Viability of bridging exits vital where relying on traditional mortgages – Jannels

As the lockdown restrictions slowly start to be relaxed, nobody knows what shape the economic recovery might take. But we can anticipate future trends based on some of the many changes that have happened during the lockdown. 

I spoke to some members of the Association of Short Term Lenders (ASTL) executive committee to find out their thoughts on the impact of Covid-19 and some of the trends we might expect to see in the future.  

The key themes were the resilience of the sector, the importance of technology and the opportunities for residential development in areas that have traditionally been dominated by commercial space.

Here’s what they had to say.

Adapt and innovate

Scott Marshall, managing director of Roma Finance, said: “The industry tone has been rapidly evolving since the pandemic began but the outlook is positive. A counter-cyclical market is developing and those focusing on adapting and innovation will be part of the new normal. 

“The vibes are good in the market, finance searches and enquiries are up, however, there will likely be some fundamental changes.”

Marshall added: “A new work life balance has been introduced and working from home may become normal, meaning less requirement for commercial space and in turn, a creation of a brand new type of city centre. Commercial space will become residential, creating opportunities for property investors. 

“This future will require investment in technology to allow for new ways to do business and communicate with customers. Those who plan ahead for this now will feature significantly going forwards.” 

Strong recovery 

Stephen Barber, director at Bridging Finance Solutions, said: “Yes, we have some tough times in certain sectors ahead, but consumer sentiment will be the key factor in a V-shaped recovery.  

“With a paradigm shift in working practices I expect a more significant impact on capital values of commercial property.” 

Gavin Diamond, commercial director for bridging at United Trust Bank, said: “Technology has been vital in enabling UTB, and many other participants in the specialist finance industry, to continue to function during the pandemic. 

“Our original rationale for investment was to use technology to strengthen our operational resilience and make it quicker, cheaper and easier for borrowers to transact with us.” 

Positive sentiment 

All in all, the messages from within the sector seem very much to sway to the positive and this is encouraging.  

Much will depend upon how the government is able to deal with the serious debt mountain it is accumulating throughout the crisis in order to provide the ability for businesses to stay alive while facing limited or no income during the shutdown. 

It is also worth remembering that, while bullish about the future, the bridging sector will still rely on the viability of exit routes needed to repay the short-term borrowing, especially where these exits are dependent on the provision of traditional mortgage options.