While the Covid-19 pandemic upended every element of the economy, the property world was particularly affected. As lockdowns were enforced – multiple times – we all suddenly needed to rethink how we lived and worked.
With millions of us forced to work from home, the need for office or retail space was put into question. Also, as an unfortunate number of businesses and workers lost their source of income, uncertainty around how we’d all cover our rents emerged.
The fiscal choices made during that period also left a lasting toll. Billions were spent on Covid-19 measures and we’ve been playing catch up ever since. Follow up decisions made trying to get the economy back on track also played their part. Often disastrously so.
Even now, the pandemic still affects us. Our underwriter, Emma-Leigh Williams, shared how she’s seen some investors struggle to progress with plans put in place prior to the pandemic.
“An investment that seemed relatively straightforward in 2020 may be difficult to push through to completion in the current market,” she said.
“Say a landlord purchases an off-plan new build BTL property in London in early 2020. The outlook for this kind of purchase before March would have seemed stable.
“But, within the space of a single day, everything changed.”
The difficulties of operating in a pandemic
As Emma-Leigh explained, many landlords and/or developers who found themselves in this kind of predicament could’ve seen their options dry up. The economic decisions made following the pandemic led to the challenges investors faced over the last year or so.
While a multi-faceted issue, the property market was hit as the government, the Bank of England, and lenders all did what they could to balance the books. Our central bank hiked the base rate from early 2022 onwards. Despite this, inflation proved stubborn throughout 2022 and 2023.
With uncertainty looming, lenders became nervous. Stress tests became much tougher. High street banks and building societies pulled mortgage deals off the shelves. Affordability issues forced overall lending to plummet across the UK.
Optionality in the market disappeared. This made things very difficult for property investors. Especially those who ended up facing tight deadlines.
“Fast forward to 2024, and some investors are facing deadlines of just 3 weeks to complete on purchases made in the pre-pandemic years,” Emma-Leigh said.
“This obviously doesn’t leave much wiggle room, but we’ve all come a long way since 2020, and Market Financial Solutions is always keen to focus on the future and not the past for our borrowers.”
Emma-Leigh broke down how we may support a landlord in this kind of scenario, who may also have limited financial resources: “We could lend 70% gross on the property’s purchase price, and take a charge against another unencumbered BTL property owned by the borrower.
“By taking a charge against this additional asset, we could cover the balance of funds easily and progress the deal. It gives them optionality and I think this is the main thing in the current market – investors need to know that they have other options and paths that ultimately get them to their end goal.
“We could also utilise our internal tools to provide even more choice here. Our eased stress testing processes allows us to work with many kinds of investors and scenarios. We can utilise top slicing to help get landlords over the line. Rolled and deferred payment plans are available from the outset.
“All these tools and more are there for borrowers who need straightforward solutions in the face of a complicated market.”
Then there’s the looming deadlines to deal with. Fortunately, having nearly 20 years of specialist lending experience behind us could help here.
“We have established relationships with many valuers in London. Not to mention conveyancers, institutional backers, and more.
“By having this broad network of support at our disposal, we can deal with tight timeframes and tricky deadlines. We’d use our trusted valuers to get a valuation done within 3 days – if not sooner.
“In this kind of case, this could allow the borrower to complete well within their 3-week deadline, and leverage additional funds to cover any shortfall that emerged.”
Specialist finance can adapt to any unexpected issue
Property investment strategies can stretch across years but during those years, it can be difficult to predict or prepare for every possible road bump. Investors may never truly know when they’ll be hit by a major shift in legislation, an unexpected economic downturn, or a global pandemic.
But, where long-term plans are derailed by these issues, short-term bespoke funding can help. The specialist finance industry is designed from the ground up to support borrowers through the unexpected.
At Market Financial Solutions alone, we have never stopped lending since our founding in 2006. Meaning, we were there for investors after the 2008 financial crash, the Brexit vote, and the lockdown years.
We have learned how to adapt to any political or financial difficulty – expected or not. We’ll continue to be there for brokers and borrowers who may struggle to roll with the unexpected.
FAQs
Q: Why did off‑plan property demand surge during COVID-19?
A: The COVID‑19 pandemic triggered a significant shift in homebuyer priorities – gardens, broadband, and outdoor space became essential as remote work surged. With traditional lenders slowing or withdrawing, buyers turned to off‑plan investments, attracted by faster, flexible bridging finance. This allowed quick purchases, took advantage of stamp‑duty holidays, and helped complete transactions before deadlines.
Q: How have buyer preferences in off‑plan investments evolved post-COVID?
A: While COVID sparked a ‘race for space’, recent surveys conducted by Market Financial Solutions show preferences normalising. Transport links and connectivity now rank higher again, while size and extension potential have fallen in priority. Off‑plan investors and developers are adapting – balancing lifestyle amenities with locational convenience to align with the post-pandemic market.
Q: Can I still get a loan if I have adverse credit from the pandemic?
Absolutely. We consider borrowers with adverse credit history, including CCJs, defaults, and even bankruptcy or IVAs, provided they’ve been repaid or resolved before the loan advance. Our case-by-case underwriting assesses your full financial profile, including your assets, exit strategy, and how your adverse credit was caused. So even if you picked up credit issues during the pandemic, you can still qualify – especially if you’ve taken steps to rectify the situation.
Q: What are the benefits of top-slicing, deferred, and rolled-up interest?
Top-slicing helps increase your loan by using personal income to cover rental income shortfalls, improving affordability. Deferred interest lets you delay interest payments until the loan ends, easing monthly cash flow. Rolled-up interest adds unpaid interest to the loan balance, so no monthly interest payments are needed, ideal for short-term projects. These options give you flexibility to maximise borrowing and manage repayments effectively.
