Steve was discussing the key factors which are set to impact the bridging sector over the next 12 months and considered what changes were ahead.

According to Steve, the bridging industry was maturing in a way that the mortgage industry did in the 1980s, and was no longer a one size fits all sector.

“Individual firms are finding their own niche in a growing market be it by geography, loan size, security type etc.

“On the basis that the mortgage market is [around] £220bn and a broadly quoted estimate of £3bn as the bridging market, with only 1.3% the niche sector has further to grow.

“In particular, we are seeing a stark differentiation in all aspects between ‘bridging’ firms and ‘short-term mortgage’ firms.”

Steve felt that the low interest rate environment had impacted the bridging market most significantly as investors with capital looked to invest in alternative opportunities.

“This has led to multiple new bridging companies entering the market seeking returns.

“By definition, the investments are short term and as the recovery continues this liquidity may not always be available as other investment alternatives come into play and funding may leave the sector resulting in consolidation.”

Steve also felt that changes to stamp duty and investment property tax relief would force changes as he felt they would cool the property investment market.

“Recent times have demonstrated the turbulence of equities and over a 15-20 year term, property will continue to provide for an attractive asset class.

“However, I expect to see a greater percentage of limited companies refurbish and sell bridging loans as a result of the changes.”

Steve believed that the government’s mission to make room for the first time buyer would take its toll on smaller investors who would no longer see the margins and returns once expected.

“Smaller investors may well drop out of the investment market but with low interest rates, wage growth outstripping inflation and government incentives, this will make way for first time buyers which in itself makes for a healthy property market.”

“As bridging moves from a niche product into the mainstream and increasingly recognised by professional advisors as a solution for clients, I expect to see considerably increased diversification of the uses of the product.

“The classic use of fast investment property purchase may well form a smaller percentage of a lenders overall book, as the sector levels off, but there will always be a requirement for fast, entrepreneurial funding underwritten on each individual cases’ merits.”