Shawbrook Bank’s outlook for 2019
Emma Cox (pictured) is sales director for commercial mortgages at Shawbrook Bank
Despite uncertainty and the likelihood of a challenging year ahead, commercial mortgage brokers remain optimistic that their businesses will weather the storm in 2019, according to Shawbrook Bank’s latest Broker Barometer.
Positivity amongst the brokers remains robust, with over two thirds (69%) showing confidence in the lending environment, over half (56%) in business growth and two fifths (41%) in the UK economy post-Brexit.
When asked about the top three challenges they expect their businesses to face in the upcoming year, the commercial brokers surveyed anticipate the impact of Brexit (62%), valuation issues (55%) and mortgage interest tax relief (39%) to have the greatest effect. Whilst the biggest issues commercial mortgage brokers expect to impact their clients in the 2019 are Brexit (62%), valuation issues (55%) and the effect of stamp duty changes (34%).
Despite the challenges, brokers remain confident, particularly as good investment opportunities remain, as rental yields remain strong. The ‘UK Buy to Let’ report, produced by Shawbrook Bank and compiled by the Centre for Economics and Business Research (CEBR) showed there are still pockets of the market where investors can achieve an average yield of 5.4%. It’s therefore positive to see certain areas showing market resilience despite uncertainty over negotiations and a barrage of tax changes making it harder to make money on BTL.
It is encouraging to see positivity remain throughout the broker community as some of the more recent regulatory and government-led changes begin to bite, in addition to the effects of a shifting political landscape. In this highly competitive market service is everything, and brokers and lenders who invest in their culture and embrace new ways of working will be best place to take advantage of the significant opportunity that remains in the BTL space.
From Shawbrook Bank’s perspective, we remain committed to building flexibility into the proposition and taking an educational stance in response to any meaningful market shift in order to help brokers and their clients grow over the short, medium and long term.
The commercial property market has faced economic and political uncertainty in the past, so there is nothing to suggest it will not be able to maintain its competitive edge in 2019 and beyond.