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Buy to Let
Office for Budgetary Responsibility
Positive Bridging Finance
Buy to let property investors are increasingly opting for bridging loans, it has been revealed, driving up demand for this type of lending in the UK. There was a substantial 25 per cent increase in loans taken out in 2013 to fund property acquisition and refurbishment, new figures show.Research from Positive Bridging Finance found that the average bridging loan now stands at GBP 220,000, Property Wire reports. This is up five per cent year-on-year, and the average term is six months. Furthermore, gross bridging hit GBP 1.79 billion in the year to August 2013, and July and August alone totalled GBP 364 million.It was also revealed that 36 per cent of buy-to-let investors are using bridging products to buy terraces and town properties, while 29 per cent were using them to buy flats, nine per cent semi-detached houses and five per cent detached.John Waddicker, director of Positive Bridging Finance, commented that an increasing number of people are realising the benefits of bridging finance when it comes to acquiring and refurbishing properties. "While the availability of buy to let mortgages is improving, bridging provides fast, short term loans that are ideal for turning round properties quickly," he said. "We have seen the buy-to-let demand for bridging loans leap this year and we believe this will continue in 2014."Mr Waddicker noted that as property prices rise across the UK, many buy-to-let landlords are seeking below market value properties that will give them greater yields on rental income. He added: "Landlords are using bridging loans to finance the development of properties which they may be unable to secure mortgages for."This follows a prediction from the Office for Budgetary Responsibility (OBR) that house prices will rocket by 24 per cent by the year 2018. The OBR revised its forecast upwards for the next five years after experiencing better than expected value growth during 2013.
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