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"Bridging finance went ballistic in November" as people downsize and amateur landlords exit

ended 02. December 2024

“Bridging finance went ballistic in November”, brokers have said, primarily a result of homeowners downsizing and seeking to sell in the Spring when rates have potentially been cut or professional property investors using it to snap up properties being put up for sale by amateur landlords following the Autumn Budget. Investors, they say, are also using bridging loans to turn existing buy-to-let units into HMOs, which generate higher yields. The views of experts on why November was so busy for bridging are below.

6 responses from the Newspage community

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Adam Stiles
Managing Director at Helix Financial Partners
Bridging finance went ballistic in November. For us, this was primarily a result of people downsizing due to the ongoing cost of living crisis. They use bridging when they have found the perfect home but haven't yet sold their own home and don't want to lose the onward purchase. The other profile of bridging borrowers we are seeing are professional property investors who are seeking alternatives to traditional buy-to-let and are buying properties and converting them into HMOs (Houses in Multiple Occupation). HMOs not only add value but provide higher yields, something that's hard to achieve with conventional buy-to-let nowadays.
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Mark Dyason
Owner at Edinburgh Mortgage Advice
There has been a groundswell of demand for bridging among downsizers who want to move before they sell. These people want to move at a pace that suits them and look to sell in the Spring when expected rate cuts will drive confidence and increase demand and the prices they can achieve for their existing property. On top of this, the properties of many amateur landlords looking to exit buy-to-let coming onto the market, often with the pain of standard variable rates, has created an opportunity for a professional property buyer to offer a sharp price and get the deal done fast. This is a classic bridging scenario, especially in this quieter autumnal period. The rates on bridging have also fallen and the best rates are not that much higher than on buy-to-let mortgages. There are deals to be done and borrowers are turning to bridging to make them happen.
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Kelsey Phillips
Head of Specialist Lending at Arose Finance
We have been busier than ever with bridging finance in November, as have specialist lenders. The demand for real yield and consequent appeal of HMOs has only been emboldened by Rachel Reeves’ recent policy announcements in the Autumn Budget. We're seeing existing clients scale and new entrants utilise bridging for the first time. Savvy investors are also continuing to capture market dislocations securing below-market-value purchases ahead of the SDLT threshold sunset March next year. The UK market is rife with opportunity for the proactive property investor, including flipping dilapidated homes into turnkey HMO (House in Multiple Occupation) investments for end-buyers in search of yield.
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Harps Garcha
Director at Brooklyns Financial
Bridging finance has been booming in October and November, fuelled by a record number of properties for sale and the exit of casual landlords. Seasoned investors are actively scouting for deals under market value where they can add value, often using bridging loans for their speed and flexibility, especially when properties require work. Many investors are now focusing on higher-yield projects, such as residential conversions to HMOs and commercial-to-residential developments under Permitted Development.
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Graham Cox
Director at Bridging Hub
We're seeing a lot of demand for bridging loans at present. November has been exceptionally busy as many amateur landlords, following the Budget, exit the market. On top of steeply rising mortgage rates, and a less generous tax regime, the increase in the buy-to-let stamp duty surcharge from three to five percent was the last straw for many. This is presenting huge opportunities for professional landlords, who are snapping up below market value rental properties from distressed sellers. Commercial to residential conversions under Permitted Development are also becoming increasingly popular.
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Patricia McGirr
Founder at Repossession Rescue Network
This month has been a bridging bonanza with investors moving fast to seal the deal on portfolios and multi-unit blocks. Getting ahead of the traditional Christmas wind-down and beating SDLT deadlines seems to be driving demand. Behind this surge it’s clear there are a lot of opportunities for investors to choose from, and it’s the professional investors that are gearing up for growth into the New Year.