Government must support short term market or face property prices collapsing

Government must support short term market or face property prices collapsing




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The Government has been called upon to compel lenders to provide more funding to the short-term market – or risk prices for distressed sale properties plunging by over 30%.

Bridging loan company Tiuta has warned that the effects of reduced access to bridging finance could prove “disastrous.”

According to the bridging firm, there would be a serious impact on prices without access to bridging finance, as many distressed sale properties would only be sold to cash buyers, therefore hugely reducing the number of buyers.

 

Tiuta says that bridging finance is essential in these types of transactions as the majority of distressed sales are “unmortgageable” at point of sale, due to the time necessary for the buyer to complete. Short term funding is therefore relied on to “bridge” the gap between purchase and mortgage.  

 

Chief executive of Tiuta, Gary Booth, has said: “I don’t think the market or the Government realise the critical role that short term lenders are currently playing. Without them tens of thousands of repossessed properties would see their price collapse. At the moment most lenders have access to capital, but with repossessions set to rise more funds will be needed, unless we are prepared to see purchases limited to only cash buyers, which could be disastrous for the property market and the confidence in the economy as a whole.”

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