the Last Word
The M25 myth exploded
Most bridgers seem reluctant to lend outside the M25 – why is this?
Ian sutherland, director, montello bridging Finance
Stable house prices, inward investment, conservative
funding lines and a concentration of large bridging finance companies are some of the factors that account for London being the focus for bridging finance providers. At Montello the large proportion
of our loan portfolio comprises security property within the M25. that is not to say we restrict our business to London (our portfolio is spread throughout the uK), however as a consequence of our base in the city of London and the local broker relationships we have developed since we started three years ago, our London loan book is considerable. London is largely seen as safe
investment, in particular in the prime areas of the capital. Foreign buyers, buoyed by low interest rates and a cheap sterling have been investing heavily in places like chelsea, Knightsbridge, Mayfair, South Kensington, St John’s Wood (areas which have seen a huge surge in prices). Further, according to ricS,
available space in London only increased 2% in Q2 of 2011 compared with an increase of 22% in the north of england; testament to the growing demand over supply in the South east. Many bridgers are geographically
constrained in where they provide funding by their funding lines which prefer to take a more conservative approach with a view that in a default situation, London is an easier place to extricate themselves. Many of the larger bridging
companies are themselves located within the M25. Whether it’s because of local broker contacts or purely because their underwriters feel more comfortable within that area, these loan books would tend to be London heavy. However bridging finance
providers are now springing up all over the country. this has to a certain extent lead to a partitioning of the market with many local short- term lenders being familiar with their own locality, its brokers and valuers and tending to do business in those areas. As time goes on, we see there
being consolidation in the bridging industry where players will perhaps have a wider product spread and have portfolios which are more national than local.
34 bridging introducer september 2011
Gareth Lewis, head of business development, tiuta
Firstly, it’s important to point out that tiuta is not a lender which is M25-centric; in
that sense we are not hamstrung by location but willing and able to lend anywhere in england and Wales. Having said that there is no doubt
that many lenders seek comfort in the property market in London and the South east, and there’s a simple fact for this – the property market in those areas has not been affected as badly as many other areas in the uK. the fact is that the uK has a
localised property market anyway. We are not just talking about significant differences between villages/towns a few miles apart, but in many areas we will see major differences between streets just metres apart. We should also not underestimate
the uniqueness of London in the property market; even when compared to the South east, London exists in its own property ‘bubble’. it’s a simple fact that in the capital
there are far more overseas investors buying property which you would
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