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Reflections on the first half

Mark Posniak Mark Posniak
Posted on Jul 24, 2018 | in Blog

No, I'm no longer talking about football. That's done and dusted for another four years. Another golden chance, blown. But saying that the French team looked in a league of their own. Chapeau.

The first half I'm talking about is the first half of the year here at Octane Capital and some of the trends we've been seeing in the market - where the action is and what's happening on the ground.

Demand for dev exit finance soars

One of the most in-demand loan types at present, for us at least, is development exit finance. It's a huge growth sector and one that more and more developers and brokers are waking up to.

Once a development is complete, and you're at the sales end, a lot of the risk surrounding a development loan - the process of getting the properties up off the ground and ready to move into - has been removed. 

It makes sense, then, that you can get a cheaper rate during the period that you market and sell the units, all the more so if a number have already been reserved, exchanged or sold. It's increasingly popular among all types of developer, from smaller, regional firms to national players. 

Foreign national buy-to-let

As anyone with an interest in property will know, the buy-to-let sector is in a state of real flux at present following various taxation changes, specifically the 3% stamp duty surcharge and withdrawal of mortgage interest tax relief.

How is this playing out on the ground? Unsurprisingly, like many other observers we're seeing a lot less activity from amateur landlords, many of whom are slowly beating a retreat from the sector.

What action there is, is coming from larger portfolio landlords who have the financial strength and commercial nous to work around, and make an opportunity of, the new taxation regime. Many are actually adding to their portfolios.

We've also witnessed a significant surge in demand from foreign nationals for UK buy-to-let, especially new build. Many struggle to get a mortgage on the high street as they're seen as too risky or as lacking a track record, but we're happy to look at each case on merit. It’s where specialist lenders come into their own.

Thoughts on the second half

Looking forward through the summer into the Autumn and beyond, the property market will be operating against a backdrop of increased economic uncertainty as we enter the business end of Brexit. We thought it might be messy, but this messy? Probably not.

Owner occupier transaction levels are likely to remain at low levels, as people adopt a wait-and-see approach. Whether or nor we have another interest rate rise in August or the Autumn will also have an impact on activity levels.

But demand from professional investors looks set to stay strong as they take advantage of the buyers' market we're currently in. Much the same applies to foreign nationals, who despite Brexit uncertainty, continue to see UK property as a safe haven irrespective of Brexit. And longer term, who would argue with them?

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