Tiuta calls on government to help short-term market

Bridging loan specialist Tiuta is calling for the government to compel one of its newly ‘nationalised’ lenders to provide increased funding to the short-term market or risk prices for distressed sale properties falling by up to 30%.

Tiuta warns that without access to bridging finance many distressed sale properties would only be sold to cash buyers, massively reducing the number of buyers and having a serious impact on prices.

The majority of distressed sales are unmortgagable at point of sale due to the time necessary for the buyer to complete whether it’s sold at auction or through a conventional estate agent.

Buyers therefore rely on short term funding to ‘bridge’ the gap between purchase and mortgage.

If this was unavailable prices would fall substantially, but even then they would not benefit most buyers, who would still not have the necessary cash to complete within the timescale required.

Gary Booth, chief executive officer at Tiuta, says: “I don’t think the market or the government realise the critical role that short term lenders are currently playing.

“Without them tens of thousands of repossessed properties would see their price collapse. At the moment most lenders have access to capital, but with repossessions set to rise more funds will be needed, unless we are prepared to see purchases limited to only cash buyers, which could be disastrous for the property market and the confidence in the economy as a whole.”