Jonathan Sealey

Funding may be the watchword of 2019

This year may be many things, but dull will not be one of them.

I don’t think there’s a person on the planet who will be able to predict what the world will look like at the end of this year, nor any section of our industry.

That we are in for a rocky ride is almost certain, but exactly how this will manifest itself is anybody’s guess. Regardless of the political turmoil and the challenges thrown up by the ‘B’ word, the market is still underpinned by some inalienable facts.

We still need property to live in and there are still more people than there are houses. Ultimately, this supply and demand scenario continues regardless of everything else. The biggest challenge to people buying property is a confidence factor, of course. Do people continue to want to borrow money either to build or buy a bigger house if they feel uncertain? And when they do want to borrow, will the funds be there for them to do so?

The London market has already been affected, as has been widely reported throughout last year. In the rest of the country, house prices have continued to rise, although by less than they did before the Brexit shenanigans. 

We have certainly seen no decrease in demand from investors wanting to develop or refurbish property, and few have had problems either selling or letting it out once it has been developed. This should continue, as there is plenty of opportunity for small developers and an increasing shortage of properties to rent, as the growing homeless issue is a witness to. 

The challenge for some developers may well be finding longer-term finance to exit from their bridging loan having built or refurbished their property. Already this year, one lender proposed to cease new mortgage lending, while another pulled its product range while it waits for its next funding line to be made available. 

Funding may well be the key issue of 2019 and it must certainly be on every broker’s radar to ensure they are placing their clients with the lenders who they know have the requisite funding to complete the loan. In fact, it is not only about completing the loan in the first place, but the lender having the back-up funds to extend it – without punitive interest – should the borrower run into difficulty and need an extension to their loan term. 

Looking towards the uncertainty ahead, lenders with the surety of their own funds and a fair policy regarding extending the loan term have to be a safer bet for both brokers and their clients.

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