1441 companies based in Europe had approached the Financial Conduct Authority (FCA) by October last year for temporary permissions to trade after Brexit in the UK. Temporary Permissions, as the name suggests, is a temporary status which allows them carry on trading whilst they seek the authorisations they require from the FCA.
These firms include banks, payment firms, asset managers and insurers. Over 1000 of them have yet to open a UK office indicating that they will do so after the UK has left the EU at the end of the month.
The statistics were obtained following a Freedom of Information request made by Bovill, who says the findings are good news overall for our service economy.
According to the Association of Short-Term Lenders, bridging loan applications come to £6.1 billion in the third quarter, which is up 17% compared with the same quarter the previous year. Applications for the year nearly totalled £23 billion and bridging loan books reached £4.3 billion at the end of the quarter which is 6% less than the year before.
UTB’s recent announcement about their new products is good news for those looking for a fast and straightforward bridging loan.
Following a successful pilot scheme, UTB have announced that they will be introducing automated valuations (AVS) for loans of up to £1million, with a loan to value ratio of 55% or less, speeding up the process.
The decision to increase the use of dual legal representation for regulated loans up to £1m is welcome news for those looking to simplify the whole process and the new 0.75% rate for first charges with LTVs of 75% is also good news.
Gavin Diamond, commercial director of bridging at UTB said:
“Our BDMs are talking to brokers up and down the country, finding out what would enable them to build their businesses and meet borrowers’ needs.
“Such feedback is invaluable in helping us to continually improve and refine what we do as we ensure our specialist short-term loans continue to meet the changing needs of brokers and borrowers.”
Certainly any products that speed up the bridging process, whilst keeping things simple, will be welcomed by those looking for bridging finance options.
Recent research by Fintech Lender, ThinCats, has revealed that just 32% of young businesses (those less than 10 years old) are relying on traditional banks as their first lender of choice for business funding. 23% of these businesses are now turning to alternative finance providers as their first port of call.
Most long-standing businesses, however, have yet to turn to the alternative finance market as 71% of businesses that have been trading for 35 years or more are still choosing to source their funding through more traditional routes.
It’s very good to see that more and more new businesses are steering towards alternative, more modern, funding options as this is essential if we are going to see a more modern economy. Thoughts should next be turned to how we can encourage more established businesses into switching up their funding methods.
The summer is traditionally a quieter time for the property market, as people focus on enjoying the weather, often putting off thoughts about moving house until the autumn.
The latest HMRC figures suggest this trend has been further impacted this year by the current political uncertainty as residential transactions fell by 9.6% between May and June this year, that’s 16.5% down on last June.
However, despite these issues, the bridging market remains strong with many landlords choosing this as the best route to fund refurbishment projects prior to taking out buy to let mortgage finance.
Interestingly an increasing number of landlords are planning to buy property as a limited company in the coming year. Research by specialist lender Precise has found that 55% of landlords plan to use a limited company for any future purchases, an increase from 44% in 2018. Even those with smaller portfolios and considering the same route, with 51% of those with 10 or less properties planning to purchase as a limited company.
Using a limited company has the attraction of being exempt from the phased reduction in mortgage interest tax relief. Landlords can also offset the interest charges against profits, which are then subject to Corporation tax at 19%, rather than being liable for income tax.
Clearly the buy to let market is still continuing to evolve and grow, despite measures to suppress it, and pressures elsewhere in the market.
Peer to peer funding provider Lendy has gone into administration after a number of issues left it unable to continue trading.
Lendy operated as a web based platform, facilitating crowd funding loans for property purchases and development. Problems first came to light last October, but despite restructuring in December the FCA has now appointed insolvency practitioners RSM as administrators.
Since its launch in 2012 Lendy has facilitated £400m in loans.
With over £160m outstanding with at least £90m in default, investors have currently been left in limbo waiting to hear about the recovery of their funds. The administrators are now seeking legal advice on the status of investors, which will determine whether they will see their funds returned.
The FCA are now investigating the circumstances that led up to Lendy’s collapse.
With Lendy being the largest peer to peer platform to fail, experts are warning that other peer to peer lenders may soon face similar problems, leaving investors questioning the safety of future investments in the sector.
Funding Circle PLC has posted record-breaking originations of £683 million for the final quarter of 2018. This figure is up by 31% year-on-year with £522 million reported in quarter four of 2017.
The SME lender also boasted their total originations for the year of 2018 which stood at £2.3 billion, 55% up from the previous year.
This news follows the announcement that Waterfall Asset Managements would be investing £1 billion through Funding Circle’s platform whilst they also secured a £150 million partnership with the British Business Bank.
Bluestone Mortgages conducted a study which revealed that 34% of respondents, all of which were mortgage brokers, agreed that the specialist lending market will grow significantly over the next 12 months. 52% believe that lending will grow by at least £1 billion over just the next 6 months.
This growth is expected due to an increasing number of customers being unable to fit the traditional lending criteria’s and need more specialist and adaptable loans. This is added to by the growing number of self-employed applicants so it is vital that the market is able to adapt to this.
In 2018, London-based specialist lender, Fiduciam, had their strongest year to date after granting bridging and development loans worth £139 million. This year, they have plans to double their lending facilities to £250 million.
To support their new lending growth and other expansion plans, Fiduciam plan to hire 25 additional employees over the coming months, including; loan servicers, loan underwriters and case managers.
Fiduciam specialise in lending to clients in other European countries and launched their business in Spain, France and opened a new office in the Netherlands during 2018. They plan to launch into two other countries and to open two new offices during the course of 2019.
Amicus Property Finance PLC, who entered the bridging market in 2010, had been showing signs of difficulties since September 2017 when they announced that they would not be progressing with their banking licence. They stated that they would begin to undergo strategies to lower costs and work towards securing an investor to grow the business.
However, in early December 2018, it was confirmed that Amicus Property Finance halted lending after the Association of Short Term Lenders announced the suspension of the lender’s membership with them. The company went into administration on 20th December 2018 with Mark Robert Fry, Jamie Taylor and Kirstie Jane Provan appointed as Joint Administrators.
Although they are not able to continue lending, Amicus have stated that they will continue to support any facilities they already have in place.
It is currently understood that this hasn’t affected the other group businesses, Amicus Asset Finance and Amicus Commercial Mortgages, and for now they will continue to trade as normal.
Last updated: 21 January 2020 | © KIS Bridging Loans 2020