In the first quarter of 2018, there was a 22% increase in development bridging loans.
Members of the Association of Short Term Lenders reported that they lent £242.2m in bridging development finance in Q1 of 2018. Many of these are for newbuild projects. Local authorities report that there are a lot of planning applications waiting for decisions, so lenders expect that more development bridging loan applications will be submitted during the rest of 2018.
Some developers have been finding it difficult to raise long-term loans for projects and this has made them look at alternative lending solutions. The chief executive of the Association of Short Term lenders, Benson Hersch, said:
“The role of small and medium building firms are seen as crucial in helping solve the housing crisis but access to finance still remains their toughest barrier to overcome.”
He said that bridging finance is a funding solution that is helping small developers deliver much needed houses.
Property development loans are also available for refurbishing and renovation work. Many developers use bridging finance for building work that adds value to a property, and then sell the property at a profit after the work has been completed. Much of this work (including new bathroom fittings, kitchens and conservatories) does not need planning permission and can be completed quickly. Property improvement work can increase the value of a property by much more than the cost of the work and the bridging loan that funds it.