Rise in gross annual bridging lending

West One said that the growth had been driven by a number of factors, including an increase in bridge-to-let loans in advance of April’s stamp duty surcharge. It also said that there had been a surge in demand for bridging finance in order to unblock property chains and raise additional finance.

Total bridging lending growth had been affected by a month-on-month flattening of construction output in February, down 0.3% alongside a 2% contraction of the commercial property market, it added.

Stephen Wasserman, managing director at West One Loans commented:

“A 3% rise in lending may seem moderate, but that’s relative to some significant recent sector expansion. Moreover, we’ve seen healthy growth continuing in the weeks since February. A major contributor is professionals using bridging as part of their strategy to buy residential properties in need of renovation, improve them and re-sell at a healthy profit.”

He continued: “With this group often buying at auction, our experience fits with the surge in auction buying noted. Moreover, we anticipate further growth from this group, favoured by the underlying lack of supply of new homes.”

Latest DCLG figures showed that housing stock growth of 0.73% lagged population growth. That means renovating undesirable properties will continue to be a profitable and attractive business, from which bridging will benefit, he said.

The index also showed that the size of the average bridging loan dipped in February, falling to £937,189 from £983,990 in December. West One said that this 5% drop was expected after the record high at the end of 2015.