This follows the resignation of numerous government members, including Chancellor Rishi Sunak and Health Secretary Sajid Javid.

Bridging & Commercial reached out to various experts in the specialist finance industry to get an insight into how the resignation and cabinet reshuffle might affect the sector. 

Almas Uddin, founding director at Revolution Brokers, said: “Now that we have the certainty that we will soon see a new prime minister, this should spell positivity for the housing market and, ultimately, the wider economy, as fresh eyes and hands go to work with a clean sheet to start to resolve the cost of living crisis, inflation and resulting interest rate hikes.”

Almas believes there may well be cuts to VAT and corporation tax, as well as restored confidence in the economy considering the main contenders, which he views as good for the medium- and long-term.

Gary Bailey, managing director at Hope Capital, is also fairly optimistic that the future and a change of leadership will create new opportunities, innovations and most crucially, growth in the bridging sector. 

“What is needed now is someone who can adapt to the current climate and move the UK in the right direction,” he added.

Roxana Mohammadian-Molina, chief strategy officer at Blend, stated: “At this critical point, what the UK now demands is the leadership and resolve to ensure that together we can overcome the challenges ahead. 

“Failing this, all businesses — the specialist finance industry in particular — and investors will remain in the dark, unable to plan for the future. 

“The UK is currently facing one of the worst housing challenges in generations, and the division within the government over the past few months has posed a real risk to the economy and to business.

“We hope that today’s prime minister resignation will open the door for a new era of stability and unity to overcome the economic challenges ahead.”

Niall Brown, managing director at Auxilium Real Estate, also views Johnson’s resignation as an opportunity to get in someone who can install continuity and impose meaningful changes for the long-term and to the benefit of the housing crisis.  

“I think there is a real need for a government, and housing minister, who has a clear intention of what they want to deliver over the coming years, and there is plenty of time to still deliver before the next election,” he added.

Meanwhile, Ranjit Narwal, head of origination at Kuflink, shared a completely different opinion, stating that he can’t see much changing with Johnson’s departure, as parliament will soon be in recess until the beginning of September, making it a ‘watch and wait’ period on various fronts. 

“Any policy for change affecting the specialist finance sector is therefore very unlikely to happen this year and 2023 is still a long way off. 

“In terms of economic conditions, will Boris’ departure help to bolster confidence among funders in the specialist finance channel? Frankly, I don’t see the markets being particularly worried about the departure of a British prime minister, especially in the short-term — if there was a general election, it might be different.”

Gavin Richardson, managing director at Mortgages for Business, said it’s too early to know what the latest happenings will entail for the property and mortgage market.  

“Michael Gove’s replacement, Greg Clark, just a few hours into the job, is yet to set out his strategy on the Levelling Up paper, if, indeed, he is to deviate from that of his predecessor.

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“It’s unlikely that the new cabinet is going to be able to stop inflation in its tracks, so it looks like interest rate rises are set to continue, for now at least."

Alastair Hoyne, managing director at Finanze, doubts the leadership contest will significantly affect the specialist finance industry, but he is interested to see what the impact on the economy will be. 

Alastair — who believes the country needs a business leader to see it through the threat of stagflation and the impending recession, and help it come out the other side with minimal damage — added: “What I think will be more pertinent to our industry will be the appointment of a new Chancellor; will they continue with the planned cuts to taxes and initiatives to shore up the housing sector or will it be more of the same, a lot of talk but no action?”

He claimed that savings need to be a priority on the government's agenda to ensure protection against interest rates rising. “I'm sure most lenders would rather lend less and to better quality borrowers then lend more and lose money, ultimately having to foreclose.”

Doug King, COO and co-founder at ASK Partners, feels there won't be any significant changes while waiting to see if a new Conservative leader can rally support and public trust. He said banks and lenders with a less flexible capital base will have to cut back anyway, as rising rates will pressure them to allocate more to reserves and increase hedging.

"Development finance is already at risk as build costs are rising rapidly and sale prices will not cover the shortfall. We will undoubtedly see lenders paring back leverage, but I expect alternative lenders with a flexible capital base to be able to continue lending throughout the cycles by picking the right projects in the right locations," he said. "A recent survey of ASK investors who provide capital for our loans showed no change in appetite despite the current economic situation."

Paresh Raja, CEO at MFS, had a slightly more pessimistic view, claiming that the prime minister’s planned departure is the start of a long and potentially disruptive process.

He added that he wasn’t really sure if the uncertainty will add to speculation that the property market will see a cooling period. 

“The market has not thrived in spite of economic and political uncertainty in recent years, but because of it, investors and homebuyers alike have placed their faith in bricks and mortar, given its long-term track record for capital growth.

“That said, there are pressing issues requiring attention — the cost-of-living crisis and housing shortage both require urgent government attention, but a cohesive strategy in addressing such issues is impossible without ministers and a prime minister in place. 

“Let’s hope the process runs smoothly and quickly. Certainly, the specialist finance sector will find it easier to plan effectively and meet the needs of borrowers when there is more clarity over the long-term political agenda.”

Andrew Hosford, director of strategy at Pure Structured Finance, claimed the timing was “awful”, as the internal power struggle will veer attention away from big issues like rate rises, inflation, the war in Ukraine and Brexit. 

He wonders if these important factors will be “pushed to the back burner” while the Conservatives choose the right leader, and if there even is someone who can tackle them. 

According to Richard Jones, CEO at Pilot Fish, businesses like stability, so a lengthy leadership campaign may harm business confidence and delay investment even more, which could lead to less demand for products that support growth and investment.

However, he believes any new leader will likely want to make daring political moves to help with the cost of living crisis, which could include tax cuts and stimulus to encourage investment.   

“Our clients are very concerned about further increases in borrowing costs; there is little to suggest that inflation will reduce anytime soon, which could lead to further rises in the base rate from the Bank of England,” he said. 

“The specialist finance market will follow with rate increases and, for many clients who have known nothing but low borrowing costs, this will be a shock and they will have to quickly adapt their business models to cope with higher interest costs.”

Mark Hawthorn, CEO at LDS Sales Guarantees, stated: “For an industry literally built on foundations, it is somewhat ironic to be governed by one without any, all the while we have rampant inflation, a softening housing market and a hardening finance market. 

“The housing sector — in particular SME housebuilders — needs stability and support now more than ever."

Andy Morris, managing director at Hayfield, commented the country’s unrest added more uncertainty and risks in the housing industry, affecting some of the recent progress made. 

“My fear is that once again, we’re in a position where a new Secretary of State comes in with the potential to tear up the plans of their predecessor and wrongfoot the industry by going in a different direction. 

“It’s frustrating that, although we recognise the unique political situation Britain finds itself in, there is still a sense that housing is not taken as seriously as it should be — it is one of the biggest challenges facing Britain, so we’d like to see the next prime minister signal that; helping to tackle the crisis is fundamental to his or her agenda.”

Jason Dempesy, director at Developer Money Market, said the macro factors (the cost of living crisis, energy crisis, war in Ukraine, and rising inflation) outside of him stepping down will have a greater impact on the specialist finance industry. 

"I imagine whoever steps into his shoes along with the new cabinet members will have to find their feet and be tied up with the issues mentioned above and therefore hopefully won’t make any policy changes that could further negatively affect the general finance market or specialist finance industry.

Gareth Belsham, director at Naismiths, said that with recession looming and the construction sector seeing confidence and new orders subsiding, lenders and developers need to concentrate on what’s ahead rather than the tumult in Downing Street.