With three Bank base rate cuts within seven months, commercial property investor demand is surging compared to a year ago.

Rightmove’s recent quarterly commercial insights tracker outlines a continued recovery in enquiries about listings for the investment sector with Q4 data showing demand of all types up by 28% by the end of 2024.

The East Midlands and London led the demand with interest in industrial listings 72% higher year-on-year.

This rise has been driven by the need for warehouse space as online shopping and e-commerce continue to flourish.

After the industrial sector, office space has seen the biggest jump in investment and leasing demand at plus 57%.

As development interest and activity rises, brokers will need to be able to offer investors the tools they need to be able to move quickly in a rising market.

To avoid losing a deal or holding up development work at high cost, understanding the lenders who can offer a revolving credit facility on flexible pre-agreed terms will be invaluable for certain clients.

When a borrower needs to move fast, lenders like ourselves offer a pre-agreed borrowing facility secured against property as quickly as required.

The financing is designed to be drawn, repaid and redrawn as many times as needed depending on how the customer needs to utilise the funds.

These facilities can work well for customers who need a ‘hunting pot’ to speculate on other purchases at very short notice. With the security on another property, purchase or working capital investment can be achieved quickly without extra paperwork or due diligence before funds are released.

Unleashing its power

The products can be available for up to 12 months with the ability to extend and secured with a first charge over a commercial or residential property or a second charge on a residential.

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Interest is only charged on the outstanding balance after a six-month minimum interest charge, making it a cost-effective solution for managing short-term financial needs.

The flexibility of this type of finance can offer several advantages. Once the facility has been approved, funds can be drawn down instantly without a further application.

From a cost perspective, the flexibility is also helpful because interest only accrues on the drawn amount, not the full sum available in the facility.

For instance, we can lend against open market vacant possession value and don’t place any restrictions on the property assets bought with the facility, giving a developer free rein.

There are also no non-utilisation fees if, for some reason, a deal doesn’t come off or plans change mid-way through a development.

How to spend it

Once the facility has been agreed, revolving credit facilities can be versatile tools for any client’s financial plans.

The ready access to funds and drawdown speed can be employed for auction finance or private treaty purchases.

Agreeing finance within the stipulated timeframe is one of the high-stress factors in buying through auction, and this is a useful workaround.

Or, in a scenario where multiple finance arrangements are expiring, a revolving credit facility can offer a short-term solution, giving investors the time to get longer-term finance in place.

Where a contractor expects to be paid at different times during the build, or unexpected costs crop up on a development project, access to working capital could make the difference between success and failure.

Revolving credit facilities can also be employed for their ability to release equity from currently-owned properties and offer liquidity, allowing clients to strike at opportunities when they emerge.

Revolving credit facilities can be powerful, flexible tools in the short-term loan arena.

As the market continues to rise, these tools can offer investors the valuable confidence or agility needed to strike at the right time.