Could bridging finance could help solve the housing crisis?
A high demand from buyers and a lack of available homes have created what many are referring to as a ‘housing crisis’. The government is urging the property industry to provide more housing to supply the demand, with bridging finance able to play a role.
The government’s target is to have an extra 300,000 new homes by the mid-2020s. When land becomes available, builders can construct housing, but there are other ways to increase the housing stock. In early 2018, planning rules were changed to allow owners of inner city buildings to extend them upwards by two stories. This will provide more commercial space, but will also enable new flats to be built.
There are an estimated 210,000 homes in the UK that have been empty for at least six months. Many are in a derelict condition. Renovating empty property to create housing is another way of increasing the supply of homes.
A survey by the Federation of Master Builders found that 54% of small to medium building developers said that the main barrier to building new homes was accessing finance. The Association of Short Term Lenders found that 93% of its members believe that short-term lending, including bridging finance, can support small to medium builders.
Bridging finance can be used to purchase land as well funding the construction work. After a home has been completed, the bridging loan can often be converted to a more long-term mortgage. A broker can arrange a finance development deal for both new build and renovation projects.