Smith: Mainstream bridging lenders are missing a trick

Martyn Smith, founder and managing director of bridging lender Bath & West, says short-term lenders have become over reliant on London’s “red hot” property market to do easy deals and have neglected areas of the country that show serious potential.

Smith, a bridging veteran with 35 years of experience in short-term lending, claims Bristol, Bath and the south west offer sound fundamentals to property developers, investors and intermediaries looking for an opportunity to expand.

Smith said: “The recovery in the property market hasn’t been evenly spread across the UK since the market collapsed in 2008. London has always been a market disconnected from the rest of the UK with strong demand from both domestic and foreign buyers.

“That’s why the mainstream bridging lenders have focused their attention on the capital over the past few years. But there are other areas of the UK that offer lots of untapped opportunity, Bristol and the West Country being a prime example.”

According to property comparison website Zoopla’s latest data the average house price in Bristol is now £243,376, up 19.39% on five years ago compared to a 31.76% rise in London.

Average Bristol house prices are also up a healthy 6.06% since this time last year while Zoopla’s data also suggests the average asking rent is now at £924 per month in the city.

Meanwhile Moneysupermarket’s latest quality of living index, which considers factors like rents, salaries, disposable income growth, cost of living, unemployment rates and overall life satisfaction, ranked Bristol as the top city in the UK.

The personal finance site’s research suggests the average employee salary in Bristol is £22,293 - above the UK average of £21,473, and the third highest out of the 12 largest UK cities.

It has the highest disposable income growth and one of the lowest UK unemployment rates. And the city boasts two universities with a steady influx of students needing a place to live.

Smith added: “There’s more to the UK than just London but despite the clear advantages of cities such as Bristol, property developers are still finding it very difficult to get finance outside the capital.

“We think that’s crazy, which is why we are focusing solely on the West Country and these cities, offering much needed short-term funding to property professionals in the area.

“The demand is there but I think sometimes developers and their financial advisers fall foul of the usual suspects in the bridging market and give up when they’re told no because it’s outside the M25.”

Bath & West is a dedicated bridging lender with several private funding lines including one from London-based bridger Fincorp.

It offers short-term finance to property professionals seeking between £50,000 and £500,000 (flexible) to fund anything from a classic bridge to auction finance, light and heavy refurbishment loans or development finance where properties have residential planning in place.

Bath & West will also consider some commercial deals with a focus in this market mainly on small semi-commercial, retail or office properties. It charges a competitive rate with loan terms extending from one to 12 months and will lend up to 70% loan to value on unregulated residential deals and up to 60% LTV on developments.

Brokers earn a procuration fee of 1% of the loan.

Smith was founder and director of the first bridging lender in Britain, formed in the 1980s. He went on to develop which floated on the London Stock Exchange’s AIM market in 2000 and which was later sold to a trust based in Gibraltar in 2005. Smith stayed on as CEO until 2009.

He said: “Bridging has had a lot of success filling the funding gap left by the big banks since the crash in 2008. We think it’s high time this availability of finance extended beyond pockets in London, the Home Counties and Manchester.

“We know there is demand out there, we just want to remind brokers looking to help their clients there’s more than just the mainstream choice of lenders.

“We have local experience and knowledge and as a result we’re much more likely to understand clients’ needs and the complexities of specific deals in the South West.

“Brokers know that expertise is critical to getting deals done fast and lenders not pulling out at the last minute. We’re here to help.”