Top show highlights BTL bridging opportunities

Top show highlights BTL bridging opportunities




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Bridging & Commercial was invited to attend the Landlord and Letting Show 2011.

Miranda Atty and Jason McGee-Abe visited the show at London Olympia to find out how bridging is affecting the buy-to-let industry and whether there has been an increase in the number of landlords turning to short-term solutions to secure their finance.

The Landlord and Letting Show is the UK’s largest event for the industry, with over 50 stands attended by landlords, prospective landlords, letting agents, government representatives and lenders.

Throughout the two-day show there were a number of seminars given by industry experts, including Buy-to-let funding: Opportunities and pitfalls, held by Mortgages for Business’s David Whittaker.

During the talk, David Whittaker explored the BTL market’s journey from its boom times during 2007, through the trough experienced in 2009, to prospects for the future.

2007 was, “a good time for you all, with money readily available” he told the room of landlords. With a market saturated with around 15 main lenders, people were actively competing for business, driving rates down.

After the recession hit, BTL lending reduced by 80 per cent – down from £47.6 billion in 2007 to £8.5 billion in 2009.

According to David Whittaker, 2010 marked the turning point. The launch of two new lenders – Precise Mortgages and Aldemore Mortgages (both offering 75 per cent LTVs) and the return of Paragon, helped boost lending prospects.

He said: “We now have more lenders in the area, offering more products and starting to jostle for position.”

Indeed, he revealed that the number of BTL products now available has more than doubled – increasing from 200 products on September 6 2010 to 480 products by August 6 2011.

So with BTL back in favour, how is bridging affected?

Richard Deacon, Sales and Marketing Director at Masthaven, also attended the show. “Our main reason for attending is that we wanted to dip our toe in the direct-to-consumer market. Over two days, around 2,000 potential landlords and developers came through the doors.

“It’s a totally different market from the brokers and intermediary area and it’s been interesting because we’ve never done this before,” he said.

Steve Bedford, of Mortgages for Business, agreed: “The show has been pretty good – we’ve met some potential customers.
“There has definitely been a trend of late of customers turning to bridging finance, particularly if they are buying at auction and need finance quickly,” he added.

So what kind of questions have landlords been asking?

“A lot of people are doing auction or renovation and refurbishment so we have been talking to them about our product guide,” Richard Deacon explained.

Steve Bedford said: “We’ve been talking to people who are wanting to re-mortgage in order to expand their present portfolio. Some just want advice on how they can get their money back and there have also been a fair few enquiries from overseas investors.”

Was the show beneficial for those in the bridging area?

Steve Mudd of Kingswood Associates, which offers Buy-to-Let Mortgages, Commercial Mortgages, Development Funding and Bridging Finance, said: “We’re based in Cardiff and get a lot of business from the South East so it’s nice to come and have a presence here meeting people. It’s also good as we meet and speak to people regularly as a result of these shows and that helps build a relationship.”

For Richard Deacon, the show offered the opportunity to talk directly to customers: “The BTL market and landlords and developers are a good source for new business. Landlords who have, say, one property but are looking to expand their portfolio need funds which they won’t necessarily get from high street lenders. If they come to us we can fund them.”

Indeed, the trend of BTL landlords turning to bridging finance looks set to continue. Steve Mudd said: “There’s been a definite increase in BTL landlords turning to bridgers. Bridging is one of the biggest growth areas, especially with the popularity of auctions and an increasing number of landlords who are buying and trying to create a quick turnover, quick sale and expand their portfolio.”

For Richard Deacon, the show was worthwhile. He added: “If we were to come back next year, we would create a very simple one-page guide about bridging but use examples of how bridging is relevant and beneficial to the landlords and developers.

“It’s been a good experience though and very educational.”

By Jason McGee-Abe

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