By Rob Lankey
It will not have escaped the notice of any Moneyfacts readers that the UK property market is facing a lot of challenges at the moment.
With the Bank of England keeping rates at a 15-year high and construction material inflation running into double digits, it isn’t an easy time to be a property developer at the moment (if it ever was!)
In a rapidly shifting market, developers are having to think and act fast and be very flexible in their approach and this is one of the factors in the continuing rise in the popularity of bridging finance.
Bridging loans used to be thought of in some circles as the finance of last resort for developers who were stretched for cash and racing against time.
But as the UK property market continues on its unpredictable path, bridging solutions are emerging as one of the best ways to negotiate the minefield of modern development.
What’s more, bridging finance is helping to breathe new life into the market while also providing numerous benefits.
For borrowers, bridging finance offers unparalleled flexibility and speed. Traditional mortgage applications can be cumbersome and time-consuming, often taking months to secure. In contrast, bridging loans can be arranged in a matter of days, allowing borrowers to seize time-sensitive opportunities.
At GB Bank, we’ve combined this flexibility internally with investment in technology and streamlined processes combined with professional services partners to turn around some bridging finance solutions in less than a week.
Such speed can be crucial in situations where time is of the essence, which is often the case with property projects in the current economic climate.
We’ve seen a number of cases where developments have got part way through and then have had to stop due to financial issues or projects where properties have only been partially completed as construction companies have succumbed to cost pressures.
In situations like these, the clock is ticking and certainty is in short supply, so the timely arrival of finance to kickstart development is absolutely crucial.
Another advantage of bridging finance is its versatility. It can be used for various purposes, not just buying properties or development land.
At GB Bank, we’ve developed a whole range of bridging solutions for both residential and commercial properties and we’ve seen our finance used for everything from completing a part-built home to opening up a dormant high street unit.
With these kind of examples, it’s easy to see why bridging finance is having such a moment. It is actively contributing to the overall health of the UK property market in helping to facilitate property transactions that might otherwise have stalled or not occurred at all.
This matters not just on a financial level, but also for people and communities across the country.
In many cases, the property transactions being brought into being by bridging finance solutions are helping to create much-needed residential accommodation and facilities.
For example, we have recently completed our largest bridging deal to date to provide a multi-million-pound lending facility for a project to create over 100 affordable homes in the West Midlands.
The timeliness which the bridging finance solution presented was crucial in this case because of the need to support the redemption of an existing lending facility which was due to expire.
In cases like this, and many others across the country, bridging finance is really living up to its name by breaking down divisions and helping to ensure that property and people are brought together.
* Rob Lankey is Chief Commercial Officer at GB Bank, which offers flexible finance solutions to SME property developers and investors.