UK Landlords Seek Alternative Lending

Bridging lender West One loans reports that more and more current and prospective landlords in the United Kingdom (UK) are using loans from alternative lending sources to finance …

Bridging lender West One loans reports that more and more current and prospective landlords in the United Kingdom (UK) are using loans from alternative lending sources to finance buy-to-let properties. Bridge financing and peer-to-peer lending are increasing in popularity among landlords who are unable to secure loans from traditional banks. Many banks in the UK are cash-strapped and uncertain of these investments, despite the fact that rental rates and demand continues to rise as more people are priced out of the housing market. For more on this continue reading the following article from Property Wire

Buy to let property investors in the UK are making more use of alternative finance as the mainstream lenders remain hesitant, according to new research published today (Friday 20 April).

A record 36% of intermediaries list buy to let as the most popular use for bridging, a rise from 23% in the same sentiment survey done in August 2012.

Brokers report a 49% annual growth in alternative finance, the report from peer to peer bridging lender West One Loans shows but it also reveals that three quarters of mainstream borrowers do not understand bridging loans.

‘A generation of renters are demanding somewhere to live and a growing army of landlords need loans to make the required investments. The latest sky high rental figures demonstrate that hunger for more investment,’ said West One Loans director Duncan Kreeger.

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‘But cash strapped banks are still hesitant to make a serious commitment. The supposed upturn in traditional lending isn’t meeting this need. And unless someone is willing to put their money where their mouth is, that won’t change. That’s why alternative finance and peer to peer lending models are proving so popular. Particularly since deals can be done in days rather than months,’ he explained.

He pointed out that even when a bridging loan is the most appropriate solution, it’s clear that the overwhelming majority of borrowers would struggle to understand the practicalities or the opportunities. ‘Brokers are increasingly able to provide support. But the rise of alternative finance for buy to let investments illustrates just how many property investors could have made use of bridging but are currently missing out,’ he added.

More brokers are seeing an expansion of alternative finance. A record 79% of brokers saw their own bridging business increase, compared to 72% in November.

According to intermediaries, the bridging industry as a whole has seen growth of 49% over the last 12 months. This compares to 51% reported annual growth in November, and 46% in August 2012.

‘Gross bridging lending smashed the £1.5 billion mark at the end of last year. Brokers certainly agree that this will keep rising, even if at a slightly more sustainable rate. Also, as our partners on a daily basis, it’s encouraging to see the opportunities of a growing industry split between a bigger proportion of brokers,’ said Kreeger.

This article was republished with permission from Property Wire.



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