Regions and PRS at heart of changing property market

The third generation of 'product-less' lending is really starting to take off. Not only was May our largest month yet but we hit another major milestone — £200m of completions since launch last year, ranging from small vanilla to large and complex loans.

Now I'm not going to dwell on the £200m figure as much as how we got there. We're seeing a shift in two main directions right now: investor attention is moving away from traditional buy-to-let and increasingly into the regions where there is perceived to be more value.

Neatly summarising this trend is a £9.2m loan facility we completed towards the end of May. It was a refinance of a high-spec lifestyle Build to Rent development in Manchester city centre, and our biggest regional loan since launch.

There's no doubt in my mind that this deal reflects how the dynamic in the UK property market is changing fundamentally. For many investors, London is now less attractive, while the once untouchable crown of buy-to-let is being slowly but inevitably usurped by Build to Rent, which offers a higher quality alternative for long-term or lifetime tenants.

That's not to say there's tumbleweed on the streets of the capital and that buy-to-let is dead, because that's certainly not the case. Professional portfolio landlords remain active and there's still value to be found in London — but it's largely only professional and more experienced investors who are continuing in the search. 

As all the major house price indices have shown, London is cooling and that's not just a reflection of prospective owner occupiers playing hardball with their offers but the lack of demand from amateur landlords, many of whom are slowly exiting the sector.

Despite recent falls, continued high prices in the capital have made it difficult to generate any kind of material yield, unless you're savvy, running your portfolio as a business rather than a hobby and aren't highly geared. For amateurs, it’s genuinely tough out there right now.

What we're also seeing is some of the money exiting buy-to-let moving into lower level commercial or mixed-use developments. Again, investors are looking for yield and this is another area where it can be found. With the correct duedil, of course.

In a rapidly evolving and increasingly disparate property market, the third generation of lending is really coming into its own. Having no products or predetermined criteria enables us to look at applications of any type and size, wherever they happen to be.

We're entering a new generation, or chapter, in the history of the UK property market and the third generation of lending is helping brokers and their clients to negotiate it with ease.