CFI: Bridging


“Show me the money” in hassle-free Scotland most


by Steven McColl, investment partner Soho Corporate


With the boom in short- term lending in 2010-11, and the vast capital inflow to this sector, it is a significant part of revenue inflow for bro- kers and intermediaries. We specialise in placing short- term business, and know of 60+ short-term funders. Whilst england and Wales


are core business for these lenders, there is demand for short-term money in Scot- land, but it is a lot more ‘spe- cialist’ in that there are only a handful of funders active in Scotland.


england-based


funders will only look at vanilla glasgow and edin- burgh residential invest- ment deals. Why is this? their strategy is usually fo- cused on ‘worst case scenar- io’. a funder based in Lon- don or manchester will most likely take a view that Scot- land is a ‘long way away’ and has a different legal system of which they are unlikely to have a strong knowledge. Scotland represents the has- sle factor and is unknown territory to them. But this does not mean


that Scottish deals are bad deals; Scottish deals can be great deals as the market is less competitive and are therefore less rate and fee sensitive. typical


“Scottish deals can be great deals as the market is less competitive and are there- fore less rate and fee sensitive”


Scottish bridging case rates are 2% arrangement fees and 1.5% a month or, if it is private money, 2-3% ar-


rangement fees and 2% a month. LtV in Scotland is usually lower too; we have completed numerous cases in the 10-50% range this year, with the max offered at 65% gross. the good news is though,


that one can now get any kind of short-term funding in Scotland. We have funded residential investment deals, commercial property, farms, land (with and without PP) and development finance this year. there are a few bridging lenders that have now put in place a good Scottish infrastructure con- sisting of a strong legal team, and a trusted panel of valu- ers (usually Shepherds, dm Hall, allied and graham & Sibbald).


It is ok to look outside the M25 for business


by Jonathan Samuels, CEO Dragonfly Property Finance


Why are bridging loan pro- viders more reluctant to lend outside the m25? to ar- rive at the answer to this question, you simply need to take a quick look at the rightmove July 2011 House Price index. according to righmove, 7


out of 10 properties market- ed so far in 2011 are still on the market. this is quite a statistic and drives home just how stagnant the resi- dential property market is


these days, a combination of weak buyer sentiment and vendors who are either un- willing — or unable — to sell at realistic prices. alongside this stagnation,


uK property prices overall are still in decline or flatlining at low levels. the one exception to this rule is London and surrounds, an area where demand remains strong, transactions are still occurring and prices are actually rising slightly. With the above conditions


in mind, put yourself in the position of a short-term lender. Lenders always look at things from the perspec- tive of risk. they will there- fore be more inclined to


50 mortgage introducer AUGUST 2011


fund ventures in buoyant markets where demand is strong and prices are in the black and edging up. Like- wise, they will also be far more inclined to invest in fluid markets that give them the all-important exit they need.


London meets both of


these requirements. the ma- jority of areas outside the capital and m25 absolutely do not. For this reason alone, lenders will be far less in- clined to lend outside the m25 and far more inclined to lend within it. Saying that, when other


parts of the uK show a strengthening in the prop- erty market and things start moving again, lenders will


naturally start looking fur- ther afield in larger num- bers. as ever, there are excep-


tions to the rule. at dragon- fly, for example, while our focus remains primarily on London and surrounds, we recently completed an £800,000 bridge introduced to us by niche Financial So- lutions on a prime residen- tial development in Wolver- hampton comprising 23 units. i cannot speak for other lenders but for us, if the numbers stack up, the bor- rower fits and we like the look of something, as we did in Wolverhampton, we will always be interested — wherever in the uK it is.


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