London is set for rental growth of 18.8% over the next five years, according to figures that were revealed at the ASTL Conference last week.

In his presentation to delegates, Lucian Cook, Director of Residential Research at Savills, discussed slides which showed that while London rental prices have grown by just 0.9% in the last year, the rest of the GB has grown by 1.5%.

However, over the next five years Savills forecasts London rental prices to grow by 18.8% compared to a UK average excluding London of just 13.1%. Over the same period, UK income is forecast to grow by 15.6%, so while UK rental growth will lag behind this, rental prices in London are expected to outstretch income growth.

Benson Hersch, CEO of the ASTL says: “Property investors have had to endure a lot of change with increased taxation and regulation in recent years, at a time when rental growth has been relatively flat, particularly in London. So, it will be reassuring for them that the demand for rental property is forecast to put upwards pressure on rental prices, especially as capital growth continues to be subdued.

“This demand for rental property presents opportunity for investors, many of whom may choose to facilitate capital appreciation by renovating property to let to tenants – and this is good news for the short-term lending sector.

“I’d like to thank Lucian for his incredibly entertaining and informative presentation at our conference last week, which proved to be a valuable event for all who attended.”

Trade associations, like the ASTL, can promote effective self-regulation, which could make further FCA intervention in the bridging sector unnecessary, according to former FCA mortgage manager, Lynda Blackwell.

Speaking at the ASTL Annual Conference last week, Lynda Blackwell said that she didn’t think full regulation of the bridging market would happen any time soon, adding that “it’s something that is down to you [the bridging sector] to make sure you react in the right way”.

Blackwell said that any regulation is always targeted towards the “bad apples” in an industry and that trade associations and members of those bodies had a responsibility to call out bad practice as this would provide evidence that the market was able to self-regulate.

Benson Hersch, CEO of the ASTL says: “Regulation of our market may not be on the imminent horizon, but we all need to be cognisant it is always a possibility and that any regulation will be targeted at the worst offenders, so could be heavy handed and restrictive to customer choice and innovation.

“Lynda highlighted the important role that trade associations play in maintaining standards, calling out bad practice and ensuring we can build a sustainable market that benefits both our customers and our participants. This doesn’t happen on its own and we all need to pull together to ensure that lenders lend responsibly, following the rules of the market in which we want to operate, rather than have those rules imposed on us.

“I’d like to thank Lynda for her incredibly insightful and thought-provoking presentation at our conference last week, which proved to be a valuable event for all who attended.”

 The latest sentiment survey from the Association of Short Term Lenders (ASTL) shows that bridging lenders have grown in confidence about the outlook for the UK economy, their own business and the bridging sector. 

The research, which was conducted amongst members of the ASTL shortly after the date was confirmed for the upcoming General Election, found that more than 75% of bridging lenders are confident about the long-term prospects for the UK economy, compared to just 50% when the survey was last run in June. 

Lenders have also grown in confidence about the prospects for their own business. Nearly three-quarters (72%) said they expect their business to grow over the next six months, which is up from 59% in the last survey. 

This positive outlook is reflected in the expectations of respondents for the turnover of the bridging sector. Just over half of lenders (52%) said that they expect the market to grow in the next six months, compared to less than a quarter (23%) who anticipated growth in June. 

Throughout this period, lenders also expect modest growth in competition from other lenders and competition is no longer seen as the biggest challenge for bridging lenders. It has been replaced by the slow-moving property market, which was identified as the main hurdle by 55% of respondents. 

Another interesting trend from the survey is that, while in January 2019 75% of respondents said that they would vote to remain in the European Union if there were a second referendum, most lenders would now choose to leave with Boris Johnson’s deal. 

Benson Hersch, CEO at the ASTL, says: “Overall, our members are very positive about prospects for the UK, their own businesses and the bridging sector as a whole. Competition is expected to increase slightly in the next six months, but this seems to hold little concern for our members, and the downward slope in positivity has been reversed. It is hoped that the general feeling of positivity will turn out to be realistic and we look forward to a great end to 2019 and an even better year ahead in 2020.”

Press Release, Wednesday, 13 November 2019

The ASTL Positivity Index

 


The Association of Short Term Lenders (ASTL) has named Vic Jannels as its new CEO to replace Benson Hersch from 1 January 2020.

Vic has gained nearly 50 years’ experience in the secured lending industry, holding senior management positions in the lender, packager and broker sectors, as well as spending several years co-opted onto the board of AMI. He currently also holds the role of Executive Chairman at Impact Specialist Finance, where he leads their Bridging and Commercial specialist team and is a director of One Mortgage System (OMS). Vic has been honoured with numerous achievement awards for his dedicated service to the industry.

Vic Jannels, CEO of the ASTL, says: “The bridging industry is at a critical point in its history. The market has delivered significant growth in recent years, but increased competition and economic uncertainty mean that it is more important than ever for lenders to maintain high standards of governance. Thanks to the magnificent efforts of Benson over the past seven years, the ASTL is the most prominent and well-respected organisation in this space, with an opportunity to unite the market and lead the way into a successful and sustainable future. I am both honoured and excited to have the opportunity to take the helm and shape the course of this fantastic industry.”

Benson Hersch, outgoing CEO of the ASTL, says: “I’m very pleased to be able to hand over the reins to such a well-respected individual to write the next chapter for this great organisation. I have every confidence that Vic will continue the good work of the ASTL, giving fresh impetus to our image and membership, and I wish him all the best in the role.”

Press Release, Thursday 14 November 2019

It seems that the ongoing saga of Brexit is doing little to dampen the growth of the bridging sector. In the most recent lending figures compiled by auditors from data provided by members of the ASTL, it was confirmed that bridging loan books grew to a record £4.62bn at the end of the second quarter of this year, representing growth of 11.7% compared to Q1 2019 and an increase of 14.4% on the same quarter last year.

Bridging loan applications also hit a record high in the 12 months preceding the end of Q2 2019, with £22.13bn of applications representing a 9.7% increase on the same period the previous year.

These are strong results, particularly given the uncertain politic and economic environment, but it is very important that we do not get carried away. Record lending is all very well, but if it comes accompanied by the ignominious collapse of lenders, as we saw with Lendy earlier this year, then reputation of the industry will be damaged and the sustainability of lending such volumes should be questioned. The challenge for the industry now is to continue this level of activity whilst maintaining high standards of underwriting and customer focus.

This is particularly important as it looks like the writing is on the wall with regards to regulation of the short-term commercial lending sector. At the end of July, the House of Commons Treasury Committee urged HM Treasury to extend the remit and powers of the FCA to unregulated SME lending, amongst other areas.

The concern is than when regulation does come, it will be targeted at the lowest common denominator to those organisations that exhibit the most questionable practices. This means that it won’t be light touch and it will impact the whole market. This may protect some customers, but it will also be to the detriment of many more and stifle innovation in this vibrant sector.

There is, however, good news. We have a window of opportunity to influence the shape of regulation and demonstrate that we are collectively a responsible industry that operates with the best intentions of our customers at our heart. And we are doing this from solid foundations in a growing market.

Lenders may feel competitive pressures, given the over-supply of funding, but there is still a good level of demand and the market is in a healthy state. We must use this as a foundation to build the next chapter of development and this is why it is so important that we agree across the board to a code of conduct that protects our investors, our borrowers and our sector.

My, admittedly biased, opinion is that there has never been more need for an organisation like the ASTL to take the lead and ensure the industry follows a code of conduct that ensures customers get the best deal, are not misled, and can encourage the FCA to take a pragmatic approach to regulation.

We have many challenges ahead of us, but at least we are facing them from a strong foundation.

Benson Hersch, CEO of the ASTL
A version of this article appeared in the September edition of Bridging Introducer

 

 

  1. ASTL announces new Board of Directors
  2. Whitehall Capital joins The Association of Short Term Lenders
  3. Bridging lending breaks new records in Q2 2019
  4. Certainty is key in the current market