A changing appetite for bridging
By John Hardman, head of sales
As Bridging Finance Solutions (BFS) continues along its pathway of continued growth and expansion, the firm begins to explore where new customer groups lie in terms of a wider demographic. John Hardman, head of sales at BFS, considers the facts, reviewing trends across 2017, and determines what makes a ‘typical’ bridging customer.
While bridging is much more concentrated in London and the South East, the Midlands through to the North of England continue to see growth in the short-term market both in numbers and volume. Investors continue to look for maximum yield, combined with capital growth – two elements that are starting to come under some pressure in certain areas in the South.
While the value of a typical loan in the North is considerably lower than in the South, the market is no less buoyant in terms of the number of transactions due, in the main, to the number of hungry, experienced property investors, landlords and builders in the region. With regards to Scotland and Northern Ireland, appetite has generally been tepid from short-term lenders, partly due to differentials in property law and also perceived liquidity issues.
The average age of a bridging customer is 56, compared with 37 for a standard mortgage. As individuals approach the age of 50, thoughts inevitably turn towards retirement. It is a common fact that many have not provided anything like the amount they should have towards retirement. Direct property investment offers a flexible, simple and lucrative method by which someone can plug this funding gap. The large majority of investors aged above 50 are gearing their portfolio towards providing an adequate income in retirement, coupled with growth in their capital.
In terms of employment status, a significant proportion of our investors currently are either self-employed builders or property investors. This has always been the case as this demographic has the knowledge to quickly assess the viability of a project to, for example, refurbish a property and turn a profit. Despite that, we are seeing more and more employed or retired clients who have taken the time to research this market via the internet, trade press or DIY programmes and are keen to have a go themselves.
Ultimately, what we are seeing is a general increased appetite for bridging across the board. The North is as buoyant as the South, however, property prices naturally dictate that loan values are considerably lower. Over 50s will naturally look at property to boost their pensions while the self-employed have a tendency to explore alternative ways to finance a project. The market is opening up and individuals are recognising the scope and value of bridging to help them meet their end goal.