How to finance property investments in the current market

It is fair to say the last few months have been nothing if not uncertain. With Boris Johnson’s resignation and the ensuing Tory leadership contest throwing Westminster into a tailspin, it’s been reassuring to see that the UK property market has remained strong.

Alongside political uncertainty, the global economy continues to stutter. With interest rates rising and inflation soaring, many might expect the market to be ‘cooling off’.

As such, this blog will explore the current performance of the market and outline how working with the right lender can make navigating wider economic uncertainty a much easier task.

Speculation of the market ‘cooling’

There have been rumblings in the media about the potential of a slowdown in the UK property market. Indeed, it’s important to recognise some of the signs that this might be the case. It’s worth noting however that prices are continuing to rise despite the unprecedented amount of uncertainty.

For instance, for the third consecutive month, house prices have slowed due to the weakening global economy and the growing impact of the cost-of-living crisis. In May, prices rose by 11.2% and dipped slightly to 10.7% in June. As such, it’s no surprise that some investors and property owners may be concerned the market faces difficult times ahead. Similarly, transactions in the property market have dropped. In June last year, there were 213,000 transactions, compared to 100,000 in May this year.

Source: The Guardian

Adding to this potentially gloomy outlook, the Bank of England may continue to raise interest rates. This, alongside record-breaking levels of inflation, may put many buyers off entering the market. However, whilst it would be foolish to dismiss the dip in performance that house prices have seen in the last few months, there is significant evidence to suggest this is somewhat of a blip.

4 reasons to be cheerful

1. To start with, we should recognise property prices are not consistent across the country. Indeed, whilst London and the south-east property prices have suffered from European workers leaving the area since the Brexit referendum, Wales and the South-West have enjoyed significant price increases in coastal towns and rural areas as retired couples and white-collar workers opted for a change of scenery.
2. With hybrid working looking like a permanent fixture of Britain’s working patterns, this trend is likely to continue.
3. Meanwhile, with banks relying on their mortgage offerings for business, unemployment low and political awareness of the importance of a buoyant UK property market, it is unlikely that prices are going to fall more significantly than they have in recent months.
4. Indeed, supply and demand, as always, is a significant factor to keep in mind. With a housing backlog of four million, it’s clear there will continue to be more buyers than sellers in the market for many years to come. In fact, it’s estimated 340,000 new homes need to be built each year until 2031 to balance the market.

Source: Showhouse

With this in mind, those investors and homeowners who might be worried about the UK market’s prospects in the quarters to come should remember any dip in price is likely to reverse once the wider economic situation improves, due to the imbalance of supply and demand.

How to finance property investments

Whether buying a property or renovating one, it is vital that brokers and investors find the right financial products to finance their investments. So, what qualities should their loan provider possess?

1. Flexibility

For any investment in the UK property market, there are likely to be some complexities and obstacles which investors and their brokers must navigate to succeed.

Here at MFS, our financial products offer investors and landlords a wide range of financial options to cater for any investment opportunity. For instance, our complex bridging loans can be delivered to landlords and investors who are struggling to find finance that suits their requirements.

Elsewhere, commercial property investors need to be aware of upcoming legislation related to the Levelling Up and Regeneration Bill, which could crack down on vacant properties on Britain’s high streets. As such, with new legislation typically increasing landlord costs, investors will need to have access to a lender who can keep up and adapt to rising costs and new legislation.

Whether it’s to complete a property sale or free up funds for another investment opportunity, our underwriters treat each loan application on a case-by-case basis and underwrite from day one. In doing so, we take all aspects of an application and investment opportunity into consideration.

As a result, our bridging loans and buy-to-let mortages can be tailored to suit even the most unusual of scenarios or complex company structures. Unlike high street banks or regulated lenders, as a specialist lender, our financial products do not have to adhere to a tick-box criteria.

2. Speed

Complex deals in the UK property market also require landlords and investors to move with speed, which can make the delivery of a suitable financial product all the more difficult.

As outlined above, there is a serious disparity between supply and demand which contributes to the competitivity of the market. As such, pressure from sellers or rapidly approaching deadlines can be extremely stressful.

At MFS, we can complete deals in as little as three days, alleviating the stress of a quick turnaround. With our Auction Bridging Loans, which can help auction-winning landlords complete a purchase within the 28-day deadline. Alternatively, if a developer needs to repay a development finance loan, our Development Exit loans can give them breathing space to find buyers or complete the renovation of a property.

3. Transparency

Finally, investors need to feel secure when taking out a loan. As such, it’s important they find a lender that won’t hit them with unknown bills or terms at the end of the process.

At MFS, client trust is very important to us, which is why we provide indicative loan terms upfront so our clients can invest with confidence. Once these terms have been agreed – we never adjust the rates or go back on a deal.

Our policy of underwriting from day one allows us to stay informed from the beginning and stay ahead of any potential issues that could arise. Furthermore, each client we take on is provided with a personal MFS contact, allowing us to easily communicate with our clients.

As such, we pride ourselves on the clarity and transparency we provide with every deal. To find out more, head to our website.