2024 was a challenging year for the property lending market. Starting in December 2021, the Bank of England increased interest rates on 14 successive occasions from 0.10 per cent, up to 5.25 per cent by August 2023. This represented a 16-year high, and elevated mortgage rates combined with a sluggish economy and an ongoing cost of living crisis all contributed to a very subdued property market in the first half of 2024.
Kuflink was able to weather these headwinds thanks to a long track record of prudent lending, and a loyal and active investor base. But Brian West, head of sales at Kuflink, is looking forward to turning the page on a year that was characterised by economic uncertainty and borrower caution.
“Now that interest rates have started to move down, election uncertainty has been removed, and Rachel Reeves has delivered her first Budget, we are starting to see some tentative green shoots,” says West. “Buyer activity and property demand has been ticking upwards and this is now being reflected in small property price increases.”
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West describes Labour’s inaugural Budget as “mixed”. Increases to stamp duty and capital gains tax were negative as were the changes to non-dom status, particularly for the high value prime end bridging market, he says.
The end of the non-dom tax status will have a particular impact on property lenders which focus on the kind of high value, prime properties that are popular with international buyers. Coupled with an increase in stamp duty land tax, this could lead to weaker demand for prime London properties, many of which are acquired using bridging finance.
“Having said that, as a property lender we remain naturally optimistic,” adds West.
“There were positives, most particularly extra funding to try and improve the massive bottleneck in planning, extra funding for affordable homes and for small and medium-sized enterprises in the build-to-rent sector.
“The drive for green energy will undoubtedly produce opportunities for bridging with many property portfolios needing work to achieve improved EPC ratings. Of course, these improved ratings will, in turn, enhance the portfolios value.”
In fact, West believes that the government’s proposed changes to the planning system, which includes the recruitment of an additional 300 planning officers, will ultimately be a good thing for property lenders.
“However, it’s important to remember training these new recruits to the point where they can have a positive impact will take time and resources away from working through the current massive backlog in applications,” he notes.
“Many would argue the investment falls far short of what is needed but there can be no denying it’s a small step in the right direction – hopefully with more steps to follow. It will all take time to trickle down.”
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Specialist lenders such as Kuflink build their reputations on their ability to adapt to every economic environment and embrace change. Over the course of 2024, Kuflink continued to grow, surpassing £370m in investments, and expanding its team with high profile hires such as West.
Next year the peer-to-peer property lender has ambitious plans to accelerate its growth, with more additions to its sales team planned, as well as geographical expansion.
“We want to increase our regional presence,” says West. “Whilst we lend in England, Wales and Scotland we want to forge stronger relationships right across the UK.
“Further recruits to the team will widen our reach in 2025 and ensure that our key broker partners, wherever they are in the country, receive enhanced levels of contact. We will be knocking on a lot more doors and making many more face-to-face visits next year to forge ever closer contacts with our broker partners.”
No matter what the new year brings, Kuflink will be ready for it.
