Who's lending in Scotland?

Yesterday, the Scottish Government launched a Help to Buy scheme in response to the UK’s strategy. With an influx of lenders and an increase in borrowing, it seems like Scotland’s property lending activity is thriving.

The Scottish Government allocated £220 million to the three year Help-to-Buy scheme that provides loans of up to 20 per cent to borrowers who only have to contribute a five per cent deposit.  The Bank of Scotland, Barclays and Nationwide are offering these Help-to-Buy mortgages.

This scheme is intended to inspire growth in the construction industry and help those who can’t buy a property of their own.

Nicola Sturgeon, Deputy First Minister of Scotland said: "There is no doubt that getting onto, or moving up the property ladder has become tougher in recent years,"

"The Help to Buy Scotland scheme will not only help people to buy their first home, it will also help ‘second-steppers' and others move to a new property.

The scheme will help drive the increase found with Scottish first time buyers. In this year’s second quarter, the Council of Mortgage Lenders (CML) revealed that first time buyer lending in Scotland was at an all time high since 2008. Scottish first time buyers took out 6500 loans, a 54 per cent increase from the previous quarter.

Recovery for the Scottish housing market in general was rumoured in the second quarter as the Royal Institution of Chartered Surveyors found that prices and demand were continuing to expand.

CML also found that lending for house purchases increased in the second quarter with 14,500 loans advanced totalling at £1740 million; this is up by 45 per cent from the first quarter. Loan to Value rates rose slightly in Scotland like the rest of the UK, resting at 82 per cent.

Iain Malloch, chair of CML Scotland, commented: "With comparatively lower prices in Scotland than in the UK as a whole, first time buyers are able to borrow less relative to income.”

He continued: “There is clearly value in the Scottish market which provides a great opportunity to get on the housing ladder."

To increase housing supply and reduce the struggle of getting on the property ladder, Scottish councils are tracking down the owners of Scotland’s empty properties. Some of which have been lying empty for as long as 14 years.

2013 has seen a few lenders achieve success within Scotland with some venturing to conqueror the area for the first time. 

Capital Bridging has been lending in Scotland for over two years and yesterday they accepted a £3 million application on an office block refinancing deal in Motherwell.

Keith Aldridge of Capital Bridging Finance said:” We are delighted that our early decision to enter the Scottish market has paid rich dividends, “

“Other lenders are certainly looking to follow our example but they will have to be mindful that it is a different market. They will have to be very trusting of their Scottish partners and be confident that their underwriters have the knowledge that is required to ensure that exits are achieved and repeat business generated. “

Bridging Lender Ortus Secured Finance landed its first Scottish completion early last month. The deal was a six month facility introduced by Conduit Finance that rolled in at £1.2 million. 

Challenger bank Shawbrook, has almost lent £130 million across all of its divisions in Scotland.

Karen Bennett, Sales and Marketing Director of Commercial mortgages at Shawbrook said: “Scottish towns and cities like Glasgow are actually some of the better investments in terms of buy-to-let property. When you take into account capital growth they can give higher yields than towns in the south of England. This is particularly true in the more specialist parts of the buy-to-let market such as student lets.”

Some lenders were initially prevented from moving into Scotland because of the contrast to England’s property law, procedures and lower property values.

Merseyside based lender, Bridging Finance Solutions recently launched into Scotland in September. Steve Barber, Managing Director of the Bridging Finance Solutions Group, said the expansion was natural from already being based in the North.

At the time, he said: “We’re delighted to be extending our service into Scotland at a time when the housing market north of the border is starting to show signs of renewed confidence.”

When discussing the Finance for Lending Scheme for Scotland’s SMEs, the Federation of Small Businesses (FSB) in Scotland said reforms were yet to have a significant impact in the country.

Colin Borland, the FSB's head of external affairs in Scotland said: "Things are beginning to ease but it's still tight,” He added:  "Far too many, when they go into the bank, are not getting what they want."

If the market holds its course in Scotland, similar triumphs to this year could be yet to come.