Bridging Loan Market Update – September 2016

August 25, 2016

We take a look at September 2016 and the bridging loan update

On the Monday morning following the referendum result two months ago, I was on the receiving end of a flurry of phone calls from worried investors, concerned about what the future may hold. Multiple deals were frozen in the lawyers office, and we were left wondering where indeed this shock result would take us

Now, 2 months later, after a brace of positive economic good news, the ominous threats and collective hysteria from the IMF, IFS, ECB and BOE; seems to have all but faded into some sort of nightmarish dream, much like George Osbourne’s emergency Brexit Budget.

It would appear that, actually the world is still turning. Government gilt yields are at an all time low, corporate borrowing is down, employment is up, benefits claimants are down, exports are at a 2 year high, and Persimmon house builders reports a 29% rise in pre-tax profits, with reservations up 17% on this time last year.

In light of this economic data, and the recent reduction in interest rates, combined with positive results from the other major house builders, we feel the market has shaken off the shock from the referendum, and is starting to move in the right direction. Consumers want to get on with life, people still want to own their own homes, and property investors still want to do deals.

However, there are some changes afoot in the overheated top end London market. With the amendment to the law by the former Chancellor, restricting the purchase of high end property in SPV’s or other such tax efficient structures, and the changes to how stamp duty is calculated; it has led to a cooling off in the capital for larger transactions over £10m.

That said, the collapse of Sterling means the cost of buying a London home for some overseas buyers is up to 20% cheaper than at the beginning of the year; so there is a chance the market will flatten out, with property values losing no more than 10-15% of their peak value.

Looking to the future, the funding lines at Tiger Financial are now back onstream.  We have a certain amount of caution around large ultra prime Central London property transactions, and some of the more speculative commercial developments, however for the most part, it is now business as usual.

This article was written by Matthew Dailly, Managing Director of specialist bridging loan company Tiger Financial.

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