When the pandemic kicked off in the UK, the outlook on the property front, as elsewhere, was bleak. Experts predicted a nosedive in anything property related and the finance that went with it.

Thankfully, after the initial shock, this proved far from the case and, despite continuing uncertainty on all fronts, by 2021 the market was moving in the right direction.

Property prices surged, confidence returned and all sectors of the property market found ways to adapt to the new normal. I look back at 2021 with pride at how the bridging market stood up when required.

Clients often have preconceptions about bridging finance that are not in line with market offerings

There has always been a need for bridging finance. Auction finance is typically the first example clients resonate with when discussing it, and that comes with its own risks and rewards. Covid did not change this, but the auctions have always been a game for those who chose the play.

Last year pushed bridging finance into the light. This is where the everyman lives, who would not even have known what bridging finance was, let alone contemplated it, until it appeared it might save the day, rescue the property transaction and, in the grand scheme, greatly alter the trajectory of their and their family’s life.

Filling the gap

Regardless of a general increase in confidence as 2021 went on, there were opportunities for the bridging sector to fill the gap when not everyone shared the same sentiment. When buyers or sellers pulled out with cold feet, for example, clients turned to bridging.

It is so pleasing to see someone’s surprise and delight on realising the cost of bridging is far less than expected

Changes in lifestyle due to Covid were also a factor. At one point many of us were working from home and, when this temporary adjustment looked like it might be here to stay, there was a surge in people seeking properties to suit their updated needs.

This, coupled with extra competition in the market, led to an increase in bridging applications to complete the transaction quickly, with clients often buying before selling and effectively approaching a seller as a cash buyer. This tactic can often lead to a negotiation of the purchase price and offset some of the overall cost of the finance.

Bridging became more wholesale to the public as the stamp duty holiday brought deadlines that, if not met, would have financial implications. People who had never contemplated bridging were now asking for advice on these products because the main turn-off — cost — was often largely, and sometimes entirely, offset by the stamp duty savings.

With many clients turning to bridging due to necessity in 2021, will this year see bridging finance serve the public out of opportunity instead, now it has proved its worth?

Misinformation

Clients often have preconceptions about bridging finance that are not in line with market offerings. It is so pleasing to see someone’s surprise and delight on realising the cost of bridging is far less than expected — particularly when there is so much misinformation online.

Last year pushed bridging finance into the light

That is not always the case, of course, and things are not always financial savings or profit-making enterprises. But, as in any walk of life, you get what you pay for. Increased risk for lenders will always come with an increased cost.

With ever-increasing talk around introducing mandatory qualifications in this sector, coupled with all-time low rates and creative product USPs, I am cautiously optimistic about the outlook for bridging finance, both in 2022 and in the years ahead.

Sam O’Neill is senior finance broker at Clifton Private Finance