The rise in refurbishment finance and developer exit funding are among the most popular bridging trends in the current market, according to Octane Capital.
At a recent Octane Capital event, hosted in partnership with Seddons and Colliers, participants examined current market trends and topics.
At the event, Josh Knight, sales and marketing director at Octane, highlighted change of use projects, house in multiple occupation (HMO) conversions and developer exit loans as lucrative opportunities for brokers.
He said: “With landlords feeling the burden of increasing rates, affordability problems, EPC requirements and regulatory change, many are turning towards HMO conversions to improve the yields within their portfolios.
“And with properties taking longer to sell, coupled with climbing build costs, many developers require extra time to market and sell their new-build units – and in some cases extra capital to finish them – which points to the developer exit opportunity.”
Patrick Kearon, director at Colliers, delivered an overview on transaction levels and the effect this is having on valuations, the continued rise in construction costs and the methodologies employed in determining property values.
He urged brokers to consider the impact of cost of finance on GDV, especially in the current interest rate environment.
Robert Brooks, partner at Seddons, confirmed that transactions have increased in size and complexity, according to the firm. This, coupled with planning and Land Registry delays, is drawing out completion times.
He also reports that refinances and development exit are overtaking buy-to-let purchases.
Brokers in attendance received practical advice on ways to help their cases progress more efficiently and streamline communication between parties—an important theme for Octane.
Knight confirmed Octane’s ongoing commitment to hosting educational events for its introducer partners: “I am a strong believer that turbulence in the mainstream market creates opportunity in the specialist space.
“This event was designed to help brokers identify new opportunities – whether that be for funding or simply practical tips to help their cases progress more smoothly through the valuation and legal processes.”
Edward Clark, CEO at Uplift Finance, said: “In the murky world of HMO valuations, this is the first and only time I’ve been able to ask a valuer how they come to their conclusions, particularly regarding HMO yield data used for commercial valuations.”
John Laycock, consultant at Sterling Commercial Finance, added: “The presentations were nicely balanced, with good information on trends.
“It was interesting for me to hear the obstacles to getting a deal over the line, particularly as I have just retired from 46 years in finance working for funders.
“Those brokers in the audience who haven’t had front line experience would have definitely learnt some valuable info from the event.”
