In the UK bridging finance, it is one of the most popular short term financings for renovation/development of properties for a big uplift in value. It is not the cheapest way to finance a building project however it is a diverse financial tool. The main difference between the UK and Europe is the overall objective. A UK developer will turn to bridging finance when conducting a long term investment. In Europe, it is more used as means of temporary financing awaiting for completion of the sale.

The UK bridging finance is an unregulated financial instrument. It is aimed at business transactions and thus it is governed by the agreement between parties without any limits as to interest and fee charged. This free trade approach is not practiced in Europe and often there are certain restrictions to the relationship. Those include an interest cap, debt inheritance, and complex debt recovery laws. Those challenges are the main reason for the UK bridging market does not face competition from Europe and at the same time can not expand into Europe. Further, with Brexit on the horizon, it seems that it will get even more difficult.

It seems that on the international arena the UK accepts assets from abroad but this does not necessarily work the other way around. The European financial instruments are more restrictive on the security and often reject them from other jurisdiction due to differences in laws. One solution to overcome this problem is to use an international firm with offices in multiple jurisdictions as those have the expertise and knowledge of the laws in both jurisdictions. This is often an expensive solution.

The arrangement of the birding finance is rather simple. The facility is released to the borrower with security in property and occasionally against high-value movables like vehicles. The short term nature of this type of finance overcomes the issue of the exchange rates fluctuations. A great example of how this can be a problem is the long term mortgages in Swiss Franc which over 6 years has almost double in value. In essence, this has created a situation where mortgages had a higher value than the security against them. In these situations, bridging finance can be of use to try and refinance the property with an alternative mortgage scheme. Perhaps the reason why the UK is so willing to accept the securities from aboard in places like Spain, Portugal, and France is that it is mainly British citizens who are using this facility of finance. 

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Henley Finance has experience in the international arena and often provide a financial facility over security in Europe. Find out more about Richard Butler Creagh and Henley Finance here. Join our professional network by connecting with the official Richard Butler Creagh  Linkedin page and read the Richard Butler Creagh news here

“We make sure our investors are protected so that no one project can affect another. The borrower gets protection on the basis that we don’t take anything on unless it has stood up to our due diligence process and is viable. We are rigorous but in the end everyone benefits. Our aim is to help all sides of the project thrive.” – Richard Butler-Creagh, 2017.

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