The results come from research carried out by Brightstone Law’s audit of 200 short-term lending cases, which does not represent the whole of the market, but the law firm claims the data can be valued as extremely representative.

The top 10 most common causes of delay were:

1. third-party external factors (for example, property chains, seller deadline)
2. lender red tape (for example, lack of empowerment at underwriting level, credit committee approvals, leaving issues identified early in the process until final credit approval stage)
3. borrower naivety/inexperience (for example, inexperienced borrowers unfamiliar with what a lender will require or expect in more complex development cases – simply unprepared to borrow)
4. borrower delay in funding initial costs and valuation fees
5. miscommunication by intermediary
6. title/legal issues requiring solution
7. borrower solicitor inefficiency
8. valuation provided late in the process, raising issues requiring legal and other investigation
9. change in terms/revised offers
10. use of third-party firms for ID verification

Jonathan Newman, senior partner at Brightstone Law (pictured above), said the short-term finance market was complex and felt deals for ground-up development, heavy refurbishment and difficult developments subject to planning weren’t simple.

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“It’s no surprise that these transactions will and do take more time.

“But is it just the fault of the borrower’s solicitors, who I am commonly told, do not understand bridging, its nuances and timescales?

“Do they really know what to produce and when they do, do they operate to the timescales of all interested parties?”

Jonathan highlighted that its research found that the borrower’s solicitors’ inexperience was not the single most common cause of delay. 

“In fact, it’s pretty low down the list at seven and there are far more pressing and weighty influences that need to be dealt with.

“That should not be so surprising, given the nature of these transactions.

“The borrower’s lawyer is not actually required to solve issues, nor draft technically complicated pieces.”

Jonathan felt the industry needed to resist rushing into perceived solutions, which may at first glance present a cure-all, when in reality, the problem more often than not lay elsewhere.

“The suggested remedy (such as panel imposition, dual representation) is not necessarily a remedy at all and can have more wide-ranging, damaging side effects.

“The solution rests in greater cooperation between all parties involved in short-term finance deals.

“It’s incumbent on all the stakeholders, including lenders, lawyers, valuers and intermediaries, to look inwards.

“Are their processes as efficient and streamlined as they believe them to be?

“Is decision making quick and decisive?

“Are decisions communicated to the right people and on time?”