9 minute read
Interview Paul Brett of Landbay keeps the lines open
Keeping in touch
As the mortgage industry and its customers reel in the turbulence of the UK economy, Landbay’s Paul Brett tells Simon Meadows that communication with brokers is key
“I t’s been a very challenging time for everyone,” declared Paul Brett, managing director of intermediaries at buy-to let-lender Land Bay, referring to the recent tumultuous period for the British economy. “No one was immune to the shock – it didn’t matter if you were a lender, a broker, a borrower, or an applicant. The most important action we could take was to keep communicating with our broker partners.”
It was reported that more than 40 per cent of mortgage products were withdrawn across the industry in the week after former chancellor Kwasi Kwarteng’s controversial mini budget. Brett, who has been with Landbay’s fast-growing lending platform for five years, acknowledged the pain that the Bank of England’s interest rate increases had caused for both the broker community and its clients. Landbay had actively worked to ensure it maintained a direct dialogue with them, he said.
“Across the mortgage industry, we have seen applicants who have been disappointed because they lost the rate they initially applied for, especially if their application was in the days preceding the mini budget,” Brett reflected. “We weren’t immune to this, and had to offer revised pricing to a relatively small number of cases that were at the very beginning of their journeys.
“It’s incredibly disappointing for me to disappoint our brokers and applicants. However, difficult decisions had to be made to ensure our funders were not significantly in the red.”
DIRECT CONTACT
Brett said he ensured that Landbay’s team spoke directly to brokers.
“As I mentioned, communication is key, and any difficult conversation was had either face to face or over the phone,” he said. “One of our brand behaviours states, ‘We never hide,’ and it was imperative that we not hide behind an email in this instance. Ultimately, it’s about trust. If brokers don’t trust us, then how will they ever promote our products?”
Brett said, “We make sure that our underwriters are also available to our brokers. Every case is different; that’s what keeps the specialist buy-to-let market interesting. Some applications can be quite complex, and that’s why you need experienced underwriters, who can actually look through and review cases, using all of their knowledge and experience.”
He continued, “I am very mindful that there can be a level of anxiety and tension along the chain, in a purchase scenario especially. The applicant may have chosen the broker from among many, and, of course, the broker is well aware they have to deliver. I’m also very mindful that there are plenty of other lenders in the marketplace a broker could choose. So it’s important that, as a lender, we constantly remind ourselves of this fact and work hard to keep on our A game.”
Some mortgage advisers were in regular contact with Landbay and there was already an established rapport, he said.
“It’s also important, I believe, that the brokers feel assured that there is an empathetic person dealing with their enquiries and case submissions through to completion,” said Brett. “There has never been a greater need for brokers and the detailed knowledge they provide, in my view.
Paul Brett
Any lenders who discount the need to engage with brokers ever more closely do so at their peril. However, this may not be true of all lenders, and factors such as lender size and market segment lead to differing levels of engagement.”
BROKER AND LENDER
What perhaps helps Brett take a more encompassing view of the mortgage sector is the fact that he’s seen the business from several perspectives. “I’ve been in the industry a long time,” he said. “I’ve been a broker, a packager-distributor, as well as a lender, and I recognise the massive importance of brokers. We’re in it together with them.”
Over a career spanning thirty-five years, Brett was part of the launch team and business development director at Foundation Home Loan, as well as holding senior sales and marketing roles at lenders SPML, Borro, and Masthaven. He owned and ran mortgage packager FastCom, and set up the packager association Freehold.
Landbay has increased mortgage lending year-on-year since it launched in 2014, and is expected to complete more than 3,000 mortgages this year, valued at around £800m. In total it has lent £1.7bn across more than 7,600 loans. Today it employs 146 employees.
Brett described the culture of the London-based business that has been his focus since 2017.
“We look at Landbay internally as a ‘customer experience company,’” he said. “We’re incredibly inclusive. Over the last few years, we have invested significantly in our own technology – we don’t use a thirdparty platform to process applications – and this has gone a long way in increasing the user experience for our broker partners. We will shortly be in a position to offer a streamlined retention product to our borrowers, as it’s clear across the industry that, in a world of turbulence, lenders work to keep existing borrowers on their books – in full collaboration with their brokers, of course.”
A PROFESSIONAL’S MARKET
Brett said it was his belief that, in future, the buy-to-let market will be geared toward professionals.
“You’ll hear some commentators say buy-to-let is doomed, and then you hear other commentators say there’s never been a better time to invest,” he observed. “What I will say is that the market has been moving ever more to professional landlords, and these are the ones who will see opportunities to expand their portfolios.”
He said, “Landlords have been an easy target for governments looking to win political points, and it looks like they may be hit again with a potential increase in capital gains tax. However, professional landlords are a resilient bunch. They’ve experienced other challenges in terms of removal of tax benefits and they’ve adapted. We have to remember that we have a limited amount of property in the UK and there is still massive demand.
“Recently I heard a London letting agent say they receive between 40 and 60 applicants for each property [available to let]. If you’re going to take away rental property, what are you going to replace it with? Whether we like it or not, the ability of potential purchasers to save for a deposit to purchase a home has just got a lot more challenging, as if it weren’t tough enough in the first place. We need more landlords, not fewer of them. We all know that we need more homes to be built. Never since the post-Second World War council-house building programme have governments met their new-build property targets. Too many housing ministers providing short-term strategies and tactics cause inconsistency and chaos over the longer term.”
Brett added, “Rental yields increase, and in some areas we’re already seeing an uptick of around 20 per cent over the last 12 months. There will inevitably be a period of adjustment before such increases permeate the country.
“Investors like property as an investment, and of course they can use leverage to get it. Buy-to-let isn’t for everyone; however, for some it’s more than an investment – it’s their business. It’s vital that we always have a strong supply of landlords, or potential landlords, who are wanting to purchase property as an investment to provide good-quality homes for tenants.”
A BETTER UNDERSTANDING
What would Brett advise brokers in the current economy?
“My advice would be not to panic and to communicate the reality of the situation we are in right now regularly to their clients,” he said. “Look at all options and actually get a real understanding of what the most important requirements are for their landlord applicants. Really understand the products and criteria that are on the market. If brokers take the time out of their week to upskill and get a more detailed understanding of criteria and lender idiosyncrasies, especially within the specialist lending market, it could enable them to help more potential-landlord borrowers, which, of course, will then help them grow their own businesses.
“It’s going to be a challenging year ahead for brokers, and they will absolutely need to keep a very close eye and ear on the financial press, and keep in regular contact with lender BDMs. The difference between now and the credit crunch
is that there wasn’t the money to lend back in 2008–09. Obviously, part of the reason why the Bank of England is putting interest rates up now is to try to take money out of the system. However, generally, financial institutions have money to lend, and still want and need to lend it … just at the right rates, so they may continue to operate within the constraints of their commercial and risk models.”
A FABULOUS ROLE
Brett clearly thrives on his work in the mortgage industry and little, it seems, could keep him away.
“There have been a couple of times when I’ve started other ventures, apart from borrowing, to actually move away from the industry – but I feel like it draws me back!”
His current role is one that he relishes.
“It’s a fabulous role in that I’m very privileged to see inside other people’s businesses. There are some incredible entrepreneurs and really creative businesspeople in the mortgage market. I’m a very curious person. I’m really, really fascinated by successful people – by good, strong leaders and what makes them tick, what drives them, and how they cope in adversity.
“It makes me feel quite humbled that I’m trusted by some very senior people within the distribution and lender world. I visit brokers who are incredibly successful, generating a lot of income and employing many people. I also love helping to develop the careers of my team, and look forward to seeing their success in the industry.”
As his interview with Mortgage Introducer drew to a close, Brett said he had made some great friends within the industry.
“There are some incredible characters and some very, very kind, very generous people in the mortgage industry,” he reflected. “And I think that if you embrace the industry, the industry embraces you back. I’m at a very blessed stage in my career. It doesn’t feel like work. I feel like I’m helping other people.” He laughed. “I didn’t choose to come into the industry, I feel like the industry chose me – and I’m very pleased that it did.” M I
