Lenders in Northern Ireland

Northern Ireland is one location where bridging seems to have hit a brick wall. With its shaky housing market and small population, securing lending in this region has become a regular enigma for brokers.

Many lenders and packagers are unwilling to lend or deal with Northern Ireland developments and cite many reasons for this. However, if there is a cast-iron deal and safe exit then a private lender or specialist may be willing to lend in Northern Ireland finance.

Ian Harrison, Operations Director at Affirmative Finance, explained what may be putting off prospective lenders: “The price of the property has dropped so much that the exposure there is too much for any lender. It’s not going to change until the prices of a property move back up.”

Mark Posniak from Dragonfly Property Finance agreed: “Lending in Northern Ireland poses a higher risk because the property prices have been hit harder than others and because of the violence – it is very volatile.”

However, specialist packager Terry Markham from The Funding Operation doesn’t see any political situation or legality issues in Northern Ireland as a problem: “I don’t see any political issues. I have had some fabulous properties but lenders just won’t lend. In Scotland people say the legality is a lot different but Northern Ireland has the same legal process as England.”

The geographical issue is also a stumbling block, as Terry Markham acknowledged: “Lenders want to know that if they take something into their possession they can sell it on quickly. Also, most lenders want to lend on properties they can physically go and visit, should they need to repossess. Northern Ireland is either a plane or boat away.”

However, Brian Mairs, from the British Bankers Association, believes that the rocky housing market shouldn’t be a problem for lenders. He said: “It shouldn’t be as long as the numbers stack up. “The Northern Ireland economy is under particular stress and I think people recognise that its property boom ended very abruptly and this is the Northern Ireland homeowner’s first experience of negative equity.”

So with Northern Ireland being so far away from the much coveted South Eastern M25 strip, as well as political issues, a slow housing market and the additional travel needed – just how do brokers find lending in Northern Ireland?

Ian Harrison suggested: “The only way it might work is if there is a cast-iron deal with an exit strategy in place – a 100 per cent closed bridge.”

With such a cast-iron deal, a specialist, private lender might be willing to take a punt on this lucrative but underexposed market.

He added: “A private lender will lend money there if they think there is going to be a return.”
Approaching such lenders seems to be the best option for those seeking lending in Northern Ireland. Robert Marshall, Managing Director of Marshall Commercial Finance, says lending in Northern Ireland does happen but the criterion is specific.

He explained: “We would only ever be looking at top quality deals that will stand up – building to order or something of that nature, usually from £5-20 million, with developers from a solid background.”

He added: “We would need to verify it is a bona fide deal and handle it with due diligence. What we do is package the finance for the private funder and take it to the underwriter and that means writing the proposal if the client hasn’t already got it, looking at the appraisal and making sure the figures work. We would look at the loan to GDV and how it is justified – like we normally do on any development.”

However, Robert Marshall has since said that due to a lack of good quality deals he has decided to focus only on mainland UK lending.

It seems finding a niche lender and proving a client’s deal is watertight is the answer to brokers’ Northern Ireland lending woes, and – though challenging – these can be mastered.

Brian Mairs agrees there is potential in the market: “Money is certainly available for viable businesses; the problem is how do you demonstrate the business is viable? What any prospective borrower needs to do is show they have the ability to pay back the loan in the specified time with a business plan in place – you must have your strategy for borrowing and paying.”

Overcoming the conundrum of finding a niche private lender willing to work in Northern Ireland and proving that you have a watertight deal might not be crystal clear; but what is clear for a broker is that overcoming these obstacles is key to securing lending in Northern Ireland.

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