October 13th, 2017

Stuart Law, CEO at Assetz Capital, discusses the latest lending statistics from UK Finance and current trends in the commercial mortgage market

It also suggested that businesses are opting to borrow less, as overall availability of credit for businesses was reported to be unchanged in the three months to September 2017, while lenders reported that demand for borrowing fell.

Statistics from the latest De Montfort Commercial Property Lending Report reinforce these findings. The most comprehensive study of the UK’s commercial property lending market shows that new lending was down by 17 per cent in 2016, but regardless of the assertions in the report we believe it remains unclear whether this is as a result of difficulty in obtaining a ‘yes’ from banks or the lack of demand for credit from businesses.

The report also revealed widespread disparities in lending across the UK regions. In total, 63 per cent of UK commercial mortgages are secured against property in London and the South East, compared to just 12 per cent in the North and 11 per cent across the Midlands and Wales. Certainly, it is possible this disparity could be caused by the known economic imbalance between the regions but could also be due to stronger rises in values in the South offering more security for lending.

This has led to a significant opportunity for peer-to-peer lenders in the commercial mortgage space. At Assetz, we have seen what will be around a 100 per cent rise in commercial mortgage enquiries in 2017 versus 2016, as companies gain a better understanding of the alternative funding options available and perhaps seek a more flexible approach to their finance needs. We expect other alternative lenders will have seen the same trend.

Our flexible repayments packages, including longer amortisation profiles and interest only periods enable us to tailor our loans to meet the requirements of the customer, which improves the customer relationship, and reduces the risk of falling behind on payments or defaulting by matching a loan to the business needs. We expect the market to continue growing at a positive rate in 2018 and beyond.

Case study 1: The Royal Oak Inn

Pub landlords Graham Tobias and Simon Elliot secured a £280,000 loan from Assetz Capital to enable them to acquire the freehold for The Royal Oak Inn, a popular traditional pub in Cornwall.

Both Graham and Simon have a great deal of experience in the hospitality sector and have been running the business since 2014. They have already invested over £70,000 on improvements to the thriving business that employs eight staff.

When the opportunity arose to purchase the building at a pre-agreed discount, they turned to Assetz Capital to tailor a commercial mortgage which allowed them to make fixed repayments.

Graham Tobias, Joint Landlord of The Royal Oak Inn, said: “The funding through Assetz Capital has not only enabled us to own the pub outright, it has facilitated further plans to make it one of the best stop-off points in the region. We plan to make 2017 one of the best years for The Royal Oak Inn, so we’re looking forward to welcoming visitors from the local area, as well as across the UK and beyond.”

Case study 2: Northern Vaporisers

Skipton-based manufacturer Northern Vaporisers secured a £100,000 loan from Assetz to expand its premises and workforce, after experiencing difficulty accessing a loan big enough from the banks.

The Assetz funding was used to move into a 7,000 square foot premises and recruit an additional three staff. This allowed the company to produce lighter, better value aluminum Vaporisers in-house, which significantly reduced the cost of production but meant quality could still remain high. Northern Vaporisers’ new aluminum model has replaced the heavier brass unit, leading to 85 per cent of their vaporisers being sold in foreign markets including several major customers in the US, such as Vetamac, Jorgensen Vets and Hartlands Medical.

Phillip Gostling, Director of Northern Vaporisers, said: “We’re always hearing from the Government that exports are key to the economic recovery. Unfortunately, that message doesn’t seem to have trickled down to the banks, who were unwilling to help. We secured funding through Assetz and thankfully the process was quick and simple – they took a serious look at the business, even coming to visit us on site and got things moving without delay.”