Roma Finance had another successful year in 2014, and with recent reports stating that bridging is back to its pre-credit crunch peak, all bodes well for another successful year. However, there are a few events coming up which may not be under the sectors direct control and so may influence how 2015 plays out.
Scott Marshall, Lending Director at Roma Finance, comments below on the 5 key points that will determine the shape of bridging lending in the next 12 months.
- Economic factors – There are positive signs that the UK economy will perform well in 2015. We’re seeing low unemployment and strong economic growth to boost confidence. The Bank of England is likely to keep interest rates low for a while longer which will help the economic growth continue. It’s also a real bonus that oil prices, and so the cost of petrol at the pumps, is at its lowest for many years, again helping fuel confidence for business and personal finances.
- Pension benefits – April sees a watershed in pensions with potentially the full pot being available in one go (although for those who take this route there will be tax to pay). But the option could prove to be attractive for those wanting to start or build a buy to let portfolio. This could be seen as their opportunity. With low savings rates, many will calculate that the higher yields achievable on rental property are worth investing in, so more money injected in to the property market. With a housing shortage and not enough new properties being built, converting property to buy to lets and HMOs will continue to thrive.
- The role of the specialist lender –The High Street banks have been much maligned by property developers in recent years as they can’s provide the right kind of finance in the time required by brokers and their borrowers. This is unlikely to change in 2015. However, the growth of product diversity and flexible options provided by specialist lenders continues and we are now seen as a real alternative as a source of non-mainstream funding. Specialist property projects require specialist finance and expert funders who understand the case and objectives of the project, whether it be change of use, buying at auction or renovation. I think 2015 will be the year that specialist lenders come of age, if they haven’t already.
- General election and tax – Rarely has ‘tax’ been so exciting in the property sector. Two important taxes Stamp Duty and the Mansion taxsuddenly became dinner party conversation recently. 2015 will be the year when we see the real impact of these. The recent Stamp Duty changes will greatly benefit the general property market and help buyers and movers. The Mansion tax may not happen at all now, as the higher end Stamp Duty almost amounts to the same thing, particularly in London. So with an election due on 7th May it all depends on the way the voting goes to see how tax may impact property further. It could also create a demand for high end property completions before the election.
- The rise of service –In the bridging finance community, the importance of service has reached its tipping point and I believe we are now in a new era of innovation. Brokers and their borrowers expect knowledgeable staff to act promptly and make fast decisions. Underwriting of specialist cases too has to be done on a case by case basis, one size doesn’t always fit all. For these reasons we have launched our Charter which outlines the business principles we will work to. This has great benefits for not only the broker and their borrower but also the valuer and solicitor who may be involved during the application to funding process. I think service will be a key factor in 2015 and Roma Finance are well placed to take full advantage of this.