September 2022www.sfintroducer.com BRIDGING INTRODUCER Champion of the Bridging Professional financeDevelopmentround table Bridging in-depth ASTL Assetz Capital on what’s anchoring them for the long term Here for the long run
Larger funding for larger deals. 0800 470 0430 bridging@assetzcapital.co.uk Laleta Buctkuar, Relationship Director: Bridging Do you need to fund a large purchase, acquisition, refinance or release cash for business purposes? Our residential & commercial bridging loans have got you covered: • Up to 75% LTV • Up to £5m available • Rates from 0.70% pcm Contact our specialist bridging team to see how we can help: 0800 470 0430 Assetz SME Capital Limited is a company registered in England and Wales with company number 08007287. Assetz SME Capital Ltd is authorised and regulated by the Financial Conduct Authority in respect of its peer-to-peer lending platform only. ’Assetz Capital’ is a trading name of Assetz SME Capital Ltd. Assetz SME Capital is registered with the Office of the Information Commissioner (Reg No: Z3338899) for data protection purposes. Download our bridging finance product guide here.
8 Jonathan Rubins
10 Mark Standley
His words were echoed by Simon Knowles, senior director of development finance at Shawbrook, who stressed the need for brokers to truly know the lenders they work with. “Brokers will do well to build up a rapport with lenders and to build on their relationship so there is an increased degree of trust and certainty between the two,” he said.
Khaye Cortez
Managing Editor
Loiza Razon Designer
Real
14 David Hollingworth
The latest on companies offering automated valuation models
Campaign Manager
And it is in that last part of the discussion that the who you know really began to shine through.
The future of commercial and development markets
21 Round table
www.assetzcapital.co.ukssetzcapital.co.uk
Head of Marketing
Robyn
Raniella raniella.alonzo@keymedia.comAlonzo
www.sfintroducer.com SEPTEMBER 2022 BRIDGING INTRODUCER 3
New education opportunities for those in our industry
Paul Lucas world lending.
Jordan jordan.ashford@keymedia.comAshford
But what if the saying “It’s who you know” were actually the key to being good at your job? In the world of specialist finance broking, that would appear to be the case.
Monica Lalisan
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18 Assetz Capital
Don’t let protection fall away in hard times
Matt matt.bond@keymedia.comBond
16 Vikki Jefferies
Advertising Sales Executive
Commercial Director
And so there lies the key to success in specialist broking. By truly knowing the client and the lender, you alone can find the best solutions for the most testing scenarios. It truly is who you know – on both sides of the deal.
here’s an old phrase that applies to most people’s efforts to climb the career ladder : “It’s not what you know, but who you know.” That is, for the most part, meant to pour scorn on the idea that people advance in their careers based solely on merit – and that, instead, factors such as nepotism or favouritism are the keys to success.
Richard richard.torne@keymedia.comTorne
Bridging finance and term loans can be a winning combination
Campaign Coordinator
Closing the gap between mainstream and specialist markets
It’s not about short-term thinking
12 AVMs
EC2NLondon25SignatureKMrobyn.ashman@keymedia.comAshmanBusinessInformationUKLtdTower42OldBroadStreet1HN
For example, Chris Oatway, chief executive of LDNFinance, highlighted that the broker must know the client better than anyone. “The broker’s role in all of this is to actually understand the deal,” he said.
COMMENT EDITORIAL
Kel Pero
Paul paul.lucas@keymedia.comLucas
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News Editor
Contents
4 Donna Wells Overview
Look no farther than the latest Bridging Introducer roundtable, brought to you in association with Assetz Capital, and which you can read in this edition of the magazine. At that get-together, the group of experts looked at the state of the commercial and development markets in the UK in light of successive Bank of England base rate rises and the cost-ofliving crisis, touching on subjects such as the impact on lenders, the effect on inquiries so far, and the role brokers can play.
Content Editor
Greeting the future with confidence
6 Jason Berry
It’s about who you know
Production Manager
Seeking shelter in specialist bridging finance
Deputy News Editor
Amie amie.suttie@keymedia.comSuttie
Jake jake.carter@keymedia.comCarter
9 Vic Jannels
Production Coordinator
Another area of opportunity for brokers appears to be in the commercial space, with rising business costs, including rent and associated charges, driving business owners to buy their properties and acquire a freehold asset, rather than navigate a fluctuating rental market and uncertainty of tenure.
otential buyers, existing homeowners, landlords, investors, developers, and businesses continue to contend with their fair shares of economic concerns in line with rising energy expenditure and general costs. From a mortgage market perspective, the result is an increased emphasis on the flexibility of a specialist lending arena that continues to rise to the fore when meeting ever-shifting challenges.
Of course, brokers, packagers, and specialist distributors remain at the heart of servicing an array of borrowing requirements. Education and awareness are vital within this process, as the intermediary market continues to ensure that valid and viable alternative lending solutions are readily available and accessible to such borrowers.
COMMERCIAL PROPERTY SALES
Holiday lets is an area that continues to generate a host of interest, opportunity, and discussion. It’s also a space carrying a level of complexity that certainly benefits from plenty of due diligence, research, and good, professional advice. As well, it’s an area that is proving attractive to a growing number of lenders, especially building societies and specialist lenders, and this will be an interesting journey to follow over the rest of 2022 and into the new year.
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programme are to raise professional standards within the specialist property finance industry, improve understanding of the roles played by brokers, lenders, and other professionals throughout the life of a loan, and provide agreed levels of knowledge set by the industry as a base standard to provide customers with the best possible outcomes at all times.
After all, it’s all about achieving the best outcomes for clients, and the more brokers know – and the more they recognise the support of real experts in specialist areas they may not be familiar with – the better the outcome.
SHORT-TERM LETS
The research shows that, across the board, there are currently 54,657 holiday lets, accounting for 3.5 per cent of total homes in these locations –up from 2.8 per cent since 2019.
SPECIALIST EDUCATION
MARKET REVIEW
FIBA and the ASTL are reported to be working with the London Institute of Banking & Finance (LIBF) on the creation of a series of optional e-learning modules that will cover bridging, short-term finance, development finance and specialist buy-to-let. The modules will be recognised through the awarding of an LIBF digital badge and accredited for CPDThepurposes.desiredoutcomes of the
Mortgage Lenders (ASTL) confirm a framework for their ongoing education programme for the commercial property finance industry, which is due to be launched later this year.
BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com
As such, it was good to see the Financial Intermediary & Broker Association (FIBA) and Association of Short Term
A look at the lay of the land
Donna Wells F4Bdirector,
As an industry, the value of a more holistic approach has been talked about for some time, but the adoption of such an approach has been somewhat lacking – although this is something that we, as a packager, have always tried to integrate alongside a strong support offering for our intermediary partners and introducers.
Staying in the shorter-term lending arena, but traversing a little across the sectors, the latest report from GetAgent.co.uk – which analysed data on active holiday rentals across 15 of the nation’s most popular tourist destinations, from Southend to Scarborough, Brighton to Blackpool – highlighted that short-term lets are still on the rise and now account for as
much as seven per cent of total homes across these areas.
Data from Allica Bank outlines that commercial mortgage brokers are expecting to see a sharp increase in commercial property sales, with 42 per cent expecting to see more SMEs look to acquire their premises rather than rent. The study also revealed that many businesses were also taking action to protect against future interest-rate rises, with more than half of brokers (55 per cent) saying there is demand among their client base for 10-year fixed-rate mortgages, while five-year fixed terms were in significantly higher demand than two- and three-year terms.
The commentary around this data shows once again how vital the support of a broker can be in helping businesses find the right products to achieve these goals. And this really is an ongoing theme throughout the specialist sectors, as the value of advice, and the value attached to trusted packaging partners, continues to rise at a rate of knots.
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Single point of contact Simply email us and one of our team will be directly in touch contact@sancus.com > Residential > Semi-Commercial | Mixed Use > PRS Schemes | Auctions | HMO’s > Light to Heavy Refurbishment > Multiple sancus.comAssets Bridge by LTV/LTC/Refurbishment costs 75%/85%/100% up to 24 months Rates from 0.625% with competitive procuration fees Bridge rates from 0.625% Fast, people-led, decision making Loans from £100,000 to £5,000,000 Indicative criteria only, each loan application is considered on its merits. Risk Warning: If you are co-funding you could lose part or all of your capital. Indicated returns, unless otherwise stated are shown before any provision for bad debts and may be subject to tax. Sancus do not provide private mortgages. Sancus Lending (UK) Ltd is authorised and regulated by the FCA (firm reference number 593992) and is incorporated under the laws of England and Wales, company number 07534003, registered office: 3rd Floor, The News Building, 3 London Bridge Street, London, SE1 9SG. Part of Sancus Group Holdings company no 57766 registered office Block C, Hirzel Court, Hirzel Street, St Peter Port, Guernsey GY1 2NL.
Given the current financial challenges many buyers are facing, specialist lenders continue to innovate by bringing new and bespoke products to the market, which is contributing to the growing popularity of this shortterm lending solution.
The strength of the relationship (and trust) between lender and distributor allows a specialist to represent the unique merits of even the most complex of cases to reach your desired outcome, fighting your corner to iron out any potential creases in a deal.
In the current market, brokers are increasingly needing an additional driving force to keep completions on a timely track. This is where the skill of specialist underwriters comes to the fore, as they can steer an application through the potential minefield of lender criteria, being both deft and meticulous in avoiding pitfalls in a way that a generalist broker may not.
Remortgagers and first-time buyers will, of course, see an immediate rise in their mortgage costs when sourcing a deal. Unfortunately, both first-time buyers and home movers are also faced with house prices that have risen on average by 11.8 per cent over the last 12 months, according to Halifax’s latest house-price report.
From the cost-of-living and energy crises to ongoing supply-chain issues to the pandemic, our short-term economic forecast is looking increasingly bleak.
Despite our current economic woes, the same report showed that house prices fell by only 0.1 per cent month on month. The consensus is that we are going to see a more general slowdown in housing market growth due to an improved balance in supply and
eaching for the newspaper or turning on the 6 o’clock news can be an experienceuncomfortablerightnow.
Tremors have been felt in the lending market, too. Recently, a US funder that backed 12+ UK lenders pulled out of the bridging marketplace with immediate effect, while other financiers have chosen to batten down the hatches by temporarily exiting the market.
SPECIALIST BRIDGING REVIEW
THERE’S ROOM UNDER OUR UMBRELLA
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This is where specialist brokers can really offer shelter from the current storm and find your clients a speedy and cost-effective solution.
There may be nothing but grey clouds on the economic horizon, but that doesn’t mean your property deal is dead in the water, as the powerful combination of specialist bridging lender and distributor is here to help you weather any coming storm.
demand, as demand tails off when the cost-of-living crisis bites harder.
With this perfect storm of eco nomic volatility, rising interest rates, product availability, and diminish ing shelf life, mortgage brokers and property buyers alike now need sta bility, flexibility, and speedy trans action times more than ever. Enter the bridging finance specialists.
In an attempt to dampen soaring inflation, the Bank of England (BoE) raised interest rates to 1.75 per cent (the highest level since January 2009) last week. This week, the MPC has predicted that the UK is now projected to enter recession from the fourth quarter of this year, with the BoE suggesting that inflation will be around 13 per cent in a few months’ time (although, it seems, falling next year).
R
BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com
Jason Berry group sales director, Crystal Specialist Finance
Any change to base rate will have a ripple effect on the housing market, but as the majority of homeowners are currently on a fixed rate (with two million on variable-rate deals), it will be some time before the real impact of rising mortgage costs hits the wider market.
Specialist bridging finance offers shelter from the storm
Specialists like Crystal Specialist Finance work with a wide and varied panel of the UK’s best bridging lenders, meaning that we have a broad picture of the current lending landscape and can source the best products available at any time.
THIS ADVERTISEMENT IS FOR PROFESSIONAL INTERMEDIARIES ONLY AND IS NOT INTENDED FOR PUBLIC OR CUSTOMER USE
That’s why we’ve launched our new Energy Efficiency Discount, rewarding investors with a reduced arrangement fee for properties with an Energy Performance Certificate (EPC) rating of ‘C’ or above.
Banking for the real world.
EnergyEfficiencyDiscountGetintouch 0330 123 property.shawbrook.co.ukcm.broker@shawbrook.co.uk4521
We’re committed to futureproofing landlords’ investments, providing long-term sustainable solutions to improve their energy efficiency.
To give an example of how a term loan can help a business, we recently provided a £500k loan to a familyowned freight-delivery business. Although established for many years, recent events had caused losses to be incurred, and this exacerbated the borrower’s bank’s decision to limit their credit
BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com
With loans from the high street banks difficult to obtain, short-term lenders increasingly offer bridging finance as a means to unlock working capital or as a remedy for businesses that are dealing
However, bridging finance is not always the best solution. A short-term loan may not be the answer to a midto-long-term problem. Often a business will be better suited to give itself more time by using a commercial term loan. These are typically for 15 years or longer, with monthly capital and interest repayments, or on an interestonly basis for three to five years. Businesses often need time to fulfil their plans, and this has been recognised at Alternative Bridging Corporation, as we offer term loans for commercial borrowers and property investors alongside their bridging solutions.
Otherfacility.high street banks were not interested, but we have a short chain of command, and our directors, working closely with the company’s financial adviser, were able to listen and learn. We believed in the recovery strategy and, as such, structured a term loan on a basis that was within the company’s ability to service.
Bridging finance is a fantastic product that has evolved considerably over Alternative Bridging’s 30 years in business. It is a competitively priced product that can provide a rapid source of funds. However, often a term loan is a better solution, and that is why we offer both. Brokers should familiarise themselves with the benefits of both in order to establish which one is better for a particular client.
The loans are for up to five years and are structured to match cashflow requirements, including special arrangements for interest to be accrued when the income has not yet stabilised, so these loans are ideal for those businesses that are reestablishing profitability.
There are other differences with a term loan and a flexible drawdown facility, which are particularly suitable for asset-management situations. For instance, if income is improved or other improvements are made, and the value of the asset increases, additional advances can be made. These are available for property purchase, refinance, and improvement, as well as working capital.
with temporary cash-flow issues and need a quick injection of capital. With a relatively simple application process and fast access to funds, bridging is being used by SMEs up and down the land for business purposes – and with intense competition to lend, the commercial bridging market is lower-priced than at any time in the past five years.
As a consequence, many businesses are finding they have an increased need for capital for cash flow and investment. According to the most recent sixmonthly SME Finance Monitor report from BVA BDRC, one in five SMEs was using more finance at the end of 2021 than before the pandemic. So where will this working capital come from?
Another consideration is that term loans can also be combined with a flexible drawdown facility. For example, at Alternative Bridging, our overdraft, which can also stand alone, enables a business to agree a facility and drawdown part or all, and repeatedly reduce, repay, and draw again and again, only paying interest on the balance outstanding. It provides
liquidity on tap whenever it is needed.
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Alternativedirector, CorporationBridging
We mean business: a longer-term approach to commercial finance
Jonathan Rubins
W
The term loan was used to repay the bank overdraft, expensive factoring, and other creditors, and the surplus was available for working capital. A bridging loan did not offer an adequate period for the business to improve its credit record, but the term loan provided the necessary time to do this prior to obtaining a longterm mortgage.
hen I say, “We mean business,” it is no idle comment. 2022 has been an eventful year, and is likely to continue to be so, with SMEs throughout the country having to deal with an unparalleled series of economic challenges that started with Brexit and were exacerbated by COVID-19 and accelerated by Putin’s war on Ukraine. Combined, they have caused doubledigit inflation, challenging both the business community and property industry. And it’s unlikely that the uncertainty has ended.
According to the latest SME Trends survey from the CBI, SME manufacturers saw the sharpest drop in optimism in the three months to April 2022 since the start of the pandemic. Growth in new orders was weakening, while there was record-high growth in both costs and prices. The percentage of SME manufacturers believing that materials/components shortages would limit output in the next three months reached a survey record high in April (71 per cent, up from 49 per cent in January).
As an example of what is available, our term loans are available to individuals, partnerships, and companies, and can be secured by a first or second charge over residential investments, office buildings, retail premises, or industrial and distribution properties.
COMMERCIAL REVIEW
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ridging lending volumes are in a very healthy place, and the latest ASTL lending data show that completions have now been more than £1bn for four consecutive quarters for the first time since records began. In the decades since its inception, this form of lending has evolved to be almost unrecognisable, from a product considered by many as a last resort to an important tool for property investors of all types and sizes.
The brand-new digital-learning programme is pitched at all who are
Vic Jannels
www.sfintroducer.com SEPTEMBER 2022 BRIDGING INTRODUCER 9 ASTL REVIEW
involved in the specialist finance market, whether just starting their careers or adding this specialism after years in the more mainstream arena. It also provides continued enhancements for those already specialising in the sector. It aims to raise professional standards, increase understanding of brokers’ roles, set an industry benchmark for knowl edge, and define how this market fits within the context of property finance overall.
The programme will also include an extensive module of interactive case studies, in which learners can put their newfound skills to the test, identifying key information needed to package the case, as well as exploring how it might be under written and the likelihood of its beingThoseaccepted.whoundertake this course will achieve professional recognition through the award of a LIBF digital badge; the course is also accredited for CPD purposes. Perhaps more importantly, learners will come away with increased confidence in dealing with specialist short-term finance, and enhanced understanding of how these products might provide ideal solutions for their existing clients.
THE PROGRAMME
ASTLCEO,
So, while we want this programme to help ensure minimum standards across the field, ASTL members will not be required to work only with brokers who have taken the course, nor will brokers be encouraged to work only with lenders whose employees can show their digital badge. This is not an exclu sionary exercise, but the opposite – it is about broadening the bridging market’s reach and welcoming new participants.
This is a mark of expertise and knowledge, yes – but, more impor tantly, our education programme aims to encourage sustained and confident participation in a growing industry.
IMPROVING THE INDUSTRY
However, this market continues to be plagued by arounda(LIBF)Institute(FIBA),Intermediaryhaveindustrytoensuringtionadvisers,standingeither,issuefinances.publicperhapsyear,beresearchleast,misunderstandings,misconceptions,orattheveryalackofawareness.OurownattheASTL,whichwillreleasedatourAGMlaterthisfoundsomestark–albeitnotunexpected–gapsinknowledgearoundshort-termThesegapsarenotjustanwithyouraveragehomebuyer,butreflectalackofunderamongmainstreambrokers,andevenlenders.ThepurposeoftheASTL,inadditosupportingourmembersandgoodcustomeroutcomes,ispromotethebestinterestsofthisasawhole.Tothisend,wepartneredwiththeFinancialandBrokerAssociationaswellastheLondonofBanking&Financetouseourplatformstomakerealandlastingpushforeducationbridging.
Improving the industry through education
The purpose of this programme is not to discourage people from entering the short-term brokering industry. Far from it. This market needs an injection of fresh talent in order to keep up with rising demand, and while experience counts for so much in our market, everyone has to start somewhere.
Instead of seeking to exclude those who choose not to take the course, we hope that it provides a welcome resource for new brokers, as well as a clear way to demonstrate their understanding even when direct experience might be lacking, so as to help fresh faces break into an industry that can be dense and complex at times.
It will look at the full range of bridging and short-term finance, development, commercial mort gages, and buy to let (BTL), with insights into how they work, how they are underwritten, and how they vary from one to another.
We’re ready for what’s ahead
ASSETZ CAPITAL FEATURE
to ensure that our lending decisions are right so that borrowers receive the optimum solution to carry out their projects. This includes fixing interest rates where possible and delivering quoted rates in our DIPs, which we also hold for three months when an application is accepted.
t’s been another interesting year in the lending market, to say the least. First, as we have exited the pandemic and said goodbye to the successor of the CBILS – the Recovery Loan Scheme – we find ourselves in a moment of high inflation, rising energy prices, and increased costs for what feels like everything else.
I think it’s important to remain somewhat traditional in a world that has been possibly over-reliant on technology, particularly in the last two years. We still enjoy meeting our borrowers face to face, shaking hands, and taking time to get to know them. We want to see their development site or business premises and really understand their operation. This allows us to interpret their needs on a stronger level and really build the relationship. That’s not to say the technology isn’t important, but it has to work in harmony with the human side of our business, and that is really important to us.
Our ‘real-world lending’ philosophy, embodied by our team of UK-wide relationship directors who are on the ground sounding out deals, is to try to rationalise and use our experience
I
Current feedback from many of our brokers is that their clients are struggling to price projects accurately. Fluctuating cost projections are stalling advances, and rising interest rates and inflation have pushed up build costs for all developers. The global shortage of raw materials and labour scarcity from last year have continued into 2022, which has constrained the production of certain products. This has since been exacerbated by the conflict in Ukraine, as the restricted supply of raw materials such as timber has affected consumer confidence and spending.
During the last few months, I’ve noticed several top-line bridging rates being increased as lenders react to the current situation and uncertainty. Whilst some lenders have notably dropped away, there still seems to
be an abundance of funders out there, which is great to see during challenging times. Total gross lending in the bridging sector has risen to £178m in Q2 from £156m in Q1 of this year, and bridging transactions were up 14.3 per cent in the same period, so the demand is certainly there to support new entrants to the market.
Assetz Capital’s national commercial director Mark Standley discusses the lender’s bridging offering in the current economic situation and their ‘real-world lending’ ethos
BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com10
We still enjoy meeting our borrowers face to face, shaking hands, and taking time to get to know them. We want to see their development site or business premises and really understand their operation
With that in mind, we have always had a very strong social conscience in terms of trying to do the right thing for our borrowers, providing real-world solutions for their growth plans, and ensuring there is ‘fairer growth’ for all parties involved. We take care to try
which has been hugely successful. We now plan to reach similar levels back in normal market conditions and through our new institutional funding lines, which has meant that we can now offer larger loans for larger projects. Our bridging product, which has supported residential and commercial projects – in particular those in the care sector – is still a potential area for strong growth and a great opportunity for us. We have a solid foundation with our
brokers who know us and associate us with development lending and managing complexity; we want to build on that to grow our recognition and share of the bridging market. We have put together a new underwriting function and a specialist bridging team to remove potential friction points and to retain our core lending fundamentals, which will not change.
and judgement to deliver the most appropriate outcome for every client. If there isn’t one, we will create one –there is no Computer says no with us. That philosophy has mostly delivered development finance and commercial mortgages, certainly pre-pandemic, with development making up more than 50 per cent of our lending of just over £1.5bn. For the last couple of years, we have tackled the pandemic through our CBILS and RLS lending,
I believe we are a fantastic business, with a friendly and expert team that works incredibly hard to provide the best service experience possible. We have remained constant through the last few years, and we are looking forward to a bright future.
Change brings opportunity, and businesses with the potential to succeed in all sectors will need bridging finance to help them grow –and we want to support that. We have the ability to provide bridging loans of up to £5m
We are prepared to lend in sectors such as hospitality and care where we have the specialist knowledge to identify supportable businesses. The market does seem to be saturated with lenders seeking vanilla residential deals. We are in the mix for those deals, absolutely, but we are also looking at sectors that may be neglected. Change brings opportunity, and businesses with the potential to succeed in all sectors will need bridging finance to help them grow –and we want to support that. We have the ability to provide bridging loans of up to Our£5m.growth is always controlled in a measured way, but remains strong even during what is a challenging period. We want to be market-leading through all our disciplines, and to deliver the best solutions for our borrowers through their brokers.
www.sfintroducer.com SEPTEMBER 2022 BRIDGING INTRODUCER 11 FEATURE ASSETZ CAPITAL
the existing Tuscan Fast Track process, in which higher-value properties can also be underwritten by using a desk top valuation.
can register to instruct AVMs for residential bridging deals
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indemnity insurance can be used, and credit-approved term sheets can now be issued within four hours of an enquiry.
A n AVM can now be used as an alternative to a RICS property valuation and inspection, where Hometrack data supports the client’s estimated value or purchase price.
Brokers registered with Hometrack can now instruct an AVM for any residential bridging deal with a maximum loan size of £300,000 and an LTV of 80 per cent or Ibelow.ftheAVM does not meet the criteria, the broker can decide to instruct a driveby or a full valuation instead. Brokers can only register to instruct AVMs through Hometrack by applying to the Kuflink sales team. The AVM costs £25.20 and the only exclusions are ex-council flats and maisonettes.
Tuscan will rely on an AVM to 70 per cent LTV for purchases, and 60 per cent LTV for refinance up to £750,000 valuation, with a confidence level accepted from 4.5.
BrokersUPDATE
origination at Kuflink, commented that the introduction of AVMs emphasises the importance of the relationship between Kuflink and its brokers.
The lender said personal guarantees, which require all parties to have indepen dent legal advice, are no longer required on cases at 65 per cent LTV and below.
“Given the challenge in busy valuers’ turnaround times for valuation reports and their increasing costs, we feel that AVMs are becoming of crucial importance to our Fast Track bridge proposition,” Deacon stated.
Tuscan Capital adds AVMs to bridge process
Richard Deacon
Ranjit Narwal (pictured), head of
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BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com12 AVMS
“In simplifying our process, we are placing greater responsibility into the hands of our introducers to manage their own cases,” Narwal said. “Since we announced the facility to self-instruct valuations in June, the response has been extremely positive.
Tuscan’s Fast Track process was introduced to speed up the application process for most bridging cases signifi cantly. As well as adding a new valua tion process, title insurance and search
hort-term property finance specialist Tuscan Capital has announced the addition of a free automated valuation model (AVM) option to its new Fast Track process, aimed at saving borrowers’ significant costs while further speeding up the process.
“This further move demonstrates our commitment to improving the speed with which we can provide the finance that customers need by offering brokers the opportunity to ensure the valuation process is instructed and completed at the right time, whether via AVM, drive-by, or full valuation, for them and their clients.”
Ranjit Narwal
Richard Deacon (pictured), sales di rector at Tuscan Capital, said this further enhancement to the Fast Track process means a large portion of their bridging loan customers will benefit from both cost and time savings.
T he new AVM policy complements
ridging and development finance lender Kuflink has introduced selfinstructed AVMs via Hometrack for residential property cases.
Kuflink simplifies valuation process with AVMs
Increasing speed while reducing borrowers’ costs
Property finance made simple
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From enquiry, to application and through to underwriting; it takes the right experts throughout the journey to make your deals work smoothly.
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PROTECTION INTERVIEW
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to cover a myriad of eventualities, whether income protection, life cover, or critical illness.
According to Hollingworth, the suite of protection products can be tailored
“Advisers will therefore play an increasingly important role in ensuring households understand the need for the right protection products, as well as advising them on the right products to suit their needs,” he said.
WHAT PROTECTIONSHOULDINCLUDE?
he cost-of-living crisis is continu ing to affect homeowners across the country, with energy bills on the rise and only expected to increase further with the changes to be made in October and January.
Brokers have a crucial role to play
“A conversation about the benefits of protection is one that will generally need to be provoked and, as an adviser, we are committed to ensuring it is something that our customers take on board,” Hollingworth said. At the very least, Hollingworth explained that L&C Mortgages wants its customers to be in a position where they are aware of the benefits and understand the potential implications of not taking protection.
“It is so important for borrowers to consider protection policies when they are taking a mortgage,” said David Hollingworth (pictured), associate director of communications at L&C Mortgages.
“Brokers are a vital part of ensuring that homeowners and buyers understand their position and the benefits that protection could bring,” he said.
PROVIDING PEACE OF MIND
Hollingworth explained that buying a home is a key trigger for many to think about how they and their families would cope if a breadwinner were unable to work due to illness – or, worse still, if that person were to die. He acknowledged that it is a difficult conversation to have, especially when customers may be focused on the exciting purchase of a new home, but Hollingworth said it is a crucial thing for them to think about.
The added features and benefits –such as helplines, access to virtual GP appointments, or second-opinion services – that now often come with protection policies are likely to have greater resonance and appeal in the post-pandemic era.
David Hollingworth
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How important is protection during a cost-of-living crisis?
“We have even seen the benefits of home and contents insurance in the case of extreme weather events, given the floods and forest fires of recent years,” Woodbridge added. “It is important that brokers highlight the role of protection products in cushioning consumers from financial shocks down the line.”
“However, the current cost-of-living rises can only make protection advice even more challenging to broach as households focus on cutting back,” he said. Hollingworth believes that circumstances could even see some looking to give up on existing policies to save on their monthly outgoings, which he added could be a costly decision if the worst were to happen.
Dave Woodbridge, regional sales director at Linear Financial Solutions, said that amid growing economic uncertainty, there is no doubt that
“As the real value of wages is being eroded by inflation, many consumers will struggle to meet the financial challenges of replacing lost, stolen, or damaged items without the correct cover,” he said.
As a result, many are looking to ways they can cut down on their monthly expenditures, with financial experts rec ommending scrapping Netflix subscrip tions and cutting down on takeaways as the first steps. However, while many may be cutting back, it’s crucial not to think that scrapping protection policies is a way forward – as it may ultimately prove to be a false economy.
protection is more important than ever.
Likewise, he believes a growing number of households may find it difficult to keep up with bills or other payments if they lose income as a result of poor health. As such, he said that protection policies will go a long way to providing some much-needed security in precarious times.
BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com
On top of the above approaches, Jefferies also said that brokers can use the website cherryplc, which allows brokers to converse online about specific topics or cases.
“PRIMIS held a workshop in June for which we recorded a huge turnout, and some cases were solved during this event through the education and knowledge that was imparted,” Jefferies said.
“The market will continue to evolve, and the cost-of-living crisis will eventually begin to bite customers; as such, brokers need to learn about the specialist market so they will be able to help these consumers when the time comes,” Jefferies said.
ongoing education is more important –criteria are constantly changing, and so staying up to date can be challenging, but it is essential,” Jefferies added.
BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com
As such, improving the education of brokers on specialist products has never been more important, as better knowledge should result in better customer outcomes.
Looking to what could be done to improve specialist education, Jefferies acknowledged that the specialist market is included in broker qualifications such as“CeMAP.However, the vast majority of knowledge a broker picks up is on the job, and therefore by them choosing to operate only in the mainstream market, they are limiting themselves,” Jefferies said.
“The use of technology and sourcing systems is a broker’s best friend; however, it’s important that they get out there and learn on the job, which can be done by simply using the technology available to assist them,” Jefferies explained. She believes brokers must not be afraid to try new approaches and take on complex cases, because solutions are out there.
Looking ahead, Jefferies said that, given current market conditions, the specialist market will be key in the near future.
“A difficult period is approaching, and brokers need to be aware of how the specialist market can help consumers,” she concluded.
Vikki Jefferies
“While the exams are necessary, the
ith people’s finances across the UK becoming more and more complex due to the cost-of-living crisis, the pandemic, and inflation, the use of the specialist market is becoming increasingly significant.
This, in turn, will not only help more cases reach completion, Jefferies said, but also improve the speed at which cases are turned around.
“People have not felt the worst of the cost-of-living crisis yet, as many will have had savings built up; however, it’s coming, and brokers need to be prepared,” Jefferies said.
Vikki Jefferies (pictured), proposition director of PRIMIS, explained that brokers believe there is a distinction between the specialist market and the mainstream market. However, she said that they should have knowledge across the board.
The importance of educating brokers on the specialist market
She believes that people will really start to feel the effects of the crisis around the beginning of next year.
EDUCATION INTERVIEW
She noted that brokers must attend events, read press articles, and welcome business development managers in order to continually improve their understanding of the constantly evolving sector.
In order to really improve the specialist industry and the lack of education regarding it, Jefferies explained that a mixture of methods is required – including face-to-face meetings, events, webinars, looking through materials on lenders’ websites, and moving forward with
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technological advancements.
“The best way to really affirm a difficult case in a broker’s mind is to complete that specific type of case several times, which will make the approach on the broker’s side become a habit,” Jefferies said.
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She added that by attending events, brokers can speak with one another and gain insight into difficult cases by speaking with other industry figures. This, she noted, in some respects can be more beneficial than exams, although she said that the two go hand in hand.
There is a distinction between mainstream and specialist –but should there be?
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Assetz Capital focuses on relationships with people – whether clients or employees, they are at the heart of everything it does
“ We are a can-do business. I think that’s especially so now, with Andrew Charnley joining as managing director – he embodies that. He’s extremely approachable; demanding, but also very good at getting things done. And I think that’s how Assetz sees itself, as the lender that gets things done.”
have the option of hybrid working whereby they can choose to be in the office for 50 per cent of their working week. Standley explained that the company offers a lot of autonomy to its employees, and there is an entrepreneurial spirit to the firm that makes for a positive and unique working environment.
Standley went on to explain that while economic uncertainty is being felt, particularly with rate increases and trying to remain competitive, Assetz Capital has had a few months in which it has seen lending at a pre-pandemic level. The team at Assetz is working hard to keep rate increases to a minimum, and it is fixing interest rates across bridging and development finance.
“ When we say fairer growth for all, what we mean is that everything that we do is geared toward helping every party involved to grow in a fair and reasonable way – and we all benefit from each other doing well,” he said.
ASSETZ CAPITAL INTERVIEW
F
“We’re known as being able to do deals that a lot of funders can’t. We use [our] experience to look for a way to make it happen. We don’t like saying no to people. Obviously, there are some things that we just can’t do, but, for the most part, we’ll look at ways that we can apply this real-world lending approach and offer a sensible package.”
To further motivate and support employees, the company has recently launched the Assetz Academy, an online competency-based learning platform whereby employees can further their knowledge or learn different areas of the business in order to upskill themselves.
build and nurture relationships with borrowers by meeting them face-toface and going to development sites in order to really understand who they are and what their business is about. Standley explained that this personal approach is what makes Assetz Capital stand out in the industry.
L aunched in 2013, Assetz Capital saw a gap in the market when it came to SMEs and property developers who did not have access to fair funding. By recognising that building properties and expanding business would help prop up the economy, Assetz Capital sought to make it simple and fair for these smaller businesses to borrow money to enable them to grow. Fairer growth for all is a core value of the company, as explained by Mark Standley, national commercial director.
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“When we say fairer growth for all, what we mean is that everything that we do is geared toward helping every party involved to grow in a fair and reasonable way –and we all benefit from each other doing well”
A ssetz Capital is an open and flexible employer. Post pandemic, its staff of approximately 130 employees
BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com
rom marketplace lending and strong personal relationships with clients, to investment in employees through a newly launched training academy, Assetz Capital is future-proofing itself in a way that only a company born of a financial crisis can.
T he business has evolved and grown, and so, too, has its key proposition – Standley’s more accurate description is “real-world lending.” Assetz Capital has a team of corporate professionals from a wide range of backgrounds with decades of experience among them, who
INTERVIEW 19
Mark Standley
ASSETZ CAPITAL
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directors based throughout the UK to ensure that its personal approach can be maintained no matter where the client is. It also works hard to maintain relationships with brokers, from whom 90 per cent of its business comes.
Assetz Capital has a team of corporate professionals from a wide range of backgrounds with decades of experience among them, who build and nurture relationships with borrowers by meeting them face-to-face
Assetz Capital has also expanded its bridging products into residential and commercial in order to diversify beyond development lending.
INTERVIEWOnceanapplication
is accepted, the rate is fixed for three months –something that Assetz feels is a USP of its own.
A ssetz’s main goal is to continue to help businesses to grow, even in times of uncertainty, and it is constantly striving to improve business to ensure this. For example, it has recently taken on institutional funding, and it now has the ability to offer larger loans of up to £50 million. Standley explained that “while it may seem like turbulent times are ahead, our appetite and our ability to fund bigger deals, more complex deals, and support larger house builders and developers is absolutely there, and we want to make that clear to people.”
Longevity seems to be the aim for Assetz Capital, and its willingness to adapt and improve in the face of adversity is allowing it to go from strength to strength and grow just as well as the businesses it is helping.
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T hat’s not to say that Assetz has forgotten the smaller developers – it continues to support them, including those in places that are often overlooked by lenders. It has increased its lending in Wales by 30 per cent by supporting local property developers who have had an uptick in demand for good-quality housing. Other areas on which Assetz focuses are the care sector, funding care home acquisitions, supported living, and student accommodation. In fact, a large development loan for student accommodation in Sheffield has recently been taken out by Taj Ubhi, who did the first-ever loan with Assetz Capital and has gone on to fund and repay around 15 more projects with the firm after initially not having been able to secure funding through traditional routes. Ubhi says of Assetz, “The banks weren’t helpful, so I was forced to look for another way to finance the deal. The Assetz Capital team are fantastic, and I have absolute belief in what they are developing, so it was great to see every aspect of this deal come off to perfection. I will definitely seek funding through [them] for future developments.”
With its head office in Manchester, Assetz Capital has relationship
With over 30,000 retail investors on the Assetz Capital platform, it has the scope to fund throughout the country. Post-pandemic, Standley feels that Assetz Capital is being proactive in
“ Partnering with institutions allows us to diversify funds for everyone involved, so we aren’t just relying on retail investment.”
changing to meet the future. Beyond the introduction of a hybrid working environment, Standley feels like the company has become more efficient since adapting to different ways of working when everyone was confined to their houses. He went on to explain that they have now taken on institutional funding in order to diversify investment for borrowers and reduce borrowing risk.
InflationOctober.hasalso reached a new 40-year high, as well as the MPC upping the base rate from 1.25 per cent to 1.75 per cent in response to soaring inflation, which it predicts will rise above 13 per cent in the fourth quarter – two per cent higher than its previous forecast, and up from 9.4 per cent in June.
ith the cost-of-living crisis continuing to have an impact on people’s daily lives, there has been a knock-on effect in commercial and development funding.
Chris Oatway, chief executive of LDNfinance, echoed Standley’s points, but noted that, behind the scenes, lenders are cautious about offering fixed rates, as they themselves cannot predict where rates will be even in the next few months.
How will these factors affect the commercial and development markets? Predictions are never easy; however, Bridging Introducer, in association with Assetz Capital, gathered experts from LDNfinance, Together, Movin Legal, LendInvest, Sancus Lending, Shawbrook, and Assetz Capital itself to get their sense of what’s ahead.
Mike Jessop, relationship manager at LendInvest, concurred, and added that some of the main challenges lenders are seeing are within the planning process of bridging propositions.
However, Mark Standley, national commercial director at Assetz Capital, explained that the funding landscape right now is still good.
Standley went on to say that rising interest rates favour fixed rates, which were something that people had rarely been interested in in the past but that are quite topical now.
Bridging Introducer recently hosted a discussion on what the future holds for the commercial and development markets
21www.sfintroducer.com SEPTEMBER 2022 BRIDGING INTRODUCER MARKET ROUND TABLE
“In addition, because of the price inflation that we have seen, it is difficult to get contractors now to commit to a fixed contract without sensible escalators, etc. So there are a number of things facing development and term lenders,” he added.
“Solid, strong competition remains, and I am not consciously aware of any firms that have stepped away or massively changed their approach to things. So, at the moment, I think the backdrop for term borrowers
Household bills have continued to rise and are only expected to increase further in October and January 2023, alongside rising inflation and the Bank of England upping the base rate at consecutive Monetary Policy Committee (MPC) meetings.
Looking to what issues developers are facing, Standley explained that there is a general shortage of skilled traders, as well as hesitation in starting builds. This, he said, is because of materials cost inflation, and he added that between April 2021 and 2022 the cost of building a house rose 22 per cent.
ASSESSING THE LANDSCAPE
“I think the issues in the planning are around timeframes for local authorities to give approval on parts of the application, which is contributing to the slowdown in people being able to start new projects,” Jessop said.
HOW IS THE COMMERCIAL AND CHANGING?FUNDINGDEVELOPMENTLANDSCAPE
and developers is good and strong,” said Standley.
“I suppose the good news is that the supply chain seems to have come back in good shape again. I think capacities have changed to suit the demand,” he said.
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The cost-of-living crisis is upon us and will likely only continue to worsen as the energy price cap is upped again in
“Atmoves.themoment I think there are a few things on developers’ minds; however, we do see an opportunity there for the right clients in the right areas,” he added.
In addition, Jessop believes the sales market, given the current issues facing affordability, is causing additional problems. He noted that with Help to Buy coming to an end and no confirmed new scheme to replace it directly, developers are assessing their next
likely a few lenders will be cautious.
“I feel developers have got some strong headwinds; I think land prices are going up and we still see some delays across our client book due to [the difficulty of] getting hold of labour,” said Richard Whitehouse, director at Sancus Lending.
“There are masses of competition in the development space, which is good for clients and good for brokers,” added Simon Knowles, senior director of development finance at However,Shawbrook.henotedthat there are challenges afoot, and Knowles believes it will be important to see how lenders deal with them, specifically over the next six months.
“It will be interesting to see what lenders’ appetites are like for new business going forward; will the number of lenders that were in the market in January this year be the same next January?” Knowles wondered.
22 BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com MARKET ROUND TABLE
“It is not always about the cheapest price, but who is actually going to deliver – and this is something brokers need to be aware of from lenders. There is a strong appetite to do more, but it comes down to the right people for the right product, as well as the right location, which are the key [characteristics] of any development finance assessment,” Knowles said.
As a result of this, she believes customers are increasingly going to need to speak with their brokers to establish what alternatives they have available.
CHRIS
Chris Taylor, director of origination at Together, explained that the market is still looking to develop, and noted that it will be interesting to see the progression over the next 12 months.
“The rising costs in terms of materials and cost supply chains has been offset to a degree by end prices going up as well; however, that is not sustainable. There are also challenges around contingency levels and advanced payments,” said Knowles.
“There is definitely a challenge in terms of timescales, and things being turned around at the moment are taking an awful lot longer down the traditional route”
Whitehouse noted that he has started to see caution from borrowers within the industry, in terms of the speed at which they are making decisions.
“I think everyone echoes here that the importance is on picking the right clients and the right location in terms of developing the right product,” Taylor said. He noted that it is a very challenging market in terms of competition, but he believes developers are still waiting to assess their budgets before considering an exit.
Knowles went on to say that he believes the number will likely decline, although he noted that he does not believe there will be wholesale withdrawals – more
Emma Hall, key relationships director at Movin Legal, offered her views from the legal side of the process. She suggested that third parties are putting the pressure on – and she noted that at the moment, this is actually helping to get deals done.
EMMA HALL, MOVIN LEGAL
Ultimately, he believes that lenders will have a massive part to play over the next 12 to 18 months because he says brokers’ choice of lenders is going to be key when considering deals, given the financial climate.
“There is definitely a challenge in terms of timescales, and things being turned around at the moment are taking an awful lot longer down the traditional route, which is going to push people into some of the lesstraditional options,” Hall said.
“[M]ost people I speak to have just reported the biggest quarter they have ever done and that their pipeline is looking strong” OATWAY, LDNFINANCE
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Meanwhile, Jessop went on to note that he had seen a slight slowdown, with developers in some cases not able to push the button and start building until they have got their planning permission in place.
“In spite of the uncertain market conditions coming up, those developers we are comfortable lending
“[B]ecause of the price inflation that we have seen, it is difficult to get contractors now to commit to a fixed contract without sensible escalators, etc” MARK ASSETZSTANDLEY,CAPITAL
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“We are seeing huge inquiry levels for refurb, but that is likely skewed by the fact it is brand-new for us,” he Whitehousesaid. also explained that he does not think people are afraid to take leverage; however, he said that it had almost become a necessity because of the input cost.
“What we have noticed is that people, particularly brokers – because our main point of contact is the broker – are engaging with us a lot earlier than they would have done traditionally in the transaction,” she said.
“Turnaround times have slowed, which is largely due to borrower hesitation, and that I would say has been driven by the financial environment,” he said.
Looking to what the market is likely to see more of, Oatway explained that those developers who have been caught up in the planning system for several years were beginning to get permissions granted and progress with applications.
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to because they can mitigate any risks that come across from their end, we are continuing to [lend to],” Jessop Whitehousesaid.concurred with the points made on inquiry volumes and said that Sancus Lending invested in its origination team last year, which he explained has paid dividends this year.
He also believes the increased cost of capital across various lending platforms is going to start to bite, and said that will start to have an impact on the choices lenders make, and/or the availability of those lenders to support “However,projects.weare still seeing lots of inquiries, we are still writing lots of business, and it remains a very competitive market, so people are not running for the hills just yet,” added Whitehouse.
IMPACT ON INQUIRES
From Hall’s perspective – as she highlighted that Movin Legal is 80 per cent residential and 20 per cent commercial development – she said she had not seen a change in inquiries.
He added that good projects from experienced developers were still easy to come by, and he noted that LendInvest’s retention rate on business had remained consistent.
However, he noted that in order to keep levels up, developers will have to continue adapting to keep cash“Weflowing.haveseen plenty of residential transactions, and commercial units are up, too. As such, the market has remained robust,” said Taylor.
“If you develop the right product in the right university town, then there is a lot of opportunity. This is a market that has picked up steam due to the pandemic resulting in more students working from home,” Knowles said.
Knowles, meanwhile, explained that student accommodation was a good market seeing high levels of inquiries, and said that if it were done right, it would be beneficial for customers as well as the devel-opers.
He did concede that things can change, but said the market is still seeing high levels of inquiries and new deals are getting funding.
“Despite that, we are still seeing decent volumes, and we see an opportunity in the coming period on our development exit product as well. We are still seeing people willing to push leverage,” said Jessop.
“It is strange because everyone is so nervous about the market at the moment and where it is going to go, but we are all sitting here relatively happy because most people I speak to have just reported the biggest quarter they have ever done and that their pipeline is looking strong,” added Oatway.
“There is plenty of liquidity in the market, so we are certainly not seeing any change at the moment – but what the future holds, no-one knows right now,” he said.
Hall believes this may be because clients are →
Looking to the impact of current market conditions on inquiries, Taylor said there had not yet been a drop off.
“Conducting advanced due diligence, and understanding as a lender what we will and will not accept, help a transaction move a lot smoother,” saidHeJessop.wenton to explain that LendInvest had an established panel monitoring surveyors and valuers to understand the nuances that can occur, which he says helped to improve the speed of deals.
“I cannot think of the last loan we wrote with a single-digit contingency percentage against it, so just having borrowers with realistic expectations of lender requirements would go a long way,” added Whitehouse.
IMPACT ON LENDERS
According to Standley, on the Assetz Capital side, inquiry volumes are holding up, and he believes there is a lot of opportunity in the market right now.
He continued, “They are looking at all sorts of bonds and insurance, but, generally speaking, that is not how it works.”Jessop said the market had learned a great deal around contingency in recent years and explained that it continues to play an important role.
more nervous and asking more questions due to the margins, particularly on commercial, and even on some
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Knowles explained that he believes it is about how transactions are being approached, particularly in terms of risk assessments.
WHAT ROLE CAN BROKERS PLAY?
Whitehouse explained that there is a huge degree of skill and capability in the broker market and said that brokers help developers understand exactly what the customer is after.
“We are seeing an upsurge in certain things such as chunkier commercial mortgages, but I think that is reflective of how our proposition is rather than any market dynamic,” he added.
Standleyadded. says he has also been getting early inquiries to feel out the various circumstances of a development before fully engaging.
“They have got that guaranteed exit, so I think a lot of the time we are perhaps dealing with a more diligent client now, which … is making us more comfortable with the transaction,” he said.
24 BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com
“Werefurbs.haveseen a little bit more caution with clients and that they are not necessarily taking the risks that they used to take because they have not got that comfort of an ever-growing market in front of them,” she
He explained that Together has its social housing channel, which he says developers are using.
“When you look backwards, what I learned in the last recession is the issues with taking notice of economic forecasters,” he said. “It’s like when the weatherman tells you what sort of summer we are going to have next year – there are so many variables. So it is very reassuring to hear that inquiry volumes are holding up.”
“Viability testing has become a much bigger feature of our decision-making process than perhaps it was a couple of years ago. It helps make sure that the borrower is in a really strong position to explain their procurement process, as well as their relationship with the contractors and the professionals that they are working with, on top of how they have sought to secure their supply chain,” Whitehouse said.
He outlined that what lenders want to understand, particularly in what are slightly more difficult times than perhaps 12 or 24 months ago, are viability, testing on projects, and the reason or incentive for the borrower to complete the project.
Understanding the role brokers can play in assisting a transaction is important, as this will benefit both developers and customers.
This, he explained, helps developers understand cost certainty and allows them to work out the likelihood of the project taking place and being successful.
Delving into the impact on lenders and whether there are issues with transactions, Taylor said, “A lot of our clients have got more cautious on their exit.”
“We assess everything on a case-by-case basis, but for argument’s sake, say we have a client who wants a heavy steel frame going in, and it’s a £2.5 million contract, and the steel supplier wants £2 million of it, what are we going to do there?” questioned Knowles.
“We have seen plenty of residential transactions, and commercial units are up, too. As such, the market has remained robust”
CHRIS TAYLOR, TOGETHER
Knowles, meanwhile, said that given the pandemic and Brexit, understanding how lenders will behave in less-than-ideal environments had risen in importance.
According to Hall, if all parties within the transaction are open with each other and there is clear communication, then often issues are spotted earlier than when the broker tries to shield the client until later in the process.
“When you are doing my job, you have got to understand the deal, you have got to understand the client, and you have to make sure you are valuing the lender’s time,” he said.
Oatway also concurred that introducing things earlier greatly benefits the transaction.
He added that once you know the deal, you know the numbers, you understand the client, their experience, their construction methods – then you can present it properly to the lender.
He added that brokers should consider how a lender is likely to behave in a situation in which additional support is needed, and bear in mind risk dynamics and changes throughout the development.
He also echoed previous points on early introductions, as he said this can help speed up the process as well as improve it for all involved.
make a quick decision on whether this is something they would consider or not,” he said.
On top of this, Whitehouse explained that it is important to understand the marketing plan, as well as what tests have been conducted, and to know the demand for the type of units in place.
“Brokers will do well to build up a rapport with lenders and to build on their relationship so there is an increased degree of trust and certainty between the two – this goes a long way in understanding reactions in difficult times financially,” said Knowles.
“From a conveyancing point of view, it is also about being able to have access to that client quite early on to get your ducks in a row, because, same as with the lenders, the conveyancers are experts in their field, so they will be looking at the transaction from a different perspective and potentially asking different things that maybe no-one else has picked up on that could affect the whole deal,” Hall says.
“As a broker you want to set up the meeting, set up the Zoom call, and start driving it forward – but it is not about trying to just throw the case away and get it done quickly from day one. The broker’s role in all of this is to actually understand the deal and not just to support it via email and hope that the case progresses,” Oatway said.
He also explained that managing expectations is important, and through a relationship between bro-kers and lenders they will understand what certain lenders can and cannot do in particular situations.
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He explained that brokers are just as much part of the process, as they understand the client and the deal better than others involved within the project – therefore, he said, they must work to impart this knowledge to the lenders and conveyancers.
Standley, in turn, believes it is important that brokers balance their service and pair the correct customers with the right lenders.
“Brokers can be resistant to giving us early access to the borrower to start discussing the facility, but I think in terms of getting a well-structured and deliverable solution, getting to this point as early as possible will improve things,” Whitehouse said.
MARKET ROUND TABLE Real world lending. www.assetzcapital.co.ukssetzcapital.co.uk Untitled-1 1 24/08/2022 17:07
“As such, the brokers must manage the expectations of their customers – but through relationships with lenders they will be able to access the best solutions available,” said Knowles.
Oatway added that once you have packaged the case properly and presented it in the right way, at that stage you must make the introduction to the lender.
“I think maybe in the current environment, it is worth taking that next step for brokers and looking to understand how a lender behaves if things do not go exactly to plan. So, if there is a bridge facility and it runs past the term, how does the lender behave in that situation?” he asked.
“I
“Once you have all of this information, you can select the right people to send the case to and you can give them all the information that they need to feel developers have got some strong headwinds; I think land prices are going up and we still see some delays across our client SANCUSRICHARDbook”WHITEHOUSE,LENDING
Hall explained that brokers are key within the process as they understand their clients’ wants and needs.
Jessop said that lenders need to be able to react to any changes in the market, and explained that COVID was a prime example, as most construction sites around the country basically shut down overnight, albeit for quite a short period of time.
“Therecontinue.aresomany
“My big thing is education – are lenders keeping brokers educated on their products and their processes? In addition, are brokers keeping themselves up to date on lenders’ requirements and what they will and will not do?” Hall wondered.
In addition, he believes there will be more opportunities, but fewer people taking advantage of them, which he noted will be beneficial for those who do remain in the market.
“Brokers can drastically assist with all of this, as they work to connect the customer with the other moving parts in the application and can also help in getting customers to fulfil their side of the project faster,” said Taylor.
“There is a general view that sale prices are going to start to stabilise rather than increase, and that there may even be a correction next year, so continued communication and openness among those involved in the process will really help,” Knowles said.
“It is going to be a challenging couple of years in the industry. I think one thing that is not going away is where housing and development sit in a political landscape,” said Jessop.
Hall believes that the market will likely stabilise in the near future, and added that she does not think it can continue growing forever.
Taylor explained what he would like to see going forward and what he believes will do well in shaping the market for clients. He put the focus on collaboration, as well as the customer providing all the necessary information accurately and quickly.
26 BRIDGING INTRODUCER SEPTEMBER 2022 www.sfintroducer.com
He believes Homes England and similar entities will continue to support lenders and developers in the market and provide innovative solutions to keep projects funded appropriately, as well as push toward the government’s housing goal and closing the
LOOKING TO THE FUTURE
Meanwhile, Whitehouse is expecting interest rates to continue to rise and a tightening in the capital markets.
He believes this will disrupt capital markets and will result in some funding lines being drawn back or tightened, and noted that could take some funders out of the
“I think there will be fewer lenders in the market – not a complete collapse of the space, but I think one or two people, through a tightening in the capital markets, will be forced to exit,” he said.
“There are masses of competition in the development space, which is good for clients and good for brokers” SIMON SHAWBROOKKNOWLES,
“[W]e are still seeing decent volumes, and we see an opportunity in the coming period on our development exit product as MIKEwell”JESSOP, LENDINVEST
B I
Oatway believes there will be more opportunities in the near future for build costs as he noted that margins have been too tight in this area.
“Ultimately,deficit.Ithink lenders need to work on long-term relationships with clients and be there for them when things do not go exactly to plan because, more often than not, they don’t. I believe lenders need to be nimble as well,” he added.
“However,market.aslong as those that are still there are standing strong, then they will be able to pick up the slack and the market will continue operating efficiently,” Standley concluded.
MARKET ROUND TABLE
“We are in a rebalancing phase, armed with central governments across the world writing cheques they cannot cash. We all knew there was a price to pay. Here it is – rising inflation and tightening monetary policy,” said Standley.
lenders out there who offer different propositions, and, frankly, there is a corner of the market for most developers – it is just a case of the broker understanding what the client wants to achieve as an end result, as well as right now,” he Knowlessaid.noted that finances are a challenge right now due to the cost-of-living crisis, inflation, and rising interest rates.
Taylor added that, looking forward, he would like to see firms bringing in more experience and allocating specific roles to people who have worked on certain scenarios within projects to help push past the hurdles.
Jessop said that understanding clients’ wider business plans and their priorities in terms of pricing or flexibility was something he would like to see
She explained that there is a lot of change in the market at the moment, and, as such, she believes it is essential that lenders and brokers be up to date and aware so that, ultimately, customers will benefit.
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Worried about interest rates in the current climate? At Assetz Capital, our bridging rates have always been fixed for the duration of your client’s Plus,loan.
Assetz SME Capital Limited is a company registered in England and Wales with company number 08007287. Assetz SME Capital Ltd is authorised and regulated by the Financial Conduct Authority in respect of its peer-to-peer lending platform only. ’Assetz Capital’ is a trading name of Assetz SME Capital Ltd. Assetz SME Capital is registered with the Office of the Information Commissioner (Reg No: Z3338899) for data protection purposes.
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Colin Mottram, Relationship Director: Bridging
