Alternative finance trouncing Help to Buy

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West One Loans

Despite its coverage in the media, Help to Buy was overshadowed four times over by alternative finance in first five months, West One Loans has claimed.

Help to Buy equity loans have so far provided £208 million in gross lending, according to official statistics for the period between May and September this year. Meanwhile, over the same five month period, alternative finance in the form of short-term secured loans provided £878 million in gross lending, according to the latest West One Bridging Index. This equates to more than four times the total lending achieved via the first phase of Help to Buy over the same five month period.

Duncan Kreeger, director at West One Loans, said: “So far, the first phase of Help to Buy has only helped a few thousand cases of first-time buyers struggling to get onto the property ladder. The real elephant in the room is the sheer lack of homes available on the market.

“It’s becoming increasingly obvious that heating up the pressure cooker of consumer demand will do little to ease the worsening bottleneck of supply.

“But while those in the property industry are desperate to tackle the supply shortage, the real barrier is a lack of finance to create more homes. Conversions, renovations and new developments are all vital in the struggle to keep up with demand. But while mainstream finance is slipping behind, alternative finance is making it easier to find the backing for schemes that can make a solid difference on the ground. Short-term secured loans are often the best way for property professionals to bring these projects to life.”

Meanwhile, in the 12 months to 1st November, industry gross bridging lending totalled £1.93 billion, up 5.5% since standing at £1.83 billion only two months ago.

On an annual basis, this brings growth to 29% compared to the previous 12 months to November 2012, when gross bridging lending was £1.49 billion.

In the two month period from 1 September to 1 November, industry gross bridging lending was £397 million, up 6.3% from £374 million in the previous two months. On an annualised basis this is equivalent to gross lending of £2.34 billion.

Kreeger added: “This industry provides vital support for some of the most central pillars of economic recovery. By doing things differently we can expand the supply of homes to let and to buy. We can provide the liquidity for large firms to get million-pound deals done. And critically, we can support SMEs too – forgotten and left out in the cold by so many high street lenders.

“Most importantly, bridging finance is about collaboration. Short-term secured finance can get things moving. Often, mainstream finance will step in once the ball’s rolling – but more often than not, bridging lenders are the ones taking the difficult free kick.”

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