Guide to bridging finance
HOW CAN BRIDGING HELP IN THE CURRENT CLIMATE? A new survey of 2,000 UK adults has revealed their thoughts on the housing crisis and the government’s attempt to support homebuyers and the wider economy. Findings included:
» 51% consider the housing crisis to be one of the biggest issues facing the UK
» 19% are considering buying a property before the stamp duty holiday expires on 31st March 2021
» This figure increases to 32% for those aged between 18 and 35
» 44% believe the media focuses too much on
worst case scenarios in its coverage of Brexit and Covid-19
» 49% are satisfied with Rishi Sunak’s Covid-19 support and stimulus packages, compared to 16% who are dissatisfied
With 51% believing that the housing crisis is one of the UK’s biggest issues, it’s clear that policy and direction need to fundamentally change to address, and solve, the problem. But, how can bridging help? When there’s uncertainty in the market, as this research shows, it’s important for all involved to boost confidence and keep things moving. Whilst the government drives policy, and can make material changes, it can’t be done without the rest of the market playing their part. Firstly, mortgages are currently taking longer to approve, and this is putting transactions at risk. This is particularly of concern at the moment, with almost a fifth of those asked wanting to take advantage of the stamp duty holiday before it ends at the end of March 2021. The only way that they will be able to do this with certainty is to understand their options outside of the high street banks, and be confident enough to transact on this kind of funding with the help of their broker. It is up to bridging lenders and brokers to make 6
sure that the market is educated in all of the options available to them to ensure that these transactions make it through before the deadline. Without it, gazumping and gazundering will increase, as more time provides those searching and selling with opportunities to move the goalposts many times before completion. With bridging deals able to complete within three to 10 days, rather than the average 45 days associated with traditional mortgages, the benefits to borrowers and brokers is clear. Bridging, as an industry and a community, should also start to tackle the ‘worst case scenario’ view that is often taken by mainstream media. 44% think that too much focus is on this, making it clear that we need to try to instil confidence back into at least our part of the market. If we can show the press and the wider industry that bridging is here to help and it’s here to stay, then this can aid continued movement. Paresh Raja, CEO of MFS, says: “While the government is often keen to stress just how important the housing crisis is, events like Brexit and Covid-19 have obviously been prioritised. This a reflection of the complex challenges that the UK is facing at the moment. “Importantly, however, Britons seem to be behind the support and stimulus packages that have been announced to help those affected by the pandemic. This includes the stamp duty holiday, which has been among the most effective initiatives. According to Halifax, house prices in October 2020 were 7.5% higher than the same month a year earlier. Clearly many are still hoping to take advantage of the holiday, too. I for one would like to see the SDLT holiday extended in order to more realistically facilitate this. “Over the coming months, the government must focus on the housing crisis. However, it is also up to those involved in the property market— lenders, estate agencies and brokers—to ensure they are doing everything in their power to help prospective homebuyers.”
