June 20th, 2016. Ben Lloyd
UK Commercial Lending is up by 19%
Recent reports from the Financial Times claim UK commercial property lending has risen by 19% as insurers and private equity groups raise limits to the highest they’ve been since 2008.
Lending Against UK Commercial Property at New High
According to recent research by De Montfort University, the level of lending against UK commercial property rose by a fifth year-on-year to the highest levels since 2008.
Nearly £33 billion was issued in 2015, 19% more than in 2014 and 80% higher than in 2013. A quarter of this came from non-bank lenders, in a definite contrast to prior to the boom and bust where banks were exposed to high-value property assets. Another 34% was issued by banks and building societies – the lowest percentage recorded in some years.
Ion Fletcher, Director at the British Property Federation, has said:
“This feels like a turning point […] Insurance companies in particular have ramped up their lending.”
Whereas Peter Cosmetatos, Chief Executive of the Commercial Real Estate Finance Council for Europe, has stated:
“In 2014 and the first half of 2015, the market was very borrower-friendly.
“Lenders were desperate to get money out of the door. It was a very competitive environment.
“After the summer last year (summer 2015), loan-to-value ratios stopped rising, interest cover was no longer falling and margins were stabilising. That’s a sign of a more balanced market. Lenders are thinking about risk in a more strategic way.”
Lending Now Available from Non-Banks
Lending from non-banks has been available for years, however it’s only recently that commercial lenders have strayed away from the safety of the high-street bank in larger numbers. Commercial property loans played a huge part in the downfall in 2008 and since then tougher lending regulations have been introduced.
Insurers and private equity groups have taken advantage of this offering longer-term loans or high-risk options, such as mezzanine finance. But that doesn’t mean bank lending is on the way out for good. Lloyds Banking Group recently issued its largest commercial property development loan in years, worth £185 million.
What Does This Mean for Commercial Property Investment and Development?
Any investment comes with a certain level of risk and despite expert predictions that the commercial property lending market is now balancing, investing in commercial property can still be highly lucrative.
Here at Pure Commercial Finance our brokers can work on your behalf to find you the best commercial mortgages and business finance deals possible. From portfolio commercial mortgages to development finance, we work independently to find you the finance you need.
If you require commercial finance give our experts a call on 02920 766 565 or email firstname.lastname@example.org
Article By Ben Lloyd
June 20th, 2016
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben