even if you are not in the market for a property, you may need to acquire equipment for your business, or raise capital for raw materials. Bridging loan provides a short term solution for you to raise the needed cash to solve your business needs.

Bad credit financing

A lot of people are in a situation where they find it hard to obtain financing due to a poor credit score. Virtually every major lender will check your credit score before approving you for a loan. Simply missing one payment can plunge your credit score into the pits and even if you manage to result the bad credit issues, the bad record can still come back to haunt you. Thankfully, bridging loan offers a way for people with bad credit score to access the funding they need.

“One of the benefits of bridging loan is that bad credit will not be a barrier. These loans are quick to arrange, can be used for a variety of purposes and involves little or no credit check” says James of Bridging Loans UK.

Bad credit financing is typically used to clear a mortgage or buy a property while a mortgage plan is being worked out, or resolve other financial situations. However, you should have a clear exit strategy in mind before opting for bad credit financing.

Covering tax liabilities

Sometimes, you can be faced with sudden tax liabilities that can be difficult to factor into your current cash flow. In situations like this, you may find it hard to meet your financial obligations before the due date and this can cause unnecessary hardship for you or your business. Whether you are an individual or you run a business, unexpected tax can a hassle.

Bridging loan makes it easy for you to access the necessary funds to meet your tax bill. You receive short term financing to meet your financial obligations so that you can have the peace of mind to focus on other productive aspects of your life.

Debt forgiveness

If you have a property that is due to be repossessed due to inability to meet your financial obligations, a bridging loan can be used to pay off part of the debt and prevent repossession. It can also be used to pay off current lenders so that you will have a bit more time to resolve your situation. If you can stop the property from being repossessed, you retain control and can avoid a forced sale situation.

Bridging loan comes with a variety of repayment plans and manageable interest rates that would not affect the lifestyle of the borrower. It provides a useful source of quick cash that can help you meet any financial obligation in a timely manner. However, you have to be certain you can meet the loan conditions; this means planning your exit strategy, which could include conventional mortgage, buy to let or selling the property outright.

Source: ABC Money

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Bridging lending rises 10.7% in 2017

Bridging loan volumes rose 10.7% to £534.1m in 2017, according to the latest Bridging Trends data from mtf, Brightstar Financial, Enness, Positive Lending and SPF Short Term Finance.

£118.79m of bridging loans were completed by Bridging Trends contributors in the first quarter, before soaring to £150.7m in the second quarter – the highest level of loans transacted by contributors in a single quarter since Bridging Trends launched in 2015.

Volume cooled slightly in the second half of the year, dropping to £142.75m in Q3 and to £122.49m in Q4.

Regulated bridging loans increased market share on previous years to an average of 46% in 2017, compared to 44% in 2016 and 36.6% in 2015. Regulated bridging loan activity outperformed unregulated bridging loans for the first time in the first quarter of 2017.

Average loan-to-value levels dropped to 46.6% in 2017, down from 49% in 2016, while average monthly interest rates remained consistent throughout the year at 0.83%, dropping slightly from 0.85% in 2016 and 0.91% in 2015.

Average loan terms remained consistent in 2017 at 12 months- up from 11 months in 2016. Average completion times averaged 43 days in 2017, down from 45 days in 2016.

Mortgage delays were again the most popular reason for clients taking out a bridging loan in 2017- at 29% of all lending, although this was a reduction from 2016 when they accounted for 34% of activity.

Joshua Elash, director of mtf, commented: “The continued growth in lending volume in this sector, as reflected by the data reported by the contributing parties over the year, evidences the extent to which bridging finance is now increasingly a mainstream financial solution.

“It is interesting to note the what appears to be a direct correlation between the data reported and the macro-economic and regulatory changes which have impacted upon the market. We have, for example, in this annual reporting cycle, seen regulated bridging finance lending outstrip unregulated bridging finance for the first time. This follows on from the implementation of the mortgage credit directive and the consequential introduction of a new class of regulated “consumer” buy to let lending.

“Equally we are interested to note that again for the first time since reporting began, refurbishment to existing investment property was the most popular reason for borrowing during Q2 of last year. This follows on from increases in the stamp duty taxes payable on the acquisition of new buy-to-let properties and indicates a potential strategy shift amongst professional property investors towards value enhancement.

“As we look ahead to the year 2018 we are interested to see how these two trends in particular pan out.  In the interim and what remains certain is that bridging finance as a financial solution continues to go from strength to strength.”

Chris Whitney, Senior Broker at Enness Commercial, said: “Between stamp duty costs and stagnation in the London property market, it’s no wonder bridging finance for refurbishment is becoming increasingly popular. To avoid heft stamp duty charges, many more clients have been buying cheaper or outdated properties, and using second charge bridging finance to update them before refinancing onto a residential product. Likewise, we’ve seen numerous client looks to raise money against their properties who do not want to refinance altogether. As such, they’re using regulated bridges as second charges against their property, in order to keep their attractive first charge mortgage whilst securing the extra funds they need.

“Encouraging to see an overall increase in the total amount of bridging originated by the contributors to Bridging Trends, indicating a strong and resilient bridging sector that can survive what was a tough year with numerous obstacles to overcome, including MCD, PRA and tax changes for BTL/second properties and not least the long-drawn out Brexit negotiations.”

Kit Thompson, Director of Short Term Lending & Development at Brightstar, added: “Our business has seen a large increase in bridging for property refurbishment, with an increase in PDR schemes and change of use projects. In fact, with the exception of our FCA regulated bridging, which by contrast doesn’t generally involve refurbishment, almost all of our non-regulated bridging loans here at Brightstar involved some element of refurbishment, whether just light refurbs or those projects involving change of use and planning consent.”

Source: Financial Reporter

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Pensioners seeking payday loans almost double in two years

The number of people aged over 65 applying for payday loans has almost doubled in just two years, according to new research.

Figures from short-term credit broker CashLady revealed a 95 per cent increase between 2015 and 2017 in the number of pensioners turning to short-term financial help to top up their monthly pension.

The average monthly income of older people applying for these loans went up by £157, from £1,478 to £1,635, in the same period.

Despite a 10 per cent rise in monthly income, the research revealed the loan amount requested had increased by 26 per cent – suggesting pensioner income is struggling to keep pace with the rising cost of living.

In the space of two years, the average amount individuals applied for has increased by £80, from £302 in 2015 to £382 in 2017.

Chris Hackett, managing director of CashLady, said these figures suggest there were more and more older people living off their pensions yet struggling to make ends meet.

He said: “Inflation has been stuck at a high level for the last five years and while pensions have gone up, the shortfall between income and the cost of living is becoming increasingly apparent.

“The challenge for many of these applicants is our lenders will only approve loan applications if the person is in employment, which effectively rules out short-term loan options for those already retired.”

Earlier this month, research from the Pensions Policy Institute (PPI) revealed millions of people were almost completely reliant on a basic state pension of just £7,000 a year to pay their bills and live in retirement.

The report showed that for the poorest pensioners, £3 in every £4 of their income comes from the state pension.

The poorest pensioners are also seeing the lowest rise in income, since pension credit is set to increase by less than the state pension next April.

Paul Gibson, managing director of Granite Financial Planning, said he was surprised with the research results.

He said: “I don’t think most financial advisers clients would typically fall into this category and none of my retired clients have any borrowing requirement.

“Whilst the data may be accurate the annual percentage rate quoted on CashLady website of 1,272 per cent is quite staggering. It seems to be akin to putting petrol on a fire to try and put it out.

“If people are genuinely struggling I would hope there are better ways to cover this short-term debt, but high street banks’ lending criteria has now become so restricted they are not helping the problem as perhaps they should be.”

Source: FT Adviser

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Bridging set for another boost – London Credit outlines why 2018 looks set to be another excellent year for the bridging finance sector

Bridging finance continues its rise as a truly effective funding option. Industry bodies have reported a record year in 2017 and the indicators show that this is set to continue this year, still playing a vital role in helping to fund property renovation and change of use. With the supply of rental property still in high demand, short-term finance has an ever-increasing role to play in easing the housing crisis and supplying businesses with much-needed funding to expand their premises.

The demand for bridging finance doesn’t seem to have been dampened by several legislative changes to the buy-to-let market: more stringent affordability tests, tax relief and stamp duty rules were all introduced last year, but the demand for bridging has remained strong.

Even the PRA rules, which mean that landlords with four or more buy-to-lets need to submit details of their existing mortgaged properties, haven’t dampened demand. Now that the new rules have had time to settle in, we’ve seen a steady stream of enquiries from portfolio landlords for blocks of flats for student accommodation and HMOs for young professionals. This is particularly important in major cities where rental accommodation is at a premium, as house purchase is still a pipedream for many, despite the stamp duty relief for first-time buyers in the Autumn Budget.

The purchase price of a property is a key factor in determining yield for a landlord and, depending on the amount of renovation needed, can help keep the costs down. As long as the property is rented out at the market rate for that area, higher yields could result.

Auctions remain a good way for investors to acquire property at a competitive price, often below market value, and 2017 was another positive year for auction sales. Landlords and developers are snapping up residential rental and commercial units, particularly when work is needed on the property for either refurbishment or change of use. At an auction, completion needs to happen quickly, often within 28 days, so bridging finance is the ideal way of making this happen.

It’s vital that developers get a fast turnaround, so they can start work on the property as soon as the funding is in place, allowing them to shorten the time it takes to get the property on the rental market. To exit the bridge, some of our clients refinance to a longer-term loan with a more traditional lender or sell the property at a profit.

In short, the bridging finance sector is in great shape, and despite legislative changes and Brexit uncertainty, it’s proved to be resilient to such factors. There is a range of lenders servicing a variety of funding types and loan sizes, with more alternative products on offer than we’ve seen for many years. Short-term finance offers a real alternative to mainstream funding sources and bridging remains one of the best ways to act quickly when opportunities arise. It looks set to remain just as popular in 2018.

Source: PR web

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Are UK bridging lenders eyeing US expansion?

The US market would appeal to many bridging lenders if they were to consider international expansion, a recent report uncovered.

The EY 2018 UK Bridging Market study revealed that while the primary route to expansion was geographically in the UK, the US market appealed to many bridging lenders due to being able to offer a similar product proposition and there being capacity to grow quickly.

In the US, bridging loans – or bridge loans – are sometimes referred to as hard money loans.

Hard money lenders tend to be regulated at a state level via the department of real estate and at least one person associated with hard money lending is said to need a valid real estate broker licence.

Additional licensing requirements may vary from state to state.

Why might the US appeal to UK bridging lenders?

“UK bridging lenders would naturally consider lending in the US market because there is a limit to the amount of capital that can be deployed in the UK and the US market is so huge, it’s natural to want to consider operating there,” explained Michael Dean, principal at Avamore Capital.

“The US is also very creditor-friendly compared to most of the rest of the developed world, much like England and Wales.”

Paul Riddell, head of marketing and communications at Lendy added: “The US bridging market is an attractive market for many UK-based lending businesses.

“We are a fast-growing platform so clearly we would not rule out expansion into new markets over the longer term, with the US being a good fit for our model.”

Rob Jupp, CEO at Brightstar, pointed out the opportunities left by the global economic crash.

“There are huge opportunities to make significant profit from property appreciation in the US and a real shortage of a short-term lending industry to facilitate this.

“It’s almost the perfect environment for UK lenders, if partnered correctly.”

Jack Coombs, director at Aspen Bridging
Jack Coombs, director at Aspen Bridging

However, Jack Coombs, director at Aspen Bridging, told B&C that while the US was interesting as it had few legal barriers and a similar language, it was “a bit obvious”.

“There are possibly more attractive opportunities in other yet less developed bridging markets while still within the OECD countries.”

What problems could UK bridging lenders face in the US?

“Because there is a lot of UK competition in a shrinking market, some lenders may perceive that with the US being a large market that there may be room for more,” pointed out Damien Druce, director and head of intermediary sales at Assetz Capital.

“Unfortunately, for most with this aspiration, there are established lenders in the US that investors would be more likely to back.”

Chris Whitney, senior broker at Enness Commercial, wasn’t convinced the US market was suffering from any shortage of short-term specialist debt providers.

“The UK has a more robust legal system, mature regulatory framework and excellent infrastructure, and we know people choose to come here to transact business for these reasons.

“We’ve seen many US- and Canadian-backed funds wanting to lend into our market because of this, but rarely the other way around.”

Adam Tyler, chairman of FIBA, said that while there had been some success for P2P lenders expanding into the US market, there were few independent UK bridging lenders with the resources to make the same entry at present.

“Having worked closely with my US counterparts in recent years, while there is familiarity in terminology and outlook, it would not only require a significant amount of research, but also some serious financial backing to help build a recognisable brand.

“A partnership with a US-based firm with existing distribution might be a better path.”

Ortus Secured Finance has entered new markets recently, including the Republic of Ireland, but ruled out an expansion into the US for the time being.

“A huge amount of research and due diligence is needed to sensibly enter a new market, along with a strong, local professional network,” said Jon Salisbury, managing director at Ortus.

“Therefore, an expansion into the US is not on our agenda at the moment.”

Michael explained that the US market was quite fragmented because the recovery of loans varied from state to state, with each having different rules.

“From what we’ve heard, foreclosure is very easy to achieve in California, whereas in New York state, Florida and New Jersey it’s much more difficult to achieve and can take a lot longer, so you need a lot of local-level knowledge to support your expansion plans.”

Mike Strange
Mike Strange, managing director at Funding 365

Mike Strange, managing director of Funding 365, added: “The US financial services market is exceptionally sophisticated and already has a comprehensive bridging offering.

“I think it is unlikely that a UK bridging company is going to be able to compete with US peers given the inherent barriers to entry that exist.

“The US market has always been viewed – across many industry sectors – as a market which can provide untold riches if conquered.

“The truth is, however, that the path to US market success is littered with the remains of companies which tried and went bankrupt trying to succeed there.”

Source: Bridging and Commercial