Bridging trends for 2022


Jonathan rubins alternative bridging

I don’t think 2021 has progressed in exactly the same way that anyone would have expected this time last year.

The vaccination programme has been a success and the property market has gone from strength to strength.

Those bars and restaurants that survived being forced to close for such a long time are now full and the economy seems to be bouncing back well.

However, this isn’t to say it’s all been plain sailing. The problems around supply chains, the increasing cost of building materials, and labour shortages, have all been well reported.

For property investors and for businesses there is both challenge and opportunity. So, what does this tell us about the direction of the bridging market in 2022?

Here are three trends we think you should watch out for next year.

Growing demand for property refurbishment

Property refurbishment has always been a popular way for investors to achieve a greater return, by renovating and modernising a run-down property, and we’ve seen a big demand for our specialist refurb products in the last year.

The pandemic has driven an attitude change amongst many people about where they live. With many businesses now only requiring people to come into the office a couple of times a week, homeowners are less tied to the daily commute and can choose to live further out from large conurbations.

This has opened up a new inventory of property that could present a profitable refurbishment project. Refurb is spreading from city centres and suburbs out to more rural locations and seaside towns.

Developers requiring extra time and leverage

Supply chain issues, increased costs of material and a shortage of tradespeople, mean that it’s taking developers longer and costing them more to complete schemes.

This means their capital is tied up for longer, which limits their chance to benefit from future opportunities.

One way developers can tackle this is by securing greater leverage at the outset and we’ve seen phenomenal demand for our Development 90 product that offers just that.

We think this will continue into next year as more developers realise the benefits of achieving greater leverage in a cost-effective way.

And, of course, some developers are likely to reach the end of the road with their current facility.

Development exit bridging loans have proven an important tool this year and they will continue to do so going into next.

Cashflow a key issue for businesses

We are seeing two dynamics with businesses at the moment. Some are looking to reduce outgoings by consolidating existing debts, whilst others – having remained stagnant for the last two years – are hunting for a capital injection to drive growth.

Either way, cashflow is going to remain a key issue for businesses and we anticipate growing demand for our Alternative Overdraft product which provides a pre-agreed drawdown facility.