The market for commercial finance continues to grow in the lead up to the general election. Ralph Black, CEO at Commercial Finance Brokers UK (CFBUK), takes a look at the latest trends in the commercial sector.

We have seen a continuing flow of enquiries as landlords and business owners take advantage of strong demand for rental property, some compelling economic numbers and more competition between existing and new lenders entering the market.

One lender (a foreign bank), relatively new to our shores in regards to commercial finance, has launched a new product which we have not seen for over a decade. A cheque book/overdraft facility for professional landlords, which provides a borrowing facility of up to £3m secured against their portfolio rather than any new property or properties they wish to purchase.

I saw another sign of the healthy UK property sector at a recent buy to let presentation from a high street bank, where the largely grey-haired audience was encouraged to gear their savings using the bank’s BTL loans. Clearly we are in a mature market for property lending and, with so many pitching for your debt, there has rarely been a stronger case for playing the market: looking at the cost of borrowing from the whole of the market and not just taking the first loan offered.

This increased appetite for property-backed lending has kept rates in check, maintaining the trend reported last quarter where strong proposals were starting at just under 2% over base and loan to value proportions of up to 80% within the commercial finance sector; rates scarcely seen since 2006/7.

This month saw more landlords continuing to expand their portfolios and refinance existing debt to take advantage of this increased competition. One case featured the inclusion of a biomass boiler within the finance which was justified by a significant contribution income from sales to the National Grid and energy savings. While green energy has been around for a while, is its inclusion in commercial finance proposals a one-off or perhaps the start of a trend?