Commercial loan: - Investors looking to buy commercial properties
There is an estimated 5.2 million commercial properties within the UK. The commercial property market expanded by over 32 per cent during
1990-2000 (according to the new products started) compared with the previous decade, in itself a decade of exceptional growth. Bank lending for
commercial property deals rose by a record £7.7 billion in the first quarter of 2005, according to data provided by the Bank of England, and property
experts believe the bulk of the new lending was for investment purchases.
There has also been a substantial rise in the number of investors looking to buy commercial properties to put into Self Invested Personal Pension
Schemes. Property investment funds received a boost as of late last year after the Government announced plans to allow them to be included in an
ISA (Individual Savings Account) wrapper.
Savers will now be able to add investments, such as property funds and funds of funds, that have previously been restricted from being included in
ISA's because the asset class did not feature on a European standard of eligible investments and commercial property funds are seemingly the
greatest beneficiary of the rule change.
With this diversified interest in commercial property by investor, speculator and businesses alike the role of the broker has become a more integral part
of the process. Increasing numbers of mortgage brokers have branched out into non regulated markets such as the commercial loan sector since
Mortgage Day in late 2004 and subsequent involvement by the Financial Services Authority, interestingly 58 per cent of mortgage brokers claim profits
are down since Mortgage Day.
Commercial lending is now not the preserve of the high street banks who, in the past, have not only seemed to cherry pick but have also had a
tendency to only lend to their existing business customers. The result was that there are now over 1,200 commercial lenders currently operating within
the UK.
The competitive market for commercia