Humphreys (pictured left) spent 12 years as an adviser in the residential & commercial property spaces. He set up his business in 2021 after pursuing his own property development projects and experiencing firsthand the challenges developers faced. He reports that Brickflow saw 2,966 loan searches in Q1 – 50% more than for the whole of 2023, indicating the strength of demand.
“Acute shortages in UK housing supply continue to create a favourable environment for investors and developers,” Humphreys told Mortgage Introducer. “The requirement for commercial property finance remains strong. Auction activity remains strong with motivated sellers, or their lenders, seeking a quick exit, so those with the ability to transact swiftly are benefitting, and bridging finance is undoubtedly flavour of the month right now.”
Base rate cut impact on commercial property investors
Clearly, the Bank of England’s recent decision to reduce the base rate from 5.25% to 5.0% is a welcome move for many in the industry, after four years of waiting for the rate to come down – and developers could feel the benefits as much as anyone.
“The impact of those 14 consecutive interest rate hikes has seen investors carrying too much debt being forced to sell in sub-optimal conditions and fairer value opportunities coming to market,” Humphreys explained. “For every 1% base rate increase, a developer needed £10,000 in equity per £1 million borrowed. When you extrapolate that across the circa £65 billion of annual borrowing across bridging, commercial mortgages and development finance in the UK, that’s an additional £3.25 billion borrowers have to find this year in equity, to complete the same amount of property transactions as when the base rate was 0.1% – a colossal gap.”
In Humphreys’ view, property investment and development are ‘a full-circle win’ for the economy, in terms of the associated benefits.
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