OFF THE BEATEN PATH FOR MAJOR GROWTH

As part of its ambition to double its loan book from £500m to £1bn in three years, Octane Capital recently restructured its senior team and launched a range of new products. We talk to sales and marketing director Josh Knight about the changes afoot

What can you tell us about Octane’s new senior team?

In January, Richard Deacon joined us as managing director of sales. Richard has a superb reputation within our industry and is someone our CEO, Jonathan Samuels, has been trying to recruit for some time. He brings a wealth of experience of the specialist lending market to the team and has already settled in incredibly well.

For me, the restructuring sees me step into a sales and marketing director role, with a focus on elevating the company’s brand. Richard and I will co-manage the sales team moving forward and will each look after some key broker relationships.We join Jonathan and Matt Smith, our director of credit, as part of the senior team.

In line with our £1bn loan book target, we will also be looking to grow the sales team in the coming months.

What can you tell us about your new bridging range?

Our bridging and refurbishment products were relaunched in November 2022 and the response has been phenomenal. Over the course of last year, we noticed a sharp increase in the rates of fixed bridging products available on the market, with many lenders now offering rates in excess of 0.9% per month. Our new products aim to offer a cheaper alternative. For the first time, we are now offering variable rates, starting at 0.36% + BBR per month, which is just 0.65% per month at the time of writing [January 2022].

Our bridging product offers up to 70% LTV on residential and semi-commercial property, with a broad appetite for complex borrower profiles. Auction purchases, non-UK borrowers and pre-planning acquisitions are among the most common cases we are completing.

We have also noticed a significant increase in developer exit enquiries over the past few months. Our bridging product can cater for developer exits on complete (or almost complete) new-build developments. We have appetite for large, multi-unit schemes and can structure our lending to provide cash releases to the developer.

Our popular refurbishment product has also returned, offering up to 70% LTV net day one and 100% of the cost of any works, with appetite for both light and heavy refurbishment projects. House-toHMO conversions seem to be an area in which we are very active at present.

Your BTL product is set to re-launch soon. What are the changes?

Our new product range will look very similar to its previous iteration.We originally launched it in early 2020 and it went on to become our most popular offering, with over £300m lent in its first 18 months.We paused it in June 2022 due to market volatility and have been working on the ‘new look’ range in the past few months.

Our appetite will be almost identical to before and the goal of the new product remains unchanged—to help brokers with cases that do not easily fit into the criteria of mainstream BTL lenders, whether that be due to complexity, affordability or a tight completion timescale.

It will offer more choice than ever; borrowers will be able to choose between two- and five-year terms and between both fixed and variable rate options.We understand some borrowers will feel more comfortable knowing exactly how much interest they will pay over the course of the term. But, with fixed rates rising throughout much of last year, being able to offer a variable rate that tracks the Bank of England base rate will likely prove popular.

ICR is a big issue at present. How will your product’s ICR assessment work?

We understand this is a pain point for brokers. It has never been more challenging to find term funding at higher LTVs, especially on cases involving lower-yielding property. We will employ a unique approach to ICR which seeks to address this issue:

In this way, we aim to provide a solution to brokers and borrowers struggling to meet mainstream lenders’ ICR requirements.

You mentioned complex cases—how broad is your appetite?

With most BTL lenders focused on vanilla business, there are not many willing to support brokers with their non-mainstream cases.We have always specialised in deals that are outside most lenders’ comfort zones, and this approach is reflected in both our bridging and BTL appetite.We have appetite for both complex borrowers and property types, including:

• foreign nationals and expats

• borrowers with no credit footprint in the UK

• first-time buyers and landlords

• offshore companies and trusts

• borrowers with low personal income

• large HMOs and MUFBs

• semi-commercial properties

• residential above commercial

• ex-local authority

• properties in need of refurbishment (during the term)

What are your completion timescales?

We have the luxury of being both a bridging and a BTL lender, and there is no difference in completion timescales between each product range. Our process—and our mindset—have always been focused on delivering completions at speed.This means our BTL product will be suitable for cases with tight completion timescales, for example auction purchases, new-build purchases within their notice period and urgent refinances of bridging loans coming to term. By delivering completions in weeks rather than months, brokers can avoid the need to complete a bridging loan first, which can potentially save their clients thousands of pounds in fees and interest.

• low stress rates—we will defer up to 2% per year of our interest rates and we will stress test at the pay rate (post deferral). This will put our stress rates among the lowest in the market

• a flat assessment for most borrowers—we will stress test at 125% for limited companies and personal name applications. Only additional-rate taxpayers borrowing in their personal name will be stress tested at 140%

• top slicing—qualifying borrowers will be permitted to use outside income to supplement the rental income from the property

What are your targets for the coming years?

Our journey so far has been exhilarating. Our first five years saw us lend over £1.4bn and grow our loan book to over £500m. We are now focused on doubling our loan book to £1bn in the next three years. While this is an ambitious target, we are confident that, with our new products and our new team, we will achieve it.

For more information contact your BDM or call 0345 222 9009. www.octanecapital.co.uk