Strong foundations for ongoing growth
Merry Christmas!
We’ve enjoyed a successful year in Bridging at UTB and I’m very pleased to hear that we’re not the only busy lender in the bridging space.
I’m a firm believer in the notion that the best way to grow your own business is to also help grow the market. Sure, you should aim for a decent slice of the cake, but if the cake is bigger too, everyone wins.
Our latest Bridging Connections expert is Vic Jannels, CEO of the Bridging & Development Lenders Association (BDLA) and long-time advocate of the Bridging industry. We asked him to give us his take on 2024, the impact of regulation and what 2025 may hold for brokers and lenders alike. I’m delighted to say he was only too keen.
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Vic Jannels is the CEO of the Bridging & Development Lenders Association (BDLA), a role he has held since January 2020, when the association was known as the ASTL. He has recently been honoured with the Lifetime Achievement Award at the Mortgage Introducer Awards, recognising his significant contributions to the mortgage industry, particularly bridging and development finance. Beyond his leadership at the BDLA, Vic serves as Chairman of Impact Specialist Finance and is a director of One Mortgage System.
Onwards and upwards – Strong foundations for ongoing growth
The bridging finance market continues its ascent, reaching record-breaking heights in 2024. According to data from the Bridging & Development Lenders Association (BDLA), bridging completions hit an all-time high of £1.79bn in Q3, a 2.6% increase on the previous quarter. The total loan book size surpassed £9bn for the first time, a testament to the sector’s resilience and growing importance in the UK financial landscape.
Of course, we can only report on the figures produces by our members. We are aware that there are a sizeable number of bridging, commercial and development lenders that are not yet members of the BDLA. We encourage those lenders to join and increase our ability to influence the sector, for the benefit of the consumer.
| Driving Growth in Bridging Finance |
The consistent growth of bridging finance stems from its versatility. Bridging loans offer a vital solution for clients needing transitional funding to meet long-term objectives. For instance, property refurbishments, conversions under permitted development rights (PDR), and lease extensions on unmortgageable flats are all scenarios where bridging loans shine.
Home movers, too, are increasingly relying on regulated bridging loans to overcome “chain break” situations. With property transactions becoming more protracted, these loans enable clients to secure their next home before the sale of their current property. Similarly, demand for development exit bridging has surged as developers refinance expensive facilities and release capital while marketing their projects.
These trends highlight how bridging finance addresses a diverse range of needs, ensuring its continued relevance and appeal.
Elevating Standards
Another important factor in the continued growth of bridging is the increasing professionalism and reputation of the sector. Whilst not all bridging lending is regulated, there are many lenders that offer both regulated and nonregulated loans and adopt the same high standards required by Consumer Duty across all of their lending. Regulation can come with unintended consequences, of course, particularly in short-term lending which has very different dynamics to the mainstream term market. At the BDLA, we are in ongoing dialogue with the regulator and policy makers to help ensure that those unintended consequences don’t negatively impact our sector and our customers.
One example is the name and shame proposals in the FCA’s CP 24/2 consultation paper. We issued a press release earlier this year to confirm that we were adding our voice to the growing number of trade associations and businesses that oppose these proposals It’s often the case that an FCA investigation results in the regulator finding nothing untoward with the firm that it is investigating. However, if that firm is named at the outset, it will undoubtedly suffer reputational, and probable commercial, damage while the investigation is taking place and possibly beyond even if it results in no disciplinary action. This is a guilty until proven innocent approach that would significantly negatively impact investigated financial services providers and ultimately their customers and we continue to work together with other trade associations in opposing these proposals.
Fraud prevention has also been a priority. The BDLA has facilitated workshops that emphasise technology-driven solutions and inter-industry collaboration to combat fraudulent activity. These efforts, combined with our commitment to responsible lending, are designed to enhance trust and transparency across the sector and we will continue our efforts in the area into 2025.
| Looking Ahead to 2025 |
The future looks bright for bridging finance. Relaxed planning regulations are likely to spur more conversions between commercial and residential uses, further driving demand. Meanwhile, as property investors seek higher yields in a challenging economic climate, bridging loans will remain a crucial enabler.
The BDLA is proud to lead this thriving sector into the future. With recordbreaking lending figures, enhanced industry standards, and ongoing collaboration with stakeholders, we’re confident that bridging finance will continue to play a pivotal role in helping clients achieve their financial goals.
Vic Jannels, CEO of the BDLA