Why Omicron won't derail growth in the short-term finance sector

The emergence of Omicron is obviously a worry.

Of course, we need to take it really seriously in the context of public health, but should we be panicking about the economic impact, too? Will we face another national lockdown?

How will this new development impact the short-term finance sector?

After a tumultuous 18 months, it felt pretty good to finally be back on an even keel.  We were all hoping to move into a post-pandemic market, with sustainable growth looking likely for 2022. But what happens now?

Don’t panic

Even in the worst case scenario, we’re unlikely to return to a full national lockdown like we saw in Q2 2020. 

There isn’t the political or public appetite for that, unless the pandemic was to take a significantly more aggressive turn. It’s possible, of course, and we’ll have to do whatever it takes.

But even if it does happen, it doesn’t spell disaster for bridging and development businesses.

Better prepared

Firstly, we are well prepared. In many cases, lenders and brokers were still remote working, or operating a hybrid model, before the recent shift to plan B. 

We were able to quickly pivot to work fully remotely and will be able to go back to face-to-face when required. Businesses have become more agile as a result of the pandemic, and we’re better for it.

Plus, we’ve already harnessed technology to cope with further restrictions. Many bridging lenders — including Roma — switched to AVMs in 2020, allowing us to keep lending. 

We still use a mixture of video calls with customers, and even drone footage of development projects where necessary, to make sure we understand the case in front of us. Site visits with social distancing and PPE are also possible if needed. In other words, we’ve done it before and we can do it again.

We’ve already planned for any future restrictions at Roma so that, if and when they happen, we can adapt quickly and continue to support brokers.

2022 outlook 

Even without the impact of the new variant, we’re expecting more subdued residential transaction volumes next year. 

Government interventions put a rocket under the market in 2020 and 2021 and, inevitably, many purchases were moved forward to take advantage of the Stamp Duty Holiday. 

After the holiday ended on 30th September, home sales in October fell 48.4% compared to September, and were down 30% year-on-year (HMRC).

The drop was fully expected and will likely settle into a steady but lower level of purchase volumes next year.

Other sectors are expected to be stronger. We’re still seeing high demand for development finance, and we predict this will continue into 2022. At Roma, our pipeline is particularly strong for heavy refurbishment and ground-up developments, and we don’t see this changing. 

Obviously, there are still some supply chain issues, and we already look carefully at how this could impact projects when we assess cases.

Think positive

Overall, we’re feeling positive about 2022. November was our strongest month ever and we’re confident going into next year. Omicron is a worry, of course, and we have to acknowledge that. But we’ve coped before and, whatever the pandemic and the government throws at us, we’ll cope again. 

The property market is robust and our sector is resilient and packed full of professionals that are ready to adapt to keep on lending.

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