Bridging finance in Manchester
Manchester is seeing an ongoing property investment surge, and is one of the UK’s best-performing cities delivering excellent rental yields for investors and landlords.
Manchester – The Northern Powerhouse
As a major UK hub which is soon to be strengthened by infrastructure as part of the Northern Powerhouse initiative, Manchester is clearly one of the UK’s property hotspots and demand for rental flats and HMO houses is expected to increase significantly over the next few years.
There are several reasons for this rise in popularity. Manchester is home a vibrant economy with significant inward investment, resulting in a huge demand for property for young professionals working and living in, or very close to, the city centre. With many still not being able to afford to get on the housing ladder generation rent is here to stay, opening up opportunities for landlords to build up a portfolio with a very strong possibility of having plenty of tenants for long periods.
Student properties in Manchester & bridging finance
Another key factor in Manchester’s popularity is the fact it has one of the largest student populations in Europe with UK and overseas students living in the city to attend the University of Salford, the University of Manchester and Manchester Metropolitan University. Again, this is a hugely attractive city for investors as Manchester can offer many suitable property types from ready-made flats to houses that can be converted to HMOs that offer very attractive rental yields.
Houses of Multiple Occupation – HMOs not just for students.
An HMO, or a House of Multiple Occupation, is a property rented out to at least three people who are not part of the same family and share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’. Landlords may require a licence from the council if you’re renting out a property as an HMO and will also need annual certificates for fire alarms, gas safety and electrical work. They have the advantages of generating a larger income from one property, and with more tenants in one house means there’ll be fewer void periods when no income is generated.
Finance options for ambitious landlords
But landlords and property investors need access to finance in order to acquire suitable property for the burgeoning rental market. Many turn to bridging finance through a specialist property finance lenders as a useful way to quickly buy property, even if it’s unmortgageable to High Street banks and building societies.
Typical product criteria could be;
- Up to 75% LTV (loan to value)
- 3 to 24-month terms
- Suitable property as security.
The borrower also needs to show they can pay all of the balance off at the end of the term, this is called the exit strategy. However, during the term of the bridging loan, the borrower can plan to refinance on to a longer term commercial mortgage, a buy to let mortgage or they may plan to renovate the property and sell it straight away to realise a profit (known as flipping).
Many lenders we deal with also cater for self-employed landlords and even those with a slight blip on their credit profile. This is because specialist bridging lenders review each case is on its own merits, they look at the potential return the property can deliver and the security put forward. This means that there are fewer red tape hoops to jump through.
Bridging finance – for speed – Manchester and beyond
Funds can also be delivered quickly with monies often paid out in a matter of days or weeks, so short term opportunities can be capitalised on such as when a developer wants to sell remaining lots on a site, or a special one-off price is agreed for a fast purchase of a property in need of renovation.
Manchester has many such properties available for those looking to start or grow a portfolio. After all, even the Bank of England’s chief economist Andy Haldane, recently said that owning property is a better bet than a pension!
There’s clearly positivity in the market reinforcing the idea that bricks and mortar are still worth considering and bridging finance is a key financial route to buying property and generating an income from it. Find out more about your bridging finance options in Manchester or anywhere else by contacting us now.