Member Article

Increasing market stability to prompt growth of bridging finance sector in 2024

With high street banks continuing to have a limited appetite for commercial property lending, 2024 looks promising for secured lending providers. That’s the view of Chris Sellars, Chief Executive of commercial short term finance company Bridge Help.

“The stabilisation of interest rates, energy prices and construction costs, together with a natural adjustment of property prices post Covid, have restored confidence in the market and people want to do deals,” says Chris.

He explained: “Covid created a false residential and commercial property market. Interest rates were incredibly low, and Stamp Duty was temporarily lifted resulting in high demand and inflated property prices. Things had to level out and they did so towards the end of 2023, bringing us back to a more realistic position. Despite the slow growth of the UK economy, the property market is still in a better position than in 2008 when we were in recession. We must not lose sight of this fact.”

UK Inflation currently stands at 4.6%, however it is expected to fall to 2.8% by the end of 2024, before reaching the Bank of England’s 2% target in 2025.

“The outlook at the beginning of 2023 was particularly austere for the bridging finance market and, as a result, we had a slow start to the year. However, in Q2 the market picked up significantly and by September Bridge Help had had its best month ever. This has continued into 2024 as the threat of a recession has significantly dissipated and stability returned to the marketplace.”

Chris is confident the Buy-to-Let market will pick up in 2024 after the government scrapped its plans to force private landlords to comply with the new EPC energy standards by 2025. Instead, the government says it will encourage landlords to upgrade the energy efficiency of their properties where possible.

“The scrapping of the EPC standards by the government in September last year has helped restore confidence in the Buy-to-Let (BTL) market and resulted in a number of BTL deals for Bridge Help at the end of the year which I believe will continue throughout 2024,” he said.

“I see growth in demand in 2024 for our Buy-to-Let and auction finance products, particularly in the North East, North West and Wales where we are seeing the highest gross rental yields for residential properties.”

Chris also pointed to the decrease in the appetite for working from home as an opportunity for property investors. “While I believe hybrid working is here to stay, the office market is picking up. Companies are looking for less square footage so there is a real opportunity for commercial property investors to develop office hubs in cities and towns.”

According to Savills, cooling inflation, and falling borrowing costs will lead to development and refurbishment starts increasing in 2024.

“I am very optimistic for Bridge Help in 2024. Being known for doing what the banks won’t do, has created real demand amongst borrowers for our products. We’re self-funded as well which means we’re not at the mercy of banks’ volatile interest rate rises and can offer stable, secured lending to commercial property investors.”

This was posted in Bdaily's Members' News section by Anna Melton .