The government has effectively closed the property market but peer-to-peer lenders are still confident that they can start getting deals ready.
Much of the UK was put into lockdown earlier this week and in recent days the government has also advised against non-essential moves and clarified that surveyors and valuers should not conduct any non-essential work.
Many banks have scaled back lending as a result but P2P lenders may actually benefit from this.
“Any temporarily lending stop by lenders will drive more enquiries to those that still lend,” Filip Karadaghi, chief executive of P2P buy-to-let lender LandlordInvest, said.
“There may be difficulties to have valuers to inspect a property whilst we have noticed that solicitors are working as usually, although remotely.
“We are receiving a high amount of enquiries, quite often with the same story: the lender pulled out in the last minute.”
However, one aspect that may have to change is timescales.
“We do expect that any transaction that we pursue will be delayed due to valuation delays,” Karadaghi added.
This is a view echoed by Mike Bristow, chief executive of P2P development lender CrowdProperty.
“In light of the current situation, we believe that timescales will push out through project lifestages – whether the purchase of an asset, progress on-site or the exit,” he said.
“As property experts having been in the shoes of our borrowers for decades, we are working closer than ever with them in many practical and knowledgeable ways to mitigate these risks. We have time contingency built into every project but it’s hard at this stage to know what the full impact will be.”
He said CrowdProperty is seeing significant increases in applications for funding as many other lenders, often with single sources of funding, revoke finance offers and have effectively shut up shop.
“Whilst we are being even more selective right now and thoroughly assessing exposure to the risks of the current situation, we are accepting applications and we are funding projects,” he said.
Brian Bartaby, founder of commercial P2P lender Proplend, said only a few borrowers have not been able to meet interest payments.
“We started engaging with them as soon as the crisis hit and it’s the very reason we maintain a minimum of three months interest reserve on all our loans,” he said.
“This may well save some of our borrowers and lenders and see them through to the other side. “
He suggested P2P lenders could still “work around” the lockdown situation by providing desktop valuations and e-signatures, adding that these would need to be priced and accepted into the system.
It seems that the physical aspect of visiting and assessing a property may be on hold for now, but astute P2P lenders will get deals lined up so funds can start flowing, getting the economy rolling again once the coronavirus crisis is over.