Virtual roundtable: What does the specialist finance industry need in 2023 and beyond?

What does the specialist finance industry need in 2023 and beyond?

Bridging & Commercial’s most recent virtual roundtable, in partnership with specialist lender Mint Property Finance, focused on how the bridging industry is expected to change in the foreseeable future, with the panellists passing remark on distribution channels, team structure, and key societal trends

Particular attention was paid to the tools and systems that are currently being embraced and whether these will become even more critical in the years ahead, evolving to adapt to an everchanging industry. Joining Beth Fisher, publishing director at Medianett Publishing, and Mint Property Finance’s underwriting team leaders Sam Herd (development) and Adam Robson (bridging) on 27th September, were Sara Griffiths, partner at Ratio Law; Michael Cartwright, short-term finance specialist at Buildloan; and Richard Stock, senior associate at Sirius Property Finance. The panellists were first asked how they felt the industry would change within the next five years. Adam pointed to the morning news, surrounding the Bank of England’s base rate rise and lenders pulling products, as indicators of the environment shifting on a daily basis. “It’s down to the lenders to adapt to all these changes,” he remarks, “this isn’t something new that we’ve had to do.” He draws references to the pandemic, during which finance providers had to adapt their ways of lending and how they communicated with one another, and highlighted the potential recession to come. “It’s something the industry has been through and survived [previously] . . . It’s time for more robust lenders like ourselves to come to the fore and prove our worth to borrowers and brokers.” Will this have an impact on smaller and newer lenders? It’s possible. Richard notes that while there are always opportunities in difficult markets for new providers, it’s far likelier for brokers to conduct business with familiar faces.

“The most succinct answer is to give you the 80/20 rule,” Richard explains. “When times become a little bit tougher, this becomes more pertinent; we will, as will lenders, get [at least] 80% of our business from 20%—if not a smaller amount—of brokers we work with. The need for specialist advice is going to be more apparent as well.”

Michael couldn’t have agreed more on this need for expert advice, particularly as he anticipates rapid adjustments in the products being offered. “The market has been fairly stable in recent years when it comes to LTVs and interest rates. I think we’re going to see a weekly/daily change in what people are offering and the products that are there. That guidance is going to be

imperative, particularly to the large brokerages out there who don’t delve into this world at all, [or] maybe once or twice a year.” As Beth comments, it’s difficult for finance providers to innovate when there are so many product revisions, and it’ll be interesting to see what comes to fruition, particularly if lenders are able to continue developing their offerings. Incidentally, it’s the frequency of these changes that Sam sees as one of the biggest threats to the industry. “You may well have had a bridging loan [and] an exit, [but] that exit may not be secure anymore,” she divulges. Additionally, the cost of funds, with lenders changing their rates, is now a regular hurdle. “You might have an offer and be ready to complete, [but] criteria and rates are going to be changing and that’s a threat to borrowers.” Offering a legal perspective on the sector, Sara believes the market has been slowed down by various factors. “In general, having the uncertainty [of] the client not being able to sell as quickly as they would have hoped affects the exit strategy,” she discloses, “and whether they’re then able to remortgage with the lenders they were planning on doing so, because interest rates are changing and the market’s closing itself down slightly to protect what it can.” As a result, Sara says delays in conveyancing can be caused by solicitors who don’t possess the necessarily skills or legal expertise to deal with the specialist financial property side of things and the requirements that are needed legally. With the conversation turning to the industry’s favoured tools and systems, and whether or not they will prove to be even more critical moving forward, Sam identifies local knowledge as vital to each deal, utilising the tools that are currently in place to look back at the successes and failures of previous loans in certain locations. “We won’t be able to just rely on [someone] telling you it’s worth X amount,” she adds. “There will be projects that get delayed over the next 12-18 months, from a development point of view, and having that local knowledge and knowing why [certain projects were] delayed, is going to be key moving forward in an everchanging market.” “We can definitely look at tools from our side of things to be able to streamline the process to make things quicker for borrowers and lender

clients alike,” Sara confesses. She continues by saying there are things on the market that perhaps aren’t being utilised as much as they could be, such as electronic signatures, and ponders how these tools can be used to help speed up the process, all the while meeting obligations. “The process that we have for many lenders is very labour intensive,” Michael notes, whereby it can involve chatting to numerous channels. With a nod to Sara’s comments on some tools not being used, he spoke about online portals either being non-existent or limited. So what is needed? “Transparent systems, where everyone involved can get an update on the case to find out where the next step lies—whether it’s with the client, broker, lender or lawyer; these things are going to be imperative moving forward.” In reference to Michael’s point about the process being labour heavy, Richard remarks there is a labour shortage within the industry. “People have moved on or been released because of the pandemic. A lot of these roles haven’t been replaced. We’ve got to get appropriately trained staff in place now.” With the consensus being more IT and knowledgeable individuals are required, Adam explains what Mint is doing to attract and retain talented people. “With everything that happened with the pandemic, working from home is key to a lot of people,” he says. In addition to investing in talent, it’s the little things like rewarding good performance and celebrating internally, such as birthdays, that ultimately help to retain staff. Don’t forget to watch the video to hear more about what the specialist finance industry needs in 2023 and beyond, and why two-thirds of our virtual roundtable attendees only expect a slight change in distribution channels over the next 1-5 years, as opposed to major steps forward.

Adam Robson

Underwriting team leader of bridging at Mint Property Finance

Samantha Herd

Underwriting team leader of development at Mint Property Finance

Sara Griffiths

Partner at Ratio Law LLP

Richard Stock

Senior associate at Sirius Property Finance