Bridging & Commercial Magazine — The Big Picture Issue

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To help you push ahead in 2024 we’ve made significant changes to our bridging finance offer including:

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After a few years of uncertainty, it seems we are finally seeing the green shoots of recovery in the UK finance market. Inflation has dropped to 3.4% in February this year—the lowest it has been since September 2021—the latest Nationwide data revealed house prices have risen by 1.6% in March, and RICS’ 2024 UK Residential Survey points to sales market conditions steadily improving. The positivity seems to be spreading across to the specialist finance sector as well: bridging completions have hit a record high of £1.69bn in Q4 2023, according to the latest ASTL data, and Colliers predicts that 2024 will be the turning point for commercial property investment.

As optimism seeps into our market, we believe now is a good time to take a look at the big picture, to see how the sector has performed recently, and pinpoint the challenges that still remain—all to prepare for a more positive year ahead.

Heading straight to the source, we sit down with MSP Capital’s head of broker relations, and Tapton Capital’s founding director, to find out whether optimism has indeed returned to the specialist finance market [p8]. Meanwhile, Shawbrook’s managing director of development finance shares with us the secret to success that led the lender to hit the £2bn funding milestone [p6] in a strained market.

Nevertheless, we’re not completely out of the woods yet, and there’s still plenty of progress that needs to be made in several areas. We take a look at the potential negative ramification of the Leasehold and Freehold Reform Bill on the commercial market [p17], and highlight how much work still needs to be done in terms of gender diversity across different sectors in the specialist finance market [p80]. Plus, we pass the mic to several property lawyers to dispel some of the myths surrounding the infamous legal delays [p67].

Of course, this wouldn’t be The Big Picture Issue without an exclusive look at the latest EY UK Bridging Market Survey. We’ve put our detective hats on to investigate the sector’s performance over the past 12 months, identify what influenced this, and reveal the sentiment for the market in 2024 [p40].

Andreea Dulgheru Deputy editor

“Where you’ve got breakdowns in sales, a lack of liquidity in the overall property market and a lack of BTL products, bridging finance is a good sweep-up for all those issues” p8

News Breaking the £2bn milestone

Exclusive Are developers gaining confidence?

Column How a bill could spell big changes for commercial property

Feature Marrying speed and quality / Keeping brokers updated on the move

View You have choices—and we help you decide

Cover Story

Interview

67% expect bridging market to grow

Marc Goldberg / Juliet Baboolal

In Conversation

One Day

Four women, four lessons

Backstory

Jamie Pritchard

The lawyers have spoken

Two billion and counting

Shawbrook is celebrating a major milestone this year—hitting £2bn in development finance lending since it started issuing these loans eight years ago. The bank’s managing director for development finance Terry Woodley looks back at the division’s steps that led it to this achievement, and unveils the secrets behind its success

WORDS BY BETH URE

Shawbrook has lent £2bn in development loans since its property development finance team was set up in 2016—a team that is empowered to create what the market is looking for.

The idea behind the arm came from Terry Woodley, who joined Shawbrook in 2011 as a credit committee manager before heading the bank’s property risk division. It was here that he first pitched the idea of creating a property development lending team in 2016—the division that would end up playing a central role in designing the lending products and writing up its policies, which are approved by the bank’s credit committees and the board.

“It’s not something I had experienced in my previous roles as policies are often designed centrally, but it works well because we are the ones who go out to the market, so we know what the borrowers are looking for and can create something that will work for the sector and the bank,” Terry says. “That is fundamentally one of the key parts of our success.”

Having the right people behind the division is also an essential part of the success equation to Terry. “You’ve got to have the right team because they’re the ones who go out and sell the benefits of the bank, and structure a product that’s right for the borrower,” he emphasises. “I’m lucky to collaborate with some of the best people I’ve ever worked with in my career. Without this team, we never would have hit this milestone.”

Change in direction

The shift into development finance represented a major change in Shawbrook’s risk appetite, as previously, all of the bank’s property loans had been on existing properties.

“To go from the bricks and mortar already being in place to giving out a loan on a piece of land with the plan to build 10 houses on it—and even then, there’s no guarantee that those will sell—is a big shift,” Terry says. “It was a completely new risk for the bank, but we were interested in areas where there was an undersupply in the market, and where we could grow and add value. Development finance fit into the overall package we already offered across our real estate products, so it was a sensible risk move.”

Over the past few years, the development sector has been hit by numerous issues, including labour and material shortages, rising build costs—which, according to Terry, have increased the risk of extending loans—and the ongoing issues with the planning system, which have worsened during the Covid-19 lockdown.

However, while different factors have affected property development, Terry

“One of our strengths as a bank is that we stay true to what we do and we don’t modify appetite and policy easily”

says the response from developers to move with the market meant the bank did not need to shift its policy. “In 2020, there was a huge drop in interest in one-bed flats in central London as people looked to move out regionally and buy houses. Our developers picked up on that and moved their appetite to where the buyer and renter demand was,” he recalls.

As developers have adjusted to the shifts in the market, Terry tells me the bank’s risk appetite has remained unchanged and no asset types have been excluded to date. “One of our strengths as a bank is that we stay true to what we do and we don’t modify appetite and policy easily. We have never changed the assets we lend against since inception because there is nothing that we feel has impacted the market significantly enough,” he adds. “We believe there is a right deal for every situation; just because a one-bed flat isn’t popular in London at the moment does not mean it won’t be popular anywhere, so we never just discount a sector completely. All our deals are assessed on a case-by-case basis by what we feel the market is doing. We may say no to an opportunity because it’s not right for the specific location, not because of the asset type in general.”

Realistic talks

Despite being a big move for the bank back in 2016, Shawbrook’s move into development finance proved to be the winning ticket, as reflected in the major lending milestone it is celebrating this year.

The £2bn the firm has lent to date has enabled the construction of 523 schemes, including 7,872 new homes and accommodation for 1,258 students. A high proportion of these loans has gone towards homes, including apartments, houses and mixed-use schemes. On the commercial side, the team prefers to lend where a pre-sale or pre-let agreement is already in place.

In recent years, the bank has established a healthcare team to work with developers to build care homes and assisted living centres. It is seeking to develop student accommodation, where the bank has a strong appetite.

Aside from having a strong team in place, Terry also credits the support from the executive level staff at Shawbrook for the team’s success in reaching the £2bn milestone. Each year, he sits down with the bank’s managing staff to discuss the plans for the year ahead. These discussions are held several months before the end of the year to ensure the teams have what they need to reach their targets.

“It’s never just a meeting about how much business we’re going to do; we discuss our appetite for growth and what is needed for us to achieve our goals,” he says. “We have a realistic and sensible chat, rather than an expectation that we will just keep growing until we crack. I’ve never worked anywhere before that has this structure and it’s really refreshing and supportive; without that support, we wouldn’t have such a good team to develop the products. It all feeds in.”

Exits and planning: 2024 aims

Looking ahead, Terry says the division plans to double its loans this year compared to 2023, and recruit 12 more people to the team. It is also looking to expand its product range, building on from the launch of its planning assistance loan last year, which is designed to help developers looking to get consent for more homes than they already have permission for. Shawbrook has also soft launched a development exit product, to help firms that need extra time to reach practical completion and achieve sales or refinance for investment. “The sector has faced significant volatility in the past two years, making business growth a challenge for many developers. Our focus this year is on empowering them at crucial stages of their projects, providing targeted support when it's needed most.”

Words

As optimism blooms again in the world of specialist finance, Arian Manouchehri, head of broker relations at MSP Capital, and James Lennon, founding director of Tapton Capital, look back at last year’s volatility and its implications, the problem with office conversions and land values, and why more efforts are needed to boost sales

After several years of difficulties due to Brexit and Covid-19 and some unfortunate political developments, the specialist finance sector is showing signs of recovery. With the bridging market continuing to thrive—with completions hitting a record high of £1.69bn in Q4 2023, according to the latest ASTL data—commercial property investment predicted to grow this year and construction output volume having seen a 1.1% monthly increase this January, all signs point to a stabilisation of the property market.

optimism

“There’s a bit more and that’s reflected in some of the terms that are being provided by lenders which, in the uncertainty of last year, maybe wouldn’t have been offered”

Arian and James share a level of cautious optimism. “There’s been a correction in the property market, rather than a crash,” observes James. “I think a lot of lenders and brokers were worried that the impact of interest rates on prices would be more significant than it has been. While there’s been a softening in property prices, it’s not been the catastrophe that some of the newspapers were talking about. There’s a bit more optimism, and that’s reflected in some of the terms that are being provided by lenders which, in the uncertainty of last year, maybe wouldn’t have been offered,” states James.

This optimism has also extended to property investors and developers, as Arian notes that there’s been a general increase in demand from borrowers, particularly in development finance, as developers have weathered the long storm caused by macroeconomic difficulties. “As a developer, while you can curtail the volume you’re doing and be more picky when choosing which projects to take on in times of uncertainty, ultimately you’ll need to build again because that’s how you stay in business and make money,” explains Arian. “As we’ve not seen a crash in the market, I think there’s now a need to get on with business and have the confidence that this is a sound decision to make. So I think, this year, we’ll see slightly more development deals go forward.”

Land values down

When discussing how different asset types have performed over the past 12 months, Arian believes housing for owner-occupiers has remained the most resilient area of the development industry. “People always have a need for homes, and there’s a chronic undersupply of houses within the UK. Despite the economic challenges we’ve had over the last 18 months, the market has seen a correction rather than a crash, and that’s testament to this fact,” he explains.

One asset type that has struggled in the past year is land, according to Arian and James. The increased finance and construction costs on the back of the inflationary pressures pushed true land values significantly down in 2023—and are still doing this to some extent—to the detriment of both landowners and property developers. “Everything within the development finance appraisal equation at the moment is pushing land prices down. Transaction volumes have been down because landowners aren’t coming to terms with the fact that their asset is now worth, in some cases, significantly less than what it was worth two or three years ago,” elaborates James.

However, Arian is optimistic that in 2024 we could potentially see land values perform better, as finance costs begin to ease and confidence in end values returns—a view supported by the latest Knight Frank report, which predicts that development land values will remain stable in early 2024.

Homes from offices, good and bad

Other projects that have experienced some struggles are large office-to-residential conversion schemes aimed at investors, according to James. “The LTVs and interest rates that you could get two years ago aren’t there any more so, for a lot of BTL investors—particularly those from overseas—the numbers aren’t quite stacking up as they were before,” he elaborates.

Looking back at the evolution of property conversions over the years on the back of permitted development rights, both Arian and James view these as a positive step in addressing the UK’s housing crisis by bringing new life into defunct commercial buildings. “It’s definitely been positive, and I think the government has done the right thing in focusing on converting existing buildings before exploring things like the green belt,” comments James. “However,

it hasn’t been enough of a success because, ultimately, it won’t make much of a dent in solving the housing shortage we have—we need to look at changing the whole planning framework to actually achieve that.”

In addition, Arian points out that the number of good-quality conversions done through permitted development rights has fallen over the years. “The obvious, more aesthetically appealing conversion opportunities have been pursued, and we’re now often left with the less obvious ones, where you don’t know if the end asset will be fully fit for residential purposes,” he elaborates. This is why he echoes James’ point about the necessity of planning reform to meet the demand for homes.

Marketing and plan B for appraisals

With several macroeconomic problems plaguing development finance, housebuilders have had to adapt to make deals work. But what about lenders—how has their risk appetite shifted over the years in response to industry difficulties? For MSP Capital, Arian says the market challenges haven’t affected the firm’s desire to lend, but have influenced the number of deals that are viable from a lending point of view.

Having worked with several specialist finance lenders to secure suitable funding for his clients, James has noted a particular focus on a developer’s marketing strategy as part of a loan’s exit plan assessment. “We are now in a different market from a sales perspective. It used to be ‘if you build, they will buy’. Now, it needs to be the right product in the right area, because you’ve got falling numbers of first-time buyers so you will have competition from other developers,” he explains.

“Lenders are now a bit more focused on the marketing strategy and the amount of pre-sales, especially for large multi-unit schemes, and looking for longer sales periods and having contingency to cover that. They’re also looking at whether there is a plan-B exit in case the units don’t sell,” he adds.

In response to this, James tells me developers have upped their sales game. To boost sales—and thus strengthen their exit plan strategy when securing funding—firms are now offering perks to buyers, such as including furniture packs and stamp duty costs within the overall price of a home, as well as boosting marketing through social media channels like Instagram instead of just working with estate agencies.

Bridging finance

While the development finance market had some bumps in the road last year, bridging finance experienced a smoother ride. Both Arian and James note this market has performed quite well over the last 12 months, as volatility brought opportunities. “Where you've got breakdowns in sales, a lack of liquidity in the overall property market and a lack of BTL products, bridging finance is a good sweep-up for all those issues,” explains Arian. “In a way it’s a sad reality, but bridging is necessary to help facilitate transactions when they’re really needed and in challenging periods.”

From his experiences in dealing with clients, James notes there has been a particularly high demand for rebridging finance, as well as development exit loans, due to the

ifferent dmarket

“We are now in a from a sales perspective. It used to be ‘if you build, they will buy’. Now, it needs to be the right product in the right area, because you’ve got falling numbers of first-time buyers so you will have competition from other developers”

lengthening of sales periods experienced by property developers. “There will still be some schemes that aren’t selling as quickly as they would have done 15–18 months ago, so I think we will continue to see quite reasonable demand for development exits, hopefully coupled with requests for development finance as well,” he adds, a view shared by Arian.

However, James believes the popularity of bridging finance will diminish slightly over the next 12 months, as the market begins to stabilise. “Taking some of the volatility will perhaps remove some of the need for bridging,” he states. “The other factor that might have an impact on this market is a slowdown in transactions towards June due to the general election— historically, there tends to be a bit of pause in activity while people wait to see what the result is and how it might impact them, so people might hold off on going ahead with a bridging loan until they know the political state of play.”

Transparency is key

Looking ahead, both Arian and James are cautiously optimistic the next 12 months hold growth and positivity for the specialist finance market. “There are plenty of lenders, brokers and activity within this space, and I hope that we’ll see a bit of a resurgence within the development end of the market,” says Arian. James agrees, adding that this overall optimism could lead to lenders potentially boosting LTVs to 75%.

Nevertheless, growth in the specialist finance market cannot be achieved without two key factors—communication and transparency—both of which still need more work, according to the two experts.

“Lenders aren’t always transparent about how they’re funded and how much autonomy they have over the decisions they make in-house. I’ve had too many scenarios where borrowers have spent thousands of pounds on valuation and legal fees only to be informed that the credit committee didn’t like something about the deal, despite us being told repeatedly the deal would go ahead. Some brokers aren’t always completely transparent about a deal either—perhaps about why other finance providers have said no to funding the deal, or why the borrower needs a bridging loan specifically, to give some examples,” elaborates James. “These factors are the ones that set apart the individuals and firms that get good results and that you like to work with. Transparency is key.”

MSP Capital has been a principal lender for over 40 years, working with intermediaries to offer specialist bridging and development lending solutions for sums up to £20 million. We are relationship-led lenders with expert industry knowledge, providing reliable decisions and a supportive lending team that our clients can depend on when they need it most.

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Developing talent through a person-centred approach

“There is no single way to develop talent that works for everyone”, says Josie Broadstock, senior HR consultant at Altum HR and head of performance at Mint Property Finance.

Having analysed the evidence on learning and development, she is clear and confident in this conclusion. From formal learning in a classroom-type setting and technical skill building to coaching and remote training, the environments in which individuals flourish through learning and development are different—something that Mint understands and embraces.

With the help of our amazing staff who have shared their experiences, we want to highlight the multitude of learning and development strategies to build an empowered and engaged team.

Documentation and case studies

As Mint’s head of operations, Karen Shepherd has been responsible for the development and delivery of training for a significant number of team members over the past five years.

For her, documentation is key. In her opinion, the more processes, procedures and policies that can be documented, the better the business will be at training people in these—and the team will be able to follow them more easily. “When processes are documented in a clear and concise fashion, only then can the team challenge them and consequently improve them,” she adds.

Expert mentoring

Sam Herd has recently been promoted to the position of head of credit at Mint, and attributes her success to the power of a strong and dedicated mentor in her predecessor, Peter Howarth, who trained her since she joined as an underwriter seven years ago. Together, they defined the systems and protocols for the business, which led to Sam taking on the mantle as head of credit.

“Peter always taught me to concentrate on the solution, not the problem.”

Formal learning

For Helena Carr, our portfolio manager support, her most transformative learning and development experience while at Mint has been the weekly ‘Lunch & Learn’ training delivered by in-house experts from across each business function, including our director Andrew Lazare and head of lending Richard Showman. From covering types of charges to carrying out training on restrictive covenants, this formal approach to training resonates well with Helena.

Different training methods

Having initially qualified in accountancy but then working in PA and then executive assistant roles, Hayley Moore, Mint’s funding and compliance supervisor, credits her ongoing success within the business to the deployment of informal training, which reignited her passion for finance so much that she has recently taken over as the single point of contact for all funders.

For our development underwriter Hannah Lamb, her development within the business has progressed apace as a result of the hands-on training facilitated by the multitude of how-to guides covering every aspect of the underwriting process. “Every deal is different but, with all the documentation I have on hand, I’m able to progress a case while referring to best-practice guidelines and, therefore, offer the best lending service to the borrower,” says Hannah.

Meanwhile, Sylvia Woznicka, our management accountant, has also benefited from team members and line managers recognising her accomplishments and putting training in place so she could take her skills to the next level. She is now on the way to becoming CIMA qualified. “I have been with Mint for seven years and am fortunate to have worked my way up from accounts assistant to management accountant, principally through targeted training delivered by colleagues,” she says.

New employee onboarding

Providing new recruits with a dedicated onboarding and training programme is another successful learning and development strategy, and it’s one that particularly resonates with Joanna Lawrie, one of Mint’s development underwriters.

“Over the course of a dedicated week, I sat with each department to understand their role in the business. It was hugely insightful and helped me to understand how Mint flexes to accommodate different deals and successfully progress them to completion.”

“There is no one way to develop talent that works for everyone”

Online and video learning

Video-based training formed a fundamental part of our underwriter Kim Cartmell’s learning and development when she first joined the business nearly a decade ago. Now returning to Mint for the second time following her latest maternity leave, she is also benefiting from the formal weekly training programme delivered by the in-house team of experts.

Meanwhile, Alice Venables, who is currently a data analyst, has worked at Mint for more than five and a half years and took the initiative to sign up for a Master’s degree in Computer Science and Data Science. Delivered online over the course of two years, this particular learning strategy suited Alice well, ultimately leading to a distinction from the University of Sunderland.

Coaching

Informal coaching delivered by another member of the team has allowed Sarah Haymes to flourish in her role as underwriter. She was taught to always ensure every deal makes sense and understand precisely why a potential borrower was seeking a bridging loan from Mint rather than obtaining funding from a high-street bank, for example.

Group discussions

Mint’s administrator Yulie Wagman’s preferred learning and development style is through the group discussions that frequently take place within the business. “There’s not a moment goes by in the office without the team talking through every single aspect of a case to find the best possible solution for a client.”

Professional qualifications

Mint’s finance apprentice Laura Kirkpatrick’s preferred learning style is off-the-job pursuit of professional qualifications through formal, regular training sessions in a classroom setting. Already armed with a first-class degree in Mathematics, she is now undertaking the Association of Accounting Technicians’ qualification. Laura has also been nominated for a global mathematics competition called WorldSkills UK, a threepart endeavour including an exam, a group task and a live final. Our role as an employer is to support and facilitate any additional qualifications.

Shadowing

Seeking a fresh challenge and with a desire to transition from the underwriting team to a new department, Kate Gregory flourished as a portfolio manager thanks to a structured shadowing period with one of Mint’s knowledgeable and long-standing portfolio managers. This meant she quickly got to grips with her new role and responsibilities and was able to deliver even greater value to the business.

While our staff prefer a multitude of different approaches to learning and development, at the heart of all this sits a two-way dialogue between employer and employee, best established through regular, documented monthly one-to-ones, mutual goal-setting and meaningful annual reviews.

Only by implementing this can a business deploy the most powerful learning and development strategy for an employee, motivate and engage an entire workforce, attract and retain the best talent and develop capabilities beyond people’s own expectations.

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Key features:

• Loan size £75,000 - £3,000,000

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• No val up to 65% LTV

• All types of Borrowers considered

• Cosmetic works permitted

• Interest can be serviced or deducted

• Second charge loans considered

• Heavy adverse credit considered where exit is sale

• Dual Representation and the ability to use Open Market Valuations on kerbside residential properties purchased by existing Borrowers with loans up to £500,000

Key features:

• Loan size £75,000 - £1,000,000

• Up to 75% LTV day one

• No minimum term

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• Interest can be rolled up, serviced or deducted

• All types of borrowers considered

• Heavy adverse credit considered where exit is sale

• Dual Representation on kerbside residential properties purchased by existing Borrowers with loans up to £500,000

Available on our Bridge and Refurb products, Mint will now match any competitor offer for finance where the deal is within our lending criteria*

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How new legislation could cause cracks in the commercial property sector

As the Leasehold and Freehold Reform Bill makes its way through Parliament at speed, one particular proposed change could hit the commercial property sector significantly

Words by Katherine Simpson, member of the Association of Leasehold Enfranchisement Practitioners, and partner at Edwin Coe LLP

“Mixed-use schemes in the notso-safekeeping of those with no prior experience will suffer from a lack of understanding and knowledge of the regulatory requirements for such management when it comes to planning, building safety or decarbonisation”

ince it was first introduced in November last year, the Leasehold and Freehold Reform Bill has made waves across the property market— including the commercial sector.

A major proposed change to the existing legislation is to raise the 25% non-residential limit in collective enfranchisement claims to 50%, which has been welcomed by leaseholders and will, in my opinion, almost certainly be enacted.

While not as controversial as other planned alterations, this change will have a much greater impact on landlords and the commercial property sector than might at first glance have been appreciated. Indeed, a number of landlords—including the Grosvenor Estate— submitted evidence to the select committee challenging the proposed increase and highlighting the need to explore the unintended consequences of the proposal.

Fragmented ownership of the high street

One of the critical issues identified is the fragmentation of ownership of our high streets. It is important to note that many areas of historic value and importance have been successfully managed in single ownership for as long as they have existed.

Our high streets and town centres are dynamic and continually evolving, bringing social, economic, and environmental benefits to communities— exactly the sorts of things that the Department of Levelling Up, Housing and Communities (DLUHC) is striving to achieve. Yet, the government is potentially defeating its own objectives by introducing this amendment.

If the change goes ahead, the ownership of mixed-use buildings on our high streets will be fractured and diversified. Cohesive management of mixed-use blocks will be undermined, resulting in a fall in standards of maintenance.

A drop in safety and management standards

Mixed-use schemes in the not-so-safekeeping of those with no prior experience will suffer from a lack of understanding and knowledge of the regulatory requirements for such management when it comes to planning, building safety or decarbonisation.

Landlords’ obligations are becoming increasingly onerous in terms of regulation, which amateur landlords are likely to struggle to keep up with, resulting in commercial tenants not wishing to renew their tenancies and thus leaving these parts vacant. Commercial landlords are undoubtedly best placed to comply with regulatory requirements and to efficiently manage the service charge regime, which is critical to ensuring that vital works to repair and maintenance are carried out to a building. They are also often better able to engage with insurers; the buildings insurance market is a sophisticated arena which does not easily embrace the inexperienced.

If the standards in management of a specific building drops, the commercial tenants might even sue for poor management, leading to loss of income due to vacancies, fines or even potential imprisonment for landlords.

The potential for disagreements in collective ownership of wholly residential buildings is well recognised. Throw into the mix commercial parts, and you have an even greater recipe for dispute, poor management, and serious repercussions for the value of the building and, notably, the residential parts.

Discouraging investment and sustainability

The proposed changes could also jeopardise capital investment and rental income from commercial premises, as property developers may be disincentivised from investing in mixed-use buildings. Even if they do invest, developers will undoubtedly seek to

ensure that the residential parts comprise less than 50% to avoid residential tenants seeking to manage the building—despite the fact that residential investment currently out-performs commercial and that there is a necessary aim (supported by the government’s increasing lenient attitude to change of use through permitted development rights) to swing the balance in favour of residential development.

Because investors will not see it as beneficial to put capital into mixed-use buildings where the freehold is at risk, and the proportion of commercial to residential will likely get adjusted to ringfence developments from enfranchisement, we will see a reduction of homes in sustainable locations. A lack of investment will affect the creation and management of sustainable neighbourhoods, with the provision of subsidised housing through planning agreements with local authorities becoming at risk.

Investors may not be the only ones refusing to put the money down. From my experience, some lenders are already reluctant to lend on mixed-use buildings, particularly the typical flat-above-a-shop type, and are likely to be even more unwilling when the freehold is in the hands of inexperienced leaseholders rather than a commercial landlord. Lenders will be concerned about the risk of buildings falling into disrepair and the related threat to value arising out of unprofessional management. This could potentially create a two-tier market of flats in mixed-use buildings and those in wholly residential use, forcing down the values of the former type.

Pressing pause on the high street’s revival

In the hands of lay people, the technical understanding, investment, experience, and institutional knowledge of professional managers—which is crucial to the high street— will be gone, and the long-term effective management and

stewardship of these areas will be thrown into jeopardy. Social vibrancy and eclecticism will be threatened as developers are forced to reset their parameters and development criteria.

Moreover, small and independent businesses will suffer without the opportunities afforded by the guardianship of professional developers looking to revive our high streets. Just as the supply of affordable housing in town centre locations will be impacted, subsidised community shops, such as butchers and greengrocers, will no longer have the foothold afforded to them by such developers, as this is only achievable through common ownership and effective area management. All of this then affects the character of towns and cities, just at a time when investment was beginning to turn neglected high streets with empty shops into thriving communities.

The government, through the National Planning Policy Framework, requires “gentle density” in urban development. This will be harder to achieve due to the proposed change, as successful major regeneration proposals will be difficult to propel. Unlike professional landlords who have invested heavily in the high street, groups of leaseholders won't necessarily be interested in the big planning and environmental picture—they will have seized the opportunity to acquire the freehold simply because it looks good on paper.

Overall, the impact of this proposal runs far deeper than the government’s goal to make enfranchisement easier for groups of leaseholders to take hold of our communities. It could leave them stranded without the benefits of continuing and long-term stewardship. While the change listed in the Leasehold and Freehold Reform Bill aims to give leaseholders more power, the reality is that it could do more harm than good to them, as well as the overall commercial property sector. How bad the impact will be, only time will tell.

Pictured (L-R): Michael Kingsley, Ben Sokel, Alan Margolis

PUTTING THE PEDAL TO THE METAL

As bridging average completion times near 60 days, one lender is bringing back speed. Intrigued by this, I head out to North London to meet the masterminds behind the lender, and the two main factors behind fast, efficient lending

Words by ANDREEA DULGHERU

“We’ve invested a lot of time into learning about the industry. If you’re arrogant enough to think you know it all, you’ll automatically fail”

On a small street 10 minutes away from Golders Green station in London, nestled above a quirky events venue, you can find four property finance experts working hard to take bridging back to its former glory: the team forming Greymax Capital.

While this name may be new to some readers, Greymax Capital has been operating since 2016, when the two founders Michael Kingsley and Ben Sokel—both estate agents with decades of experience—decided to take a chance and support a mutual acquaintance with a £320,000 short-term loan as a side gig on top of their work buying and selling investment properties. “We fell into bridging by accident. In 2016, the property investment market was somewhat slow and we couldn’t do loads of business so, since we had investor funds, we decided to do our first bridging loan,” recalls Michael.

Having no experience of bridging, the duo decided they needed to learn as much as possible about it. So, with the help of several lawyers and professionals— including Daniel Tunkel from Memery Crystal and Ray Cohen from Jackson Cohen Associates—Ben and Michael hit the books. “We’ve invested a lot of time into learning about the industry. If you’re arrogant enough to think you know it all, you’ll automatically fail,” says Michael.

With their extensive knowledge and understanding of all things property plus additional support from their lawyers, Ben and Michael continued to provide small bridging loans within their network of existing clients, who

flocked at the opportunity to secure high-quality short-term finance in a matter of days. “We saw a gap in the market for what I call old-fashioned bridging, where you can turn something around fast. We noticed very quickly that people liked transacting with us because of the way in which we dealt with relationships and how we completed a transaction. It was the opposite of a bank,” adds Ben.

What had started off as a venture to complement their property business soon became Greymax’s bread and butter and, within the first few years, the founders decided to focus only on lending.

The moment that solidified Greymax’s position as a bridging finance provider was the Covid-19 pandemic in 2020. This came as a surprise to both experts, who were terrified at the time that this would cause huge damage to both businesses. “During the first lockdown, many lenders withdrew from the market because they couldn’t get valuers out, whereas we could because we do our own valuations. So we just motored through, and we ended up tripling our loan book in the first lockdown alone,” Michael tells me.

TWO MORE EXPERTS

As Greymax’s bridging finance business was rapidly growing, Michael and Ben realised it was time for the team to expand as well. So, in October 2021, they brought on board Katie Belchamber—who had previously acted for Michael and Ben in connection to various property transactions—as the firm’s operations director and in-house counsel, to improve the company’s operational processes, and deal with regulatory compliance, risk management, and general advisory issues. “I was delighted to join forces with Michael and Ben. Having experienced first-hand their entrepreneurship, integrity, and tenacity, I believed that our complimentary skills and aligned values, vision, and passion would enable us to identify ways to enhance the company and deliver operational excellence,” says Katie.

Then, in January last year, the final piece of the puzzle fell into place, when Jonathan Newman, senior partner at Brightstone Law, introduced Ben and Michael to none other than Alan Margolis. Hearing about his impressive resume and extensive experience in the bridging sector, the two founders were nervous at the beginning, thinking Alan would not be interested in their smaller-scale business. Yet, as soon as they met, the three clicked.

“I looked at what they did and, while I did see things that needed changing, fundamentally

they were doing all the essentials correctly, and I told them they were better than they thought they were,” recalls Alan.

With Alan on board as the bridging finance guru, Katie handling all legal aspects and Ben and Michael using their extensive real estate knowledge to assess and value each property to bring in deals, Greymax reached a new level of proficiency, and the numbers say it all: the lender completed 59 transactions in 2023, and 26 in the first quarter of this year alone, and its current loan book sits at over £66m—almost 15 times higher than pre-Covid levels.

ESSENTIAL BRIDGING

On average, Greymax offers bridging loans from £250,000 to £7m—although the lender’s sweet spot is £1m–£2m—on terms of minimum six months and at a rate of 15% per annum (with no fees). “I would say we will always be, as a rule, about a per cent or two more than the competition by the time you put all of their costs in. But we’re not just selling money, we’re selling a service,” says Michael.

This service and the lending process are where the firm shines, as the whole process was created with one idea in mind from the beginning: to take bridging finance back to its purest form. Clients can apply for a bridging loan with Greymax in one of two ways: giving the team a call or emailing the office with the loan details. Once that’s done, one of the team members will get in touch with the customer to go over the fundamentals of the loan, and indicative terms are issued swiftly if the deal matches Greymax’s criteria. As Ben, Michael and Alan respond and assess each case directly and the two founders carry out the valuation themselves, credit-backed terms are often issued within the same day—sometimes even in minutes, as I witnessed Ben do exactly that in front of me during the interview.

The next step is for solicitors to be instructed immediately under the watchful eye of Katie, who monitors the progress and, with her legal background, aims to catch and resolve any potential issues as early as possible in the process. Meanwhile, Greymax will conduct its own AML and KYC processes directly with the borrower—which have been condensed by Alan into a two-page internal checklist that includes only the essential issues. Alan explains that this has been done to avoid having to sift through numerous unnecessary documents, which often

duplicate information, and thus speed up the process, without any compromise to the efficiency and quality of the checks.

Using Westcor title insurance, the due diligence can be completed efficiently and once all requirements have been satisfied, the funds are ready to be released within 24 hours of receiving all supporting documentation. On average, the overall lending process from enquiry to release of funds takes about five working days—although this varies depending on the complexity of the deal and the borrower’s requirements.

FAST VALUATIONS AND CLOSE FUNDERS

The significant speed and efficacy of the lending process is thanks to a few factors: the firm’s ability to carry out valuations, AML and KYC in-house; its excellent panel of solicitors; and the flexibility and trust of Greymax’s sole funding via HNW individuals.

“We saw a gap in the market

Currently, Ben and Michael carry out all valuations for each deal—although I’m told they are teaching Alan the art of valuation as well. Having done this for decades as estate agents, valuing property is as natural as breathing for Ben and Michael.

“I’ve done so many of them that I can do a valuation pretty much immediately, pick the information that is relevant, and prepare a two-page report, which has as much information as you could ever want to know about the property. Whereas with external valuations, you get a 40-page report, 38

for what I call old-fashioned bridging, where you can turn something around fast”

“You can easily get trapped in a cycle where you’ve got money that you have to deploy, lots of staff you have to pay and fancy offices that need to be maintained; that’s a huge pressure. We’d rather not be busy fools”

pages of which tends to be cut-and-paste nonsense full of caveats,” says Michael. Having done this for so long, estimating the value of a property is a sixth sense for the two founders—in fact, the two like to test their skills by predicting a dwelling’s value on the spot and comparing it to outside valuations, and are often within a few pounds of each other.

The company’s funding also sets it apart from others, and is another reason why the team is able to complete deals quickly and successfully. Greymax’s capital comes from a variety of individual funders, such as celebrities, premiership footballers, people from the music industry, former commercial surveyors, business people, ex-direct lenders and more—which Michael likens to a property club. “They’re not just investors, they’re friends as well,” adds Ben. “We’re very close to them, we see them and speak to them regularly, and a few of [the property professionals] have opened doors for us in a sector they understood better than we did.”

As Greymax is very close to its funders, it understands their risk appetites, while the funders know the in-depth the skills and expertise the team has, thus creating a seamless operation based on trust. “I’d rather pay a little bit more for our funding and have flexibility rather than worry about covenants every time. We are able to have open conversations with our funders,” says Michael.

Aside from this, Greymax prides itself on its customer-centric and personable approach, which is the essence of the business. “When you're doing a deal with Greymax, you get all of us, we're all on it. Everyone knows about everything, and we all weigh in at different points. If you want to speak to anyone, you pick up a phone and you get directly through. We are selling a truly bespoke service,” elaborates Ben.

AVOIDING THE TARGET TRAP

Looking at the evolution of the business so far, there’s no denying that Greymax’ future is looking bright—and the team has plans to continue to grow. To further streamline the lending process and cater to the current and next generation of borrowers, Michael divulges that the lender is planning to enter a partnership with a fintech provider to explore automation, with plans to launch this in Q3 this year.

While Greymax has growth plans, I am told there are no set annual lending targets. “It’s easy to write lots of loans and have massive overheads, but you can easily get trapped in a cycle where you’ve got money that you have to deploy, lots of staff you have to pay and fancy offices that need to be maintained; that’s a huge pressure. We’d rather not be busy fools,” says Alan. Michael and Ben agree, saying that they want the business to grow organically, without pressure to reach particular targets. “We want to keep expanding, but we’re not bothered if we don’t. We just want to do nice deals with nice people and, ultimately, keep growing at the right time,” concludes Michael.

GETTING BROKERS PRECISELY AHEAD

A pioneering app with instant notifications on product changes, a snappier moniker, and a smart rebrand signal a distinctive new direction for Precise. At parent company OSB Group’s London office, I catch up with Jon Hall, the group's managing director of mortgages and savings, for an exclusive glimpse into the future of the business

Words by Beth Fisher

“THE BAR IS QUITE HIGH TO DELIVER SOMETHING MEANINGFUL FOR THE BROKER"

Stepping into OSB's London hub on Whitfield Street after a much-needed caffeine fix in Fitzrovia, I'm greeted by large pop-up banners heralding Precise's sleek new black and beige look. It's simplicity is miles apart from the specialist lender’s previous acclaimed branding, standing out in an industry often drowned in corporate navy blue. Refreshing? Absolutely.

Bumping into Jon near the lifts, I kick off our conversation by congratulating him and the team on the rebrand. He reveals that this journey has been charted since he joined the company in 2021. Back then, the group was wrestling with its identity after merging with Charter Court, pondering whether to blend its subsidiary brands or forge distinctive paths. Jon was firmly in the latter camp.

“I’ve seen the history of Precise since it came about,” Jon reflects, “it always had a high degree of confidence— arrogance, to a point—but a certain kind of distinctiveness in terms of what it was there for.” Yet Jon sensed the lender had veered off course in defining its market stance, signalling the need for a rebrand. The task ahead was no mean feat.

“How do you take an iconic market leader that has lost a little bit of its razzle and focus and give it a new, fresh lease of life from a brand strategy perspective without people thinking it [was done] just for the sake of colouring it in?” he says. “We wanted to make it meaningful and, at the same time, invest in the digital experience. Precise has always been about slickness and being straight to the point—and it's got the most fantastic name because it says what it does.”

Toothpaste and rocket science

With a vision to preserve Precise’s trademark distinctiveness, Jon set his sights on aligning the brand with the evolving needs of the next generation of borrowers and brokers. To help, the lender brought in Design Bridge and Partners—renowned for its work with giants such as NASA, BBC Two, Fortnum & Mason, Guinness, Hellmann’s, and Colgate—to look at the brand strategy.

Since revealing its new image just a few weeks before our chat, Jon shares that the industry response was immediate. “The feedback has been ‘Wow, that woke me up’. It’s like nothing else in the specialist lending market in terms of its look, feel and tone.”

Miho Aishima, design director at Design Bridge and Partners, says that the best thing about seeing the brand come to life was capturing the straightforward

attitude of Precise’s team. “Seeing them embrace the brand idea and committing to it wholeheartedly, rolling it out across all of their touchpoints, platforms, and even creating a launch film has been wonderfully rewarding.”

In a strategic alliance aimed at enhancing user experience, OSB joined forces with MagiClick to overhaul its broker and customer websites. Mark Lusted, CEO at MagiClick UK, highlights that developing a new website for Precise was a fantastic opportunity: “The new website forms part of a wider project we are delivering for OSB Group and we’re looking forward to launching further developments for the business in 2024.”

One of the new tools it created was OSB’s unified registration portal that allows brokers to register with any of its lending brands— Precise, Kent Reliance for Intermediaries and InterBay—in one place. Since it was introduced at the end of February, the group has reported a substantial 27% uptick in the average number of intermediary registrations, as well as an increase in the number of brokers registering for more than one of the group’s lending brands. “Brokers know that there's a place they can go and register for all of the brands, and they do it in pretty much one click,” Jon adds.

The portal has also opened up intermediaries’ access to brands that they might not have worked with before such as InterBay and their interest is evident, according to Jon. This could be due to brokers looking at entering other areas of finance, such as commercial. “It raises the profile of InterBay, and also raises the possibility for mortgage clubs and networks to think about how they might use that proposition alongside their more traditional long-term business,” adds Jon.

In addition to rebuilding its website, which has resulted in a 22% surge in users since launch, Precise has integrated APIs with Knowledge Bank.

Instant updates by app

The final challenge that Precise is working hard on behind the scenes is offering a way to keep brokers updated while on the move, as they often are. “There's so much for an intermediary to try and absorb at the moment,” highlights Jon. In a bid to get information to brokers as quick as possible, Precise is building a first-of-its-kind mobile app, expected to be launched by the summer.

The app is set to be accessible and personal to reduce pressure on brokers; intermediaries will be able to set

preferences for areas of finance, what cases they have on the go and push notifications for product changes they want to hear about. “You don't have to wait passively to log into a portal. If we can push a lot more information out and make it really timely, then hopefully we can take some of that stress away and make an intermediary more efficient and in control,” says Jon.

“Our approach to this is to try to make it a virtual assistant to the intermediary,” he explains. “We know that intermediaries are moving between their various sites or seeing clients, and we've also got product withdrawals or additions happening quite regularly at the moment; you can't rely on someone logging into a portal to see all of that information. Sometimes you need to make decisions during the day. If you can deliver the message to them in a timely fashion, then they can respond to it.”

According to Jon, this will be the first specialist lending app of its kind, so doing it well is a significant challenge. “The bar is quite high to deliver something meaningful for the broker.”

Jon adds: “This is our first app within OSB, and we see an increasing use of apps across the group in coming years as part of our digital journey.”

Bridging and beyond

In the middle of the digital and branding changes, Precise has been firing new products into the market. While the lender is predominantly in the regulated bridging space, it recently added developer exits to its range and widened its scope for heavy refurbishment (tier 2), which will support commercial-to-residential conversions up to four units, as well as residential-to-HMO conversions up to 10 lettable rooms.

Precise has also set up a specialist bridging sales team consisting of five experts to support brokers. “What we're trying to make sure of is that Precise can be a one-stop-shop for all your bridging requirements,” Jon comments.

The group’s annual results for the past 12 months indicate that Precise is on the right track. OSB—which predominantly lends in BTL and the residential mortgage markets—recently announced that its underlying pre-tax profits fell by 28% to £426m in 2023 following a one-off adjustment in the year as customers reacted to an unprecedented number of interest rate rises in a short period of time. During the period, the group’s net loan book climbed by 9%, with expectations of slower loan book growth of approximately 5% this year. Nonetheless,

its Precise brand saw bridging originations double from £217.5m in 2022 to £437.2m in 2023. Its underlying gross bridging loan book also soared to £333.1m from £149.7m the year before.

With Precise reporting that 2023 was a record-breaking year for the lender in bridging, it highlights the need for shortterm finance when there are rapid changes to product availability in other parts of the market, such as in BTL and residential mortgages. “The bridging market is at its most successful when there is some degree of disruption and dislocation,” explains Jon. “It also performs really well when there's a degree of liquidity, which means you can move stock off your balance sheet… You need that flow, and I think both of those conditions were met over the past 12-18 months in bridging.”

Jon also believes that the bridging sector has “the legs to grow”, simply because not enough houses are being built. “We have to repurpose homes . . . there's just not enough residential property in the UK.”

It is argued that homes are also not always being built in the right place nor are they of the type that people will want in the future. “Bridging gives you the chance to take a current property and turn it into something that is going to work in the long term,” Jon notes. “That conversion and change in purpose makes it more meaningful and sustainable.”

It is notable that OSB has pulled back somewhat on providing funding lines to non-bank lenders in the bridging and development finance market, maintaining “a cautious risk approach” throughout the year. With Precise’s growth in the bridging space—in addition to its development lending brand Heritable, which committed at the end of last year to fund 2,709 new homes—it makes sense. “We've expanded and gone back into all of the bridging markets we were in before, and it just felt like a distraction to a degree,” explains Jon, “it just didn't feel like we needed to put that money into funding lines when we could lend it directly ourselves.”

Moving forward, OSB aims to maintain its position as one of the leading lenders in the BTL market, giving it the opportunity to increase its representation in the residential and specialist subsegments of the market. “We're going to maintain where we are on BTL and then continue to grow the residential, bridging, and commercial sides,” explains Jon. “We've got a really diversified loan book and I think, over time, our ambition is to be well represented in all of our markets.”

Bridging from 0.33% per month + BBR

Residential and semicommercial bridging Light and heavy refurbishments

Developer exits, including before PC

0.33% Rates from per month + BBR 0345

You’ve decided to take matters into your own hands and start your own brokerage—but how do you map your journey? We examine the two main ways brokers can take to set up their own firms and how to navigate each to get to your destination

DOYOUKNOWWHAT ROUTETOTAKE?

Wordsby ANDREEADULGHERU

Do you know whatecoming your own boss is a dream many people have—whether that’s because of a desire to earn more money or simply to run things the way they want—and many decide to turn this into reality, including specialist finance brokers. However, putting ideas into action is often easier said than done and can be more complex than expected.

While regular mortgage brokers are required to have the CeMAP qualification to practice, no qualifications are needed to become a specialist finance broker or to set up your own specialist brokerage. Nevertheless, you will have to meet certain requirements depending on the type of arrangement. There are two main paths a person can take: becoming an AR of an FCA-authorised firm or network or being directly authorised. Each of them comes with its own pros and cons.

The DA route

The first route to setting up your own brokerage is to become directly authorised by the FCA. If you are looking to provide unregulated specialist finance services—such as unregulated bridging loans, development finance or BTL mortgages—you technically are not required to be FCA authorised to carry out broking activities. However, many broker firms opt to be authorised, as several lenders prefer to work with those who are—meaning that companies which do not want to opt for the AR route must in practice apply for authorisation to the FCA.

Becoming a DA firm means you’ll be directly responsible for all business actions, including compliance and liabilities, and having the necessary professional indemnity (PI) insurance in place.

PROCESS

ARs looking to move to being directly authorised must first inform their principal firm about this decision as they will likely be contacted to provide a reference to the FCA for the application to progress. If you have carried out any regulated business while an AR, you must agree with your principal how they can have access to your client files in case of complaints and discuss any other contractual arrangements ahead of the departure.

Any firm looking to become directly authorised can apply to the FCA through its Connect system or hire a consultancy service to aid them with the application process. To apply, businesses must pay an application fee of £2,500, complete the necessary form and provide all supporting documentation, including the firm’s financial information and forecasts. They must also submit a winddown plan to ensure all regulated activities are stopped with minimal adverse effects on clients, counterparties and the wider market should the brokerage go out of business.

Brokerages looking to become directly authorised with the FCA must present a comprehensive list of information about their business to prove the company’s need and eligibility for authorisation.

The first requirement is a full regulatory business plan, which needs to state the

firm’s aims and objectives and reasons for application, and provide details of the full range of activities it will undertake, how customers will be sourced, any website or social media advertising, and details about all employees. This includes at least three years’ worth of historical financial statements, forward-looking financial projections for the next three years and a financial analysis template.

Other supporting documents that will likely be required as part of the application process include policies for consumers in vulnerable circumstances, complaints and financial crime, senior managers’ CVs and DBS checks, a PI insurance proposal and quote, and consumer duty requirements among many others.

Once the application is submitted, a case officer will be allocated to assess and make a decision on a brokerage’s application; the process can take up to 12 months. Should additional details be required, the case officer will contact the brokerage directly to request these or call or meet the founder.

There are three outcomes that can happen after submitting an application to the FCA. Those that do not provide the minimum information required will be immediately rejected and the application fee will be refunded. If the application is accepted but found to not meet the standard for authorisation, the FCA will refuse it and the fee will not be refunded. Lastly, the application can be successful, in which case the FCA will add the brokerage to the Financial Services Register and give it a firm reference number (FRN).

It is safe to say that this is not an easy road to take—and Meir Peer, founder of Redi Finance, who has gone through the FCA authorisation process, can attest to that. In addition to providing details about all his previous transactions— at the time, he had been operating in the unregulated space for roughly two years—and business projections for the future, Meir had to compile a comprehensive list of identity documents.

“As I’m not a British citizen, there was some background digging into my past. I had to provide referrals from my bosses

in the US, and contact details for all the US and UK companies I worked for. They did criminal and credit checks and wanted to see my personal bank accounts. They even asked for some details on my wife as she is a minority shareholder in Redi Finance. It’s a thorough and quite stressful process,” he elaborates.

Despite Redi Finance being a one-man operation, the process for it to become a DA firm was extensive and took 11 months, as Meir had to provide additional proof at the request of his case officer. “One of the things they asked for was details about annual refresher training courses. I had to show what steps I’d take to make sure the brokerage follows TCF and consumer duty guidelines, so I had to find a third-party company that offers these exams, register with them and show that I’d be doing these courses annually or bi-annually to keep up with the regulation. The FCA doesn’t miss a beat.”

And the work doesn’t stop even after receiving the FCA authorisation. Meir tells me that to remain authorised, he has to continue providing detailed reports to the FCA about each transaction to ensure everything is above board. Not only that, but the firm also has to pay an annual fee to remain directly authorised.

THE PROS

One of the primary advantages of being directly authorised is full independence and control over the brokerage. “As a DA firm, you are much more involved with compliance, you learn a lot more what is best for your clients, and it gives you the freedom to integrate new technology when you see fit. If we became an AR instead, we would’ve been governed by another firm that might not share the same ideas for the best outcome for us and for the client,” says Nathan Raffour, co-founder of Ngage Finance.

Nathan also argues that being directly authorised enables brokers to learn a lot more about the industry and what solutions are best for their clients, as DA firms are entirely responsible for their compliance and for keeping up to date with regulation changes. “Setting up a DA firm was the only option for us as we could be in control and adapt to the ever-changing market that we face in the modern day.”

Another substantial benefit of being directly authorised is that the brokerage gets to keep all the broker and procuration fees earned from each deal, as opposed to sharing part of the profit with a network or principal firm, like ARs do. “If I’m honest,

I chose the DA route because it was more profitable for me; at the end of the day, this is my living,” divulges Meir.

THE CONS

With great power comes great responsibility, and the same applies to being directly authorised. DA firms are fully responsible for all compliance for each deal, and ensuring the right PI cover is in place—they will shoulder the full blame should anything go awry.

The authorisation process is long and arduous and brings with it a lot of paperwork and stress. “The amount of the paperwork, reports and constant auditing does add an extra layer of pressure, particularly for small companies. Small brokerages get the same amount of time under the microscope as a big company. However, larger firms probably have a proper compliance person to deal with these requirements, whereas I handle everything myself. It’s a big undertaking, especially if you’re on your own,” says Meir.

He adds that the time-consuming authorisation process may also impact a brokerage financially. “One of these past weeks, I’ve been with my accountant three times to go over FCA filings and make sure everything is okay. It’s a lot of work and it does stunt your growth a little bit because you spend a lot of time on this—and that can stop you from writing new business and getting more completions down the line,” he elaborates.

While being directly authorised does mean a broker can keep all the profits, they are also responsible for covering all administrative costs—including PI cover, compliance members, annual FCA membership fee and more. Add that to the cost of applying for authorisation, plus any additional charges if you decide to hire a consultant to help you with your application, and you may be faced with a big bill.

“When we applied for the licence in 2021, I believe the overall cost was in the region of £20,000—this included FCA fees, compliance oversight and funds available to start the business. I have heard of companies being successful and doing it cheaper, but feel that will come at a cost later down the road of that business plan,” adds Nathan.

Overall, while he personally does not believe there are any drawbacks to being a DA firm—just more risks—Nathan does believe that smaller firms are better suited to go down the AR route. “Gone are the times that the FCA was freely authorising firms. There are a lot more vigorous checks and benchmarks to hit to fall in line with FCA guidelines, which is a good thing. If you are a firm with 1–5 advisers and have no plans for growth, the AR route is more suitable if you are not dealing in volume business. The reason for this would be cost and of course the compliance infrastructure, which comes as part and parcel.”

“As a DA firm, you are much more involved with compliance, you learn a lot more what is best for your clients, and it gives you the freedom to integrate new technology when you see fit”

The AR route

“Becoming an AR gave us the ability to transact with lenders that we couldn’t at first and build our knowledge of them while simultaneously building our own brand”

WHAT IT ENTAILS

An AR is a firm or person who carries on regulated mortgage advisory activities under the responsibility of an authorised financial services firm, which is known as the principal. The principal can be either a DA company or a mortgage network. In appointing an AR, the principal assumes responsibility for the regulated activities carried on by that AR firm.

As the compliance umbrella for the AR, the principal offers a range of services, including FCA regulatory compliance, support and oversight, access to lenders and fintech tools, and advice on marketing and branding among others.

Choosing to become an AR of a mortgage network seems to be growing in popularity among independent brokers. According to the latest Network League Table put together by Network Consulting (using data from the FCA register), there has been an influx of new firms joining mortgage networks in Q4 2023—the number of ARs across the main networks prevalent in mortgages increased by 110 during this quarter.

THE PROS

It is not hard to see why the AR route may be an appealing choice for new broker firms. Compared to the FCA direct authorisation process—which can take up to 12 months— becoming an AR can be a relatively fast affair, taking a few weeks to a few months at most. This

is the main reason for many brokers choosing this option, including Emma Ross, who set up her own firm Ross Commercial Finance after her previous tenure at a different brokerage. “It can take a long time to get directly authorised. Simply put, I couldn’t afford to not be income generating for that period.”

The other main reason for becoming an AR is compliance. Unlike DA firms, which have to ensure and prove they are fully compliant with the FCA rules and regulations, for ARs, this task is automatically passed on to the principal firm or mortgage network that has taken them on. “It’s like having an internal police force,” says Dave Symondson, founder and director at DevBrok. “The principal provides you with a proven, oven-ready deal process that the FCA is happy with, and you just have to follow that. There are certain things on every deal I have to go through— fact-finds, initial disclosure documents etc—and my file has to be checked by my network before a deal completes. Basically, this is making sure that if the FCA knocked on my network’s doors to do an audit, it’d be able to show that all the right things have been done—that’s what you’re paying for,” he explains. To Dave, having the principal broker handle all the compliance for his business on his behalf is not only more efficient cost wise but also gives him the peace of mind that everything is indeed up to standard

rather than having the stress of overseeing all compliance himself.

Other matters make becoming an AR more appealing, one of which is access to a wider range of finance providers. While most types of specialist finance are unregulated, lenders will often choose to work with FCA-authorised brokers, either because they have a regulated division or because they desire to work with well-respected intermediaries, which the FCA badge can evidence. Therefore, any independent brokerage that does not have this seal of approval or is not an AR may miss out on potential business or preferential rates.

“My business is entirely unregulated—I don’t do residential mortgages, just bridging, commercial and development finance. When I did try to get directly authorised, the FCA came back and said they don’t technically need to give me an FCA number because I don’t do regulated deals—however, a lot of BTL lenders want you to have that number. Because of that and because I didn’t want to do regulated finance just for the sake of it, I thought becoming an AR made more sense,” explains Shaz Ahmed, founder and director of Elan Property Finance.

This thought process was the same for Jasmine Ough and Michael Street, founders of Word On The Street, who decided on the AR route shortly after setting up the brokerage independently. “Becoming an AR gave us the ability to transact with lenders that we couldn’t at first and build our knowledge of them while simultaneously building our own brand,” says Jasmine.

Emma adds that being part of a big mortgage network that does a high volume of deals with lenders means finance providers are more open to providing higher procuration fees for their ARs that are under the network’s umbrella.

However, access to a wider range of lenders is not always guaranteed. Nathan notes that some AR firms may not be able to offer certain unregulated products as their principal firms might not have the right PI to cover these types of loans.

The other attraction of becoming an AR is the extensive support that a principal firm, particularly mortgage networks, can give. Many networks offer a range of advice, training

and education as well as access to technology, tools and sourcing systems that can boost the efficiency of brokerages. This is the main reason why Sarah Tucker, founder of The Mortgage Mum, decided to take the AR route, as she realised this extensive support would benefit the evolution of her brand. “Because of the way the business was going to be structured and modelled, I wanted further support. I was bringing in people who had never done mortgages before and I knew that I would be training them, and I felt that by becoming an AR, my brokers were also going to get additional support. Being part of a mortgage network has helped me grow my business and assisted me in training and levelling up my team throughout.”

The support that principals and networks offer can come in the form of encouragement, which Emma also values in her mortgage network, Synergy Commercial Finance. “What's really good about Synergy is it is all about trying to drive us to be the best, and they’re recognising and promoting us [ARs] as our own entities.”

THE CONS

While becoming an AR comes with perks, it also has its drawbacks. In order to have access to the extensive services offered by principals or mortgage networks, ARs have to pay. While each firm and network has its own pricing structure, brokers are required to pay a membership fee, which can be structured as an annual or monthly charge, and it includes a proportional cost associated with PI insurance.

On top of that, principals and mortgage networks generally take a percentage of an AR’s commission/procuration fee from the business completed by the broker. Again, each firm will have its own pricing, either per deal or per overall yearly business—however, based on his experience and conversations with other ARs, Dave estimates the amount retained by principals and mortgage networks to be 15%–30% of the procuration fee.

This is why both Dave and Shaz believe this route is not as cost-efficient for big firms with high business volumes and consider these companies might be better off becoming directly authorised. “It depends on how big you are or are planning to be. For example, if I earned £100,000 as an AR, I’d be paying £15,000 to the network, which wouldn’t be much different to what I’d pay for fees, PI cover and a compliance consultant as a DA firm—in fact, I’d argue the directly authorised route might cost me a bit more. However, if in five years I’ve got myself and nine other brokers earning £100,000 each, that’s £1m in total and, for me, that’d be the time when I’d be thinking about becoming directly authorised. For me,

it’s all about the size you’re planning to grow your business to,” Dave elaborates.

However, he clarifies that the circumstances and thresholds when a brokerage might be better off switching from AR to DA are different for each business and each individual—something Shaz and Sarah both agree with. “There is a certain point when going directly authorised is the best thing for a large company, but I wouldn’t necessarily say it’s black and white,” says Sarah.

FINDING THE RIGHT PRINCIPAL OR NETWORK

If you have decided that becoming an AR is the best step for you, it is important to understand that every principal firm and mortgage network is unique—finding the one that suits your particular needs is key.

For Dave, the experience of the principal firm/network and the income share were two important things that he looked at when choosing which firm to become an AR of. Another major factor he considered was the type of support each network was offering. “The network I was part of 13 or 14 months ago offered phone support given by someone in the office, which was great, but that person didn’t really do deals on a day-to-day basis—they were just an encyclopaedia of information. Meanwhile, the network I joined recently has a WhatsApp group with other advisers who are actively working in different areas so, if someone has a problem, they reach out. They’re all doing deals and they understand the pains,” says Dave.

Meanwhile, for Shaz, Sarah and for Sam Norris, founder and managing director of Grand Union Finance, partnering with a principal firm or network that truly understood their brands’ vision was essential. As social media interaction and education are fundamental elements of all three brokerages’ brand identities, Shaz, Sarah and Sam desired

to partner with firms that fully appreciated and supported this with no restrictions.

“I wanted to do things differently. I wanted to make everything online, virtually train people who were new to the industry, and service clients online rather than face to face. All of that was quite uncomfortable for networks at the time and most of them just weren’t interested,” recalls Sarah. “The reason why we picked our network, Mortgage Intelligence, is because the firm took a punt with us and was in line with our values. The team could see the vision and they were going to support me.”

For the three brokers, having almost complete independence was also important when considering which principal firm or network to join. “When you’re sitting under anyone, you’ve always got an element of control from that, and I wanted to eliminate that as much as possible. I was very lucky that I had a pre-existing relationship [with my network, City Finance Brokers], with whom we talked about being autonomous and doing things the way we wanted to, and it was happy to accommodate that,” says Sam.

Shaz also argues that the right principal or network for an AR is the one that understands the type of business the brokerage aims to conduct. “I’ve heard horror stories of people going to networks and being asked to do many letters and reports which are not relevant to the kind of business they’re doing. It was important that the network, whoever I joined, understood the unregulated business and the world that I live in.”

Regardless of what your needs are, Emma advises other brokers considering which principal or network to join as an AR and to speak to other people who are part of those firms to understand as much as possible about what they offer.

“There is a certain point when going DA is the best thing for a large company, but I wouldn’t necessarily say it’s black and white”

KNOW WHAT YOU WANT

Overall, there is no right or wrong way of setting up your own brokerage. Each path has its own pros and cons, and each brokerage will have a different roadmap.

However, one thing is for certain: before embarking on this journey and deciding which business trajectory may be best for you, it is essential that you consider your long-term ambitions for your brokerage and have the courage to take this step. “Don’t be put off

APPOINTED REPRESENTATIVE PROS

• Faster and easier set-up process

• Compliance handled by principal firm/network

• Access to wider lender network

• Additional training, tech and support from principal

CONS

• Less control over day-to-day r unning

• Membership fees

• Less commission earned per deal

by the layers that you need to go through to get started. Having your own brokerage isn’t for everybody as it can be lonely at the top, and lots of people miss being part of a bigger team and community once they take the leap. However, if you have that gut feeling and desire, you should absolutely listen to it, because that won’t go anywhere until the day you put your name above the door. If you have a vision and faith, you should build your business,” concludes Sarah.

DIRECTLY AUTHORISED PROS

• Full independence and control over business decisions and operation

• Full proc fee earned per deal

• Access to wider lender network

CONS

• Full responsibility over compliance and company insurance

• Full responsibility over admin costs

• Long and complicated application process

The 2024 UK Bridging Market Survey

Once again, Bridging and Commercial has teamed up with EY to exclusively reveal its seventh annual UK Bridging Market Survey. This report offers an in-depth analysis of the bridging industry and its performance over the past 12 months—highlighting the latest market trends and challenges experienced—as well as the top predictions for 2024, including how the upcoming general election will impact the sector and what firms have planned for the next 12 months in terms of business initiatives, lending changes, technology and ESG

Words by ANDREEA DULGHERU

Illustration by VALF

Who took part?

The survey had 39 participants—37 lenders and 2 brokers . The majority (54%) are based in London , while 20% are based in the South , 13% in the North , 8% in the Midlands , and 5% in other locations, such as Wales and Guernsey. 31% of businesses surveyed employ up to 10 people, while 43% have between 11-50 people, and 26% boast a team of over 50 employees.

What the bridging market looked like in 2023

The number of participating lenders lending over £100m per year has dropped to compared to 68% in last year’s survey

46%

67%

54% of businesses have seen an increase in profitability in 2023 compared to the previous year

of participating lenders have loan books of £100m or less, compared to 32% in last year’s survey

“Auction sales are increasingly popular in the current property climate as homeowners look for fast, simple ways to sell their houses. At the same time, bridging loans, which offer the speed and certainty of funds required in the purchase of an auction property, are also seeing a rise in demand”

Alex Araujo, partner, UK FS specialty finance strategy & transactions leader at EY

Funding models

Equity funded

Retail deposits

Principally funded (or own debt fund)

Forward flow arrangements/ correspondent lending programmes

HNW, private and family office money

Mix of different funding models

Other types of institutional funding

Senior and mezzanine (wholesale facilities)

Other significant highlights from the past 12 months

87% of lenders who responded cited average extension fee rate to have been between 1% - 3% · 87% claim the average monthly cost of origination over the past 12 months was between 1% - 2% · 69% reported either no significant change or a decrease in competition · 23% saw the average credit quality of loans decrease · 66% have noticed growth in the bridging market · 51% saw the cost of origination increase · Almost half of respondents (46%) saw a rise in the foreclosing of properties, increasing from 33% who saw a rise in last year’s survey · 95% of firms cited a protracted legal process as the biggest factor contributing to operational delays

Auction purchase was the second most popular reason for obtaining a bridging loan, cited by 19%

of respondents, compared to 7% last year

Refurbishment was still the most popular use for a bridging loan, while pre-development purchase was the least popular use once again

· Independent brokers remained the most important primary channel for bridging loan originations, cited by 60% of lenders who responded

· Speed of execution, the lender reputation and relationship management continued to be the top three most important qualities to a customer or broker when choosing a bridging lender

· Funding flexibility has fallen down on the priority list when choosing a bridging lender, only cited by 19% of respondents as the most important capability compared to 26% in last year’s survey

· Strong origination capabilities overtook strong relationships with brokers as the most important capability for a lender to stay successful—both remain the top picks, cited by over 70% of lenders who responded

Trends over the next 12 months

67%

of participants expect the bridging market to continue to grow (based on annual origination volume)

43%

of respondents expect average monthly interest rates to go down

39% of lenders who responded are looking to expand regionally, and 20% are considering international expansions

64%

of respondents intend to raise or refinance debt capital, while 39% are looking to raise equity capital

30%

of respondents expect higher interest rates to be the UK bridging market’s biggest challenge next year

The number of participating lenders interested in diversifying their products has jumped from 49% in 2022 to 70% in 2023

49%

of firms expect to see an increase in cost of originations

20%

72%

23%

of lenders who responded are contemplating regulated lending—almost double compared to last year’s report (7%)

of businesses predict the average credit quality of loans will remain unchanged

of firms think loan performance will be their most important challenge for their business

The number of participants considering M&A activity or selling their business has dropped to 28% and 8% respectively

“Looking ahead, while the macroeconomic environment remains challenging, falling inflation and expected cuts in interest rates this year should have a positive impact on market sentiment. Those firms that are well capitalised and have a clearly defined strategy are likely to benefit the most, attracting higher levels of lending business”

Alex Araujo, partner, UK FS specialty finance strategy & transactions leader at EY

“The research suggests that technology investment and product diversification have become higher priorities than green finance initiatives in the near-term for many firms. However, sustainability remains a strategic imperative for the longer-term, with most firms planning to implement or continue an ESG strategy”

Alex Araujo, partner, UK FS specialty finance strategy & transactions leader at EY

ESG

Green finance has become less of a priority for bridging lenders—only

13%

of finance providers who responded are considering green/sustainable finance in the next 12 months, compared to 42% in last year’s survey

24%

14%

of respondents plan to provide carbon offsets for their own direct corporate impact

intend to stress

test their portfolios based on their environmental impact

82%

of firms said they would not take part in lobbying activities to influence governments and policymakers for the property and finance industries

74%

of businesses will be implementing or continuing to implement an ESG strategy over the next 12 months

17%

of respondents are considering improving DE&I over the next 12 months

67%

of firms are looking to enhance their AML systems

Technology plans over the next 12 months

80%

56%

41%

of participants are using electronic signatures for legal documents

of firms believe the introduction of broker portals will significantly increase the volume and efficiency of business

“Technology-driven solutions are increasingly critical across the bridging market, aiding faster loan approvals, better risk management and improved loan underwriting through datadriven decision-making. A clear, outcome-focused technology strategy is key, particularly for those firms seeking M&A opportunities.”

Alex Araujo, partner, UK FS specialty finance strategy & transactions leader at EY

of lenders who responded are considering investing in technology—up from 58% revealed in the last report

44%

of businesses agree or strongly agree that open banking will significantly improve the efficiency of the origination and underwriting process — compared to 26% the previous survey

51%

of respondents agree or strongly agree that biometrics (facial recognition technology, etc.) will significantly improve the efficiency of the origination and underwriting process

33%

of respondents are using AVM technology

Impact of 2024 macro-outlook

53% of respondents believe the 2024 macro-outlook will impact the bridging finance market moderately or largely in a positive way · 66% predict borrower default rates will go up this year · 63% expect a rise in forbearance requests and 74% predict rises in foreclosures over the next 12 months · 84% expect loan extensions to increase this year

34%

of respondents believe the upcoming UK general election will negatively impact the UK bridging market to a moderate extent, while 37% believe the election will have no significant impact on the market and 24% believe it will have a moderately positive impact

79%

53%

expect average loan sizes to remain unchanged in 2024

believe origination volumes will rise this year

“An expected rise in forbearance requests means strong servicing capabilities will be key for the success of bridging lenders over the next 12 months, requiring them to balance the operational demands of asset management with a continued focus on origination growth”

89%

believe the average extension fee rates in the UK bridging market to remain between 1% - 3% over the next 12 months

Alex Araujo, partner, UK FS specialty finance strategy & transactions leader at EY

Bridging, Commercial, BTL and Development Finance

A broker’s essential guide to finding the right lender

Distributed to circa 4,000 brokers

Connecting brokers to lenders across the country

Scan the QR code for more information

Over 2,000 visits to the online versionmonthevery

From tea boy to industry titan

The chances that an impromptu job offer received while babysitting could put someone on the path to leading a multi-billion-pound division is slim— yet that’s exactly what happened to Together’s commercial CEO Marc Goldberg. On a bright Monday morning, Marc and I discuss climbing the company ladder, the power of mentoring, winning people over, and honesty as the best policy

Words by ANDREEA DULGHERU

Christian Faes

Marc Goldberg

“Humility, being honest and transparent with people and showing them that you don’t always get it right are good ways to earn respect from people”

espite having had an interest in property since he was a teenager, Marc never had a career in specialist finance on his radar when he was young. But a twist of fate set him on the journey to becoming the industry stalwart everyone knows him as. It all started one Sunday when Marc—then a part-time college student—was babysitting none other than Henry Moser’s children, when the offer to join the entrepreneur’s business as his apprentice arose, one that promised £65 a week and a company car.

“The car bit was what sold the job to me,” reminisces Marc. “All my friends had a car, but my mum and dad couldn’t afford to buy me one, so that’s what convinced me to join.” So, after quickly accepting the job, in 1989, Marc found himself working as an office junior at the firm’s first office, based in a mill in Ancoats, Manchester.

Marc vividly remembers his first day, sorting out documents in a cold, wooden filing room, as well as his first challenge— appeasing the strict office general manager Mary Lawson, or as he fondly calls her, “the

mother hen of the office”. “For the first two months, she hated me and I hated her but, every time she gave me difficult tasks, I just came back and asked for more—it was a fantastic learning curve for me. When she saw she wasn’t going to defeat me, she took me under her wing. She was an amazing lady who unfortunately passed away a few years later, but she was my first challenge in working life, and I learned how to win people over by delivering, no matter how difficult it was,” he recalls.

A LEAP OF FAITH

Marc’s career-defining moment at Together came a few years later, when he was working as an underwriter at the ripe old age of 18. In the middle of an office meeting, as the team was discussing which loans to take on, Marc chose to openly challenge Henry on a £15,000 loan application, for which the founder wanted to lend only £5,000. “I still remember the client—it was a nurse who wanted to challenge her dead husband’s will after he left all his estate to the nurse who looked after him. So, in front of the whole office, I told Henry I disagreed with his lending decision on that deal—his number two at the time was not happy with that.”

With a strong belief that this was a deal worth pursuing, Marc took a leap of faith and drove to Nottingham on a Saturday to speak to the client and check out the property’s valuation to get the full picture of the entire case, then returned to Henry to advocate for his client. “I told him I would lend my own money on this transaction, and he agreed to lend the £15,000, but told me that, if we lost any money, it would be coming out of my own pocket. The lady ended up winning the case so it was a good lending decision—my only regret is not asking Henry to get some of the profit if we made money on the deal,” smiles Marc.

Over the years, Marc has progressed to take on nearly every role within the business—jumping from an assistant fetching tea and coffee to being a driver, a processor, a collector and an underwriter, before moving on to running the sales, underwriting and lending divisions and becoming one of the youngest directors ever at Together.

One thing stayed the same, though: his desire to always go the extra mile for the business and do more than was asked of him.

“I used to do a lot of sign-ups, so I’d go around to people’s houses in the evenings to get them to sign loan agreements. I did that in my own time without getting paid for it because I felt that if I worked hard and demonstrated I was

good at my job, at some point there would be either a promotion or more money and it would further my career—and that is exactly what happened.”

With every new role he took, Marc absorbed everything there was to know about those jobs, and gained a deeper understanding of the business that has now been his home from home for more than 30 years.

MENTEE TO MENTOR

Nowadays, Marc—who has been Together’s commercial chief executive officer for several years—is known as a specialist finance titan and a deal wizard who is only a phone call away.

Looking back at his achievements and career evolution at Together, Marc credits his success, both at Together and in the specialist finance market, to the numerous mentors he has had throughout his working life. Chief among these are his father and Henry, both of whom taught him the value of customer service and instilled in him an exceptionally strong work ethic shown through their own work styles. “Henry is 74 and he’s still doing deals, recruiting people and sharing his knowledge and experience—if that’s what your 100% shareholder is still doing, then you feel compelled to do it yourself too. Everything comes from Henry, his hard work and his business ethic of putting the customer at the heart of everything we do at Together,” states Marc.

That being said, others also taught him a great deal over the years, including Colin Punshon, who was Henry’s senior in Marc’s early days, and Joe Shaol, who is still a non-executive director at Together. “Colin came into the business and transformed us—moved us out of the Ancoats mill, introduced me to lots of brokers, helped me design products and understand more about marketing, sales and process, and just overall guided me. He was the one who set me up to be the successful person I am today,” Marc elaborates. “Joe is another person who has helped guide and support me. He’s been with the business for over 25 years and been a trusted counsel; I hold him in the highest regard.”

One other person who has shaped Marc’s work ethic was his former life coach, who gave him one valuable piece of advice. This was to take five minutes before going to bed to think about the positive and negative things that happened in his meetings that day, and what he would do about these the next day. “I do that every day—I actually think about the meetings, what went really well and what didn’t, and what I could’ve

done about the latter. Sometimes, on the following day, I will get up and speak to whoever was in the meeting if I realise there’s a better way to do things or if I actually got it wrong. Humility, being honest and transparent with people and showing them that you don’t always get it right are good ways to earn respect from people.”

Marc also set himself his own personal challenge to make three business calls every day to people (such as clients or brokers) he has not spoken to in the past couple of weeks to check in on them, talk about the marketplace or potentially arrange new deals. He also believes it’s incredibly important to return every phone call received. “If I have five missed calls, I’ll always ring back the number I don’t recognise first, because that one could be a new business opportunity,” he explains. “You also have to think about everyone’s needs, those of our customers, colleagues, business partners and Together as an organisation. It’s important to regularly speak to people to get feedback and find out how we can help.”

All these lessons that Marc has learned over the years have shaped him into the businessman he is now. Knowing full well the power of mentoring, he is determined to pay this back to others, hence why he is heavily involved in Together’s graduate and apprenticeship schemes, which have seen current colleagues rise from graduate positions to senior roles, like chief commercial officer. The longevity of many Together employees' careers is testament to the business’ dedication to nurture its staff, with 256 colleagues having worked for the business for five years or more.

Marc personally is always willing to mentor the younger generations and share his own journey to inspire others. “Henry put a lot of time and effort into me, which is why I do the same for our colleagues and why I take a lot of young people out to internal meetings and client appointments. We invest a lot in graduates and apprentices, and I genuinely love seeing them succeed.”

PEAKS AND TROUGHS

Since Marc joined Together in its early stages of the business, they have had a symbiotic evolution. Since its official launch in 1974, the specialist lender has grown from a one-man operation that started off with a £1,000 car loan to an over 750-employee behemoth, boasting a £6.8bn loan book, an average monthly lending figure of £250m–£300m, and over £20bn lent across 239,000 transactions. The business has also relocated from a tired office, Bracken House in Manchester, to

“I’ve always put the customer at the heart of everything that I’ve done, and I think that’s helped me build respect. After all, you can’t buy respect—you have to earn it”

“I want to continue doing the things I’m very good at, and pass my knowledge to the new people who are coming through the business, so they can carry on the great work that Henry and I have done”

its current Cheadle headquarters in 2012, and has gone through a rebrand in 2015, which brought together 25 separate companies under the same umbrella—a key milestone that “put Together on the map” according to Marc.

While the lender’s growth to date is very impressive, that’s not to say Together hasn’t had any bumps in its long journey. For Marc—and for the business as well—two times stand out as having been particularly tough: the 2008 global financial crisis and the Covid-19 pandemic in 2020.

Marc vividly remembers the financial crash and its impact on the business. “It was a challenging time—we had a lot of losses and issues to deal with. Many of our funders were asking more questions about what we were doing and how we were treating customers in arrears—who obviously increased in number—but we got through that time and learned a lot. It was a defining moment for us because a lot of people saw the strength of Together passing through the recession still lending, and it helped us understand more about what we wanted to be and how we could tighten up our lending criteria to make us a better business,” he elaborates.

More than a decade later, the Covid-19 pandemic and the lockdowns came as a big shock to the market and to both the specialist lender and Marc himself. Although investment in technology allowed Together’s colleagues to work from home, the specialist lender had to make some tough decisions to keep the business afloat, including temporarily halting new lending and making around 200 people redundant—a decision that still weighs heavily on Marc. “We are like a family here, we are all on first-name terms and we genuinely care, so to make this decision was very difficult,” he says. “The pandemic was something that no one had come across before, and there were days when we thought the business wouldn’t survive.”

For Marc personally, the pandemic gave him a major career lesson in how to navigate tough times, and the value of honesty and transparency with everyone—clients, work colleagues and funders. “Dealing with matters head-on is the best way of handling them— there’s no point burying your head in the sand. I run my life with honesty and transparency, and I think a lot of people respect that.”

Despite the numerous difficulties the pandemic brought, Together made it through, slowly but steadily growing its lending performance back to its former glory and beyond. “Last month, we did 1,125 transactions—so nearly 52 deals a day. To get from the pandemic to being a firm that constantly lends over £100m in bridging alone is pretty amazing.”

CRITICAL FEEDBACK SOUGHT

This resilience during the pandemic and the overall success throughout Together’s 50-year history are all thanks to its customer-centric approach, and its constant focus on improving its service, Marc believes.

“When we get ratings, I only look at the ones with three stars and below. I want real feedback about our business and processes in order to help us become a better lender. I strongly believe customer service, and collaboration between the lender and the client is critical to the success of your business. I’ve always put the customer at the heart of everything that I've done, and I think that's helped me build respect. After all, you can't buy respect—you have to earn it.”

THE NEXT 50 YEARS

Fifty years in business is definitely no small feat, and not something a lot of companies can brag about—however, for Together, this is just the first half of its 100-year plan to become the most valued lender in the UK. Looking ahead, the business has major plans, one of which is to hit an average monthly lending figure of minimum £150m in bridging finance alone. Not only that, but the firm has already set out its intentions to invest £50m over the next 18 months in overhauling its entire tech system to further improve its lending service. “In the first- and second-charge and the BTL sectors, we've got such a small market share, so there's a huge amount of growth for us. I think we could grow to £300m of lending per month—but where could we go after that? We could hit £500m or even £1bn a month. With the knowledge and experience, the people and technology that we have, we will grow.”

As for Marc’s own goals, he is fully dedicated to supporting the entire Together team, and mentor the next generation to take over the business and bring it to new heights. “I want to continue doing the things I’m very good at, and pass my knowledge to the new people who are coming through the business, so they can carry on the great work that Henry and I have done. Experts are the people who can help you run your business—but mix that with the graduates and apprentices because they are the future. So, if anyone wants my chair, I’m keeping it warm for them.”

When opportunity knocks, our door is always open.

Common sense lending.

Opening doors since 1974. togethermoney.com/intermediaries

‘For me, law was always the way’

JULIET BABOOLAL

In January this year, Gunnercooke welcomed its latest partner to the team—none other than prominent real estate finance lawyer Juliet Baboolal. We take a trip down memory lane to find out what inspired her to take this career path, her advice for aspiring lawyers—and how a legal route can take you anywhere

Words by ANDREEA DULGHERU

After qualifying as a lawyer in Trinidad and Tobago in 2003, Juliet Baboolal took a leap of faith and moved to London for a new adventure. Despite hitting a few bumps on her road to get her qualification in the UK, Juliet persistently refused to take no for an answer and persevered. Fastforward to the present, Juliet is a partner at Gunnercooke, drawing on more than two decades of legal experience in the real estate, development and finance industries to help her numerous clients, while also being a role model for women in finance—showcasing that anything is possible if you put your mind to it.

What exactly attracted you to pursue a career in law?

I always believed in justice and wanted to help people, plus I loved public speaking. I also grew up in a family that was involved in politics. It was either law or medicine, but I was more inclined to do something that was word related rather than science based, so for me, law was always the way.

What prompted you to move from Trinidad and Tobago to the UK?

My great-grandfather was Scottish but since I wasn’t Scottish qualified, so I decided to give England a try to get requalified and to find my roots. I passed my exams in Trinidad on a Tuesday, and then I was on a plane to the UK the next day.

As I didn’t have a husband, children or any commitments, I planned to stay here for maybe two years then go back to Trinidad—I was accustomed to 365 days of summer and sunshine, not this UK weather [laughs]. But you know the saying: life is what happens when you’re busy making other plans. I met my husband, who’s Italian, and because at the time he had elderly parents, we needed to be close by. So we were going to stay in the UK or go to Italy, and we chose to stay here.

How difficult did you find it to adapt to working in the UK, and what are the differences between practising law here and in Trinidad?

There definitely was a shock. The legal system in the West Indies is all based on the laws in England and Wales anyway so, in terms of that, it was relatively easy. But in Trinidad, I would have had more connections and more doors open to me. There was none of that here. I didn’t know anyone so I started from ground zero; it was quite difficult. But I persevered and I always did something to enhance my knowledge and skills, which helped and the doors opened.

That said, the systems in place are different. For example, in the West Indies, you find that people graduate law school and may just start their own law firm with very little money. Here, if you were to do that, you’d have to ensure that you could afford the premiums on the professional indemnity insurance, and there would be a lot more rules and regulations.

There’s also a big difference between the role of a lawyer here and in the West Indies. There, you qualify as an attorney at law and have rights of audience at the Privy Council—the final court of appeal. There is no distinction between a solicitor and a barrister as there is here in England. In Trinidad, I trained with the Attorney General and did a lot of crime and corporate fraud cases. I spent days going into prisons or court to see prisoners who had committed high-level crimes, such as murders. Over there, you’ll often find people who have both civil and criminal law experience, but here in the UK, you get pigeonholed into one area of law and that’s all you do for the rest of your time—to change from one area of law to another is very difficult in England.

What were the biggest challenges you’ve had to overcome throughout your career?

In 2008, I was made redundant—that was a challenge because my heart and my soul go into my profession. I felt like I didn't have a personal identity outside of law, so it left my confidence a bit shattered. But I told myself this was just another stumbling block in the road, and that I had to reroute where I'm going to. So I applied for other jobs and then, after about two weeks, the company said the redundancy didn’t apply anymore. It was a very difficult two-week period, but it was a learning curve and it happened for a reason—that was the universe’s way of giving me a bit of a break in that period. Often I say to people, we’re like hamsters on a wheel and if you don’t pause to ask yourself where you are heading and where you want to be, years can pass without reaching your destination. Sometimes, that little pause is because God or the universe is looking out for us. Shortly after this break, I wrote a book called ‘My Redundancy Discovery’ to help people with affirmations and being in the right mindset because that's what I felt helped me, so that was something positive that came out of a hurdle, which was the biggest thing for me.

Another challenge was the Master’s degree, for which I had to write this 30,000-word dissertation and attend these classes while also working full time. That balancing act between education and work was quite difficult.

What would you consider your biggest career achievements to date?

Being one of the youngest qualified lawyers at the age of 23 was a big achievement, and so were surviving in England without any relatives or any help, getting my Master’s degree and writing my book. Training clients is also an achievement for me, as is being featured in magazines and having that legal presence in leading forums.

What is something the industry doesn’t know about you?

I own and run an Italian restaurant in north London with my husband and, as part of that, I tend to get involved in a lot of charity activities where I feed people in need. I’m also working on a perfume line at the moment, called ‘Overcomer’ —I chose this name because

it suggests you’ve won. All the other fragrances out there are about being sexy for a man, but what about our minds? So I wanted to make something that symbolises mental strength and tenacity. Women have been given a script for too long to play the role of the underdog so, for me, this perfume is all about showing women that you can get there if that’s where you want to go.

What would you say is the characteristic that defines a highquality lawyer?

A good lawyer is a person who understands their clients’ requirements and transactions, and is able to convey the essence of said transaction to their customers, while also being able to take control and orchestrate all the moving parts to get to the ultimate goal, which, in my case, is to draw down the

monies for a borrower. Having those soft skills, understanding that certain things are sensitive, trying to sniff out issues up front and finding solutions for those problems—all these make a good lawyer in this field, as do being quick to respond, understanding the time frames that are involved in the work and keeping the momentum on a deal alive.

How do you think the legal landscape has changed over the years?

Society has changed since Covid-19 and the law has kept up with the times. Back in the day, when I first qualified, there wasn’t such a thing as advising people on Zoom or virtually watching someone sign a legal charge with the witness physically next to them. Also in the olden days, you’d have to wait for paper files to come in the post, whereas now you can have dozens of documents sent

“A GOOD LAWYER IS A PERSON WHO UNDERSTANDS THEIR CLIENTS’ REQUIREMENTS AND TRANSACTIONS, AND IS ABLE TO CONVEY THE ESSENCE OF SAID TRANSACTION TO THEIR CUSTOMERS, WHILE ALSO BEING ABLE TO TAKE CONTROL AND ORCHESTRATE ALL THE MOVING PARTS TO GET TO THE ULTIMATE GOAL”

to your inbox, and the expectation is that you’ll deal with them before close of play that afternoon. So the risk of an application getting lost in the post is reduced, but there’s also the added pressure of completing tasks faster, which is a challenge.

We’ve tried to make things easier but, in doing so, we also have to be less risk averse—so that means having a lot of fraud prevention measures because fraudsters are getting cleverer, and that’s where the legislation has tightened up.

What advice would you give people who are looking to pursue a career in specialist finance law?

I would advise them to find a good mentor, so that they can do some shadowing before getting involved and invested. It’s also important to work out if this is something you really want. One of the first bits of advice I got was to not watch law TV programmes because they glamorise what the profession stands for. You mustn’t base your decision on that;

you must be really practical and do your research first. The beautiful thing about law is that it gives you foundational knowledge for life, because every single area of life is governed by a law—no other profession gives you that skill set. It is an excellent career, but you have to do your research before you actually commit to law.

“THE BEAUTIFUL THING ABOUT LAW IS THAT IT GIVES YOU FOUNDATIONAL KNOWLEDGE FOR LIFE, BECAUSE EVERY SINGLE AREA OF LIFE IS GOVERNED BY A LAW—NO OTHER PROFESSION GIVES YOU THAT SKILL SET. IT IS AN EXCELLENT CAREER, BUT YOU HAVE TO DO YOUR RESEARCH BEFORE YOU ACTUALLY COMMIT TO LAW”

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Words by ANDREEA DULGHERU

The

blame game who’s at fault for transaction delays?

For years, specialist finance experts have had a consistent complaint: transaction delays. Many claim bridging deals are taking longer and longer to get done, and the latest Bridging Trends report shows that the average completion time has reached 58 days, a whopping 24 more days than in 2015, when the report was first issued.

This same topic has bred discord among the various parties involved in these transactions, each passing blame onto each other like a game of hot potato. Yet one party seems to bear the brunt of it: lawyers.

We gathered experts from five law firms— Juliet Baboolal, partner at Gunnercooke; Jodi Lund, head of real estate finance at JMW; Laura Brown, partner at Memery Crystal; Ranjeev Kumar, partner at TLT LLP; and Ashkan Nejad, head of real estate finance at Ackroyd Legal—to get the legal lowdown, dispel misconceptions and get to the root of the problem.

Andreea Dulgheru: Have you seen any delays in specialist finance transactions over the past 12 months and, if so, how much of a delay have you noticed overall?

Ranjeev Kumar: There are typically three types of delays: when getting the transaction started, during the transaction, and post completion. In terms of delays in getting deals started, yes, we have experienced that. We’ve seen term sheets come through and quotes being accepted but, after that, it takes a while for the parties to instruct lawyers to get documents out and get working. That may be in part due to what lenders are doing behind the scenes or have something to do with the initial verification and due diligence processes.

Jodi Lund: Yes, I think that might be linked to valuations as well, because sometimes you've got your term sheet but some vendors might not issue the valuation at that point. A lot of borrowers are waiting to receive that before they instruct their own solicitor or, if it’s dual representation, to instruct us. I'm not piling this on valuers by any means—valuers and solicitors get a bit of a bad reputation in terms of delays—but I think that borrowers are more cautious now and waiting for those valuations because they've fluctuated in recent years.

Juliet Baboolal: Yes, I agree. And, by extension, we work on undertakings so, if there's a delay on the cost undertaking because the borrower is being cautious, then there’ll be a delay to the start process for the legals. It has a knock-on effect because there are so many moving parts of the transaction but what tends to happen is we get the blame. I saw a LinkedIn post the other day saying “Time kills deals”, and someone commented “and solicitors” underneath the post. That's just typical. What we’re also seeing are delays because of the Land Registry. People think expediting an application is a secret tool, but it doesn't work any magic; you're just in a pile of other applications to be expedited. The Land Registry seems to be continuously understaffed and that’s been a problem across the board, but that is not within our control.

Laura Brown: In my view, the legal process hasn’t changed; other factors cause these delays. At the moment, I'm having to revisit finance documents numerous times on transactions because the valuation is late in being instructed or the property has been down valued and terms then have to be modified, which delays the process. This doesn’t have anything to do with legals.

AD: Regarding the Land Registry lags, has this always been the case or is this a recent development?

Ashkan Nejad: Since the stamp duty holiday and then Covid-19, there’s just been an influx of pending applications. And there is a shortage of staff in general. Combine the two, and the result is delay, unfortunately. It’s not all doom though—I have made some AP1 applications [used to change the register for a property] and they've been returned within a week or two, but there’s just no consistency at the moment. I think they are trying to improve their services, but this is happening slowly.

JB: I think they're just short-staffed. And the reality is, the applications that get pushed through quicker are the easier ones. There's no chance that a TP1 [part transfer of a registered title], where you might have some sort of map search needing to be carried out, will be done even in a couple of months. I've been waiting three years on some TP1s to get registered. The Land Registry is short-staffed and they don't work fulltime—I was told case workers tend to work on Mondays and Wednesdays, so the case worker in charge of something won't pick it up until the next week. We’ve got electronic submissions of AP1 forms and other electronic data, which have certainly helped, but the Land Registry needs to do something about its staffing and processes.

“I understand that the Land Registry is indemnifying a lot, so I get that they’ve got to be very cautious in what they’re doing, but it does, inevitably, cause delays within our legal process”

JL: I understand that the Land Registry is indemnifying a lot, so I get that they've got to be very cautious in what they're doing, but it does, inevitably, cause delays within our legal process. What Laura said is right: the legal process hasn't changed—we’re working within what is, essentially, an archaic system. We can wrap tech around it and streamline things as much as we can in terms of operations and processes but, ultimately, property law is no different now to what it was 100 years ago. Unless we go absolutely radical and get rid of covenants and use blanket indemnity, there's still a process that needs to be followed.

JB: On that point, bridging transactions are becoming more complicated. For example, we’re now looking at development exits where you have to look at not only often quite complicated titles but also planning permissions, section 106 agreements, build liability, new-build warranties etc. All of that is incredibly time consuming, particularly when you're looking at larger development sites that might have multiple planning permissions. If you receive access to a data room on a Thursday and there are 300 documents to review, you're not going to get a list of enquiries out on the Friday—it’s completely unrealistic. As lawyers, we have our practising certificates to think of, so we are honour-bound to review those documents properly for our own sakes, and also to protect our client.

RK: It’s really important for us, as a group and profession, to dispel the myth that we have any material control over the Land Registry and/or HMRC. A lot of clients do still believe that we’ve got some sway when it comes to the Land Registry. While we can respond to requisitions, ask for an application to be expedited etc, the Land Registry does its own thing and it’s got its own processes and procedures. Having that wrong narrative be perpetuated, much like Juliet was saying when she looked at some comments on a LinkedIn post, is not helping. It really is the case that we don’t have control over these independent third parties at all.

AD: You’ve also mentioned that valuations slow things down in transactions—what exactly is the issue with them?

JB: From a practical perspective, valuers may not be able to just go on site at the whim of a call or an instruction because there's a whole backlog of other valuations that need to be done, which means that particular one might get pushed back. Also, a lot of people don't realise that the valuers have gotten a lot of flak from their professional indemnity (PI) insurers because they’re so exposed in terms of lenders looking to underwrite their losses using the valuers’ PI policies—so they're erring on the side of caution. When valuations come back, properties are down valued because they've been told by their PI insurers to do that. The reality is that we’re seeing a lot of that, but it’s to be expected because they’re looking to protect themselves from overexposure. The other thing I'm seeing with valuers is that the instruction letter that lenders tend to send out is being redacted a lot by the PI insurers to reduce the exposure that the valuers have. Historically, we haven't seen that but, because of the spate of valuer claims that have been made in recent times, I just think they are erring on the side of caution.

JL: That then has a knock-on effect on borrower and lender confidence, in terms of getting cracking on a transaction. Before, if you’d got a DIP or equivalent from a lender, people were happy to start work and pledge costs to take certain actions. Now there’s uncertainty, which gives you that initial lag. I do think that, generally, delays are subjective. Delays on a very straightforward linear remortgage and those on a development exit loan with a title split, planning and other issues are two very different things—you can't compare the two. A lot of the time, there’s this perception that everything falls into a black hole at legals but, in reality, you’ve got to really dig deep into the different transaction types and the reasons for delays, rather than just assume it’s all due to legals.

AD: Do you think the overall lending process is becoming bogged down by paperwork and unnecessary steps that slow down everything else, including legals?

AN: I personally think it just stems down to the borrower. If you've got a motivated client, they’ll be sharp and on the ball in terms of paying for the valuation, getting a solicitor involved and undertaking costs. I think lenders are willing to work with the motivated borrowers, and everything else gets streamlined once that is ticked off. Meanwhile, you've got other borrowers who want to take a bit of time because they're more cautious; they want to know how it might be playing out.

RK: It all starts with a well-drafted term sheet that covers the principal points well. A badly drafted term sheet does have significant consequences and can raise a lot of issues going forward—the transaction may even have to go back to credit. Lawyers typically want commercial terms to be agreed in advance so we can document them easily without having to refer back to clients and so on. Everything starts with a good development appraisal and term sheet.

AD: How much do brokers contribute to transaction delays?

JB: The broker plays a huge role because they are the middleman facilitating the relationship between the lender and the borrower. If the broker isn't being transparent upfront—whether knowingly or not—that’s going to cause delays. Let’s say, for example, that a borrower’s equity is coming from a gift from the parents. If we’re told this only the day before loan drawdown, the lawyers are going to want a deed of gift, which will slow things down. The message that’s going to be sent is that the lawyers have asked for another thing when, in fact, the feeding of information was delayed to us when the broker could have sent that information upfront. There is this blame culture with transactional work. Yes, sometimes things get delayed at legals but, in reality, that can be a result of brokers not feeding the information down the chain from day one or when they get that information. The broker has a big role to play in all of this.

RK: Yes, a broker can act as a very useful middleman to manage expectations, communicate quite clearly where the issues are and so on. I think problems can arise when brokers set or communicate unrealistic expectations between the parties, and when brokers require the lawyers to report to them. If you're taking three calls a day from a broker to explain where the transaction is, that's an hour you're not spending on the deal itself. In this case, as a lawyer, not only are you communicating with the other side’s solicitors, but you're also responding to your client and to a third person—all of that takes time. Good brokers with experience work very well, they package the deal together, they let the lawyers do their job and they understand many of the common issues which arise. Others, perhaps less experienced ones, will try to get involved in a transaction but, frankly, without a good grasp of the process and fundamentals, may act as impediments to getting the deal done and slow down the process.

JL: A good broker will make all the difference, because they’ll help the transaction along. The less experienced specialist finance intermediaries might see our requirements as polite requests, whereas the good ones will just get on with what we’ve asked for and not challenge them. We’re not sitting here making spurious requests for information, we don't want to do more than we have to—what we’ve asked for is what we need. The brokers who understand this can really help.

“We can wrap tech around it and streamline things as much as we can in terms of operations and processes but, ultimately, property law is no different now to what it was 100 years ago. Unless we go absolutely radical and get rid of covenants and use blanket indemnity, there’s still a process that needs to be followed”

RK: We do appreciate that brokers get paid on completion; that fact is never lost on us. But we’re not eating anyone else’s lunch here— we’re trying to get it done for everyone.

JL: But, equally, we don't get paid until completion so we’re just as focused on getting the deals across the line as they are, and I think sometimes that's missed.

JB: Indeed, we all have a common objective. It’s not in our interest to slow a deal down or to have it aborted—we want to get paid just as much as the next person. But, while the broker’s out of the game after they get their commission, the lawyer’s PI insurance is at risk for the next six years after we’ve completed, so we’ve got to protect ourselves and our client.

“If the borrower tries to pinch on fees and goes to a solicitor who doesn’t know what they’re doing, that can be problematic”

LB: Speaking of being paid, fees play such an integral part in this. With lawyers, you get what you pay for. Unfortunately at the minute, lawyers are constantly being squeezed on fees. The broker, borrower or lender may want a transaction to be partner-led but the economics just don’t work, so they end up with very junior lawyers handling a complex transaction which leads to delays.

RK: Yes, that is true. There’s no substitute for experience. An experienced lawyer will arguably have a toolkit of solutions for pretty much any problem that might occur and be able to readily fix it. I suspect that a lot of transactions do get stuck because a junior or inexperienced lawyer may not be able to progress the file as quickly as possible due to a problem that might seem insurmountable to them, which in turn gets the client worried that it might be a huge issue. Meanwhile, an experienced lawyer will have seen most things and will be able to at least propose a workable solution. If you're nickelling and diming people over fees, that's potentially going to lead to delays, and then you may find yourself four weeks in without having instructed a solicitor or sitting on an issue for two or three weeks longer than needed.

JB: Yes, if the borrower tries to pinch on fees and goes to a solicitor who doesn't know what they’re doing, that can be problematic. It may also mean that if you’re hand-holding the borrower’s solicitor, your costs are going to increase because you're spending that much more time. The borrower may have a really small deal, but the costs will not be proportionate to the loan size because you're spending that much time spoon-feeding their solicitor, as they don't know what they're doing. It’s really important that borrowers choose the right lawyers as well.

LB: I think borrowers tend to go to their local conveyancer because it is cheaper. The problem is that conveyancing departments won't admit that they don't have the necessary expertise to deal with some of the difficulties that can surround commercial finance.

JL: Absolutely! I think there's been lots of talk recently about lenders having a preferred borrowers’ solicitors panel, which has always been a bit difficult because everybody has freedom of choice, so they can't really push people down that road. But it’s a thing that is being discussed because some of the borrowers’ lawyers that we encounter just aren't equipped to deal with this sort of transaction.

“There is this blame culture with transactional work. Yes, sometimes things get delayed at legals but, in reality, that can be a result of brokers not feeding the information down the chain from day one or when they get that information. The broker has a big role to play in all of this”

AN: I'm 100% for that. I think we’ve all experienced the pain of having a conveyancer on the other side acting as borrower’s solicitor and trying to get information out of them—it’s like getting blood from a stone. I know there are talks in the market about lenders potentially having a recommended panel, and I'm all for that. You can't force anyone to use a specific solicitor or firm, but I think this is the future, from my personal stance on it.

RK: Yes, I think I’d much prefer this over dual representation. We often get asked about dual rep, and then we have to go to the insurer, who says absolutely not unless the transaction is completely standard form and non-negotiable, and everyone knows what they’re doing. Personally, I like to steer away from dual rep if I can.

“It’s not in our interest to slow a deal down or to have it aborted—we want to get paid just as much as the next person. But, while the broker’s out of the game after they get their commission, our PI insurance is at risk for the next six years after we’ve completed, so we’ve got to protect ourselves and our client”

LB: Dual rep can be very dangerous.

JL: I know exactly what you’re talking about here. There are specialist lenders and challenger banks out there where dual rep might be appropriate if the deal is relatively vanilla and everything is agreed and non-negotiable. But if you get into the more specialist side of things, then absolutely not.

LB: Perhaps on regulated transactions where a borrower is purchasing a flat to live in, but for anything in the unregulated space, commercial investment, development deals etc, it’s not appropriate to use dual rep.

AD: What exactly are the dangers of using dual rep for these complex, unregulated cases?

JL: It’s a negotiation point, really. A lot of specialist lenders in this sphere don’t necessarily have a standard set of documentation or terms. They’ll issue a set of terms but, potentially, there's that ability to negotiate those and, at that point, how can you act in the best interests of your borrower and your lender clients? Short-term finance, by nature, is expensive, complex and variable. There is the possibility that a matter could end up in a conflict situation because of the nature of it. That's why earlier I mentioned looking at certain scenarios. It is possible—but not at the more complex end in the unregulated market.

LB: And if a conflict arises during the course of a transaction, then you have to stop acting, which causes further delays as the borrower and lender have to instruct new lawyers, who then have to get up to speed with the file.

JL: And then we’re back in delay territory, aren’t we?

JB: We’re also potentially in breach of the Solicitors Regulation Authority objectives, so it’s just not worth it. We worked so hard for our practising certificates; there’s just no point doing something silly to lose them.

RK: It goes back to being a false economy. Often, the question of dual rep doesn't arise because a structure is capable of supporting that—it starts with the question: “Can we save on fees here and shave something off the bottom line?”, which I don’t think is necessarily the right way of approaching a discussion on dual rep.

LB: And you may end up paying double the fees if a conflict arises during a transaction. It just doesn’t work.

AD: Beyond borrowers trying to cut corners on costs, do you think another reason why they might make the wrong choice is because there are not enough knowledgeable specialist lawyers who can deal with these complex transactions?

LB: I don’t think there is a lack of quality. I think it’s simply that borrowers are driven by cost so, rather than instructing the best for the job, they instruct the cheapest. It usually turns out to be a false economy.

JB: It may be a lack of knowledge on the borrower’s part—not knowing that you need a specific lawyer. For example, you've got a client who’s purchased a property using a conveyancer, but they are now going for development finance. The lender’s going to want construction security, so that borrower needs a construction lawyer or a solicitor with knowledge of construction work, which the conveyancer might not have. So it’s up to the conveyancer to guide the borrower to whomever the next professional adviser should be.

AD: What exactly should borrowers look for in a solicitor to ensure they are well equipped to handle these deals and prevent legal delays?

LB: Previous experience. They should also look at the nature of the transaction. If it’s a development transaction, for example, they might need to involve construction or planning lawyers. The lenders and brokers can't dictate who the borrowers use, but they can certainly recommend lawyers if that's what is asked of them. It goes back to open communication and having those conversations at the outset so that borrowers make the right decisions early on.

JB: Indeed. A newbie borrower might be the one struggling to find the right representation, whereas a seasoned client has their team in place, and they know exactly what they’re doing. The education and knowledge need to be shared with newbie developers and borrowers.

LB: I agree. Ironically, the larger, more complicated transactions are often the ones that progress to completion the quickest because they have more sophisticated teams involved.

AD: If a case involves a newbie borrower, is it their responsibility to educate themselves on what the transaction involves and everything they need to know or does that onus fall on the people advising them?

JL: In my opinion, brokers are perfectly placed to do this because they are often the first point of call and contact, and the liaison between borrower and lender. If you’ve got a broker who deals with specialist finance and with the same lenders on repeat, they're going to be aware of what the requirements are. If they fully understand the deal, they can advise a borrower on which lawyer firm to speak to. Yes, everyone’s got freedom of choice, but they are very well placed to give recommendations.

JB: You’d also expect the lawyer the borrower is instructing to suggest other options if they don’t have the experience for that deal, and to not accept an instruction for something they haven’t done before. There should be some level of responsibility on the part of the lawyer they're appointing to let the borrower know if this is outside their remit.

RK: Yes, but sadly that’s not the case. I think people just take on the jobs and think they can muddle their way through it and see what happens—and, if there's a problem, they’ll just complain to the client that it’s the other side’s fault, which obviously doesn't help anyone. In theory, they should be passing the file on to somebody who can do the job.

“If an inexperienced borrower who’s not aware of the processes and how things need to be played out is coming into the game, I think it’s our duty as solicitors to pick up the phone and call, just to explain in layman’s terms and educate them on what needs to be done”

AN: I think communication is key here as well. If an inexperienced borrower who’s not aware of the processes and how things need to be played out is coming into the game, I think it’s our duty as solicitors to pick up the phone and call, just to explain in layman’s terms and educate them on what needs to be done. I think it goes hand in hand with the broker’s duty, as well, just to assist and feed the information on.

AD: Why do you think lawyers who may not have that knowledge to deal with complex cases still go for it?

LB: Embarrassment. They don’t want to admit that they can’t tackle certain types of transactions.

JB: They might just think it’s property law and they can just plough through. It boils down to a lack of knowledge—they're not aware of what they don't know and, because of that ignorance, they accept the instruction. Then, later down the chain, they realise the case is beyond them and may need to cease acting which, again, results in further costs and delays for their client.

RK: I think it’s also a desire to keep a relationship going with a client, despite the borrower having outgrown that relationship. You do see that in terms of lawyers taking on jobs that may not be appropriate for their experience just because they want to hang in there for as long as they can and get the job done, but not necessarily improve the quality of experience for their client. There could be a variety of reasons. Some clients suffer from inertia as well—the incumbent law firm is often preferred to anyone else who’s coming in.

AD: Do you think there should be more supervision or regulation to prevent issues arising from less experienced solicitors acting for borrowers on complex deals?

JL: I think that should be the responsibility of the firms that are looking at these deals. We’ve all got responsibilities to do risk assessments, whether that's at quote stage or if a client goes to instructions. It’s no different for borrowers’ solicitors—they should be looking at the types of deals that are coming through their door and deciding whether they've got the expertise within that firm to deal with it.

“It’s all about getting that balance between making sure you’ve got clear communication without overkill. If you’ve got a broker ringing you three times a day, you’re not getting on with the job”

JB: I know there are some lenders that blacklist lawyers, so if a borrower comes in and says they’ll use a firm the lender has banned, it’s an absolute no-no. However, because consumers have the freedom to choose who they want to represent them, it’s very difficult to police that.

AD: You mentioned before that communication is key. How often do you see breaks in communication, and whose fault is it normally?

RK: It can happen if an inexperienced lawyer is sitting on something and not communicating the issue properly to a client. Communication issues can also arise when a lender is potentially reassessing an application and not informing the solicitor. The line of communication has to be clear, transparent and very regular, so we all know exactly what we’re doing and we can then work with some speed as well.

LB: We’re often unfairly blamed for raising issues towards the end of a transaction, but the nature of how information is fed to us means that this may be the earliest opportunity that we have to raise that issue. We don't tend to receive the full property pack on day one—we receive it piecemeal over the course of a transaction. There may, for example, be an issue that arises at the 11th hour and it is therefore at that 11th hour that we must communicate that issue to all parties. Open dialogue throughout transactions garners respect which helps enormously where issues do arise late in a transaction, and it may even prevent the blame game being played.

“We’re often unfairly blamed for raising issues towards the end of a transaction, but the nature of how information is fed to lenders’ lawyers means that may be the earliest opportunity that we have to raise that issue with the broker and lender. We don’t receive the full property pack on day one— we receive it piecemeal during the course of a transaction”

JL: It’s all about getting that balance between making sure you’ve got clear communication without overkill. Like Ranjeev said earlier, if you've got a broker ringing you three times a day, you're not getting on with the job. With some people, no matter how much you update them, they will still want more. It’s just finding that balance. Relationships are key to that—once you've got a good relationship with a lender, broker etc, that helps because they then trust that you are getting on with things, and you’ll update everyone at the appropriate time. It also stops costs running away with you. The end of a complex deal might warrant multiple talks or a conference call in an afternoon but, when it’s a fairly standard deal, you've got to be a bit proportionate.

AD: In your view, what is one key thing that needs to be changed in the specialist finance transaction process to ensure legal delays will likely not happen?

RK: I’d personally advise people to involve us early, at the term-sheet stage, as hopefully we can help with that.

AN: Having a borrowers’ solicitors panel—I'm all for it. I think it truly helps greatly. Having a firm on the other side which you recognise or have previously worked with gives you that confidence that the deal is in safe hands, and enables you to really progress a transaction in a speedy manner, which I think is the aim here for all parties involved.

JB: I think we need to move away from the blame culture and understand that we’re all working toward the same objective. If a lender’s solicitor raises a requisition or a query, it’s in the borrower’s best interest—it’s not to cause further delays, they’re just doing their job. Understanding that we’re all working towards a common goal can alleviate the misconception that it’s the lender’s lawyer causing the delay.

LB: That’s probably an education point... Lenders and brokers should be made aware that where the transaction is particularly complicated, it will take a lawyer a certain amount of time to properly review the documents. That's just unavoidable.

JL: People need to stop seeing the legal process for specialist finance transactions as commoditised—it is a different thing. I don’t think there’s one silver bullet in specialist finance that will make it all better, but we can certainly all work together to smooth out the journey.

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‘If you’re not out of your comfort zone, you’re not growing’

On 7th March, our deputy editor had the honour of sitting on LendInvest’s Women in Finance panel at the lender’s head office with three exceptional participants: Kim McGinley, founder and CEO of VIBE Finance; Ellie Matthewman, lead Salesforce engineer at LendInvest; and Naomi Kerbel, director of communications at SEC Newgate UK. Moderated by LendInvest’s director of legal Christa Zillwood-Hunt, the discussion focused on female representation in various sectors and the role of industry culture in inclusion. Here are some top lessons from the event

“If someone tells you that you can’t be emotional, that’s a lie—you can. Just be yourself”

1. Progress has been made, but there’s further to go

Looking at how female equality has progressed over the years in finance, technology, journalism and PR, all panellists agreed that overall, some positive steps have been taken, yet there’s still plenty of room to grow.

“Regarding women, we are improving in the tech industry, but we came from such a low position that we’ve still got so far to go. When I joined LendInvest—which is a company that does embrace diversity and inclusion—I realised I was the only woman in a team of 15 Salesforce people. We have recruited more women since but it just shows how far we’ve got to go still,” said Ellie.

Kim shared this view: “In the finance industry, what you often find is a lot of talk about gender equality, but the action behind this is not substantiated. We’re hearing more about women being put forward for more prominent roles within businesses, but I think a lot of companies are very far off the targets that they have committed to.”

While Naomi agreed that more action must be made to encourage more women and achieve gender equality, she said: “You don’t want to do that to the detriment of our male

counterparts. We’ve got to be really balanced in this conversation, because we also have young men coming into the workplace, and it’s really important that we don’t ostracise them. This is not just a women’s issue—it affects everyone—and, if we create intergenerational, gender and ethnically diverse teams, we will create more profitable, happier companies that we want to work in.”

2. Workplace flexibility is key to achieving and maintaining sex equality

When talking about how firms can bring more women on board, Ellie and Kim highlighted the importance of workplace flexibility, as female employees often require this to balance workloads with caring responsibilities at home.

“I know there’s a lot of push for getting people back into offices now but for me, having that remote environment I can work in—where I don't have to spend two hours getting home and I can see my children—is important. That's not to say I don't love coming to the office—I definitely do—but, at the same time, I want to have that flexibility to do it on my terms when it's actually worth my while. I think embracing remote working

“In the finance industry, what you often find is a lot of talk about gender equality, but the action behind this is not substantiated”

is a huge part of getting more women into positions where they feel comfortable without having to spend four hours a day in the office,” says Ellie.

Workplace flexibility extends beyond that to health provisions, such as policies on menopause. This is why Naomi is encouraging all firms to look at various methodologies and recommendations—such as the Menopause Mandate and the Women In Work Summit guidance—to tailor suitable and inclusive policies to support women in the workplace, as well as to press for workplace insurance policies to cover female health issues such as menopause, which may not be included as is seen as “natural”.

She notes: “Women feel like they have to quit their jobs because they’re not being heard, or it’s just not an environment that they can physically work in. It all comes back to flexibility.”

3. Women must be mentored and pushed out of their comfort zone

Having female role models mentor younger employees is key to women pursuing and achieving senior positions, notes Ellie: “Without women in these leadership roles, you start to get a boys’ club if you're not careful, as the male leaders will continue to promote other men. Women are more shy about putting themselves forward for those promotions, especially in the tech industry, so we need to help them and push them forward, rather than wait for them to step up.”

Having a role model is only half the battle, though. Both Kim and Christa believe women themselves should bite the bullet and push themselves out of their comfort zone as much as possible, which will help them in their development and allow them to reach new heights. “Someone once said to me: if you’re not out of your comfort zone, you’re not growing. That’s the mentality I have now, and what I try to teach my team as well,” said Kim. “If fear is the only reason you’re not doing something, then you have to do it,” added Christa.

4. Women must not mute their voices

When asked what advice they would give other women in these areas, all panellists agreed on one resounding piece of advice: never tone down your voice for anyone. “About 15 years ago, my manager told me the reason why women can’t be leaders is because they’re too emotional. Because of that, for the next 15 years, I’d been holding back on getting a leadership role, as I doubted myself that I would be a good leader. But, 18 months ago, I decided to just be myself, and now I’m in a senior role. If someone tells you that you can’t be emotional, that’s a lie—you can. Just be yourself,” concluded Ellie. “People need to be pushy.”

Pictured (L-R): Ellie Matthewman, Kim McGinley, Naomi Kerbel, Andreea Dulgheru, Christa Zillwood-Hunt

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Jamie Pritchard

Glenhawk has started the year with a bang, having overhauled its products range and promoted Jamie Pritchard to managing director of sales. Jamie talks about the company’s plans to scale up and target gaps in a new market, and weighs in on the evolution of the specialist finance market and the identity of bridging finance

Q Congratulations on your new role! How does it feel to have been promoted to managing director of sales?

It feels really good! My promotion is an endorsement of what the executive team thinks of me, and of what we all have done over the last three years, really putting Glenhawk further on the map and scaling it up. I wouldn’t be managing director of sales without a great team behind me—you can’t be MD of nothing. Now I’m focused on what I need to do next, and what I need to add to make myself a really good MD of sales.

Q What will you be focusing on first in your new role?

We want people to use Glenhawk for the people and the processes, and that centres around the client and the customer journey—so it’s about what we can do to further improve that. We’ll be bringing out more products and will be launching into BTL in 2024. We’ve hired some key people and are constantly working on technology platforms to help with that. We want to see where the gaps are in the market before we enter the BTL sector, rather than just trying to put something in there that somebody else already does.

Q Do you have any particular lending targets for this year and beyond?

The target is mainly improving on last year’s results by a few hundred million. Guy [Harrington, founder and CEO of Glenhawk] wants us to be doing £1bn of loan originations each year within the next couple of years—that’s including BTL and other angles—which we can do. Aside from that, my personal targets are always around improving conversion rates and margins.

Q What do you think the specialist finance market will look like in the near future?

With the general election coming up later this year, this could create a little bit of stability. I think there won’t be massive rate rises—there may be some rate decreases , which could help us all out. We can still grow the overall bridging sector, but there might be some consolidation within the market this year—that could be some lenders that will unfortunately have to close their doors or some merging with others.

Q In your opinion, what is the secret to a specialist finance lender’s success?

If you’re setting up a lender in this space, you must have courage of your convictions, and know who you’re getting into bed with—so know your funders and what their goals are. The other things are determining what your risk appetite is and not trying to be everything to everyone. It’s important to really understand the product and the type of customer you want to attract, get your processes and procedures in place and know how you can get deals redeemed. Having that clear process will lead you to success later on—all of that comes with scale, but if you don't get those loans redeemed, that scale's going to start crumbling.

Q Do you think bridging finance has lost its USP of being a speedy funding option?

Speed has come down, probably because there’s a lot more appetite from bigger funders to enter the market, which means there’ll be a lot more due diligence. When you’ve got the big institutional funding, you want to make sure that the deal is correct, and you’ll find that, with the good lenders, there are fewer defaulted mortgages because they’re set up correctly and firms are asking more questions than they did in the past. Speed is relevant and can be achieved if everyone—the broker, the customer, the lender—is aiming for the same goal. However, bridging shouldn’t be used just for speed—it should be used because it’s the right choice.

‘Bridging shouldn’t be used just for speed—it should be used because it’s the right choice’

X What’s been your biggest achievement to date?

Seeing BDMs who I have helped and mentored in the past run their own sales divisions or firms.

X What is one thing the industry doesn’t know about you?

On top of being a DJ, I produce and release music—my producer name is naked AMB1TION. My biggest audience, for some reason, is in Mexico. I’ve got thousands of listeners there so, if I go on holiday in Mexico, I might get recognised.

X What’s your go-to karaoke song?

‘California Dreamin’’ by The Mamas & the Papas.

X If you could live anywhere in the world, where would it be? California—I just love the sun, the free spirit and the entrepreneurialism there. I’m trying to convince Guy that I can commute from there, but it’s a bit of a stretch. [laughs]