Property lending and the Coronavirus Crisis.Published on 31st March 2020 2020-03-31T11:00:00+00:00 - Last update on 2nd April 2020 2020-04-02T12:19:43+00:00
The coronavirus has affected every aspect of life - and business - in the UK and the property sector is no exception. Some deals have been put on hold, while others seem to be running to a very different pace as the professionals and resources required are tied up by the lockdown.
But while the volume of enquiries has decreased over the past week or so, there are still deals going through – and inevitably there will be still some new opportunities arising, some of which will need to be acted on quickly.
Residential investment and redevelopment opportunities may come to the fore while most types of commercial property transactions may take a back seat.
This means that there is still a need for property finance. Commercial Mortgages, Development Funding and many other types of finance are still being sought – and at Rangewell, as experts in property funding, we look at the challenges you might face in securing the funding you need.
Getting a valuation
Valuers have joined the rest of the UK on lockdown amid the COVID-19 crisis. With fewer valuers and quantity surveyors willing or able to visit sites, property lending has inevitably slowed down – or even threatened to grind to a halt.
However, getting a valuation is always a key step in the funding process. In normal times, an inspection of the premises is a vital contribution to taking that step. But of course, these are not normal times, and it may be impossible to get a site visit booked.
The good news may be that - while site visits may be difficult to arrange, and considered by some valuers to be in conflict with the government's initiative to stop the spread of infection - it may still be possible to arrange the valuation you need for a property project.
Obviously, we are in unprecedented times, and with the market turned upside down, getting the best possible advice by experienced local professionals has become even more important for a funding application. An experienced valuer who knows your local market may be able to rely on their knowledge and expertise to be able to give an opinion on value.
In many cases, they may already know the property and will be able to use this knowledge to arrive at a market valuation.
Surveyors and valuers may well be on lockdown, along with most of the rest of the population, but they can use desktop valuations to arrive at workable figures.
At Rangewell we know that physical inspections will not be mandatory for some of our lender clients. Some will be prepared to progress an application, armed only with a market-based valuation from a respected valuer.
But are all lenders lending?
Lenders always take a long-term view of property lending, which can mean timescales based in decades with many products. Some are, therefore, understandably unsure about the market over the next few months and years. The economy will take a battering, at least in the short term, and this may increase the risk of many types of lending.
Some lenders are looking back to the property price falls of the financial crisis of the last decade. But the crash was an economic crisis, and COVID-19 is a health issue with very different economic effects. This means that the commercial property market could recover much quicker once the virus has been contained or a cure found.
At Rangewell we have already seen a number of lenders temporarily halting new loan applications. Some will not be looking at any new applications until the lockdown is over, while others are working to understand the effects of the crisis, and may be prepared to lend once they have reconsidered their appetite for risk, and the new market realities as the situation develops.
The possibility that there will be no sales market in the short term may mean that lenders must anticipate holding on to any asset for a longer period than usual in the event of default. This may prompt some of those that are still prepared to lend to only do so at low LTV ratios.
What can you do?
If your property deal looks in danger of stalling because of your lender's policies, or their confusion about what those policies should actually be – or if you are ready to buy a property and have not yet started your lending applications, the answer is the same.
Call us at Rangewell. We are determined to continue to support UK businesses though the pandemic – and we are in constant contact with lenders throughout the market.
We know those that are still able to lend, and the kind of finance deals they are able to offer. Bridging for short-term deals will certainly be available, especially if you are able to find a surveyor who is able to do more than a drive-by valuation. Longer-term funding may be more difficult to find, with an uncertain market ahead – but, at Rangewell we know the lenders who are best-placed to find the funding you need.
Whether your property funding has stalled or whether it is a new opportunity that needs a new solution, call us, and our property funding experts will be ready to look at the entire market to help you secure the funding you need.
Call us at Rangewell on 020 3637 4150 - or email [email protected]. Our service is free.
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