Whilst the article recognises that the popularity of bridging has ‘surged’, its cautionary tone focuses on the risks of bridging rather than the benefits. Bridging & Commercial spoke to industry experts in response, in an attempt to discover the bigger picture.

In a time when many of the high street banks are unwilling or are unable to lend to those who wish to buy property, it has been up to lenders within the bridging industry to step up to the plate. Bridging lenders have established funding streams and have extensive teams to help support not only residential borrowers and those who wish to buy a property, but also people who wish to develop their portfolios.

Steven Nicholas, Chief Executive of bridging finance specialist Tiuta PLC, said of the article: “It was clearly aimed at residential borrowers, and to that end I suppose it highlighted some of the key areas and responsibilities that those considering a bridging loan need to think about. 

“The main point we would wish to make is that the vast majority of bridging loans we provide are not for residential borrowers but for entrepreneurs, property developers, and the like. Residential bridging has become a very small part of our loan book and, quite frankly, this is the way we like it.”

Tiuta was mentioned in the article in reference to a list recently published by the Council of Mortgage Lenders (CML) in which they placed 21st in the Top 30 for gross mortgage lending in the UK last year.

Whilst the Guardian’s recognition of this accolade is a step in the right direction, Steven Nicholas believes that the article failed to accurately depict the industry’s nuances. “The article quotes the CML as saying that bridging finance is ‘clearly not the answer to anything other than a minority of financial problems’ which could be somewhat misconstrued. 

“There could be an assumption that borrowers, who have ‘financial problems’, might be appropriate for bridging finance, when that is not the case at all.  Bridging loans are not for those in serious adverse credit and this should be a clear message from the bridging community to consumers,” he explained.

Masthaven also featured in the Guardian’s article, mentioned as another leading provider when the article detailed other costs involved in taking out a bridging loan. Managing Director of Masthaven Bridging Finance Andrew Bloom responded to the quotes: “For a significant number of people, bridging finance plays a pivotal role in their property purchase. Nevertheless it is vital that customers fully understand the product before they sign on the dotted line.

“As one of the few FSA regulated bridging lenders in the market, we insist that the borrower’s solicitor fully explains to their client the terms of the loan prior to Masthaven being willing to proceed.”

Masthaven’s Sales & Marketing Director, Richard Deacon, also commented on this issue: “Bridging finance should always be looked at as an individual deal cost. If it is explained clearly and concisely by the introducer to the client and that cost is acceptable to what the client is trying to achieve, then bridging finance can be viewed as a viable financial solution in today’s climate.”

Alan Margolis, Head of Bridging at United Trust Bank, commented on mortgage broker Melanie Bien’s statement in the article that ”bridging finance has its uses,” but if you don’t have a realistic exit strategy…”bridging is extremely risky and should be avoided at all costs.”

He said: “It’s great to see that bridging is being noted by the mainstream press, however, the article is rather unbalanced. The tone is also somewhat unfair because the majority of cases we deal with are assisting people to do positive things as opposed to solving a problem.

“With regard to the risk, most bridging lenders are responsible and will only lend when there is an exit.

“With regard to the costs, which are often higher than for mainstream long-term mortgages, the article fails to appreciate that a bridging loan is not like a mainstream mortgage and should not be compared to one - not just because of the intense bespoke effort, much like private banking, that goes into the underwriting, but because lenders cannot obtain a return over a number of years; bridging is meant to be short term funding.”

Like all other industries, the bridging industry does contain risk but due its specialism and transparency at the moment it appears to be booming. Steven Nicholas continued: “It is pleasing to see the mainstream press acknowledge the growing strength of the bridging finance market and Tiuta’s pre-eminent place within it. 

“We are completely transparent about our prices, our fee structure, and we make sure that the advisers and introducers we deal with are giving full and frank information to their clients about what they are signing up for. 

“Indeed, a secure exit strategy for the client is paramount in our decision to lend and we would not be lending to those borrowers where there is no clear and achievable exit strategy in place.”

Whilst it is encouraging that bridging is becoming more recognised in mainstream media, as this article reveals, it appears that there is still more work to be done in terms of explaining the realities of bridging finance.