Article 50 delays could lead to more uncertainty, warns specialist lender

As uncertainty over the timetable for Article 50 grows, lenders need assurances that their funding lines are secure, according to Ashley Ilsen, head of lending and chief marketing officer at Regentsmead.

Ashley’s warnings followed a poll conducted by United Trust Bank, which found that 47% of brokers do not expect Theresa May to begin the process of withdrawing from the EU until early 2017, while 18% believed it would not happen until the end of next year.

A further 9% believed that Article 50 will not be triggered at all.

“The longer the delay goes on the more uncertainty this creates for the market, and markets never respond well to uncertainty,” Ashley explained.

“A large part of the alternative finance market is backed by wholesale funding lines and investor or institutional funding, which can dry up overnight, as we have seen already.

“What’s key for lenders at this time is that funding is assured.”

Despite this uncertainty, Ashley claimed that principal lenders such as Regentsmead took confidence from knowing that it would not lose its funding lines.

Jonathan Sealey, CEO of Hope Capital, echoed this sentiment.

“…Private lenders like ourselves are benefiting from institutional unrest within the economy at this time.

“Demand for loans remain high … so for those who have funds to lend there has been no slowdown and this looks set to continue.”

On the other hand, Bob Sturges, head of PR and marketing at Fortwell Capital, insisted that Brexit could prove to be an opportunity for a range of specialist lenders.

“The specialist lending sector – flexible as ever – appears to be taking all this in its stride.

“We’ve heard much talk about ‘uncertainty’ and ‘negative sentiment’ elsewhere – often without logical foundation – but securely funded alternative lenders are clearly seeing an opportunity.

“They also observe the short-term challenges facing the banks and sense a chance not seen since 2008 to hoover-up new business from funding-hungry buyers, investors and developers.”

Indeed, Benson Hersch, CEO of the Association of Short Term Lenders, asserted that many lenders were well prepared for the long wait ahead of them.

“Uncertainty is not good for the sector, but the delay is already factored into most firms’ calculations now and it is business as usual for most firms.

“Movements in house prices and the reactions of long-term lenders will be monitored carefully.”

Meanwhile, Jonathan expressed a hope that the situation would be solved as rapidly as possible.

“I would be against a delay in theory, as I think this will do nothing to help consumer confidence.

“We need a plan and we need the government to take action as soon as possible.”

But Bob added that with a maximum period of 24 months to leave once Article 50 was activated, the inflexibility of the process meant that the government would be hesitant to officially begin withdrawal.

However, Bob also admitted that taking time over the process was not necessarily a bad thing.

“Given this inflexibility, it is vital that the UK government – which, alone, can trigger Article 50 – takes as long as it needs to ensure its negotiating position is fully defined, and all resources are in place, before taking the definitive step.

“This will jar with many who expect a more rapid conclusion.

“But the prime minister is likely to resist any precipitate action in favour of exploiting the maximum period available to her politically to craft a strong negotiating position that works in the UK’s long-term interests.

“We appear to be some way from this position at the moment.”

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