The latest report from Acuitus suggests that some of the more excitable and negative headlines in the press, the result of the EU Referendum is yet to have a profound impact on the property financing landscape.  The below details some of their key findings: 

Commercial Investment Properties
The market seems to be split between high value loans and sub- £20m loans. All of the clearing banks and commercial investment lenders who are active in the sub-£20m category are demonstrating no change to terms or appetite. In fact, judging by the number of calls that Acuitus Finance has taken following the referendum, they are actively looking for more business.

The results of the recent Acuitus auction and the Bank of England’s provision of a very high level of liquidity illustrate the positive sentiment towards smaller commercial investments.

With most of the banks offering 3-5 year term loans since the 2008 crash, many clients have single asset or portfolio finance renewals occurring on a regular basis. As previously suggested it is beneficial to look at what the market can offer, particularly interest only, reduced amortisation and different lenders attitudes to remaining lease profiles.

At the higher end of the commercial investment market where the specialist lenders include overseas banks and insurance companies, there is a little more caution and loan-to-value ratios have reduced by 5-10%.

Development Finance
To date, the clearing banks and the majority of specialist development lenders are operating on the same basis as prior to June 23rd. Acuitus Finance has seen Permitted Development and normal development schemes go through full credit approval at the same terms that were offered pre-vote.

Some of the smaller bridging and development lenders are taking an understandingly more cautious stance by reducing loan-to-GDV by 5-10% and being more selective about the schemes that they want to fund.

Residential Portfolio Finance
Despite a potential reduction in residential values, portfolio lenders are still operating the same facilities and pricing that they were offering prior to the referendum. For the past few years, debt service cover has been the limiting factor for many portfolio refinances rather than loan-to-values which helps to retain previous terms.

Fixed Rates
The stated intent of the Bank of England to loosen monetary policy has had a knock-on effect on fixed rates. The fixed rate cost of funds are now at historically low rates and are anticipating future base rate reductions. For investors who like the security of fixed lending, rates have never been lower.

FINANCE REVIEW

Key finance market features:

• Historically low fixed interest rates
• Finance available for primary and secondary multi-let sub five-year lease terms
• Higher loan-to-values for low-yielding commercial investments with strong covenants
• Prime residential investment loans at higher LTVs
• HMO and apartment block finance available
• 80% loan-to-cost finance for development
• Lower interest rates for development finance
• Pension fund finance available​