When bridging deals blow up, it’s usually unrealistic timelines and exits that do the damage
Foreign investors and developers are piling into the UK’s short-term lending market, often with tight timelines and ambitious value-add plans. But according to elan property finance director Shazad Ahmed, the real tension on fast-paced bridging cases isn’t between brokers and lenders – it starts long before a term sheet is issued.
“The real tension is rarely the lender or the broker. It’s usually the assumptions made before the deal ever reaches us,” he told Mortgage Introducer.
When urgency is built on sand
Most time pressure, Ahmed argues, is homemade.
“Time pressure comes from clients not building in enough contingency. That might be build costs creeping up, but more often it’s time,” he explained. “How long the works actually take, how long a refinance really takes, or how long a sale genuinely needs. Those timelines are almost always underestimated.”
That pressure intensifies when a client’s gearing leaves no room for slippage.
“We see this a lot where the first charge lender is comfortable, but the client has also taken unsecured money from private investors to fund the deposit. On paper the deal stacks up. In reality, there is very little margin for error if anything slips.”
The result is a familiar picture for many specialist brokers: a superficially attractive project, built on optimistic assumptions about cost, time and exit – and stitched together with private money that depends on everything going perfectly.
Compliance isn’t the brake – it’s the seatbelt
Against that backdrop, pressure to “go fast” can put brokers in a difficult position. But Ahmed is clear that speed can’t dilute regulatory standards.
“From a compliance point of view, speed doesn’t remove responsibility,” he said. “Even when a client says the urgency is critical, we still have to evidence affordability, document the exit properly, complete AML and make sure the client genuinely understands the risks.”
Auctions, he noted, are the classic flashpoint.
“Yes, there is a fixed deadline, but that doesn’t mean corners can be cut. The broker still has to stand behind the advice.”
For Ahmed, the danger is when urgency is emotional rather than structural.
“Where deals go wrong is when urgency is driven by expectation rather than necessity. A vendor being promised a fast completion does not override the need for proper due diligence. Doing things properly can feel slower in the moment, but it is usually what prevents the real delays, defaults and disputes later.”
His conclusion is blunt: “In short, speed is achievable, but only when the deal is structured realistically from day one. Compliance isn’t the blocker. Poor planning is.”
Stress-testing exits when the clock is ticking
So what does responsible practice look like when a broker has days, not weeks, to make a call? For elan, the starting point is non-negotiable.
“If it’s not clear how the client gets out of the bridge, we don’t put them into one. No matter how urgent it feels or how attractive the deal looks on the surface.”
In practice, that means interrogating far more than the headline loan-to-value.
“We sanity check the end value, the likely refinance options, rental coverage where relevant, and most importantly the realistic delivery timescale of the project. The biggest risk is rarely whether the works can be done, it’s whether they can be done in the time the client assumes.”
Ahmed’s concern is less about whether today’s version of the deal works and more about whether tomorrow’s will.
“Values can shift, lender appetite can change, and a project that looked straightforward at the initial loan stage can become far less predictable when it comes to refinancing or selling. That uncertainty has to be acknowledged and documented, not glossed over because the clock is ticking.”
That sometimes means hitting pause – even late in the process.
“Walking away is never the goal, and it’s not something we do just because a deal is hard or inconvenient. But if progressing would put the client into a level of debt that isn’t responsible, that has to be part of the conversation.”
The principle is simple, he added: “Speed is important, but exits only work when they are realistic. Pressure doesn’t change the maths or the timelines, and pretending otherwise is where problems start.”
File quality: from box-ticking to genuine protection
Elan’s response hasn’t been to reinvent its advice, but to harden how that advice is captured.
“The biggest change has been tightening how clearly we document what is already being discussed. The advice itself hasn’t shifted dramatically, but the way it is evidenced has,” Ahmed said.
That means ensuring everyone with skin in the game sees the same picture.
“We now make sure everything is clearly recorded and that all interested parties know exactly what is going on. That includes the client, any private investors involved, and where appropriate the lender. If there is a Plan A, there is also a documented Plan B, and sometimes a Plan C. Not because we expect things to fail, but because developments and refinances rarely run perfectly to schedule.”
On vulnerability and risk, Elan leans on both signed disclosures and written summaries.
“It is not enough to assume understanding because a client is experienced or confident. We confirm in writing what the risks are, what the costs look like if timelines slip, and what the consequences are if the exit changes.”
Crucially, those conversations are happening upfront, not when a deal is already wobbling.
“We also spend more time upfront explaining costs and risks in plain English. Default interest, extension fees, refinance delays and sale times are all discussed early, not when the pressure is already on. That can feel uncomfortable, but it avoids far bigger issues later.”
For Ahmed, good file standards are not a regulatory chore; they are a client safeguard.
“Ultimately, good file standards are not about ticking boxes. Brokers work on the client’s behalf, on their agenda, and in their best interests. Clear documentation protects the broker, but more importantly it protects the client from making decisions they do not fully understand.”
When “no” is the right answer
The difference between theory and practice is often revealed on individual cases. Ahmed points to a recent HMO strategy that, on first glance, ticked all the usual boxes.
“We had a client whose model was to buy four-bed houses, convert them into six-bed HMOs, then refinance on an investment valuation. On paper, it worked. The exit lender had been discussed upfront at the bridging stage, and the same valuer was expected to be used on both sides.”
But closer due diligence uncovered a critical, hidden risk.
“During our due diligence, we picked up that the client had late payments on existing mortgages with their usual exit lender. These had not impacted the external credit file, so at first glance nothing looked wrong. However, internally the lender was not prepared to consider a refinance for at least nine months.”
That single change collapsed the whole strategy.
“That completely changed the viability of the strategy. The client’s timelines no longer worked, and the enhanced valuation on exit could not be relied upon.”
The knock-on effects were serious.
“The client had also used private investor funds to support the deposit. Without the uplifted valuation on exit, they would not have been able to repay those investors. In effect, the entire model depended on an outcome that was no longer realistic.”
Elan tried to find a solution, but the exit lender wouldn’t budge.
“We attempted to appeal to the lender, but there was no movement. At that point, the responsible decision was clear. Proceeding would have meant putting the client into a level of debt that relied on assumptions rather than certainty.”
Unsurprisingly, the client was unhappy.
“The client was understandably frustrated and did not want to accept responsibility for the change in circumstances. That made the decision harder, but also clearer. We respectfully stepped back from the transaction.”
Could the deal have been forced through? On paper, yes.
“Technically, the deal could have completed. Practically and ethically, it should not have. Slowing the process down and ultimately walking away protected the client, the investors involved, and us as the broker.”
This article is part of our Monthly Spotlight series, which in January focuses on bridging finance. Full coverage can be found here.
