While some areas of the market are, against all expectations, having one of their best ever years, commercial has been less fortunate in many cases.
Kevin Thomson is sales director of Connect for Intermediaries
It has been a tumultuous year, and the commercial market has been one of those most badly affected. While some areas of the market are, against all expectations, having one of their best ever years, commercial has been less fortunate in many cases.
Commercial of course incorporates retail, and as I write this, the news breaking is that both Arcadia and Debenhams are going into administration with the loss of many thousands of jobs. This highlights the challenge of both the rising unemployment figures and the fall in retail shopping. The second lockdown could not have come at a worse time for high street.
The bright note, however, has been the housing market both in residential and buy-to-let (BTL). The stamp duty holiday has been an overwhelming success in terms of getting the housing market back on its feet but whether there will be a cliff edge after March, or the Chancellor will taper or extend this is, as yet, an uncertainty.
In the commercial market we have also seen an unprecedented amount of governmental help through the launch and take up of the Bounce Back Loans and the Coronavirus Business Interruption Scheme (CBILS). This has kept many businesses afloat, but focusing on these government-backed loans may have been a distraction from some lenders pulling back from the commercial mortgage market earlier this year, making it more challenging for brokers and investors.
With that backdrop, what can we look forward to in 2021?
We can take some comfort that some of the lenders who pulled back are now relaunching their commercial mortgage propositions. Interbay Commercial have come back into the commercial market with their semi-commercial product range. Whilst this is not full commercial and was a cautious approach, it has now been followed by commercial products and demonstrates a confidence in the medium to long-term market.
Together Money having returned to the market with a range of products for businesses. It is fair to say that they traditionally provided a solution to many who could not get finance from the High Street. They are now in a position to assist again, where others are more reticent to do so, due to the coronavirus pandemic.
The return of these lenders to the commercial market will be welcomed by brokers and clients alike. I’m sure more solutions will become more readily available as we move through 2021 so these two lenders are just ahead of the game when compared to those that continue to stay out of the market.
We do, of course, have the uncertainty of any Brexit deal and the impact of that in 2021. As a result, are likely to see a rise in UK manufacturing and therefore business owners will need to expand or refinance their current properties.
There will probably be a need for short term cash flow solutions for businesses in the early part of 2021 to see them through to smoother, post-pandemic waters when they can take advantage of the new norm.
There will undoubtedly be issues when it comes to business paying back the CBILS and the bounce back loans that have been taken out. There may also be issues with lenders granting future loans to businesses who have taken them out too. Lenders will see them as businesses under stress who needed this support. That may mean a need for a bit of finance restructuring by the savvy broker to get the financial solution for the client.
The overarching conclusion is that business owners will need a commercial finance broker to help and support them with their business plans and strategy to maximise 2021.
