This week we speak to Benson Hersch, chief executive of the Association of Short Term Lenders, about the trade body's membership and future growth in the bridging industry.
Your membership has grown enormously in the last 12 months. Why is this a good thing for the industry?
Membership of the ASTL has continued to grow steadily, which highlights how an increasing number of lenders appreciate the value of the association. Lender members are choosing to set themselves apart from the competition by adhering to the ASTL’s high standards and ethics which in turn gives confidence to brokers and clients. They know that when they deal with a lender that is a member of the ASTL that their clients will be treated fairly and ethically.
The growing membership allows the association to enhance its reputation in the market even further, to ensure it provides a representative voice of responsible lenders in the short term lending sector.
Bridging finance growth has slowed to a steadier pace in recent months. Do you think the market will continue to see growth?
As we peer through the Brexit fog in search of growth indicators, one thing is clear - 2016 was always going to be an interesting year to predict, what with taxation and SDLT changes. Brexit has added yet another item to the mix. It is not unrealistic to say that the bridging sector will continue to grow, albeit at a slower pace, as more professional investors see it as an efficient way to fund their short term cash flow needs (whether for property investment or other purposes), while other borrowers use it to raise additional finance and unblock property chains.
Do you think the short term lending market will be affected by the current political landscape and, in the long term, by a Brexit?
The result of the referendum has inevitably weighed heavily on the market and it seems that uncertainty is the only thing that is certain, as many borrowers and investors err on the side of caution as they wait to see the lay of the land.
Although volatility in prices, demand and supply require caution to any market, it is important to remember that specialist lenders have been through turbulent times before and managed to adjust to the situation to achieve the most appropriate outcome for borrowers. Therefore, although we can expect repeated bouts of uncertainty in financial markets as Brexit is debated and trade deals negotiated, we must focus on Britain’s strong fundamentals, particularly as housing demand continues to outstrip supply. Future trends in commercial property valuation are less clear, and very much subject to the performance of the economy and investor confidence.
What issues will the ASTL be focusing on in the next 12 months?
The long and short term mortgage industries will continue to pose new challenges so it is vital that the lending market is prepared to effectively negotiate these. Property lending is by no means a risk-free business and fraud continues to be a major factor.
We will be focussing on this, as well as dealing with issues such as the additional regulatory requirements recently enacted. Above all, lenders will need to be sensitive to changes in the market, and act accordingly. Our upcoming conference on 22nd September at Painter’s Hall, entitled ‘Lending in an uncertain world’, will emphasise how the sector must not become complacent because, the more information it can access, the better the market will be able to endure the changes and uncertainties of a post-Brexit future.