Let’s start with the obvious: stamp duty is a blunt money-raising tool for the government and is ripe for reform as it doesn’t help those who most need support. This has been demonstrated during the recent stamp duty holiday; despite the unprecedented scramble to complete by 30 June, very little of this activity has been from first-time buyers (FTBs).

As highlighted in a recent report by Santander, 44% of FTBs put their plans to buy on hold in 2020 with the double blow of rising house prices and constrained personal finances cited as the main reasons. The surge in property transactions is displayed in data from Search Acumen, the property data insight and technology provider, which shows that the number of transactions registered in England and Wales rose by 26% in the first quarter (Q1) of 2021 to 241,916, up 2% from Q4 2020.

Archaic processes

The volume of transactions has put already archaic homebuying processes under immense strain and, with the added impact of people working from home, this has led to much longer turnaround times across the board. It has also exasperated the continuing capacity challenges in the surveying and conveyancing sectors. Transactions usually take three months on average to progress from the sold stage to completion. However, the surge in sales means they now typically take four months or longer.

More than 50,000 homebuyers are at risk of missing out on the stamp duty holiday because of delays in the system, as reported by Zoopla. However, some say the figure may be nearer 100,000. What reputational damage could this inflict on the sector?

We will see many more brokers writing bridging finance business on a regular basis

What has become apparent, though, during the past 18 months is that bridging finance is now more widely recognised by brokers as a solution for a wide range of customers, including investors and property developers. Without bridging finance, how many more transactions wouldn’t have completed in time? For some brokers it has been a steep learning curve.

At the start of the stamp duty holiday, the relative inexperience and lack of knowledge of many brokers were clear. So special mention should be given to the likes of the Association of Short Term Lenders, many firms in the packaging sector, networks and mortgage clubs that have run webinars and/or provided extra guidance on sales processes, plus tech businesses like Knowledge Bank, which ran educational webinars as well as listing bridging lenders’ criteria. All these efforts have undoubtedly increased awareness and built confidence for many brokers who have recommended bridging finance for the first time.

Challenger banks are launching bridging propositions

The professionalism of providers and increased institutional funding have also enabled bridging lenders to boost the number of products, plus the extra competition in the sector has made rates much more attractive. We are also seeing challenger banks launch bridging propositions, either under their own brand or via forward-flow/whole-loan sale funding with existing or new bridging finance brands.

These new funding options have led to the rise in products such as bridge-to-let, giving brokers and their customers far more certainty in relation to the exit and buy-to-let funding. They also provide an easy step for bridging lenders to enter the buy-to-let market, which in turn gives them access to a wider broker distribution.

The genie is out of the bottle now and we will see many more brokers writing bridging finance business on a regular basis.

Hiten Ganatra is managing director of Visionary Finance