Bridging Introducer December 2019

BRIDGING

December 2019

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INTRODUCER

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Champion of the Bridging Professional

The dynamic duo Emma Cox and Gavin Seaholme talk 2020 priorities BRIDGING IN-DEPTH

INDUSTRY COMMENT

YEAR IN REVIEW

ROUND-TABLE

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Comment

Publishing Editor Robyn Hall Robyn@mortgageintroducer.com @RobynHall Managing Editor Ryan Fowler Ryan@mortgageintroducer.com @RyanFowlerMI Deputy Editor Jessica Nangle Jessica@mortgageintroducer.com News Editor Ryan Bembridge RyanB@mortgageintroducer.com Reporter Michael Lloyd Michael@mortgageintroducer.com Editorial Director Nia Williams Nia@mortgageintroducer.com @mortgagechat Commercial Director Matt Bond Matt@mortgageintroducer.com Advertising Sales Executive Tolu Akinnugba Tolu@mortgageintroducer.com Campaign Manager Joanna Cooney joanna@mortgageintroducer.com Production Editor Felix Blakeston Felix@mortgageintroducer.com Head of Marketing Robyn Ashman RobynA@mortgageintroducer.com Printed & distributed in England by The Magazine Printing Company, using only paper from FSC/PEFC suppliers www.magprint.co.uk

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BRIDGING

INTRODUCER It has been quite a year hasn’t it? With the constant ‘will we or won’t we’ of Brexit followed by a change in Prime Minister and ending with a General Election. Phew! It has been a lot to keep up with, but luckily it seems the industry has been largely unaffected by the goings on in Westminister and Brussels.

This issue focuses on the year gone by, with many members of the industry voicing their thoughts on what the highlights of the year have been along with the challenges they have faced.

“Luckily it seems As the year draws to a close, we sadly say the industry has goodbye to Benson Hersch been largely at the ASTL, who after seven years at the helm has unaffected by decided to pass the baton the goings on in onto Vic Jannels who heads up the association Westminister and from January 1. Benson Brussels” has been a great advocate for the industry and he will be missed by all those involved in bridging finance.

You can read Benson’s reflections on the past seven years on page 25.

This month, Bridging Introducer interviewed Emma Cox and Gavin Seaholme from Shawbrook to discuss their thoughts on 2019 and the many propositions they have released throughout the year.

Despite challenges ahead, the pair seem optimistic for the future and have many exciting plans ahead. Turn to page 36 to find out more.

Finally, from all of the team at Bridging Introducer, we want to thank you for your continued support and wish you a very Merry Christmas and a Happy New Year. 2020 is set to be an exciting year, and we have many changes happening which we can’t wait to show you.

We will see you again in January when we will have an election result, a potential EU departure and continued political chaos awaiting us!

Specialist Buy-to-Let

5 Terry Pritchard

Hopes for the future of Peerto-peer

7 Kevin Thomson

It’s not so grim up north

9 Damien Druce

Getting the right people for the right deal

10-22 Year in Review

Our experts look back on the past 12 months in bridging

10 Jonathan Sealey 13 Gavin Seaholme 15 Roger Morris 17 Jonathan Samuels 19 Marcus Dussard 21 Narinder Khattoare 22 Matthew Tooth 25 Benson Hersch

The final news and views from the outgoing chief executive of the ASTL

26 Round-table

Our panel discuss the latest market issues

34 Cover - The dynamic duo Jessica Nangle catches up with Emma Cox and Gavin Seaholme from Shawbrook

38 Alan Dring Time for time

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DECEMBER 2019

BRIDGING INTRODUCER

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Comment News

The P2P landscape Hopes for the future

Last week I was asked to comment on the peer-to-peer (P2P) market.

Some of the industry are suggesting that the sale of the investment should be on an advised basis.

Frankly up-to that point I had given the subject little thought, however, I have devoted some considerable time to the matter and researched the situation in more depth.

To recap, my comments were usually based around the fact that the idea of advised sale is an ideal situation for all parties. However the main issue with this was the reporting by each funder of their actual performance. This point on its own rules out any adviser being able to give accurate information to a client, as they do not have comparable information to put forward.

Interestingly since that article was published, I was contacted by a gentleman called Rupert Taylor who has created a company called Brimsco. Before you ask, I also enquired as to where the name came from and it is in fact the Welsh word for Prism which in my mind is a spurious link to the job they actually do - but I suppose we cannot have everything! Despite the name, Rupert eloquently talked me through their proposition which in my mind instantly solves the issues the industry has with a standardised reporting structure that all could use, and something that offers the investor real-time information on each potential investment company/ funder.

The metrics used cover all the areas any potential investor would want and can offer a good basis for advisers to work from. The problem that I can foresee is that some who are not keen to be so transparent will shy away from such a detailed reporting structure and these are the www.specialistfinanceintroducer.com

ones that should be worried about their long-term funding strategy.

The fact is P2P particularly has to go through a transformation and period of “clean-up”, so those that do not like this sort of potential industry standard reporting system really need to either work on how they will survive in a market that requires radical change if it is to remain a viable proposition.

Some people will take my comments as meaning I am becoming anti-P2P which is certainly not the case, in fact we are hoping that by the end of February we will have our own P2P platform as we merge with an existing brand.

However, the differences we will have are, a) we WILL be using the Brimsco reporting system and b) we will also be offering a capital protection product which is exclusive to us but will be available to the market at some point in the next few months. These two additional product benefits should (I hope) help us take at least a small

Terry Pritchard director, Charter HCP

step toward encouraging others to follow suit.

With further regard to Brimsco and the reporting system, I can see that this or something similar is a tool that can be used by other lenders to attract funding options which is something that may help the UK lending market grow again - especially overseas investors who need a level paying field to make their investment decisions.

It will be interesting to see over the next few months if the P2P funded lenders actually do anything about their situation or whether they just continue to hope things change. My theory is the latter, which would be disappointing.

I hope that this at least starts a debate on what is done next because there is limited time left to make changes before the regulator is forced to make changes themselves.

Perhaps the ASTL and other similar trade bodies can look at introducing a system such as Brimsco to make the job of auditing simpler.

DECEMBER 2019 BRIDGING INTRODUCER

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Comment News

Head North Diversification is happening from both property investors and lenders

For many years London and the South East has been the main focus for investors of both residential and commercial, however the drop off in the London market together with the regeneration of a number of northern cities has meant that investors from around the UK, including those based in the south and south-east, are now looking outside of London to the North. A key reason for this is that investors can now find higher yielding properties in many northern towns in comparison to the London market. Many associate this just with residential but increasingly these investments include houses in multiple occupation (HMOs), student lets, semi-commercial as well as fully commercial assets.

Fundamentally, property prices are so much lower in the north that they can be just a fraction of the price of a property in London but the yields, while not as high as in London, are continuing to rise. Where the London and South East property prices have dropped over the past three years, property prices in the north continue to rise, as they do around the rest of the country too.

Needless to say, expats and foreign investors have also not been slow to catch on to this trend, although many lenders impose minimum purchase prices for this type of investor which can be a barrier, not everyone is deterred.

The drop in the pound also helps here as it makes property purchases relatively cheaper than they would otherwise have been.

Here is a quick look at some of the key cities and why they are www.specialistfinanceintroducer.com

seeing the development that they are. There are a lot of developments of blocks of new flats in cities like Birmingham, Liverpool, Manchester and Sheffield.

These are either new developments or conversions of former industrial buildings and investors have been known to buy several at a time. Other investors are still taking advantage of the relaxation of the rules around Permitted Development Rights in order to convert smaller commercial buildings into residential in and around these cities. Lenders have also caught onto this movement and, whereas in previous years they preferred developments around London, now they have an increased appetite for the North as the risk profiles have changed.

Birmingham The Commonwealth Games of 2022 will take place in Birmingham and regeneration has already commenced.

This should not only help to grow the local economy but also to increase the population both of residents and students, which in turn will increase the popularity for student demand.

These circumstances are increasingly favourable for investors both of residential and commercial property as they are likely to benefit from increasing property yields.

Liverpool Liverpool continues to benefit from the regeneration that occurred in the past few years and that looks to continue throughout 2020 creating more residential and commercial opportunities. The retail market

Kevin Thomson sales director, Connect for Intermediaries

in Liverpool is booming as are the surrounding, hotels, bars, restaurants and office space.

In turn the yields on all of these properties are increasing attracting property investors who may not previously have looked at this region.

Manchester Probably the first of the northern cities to really grow and develop into a transformed, attractive city.

Manchester gained popularity in business circles, attracting more businesses into the city and with it the young professionals, student population and young families.

This in turn has led to an increase in business owners wanting to buy their own commercial properties here so it is now an established city for the property investor.

Sheffield Not currently in the same league as my other three highlighted cities but maybe one to watch in 2020 as it catches up on its counterparts. With low priced property the opportunity for high yields and property price growth will encourage not only buy-tolet investors but also commercial investors as has happened in Manchester.

These are just four cities where we are seeing increased demand from investors whether that is property for conversion, refurbishment or development.

I’m sure 2020 will be a really positive year for the north which will need to be supported by specialist brokers with expertise across buy-to-let, HMOs, student lets, semi-commercial and commercial property.

DECEMBER 2019 BRIDGING INTRODUCER

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Comment News

New business opportunities Knowing who to rely on for large loans will give you an edge

When the final Bridging Introducer issue of 2019 lands on your desk, the results of the General Election will be known and the endless and interminable debates will be over.

The industry has been crying out for a period of stability. There is a pent up demand, which is just waiting to see whether a new government will provide a background for the property market to thrive, or on the other hand pursue policies which inhibit at best, or at worst seek to further depress demand for home ownership, kill off second home ownership and halt both commercial and residential development projects.

However, being the optimist I am, and on behalf of property builders, lenders, property owners and those who aspire to own property or look to rent privately, I sincerely hope that when I wake up on the 13th December, we are finally in a position to have that certainty and the pent up demand for funding will find the conditions right to open the floodgates.

In the world of property development, there are an untold number of deals which have been put on hold, pending a new government and the end of Brexit uncertainty. In the event of a government still wedded to the principle of endeavour and enterprise there is likely to be a resurgence in demand for funding, particularly in the London market. Those green shoots will inevitably drive the need for larger short term bridging loans.

For the intermediary sector, there are great opportunities to generate new business from www.specialistfinanceintroducer.com

builder and developers. However, while there is plenty of funding available, the question of where they go to find the kind of larger loans that will be required is one which brokers need to be able to answer as soon as possible.

There have been plenty of announcements from lenders claiming to have the appetite for larger loans but there has to be a question over whether, for many of them, there is significant funding actually available, rather than just a limited tranche for appearances’ sake.

What do I mean by larger loans?

We are all used to bridging loans for traditional purposes, which can start from as little as c.£50,000, but for larger deals we are looking at loans which can go well in excess of £10m, it is therefore important to make sure that when you are putting your trust in your lender of choice that they are truly able to deliver.

In my opinion, it is healthy to adopt a degree of cynicism about the claims being made by some lenders. A prominent bridging broker told me recently that large loan enquiries can require more work, simply because of the number of approaches that need to be made to multiple lenders. For all the hype there are probably only thirty lenders, many of which are family offices open to a select few, which have the capacity to write larger bridging loans and fewer who have a genuine capacity.

Of course, it looks impressive to claim that large loans are part of your portfolio if you are a lender, but in reality in many cases it is just a marketing ploy, to make advisers believe that the

Damien Druce consultant, retained by InterBridge

particular lender in question is a ‘genuine’ player. Other contacts have also told me that they are tired of seeing brokers sucked in by the claims on offer, only to find that it is just a tactic to generate enquiries.

It would be easy to believe that with the growing number of bridging lenders and the increasing volumes of business being transacted, that all was fine and dandy in the sector.

However, while at the moment, there is enough capacity to satisfy demand, we need to be aware that the property market is

“For all the hype there are probably only thirty lenders, many of which are family offices open to a select few, which have the capacity to write larger bridging loans” hardly functioning at anywhere like it could, if the economic and political situation was sorted.

The consequent release of pent up demand will see developers’ plans resurrected swiftly, followed by the demand for funding and particularly large loans.

My feeling is that there is genuine shortage of capacity at the moment and brokers would be well advised to start doing their research and become aware of the lenders they can rely on for large loans when the enquiries come through.

Predicting the outcome of a General Election is a difficult call and I am not going to attempt it.

All I hope is that we got what we were all waiting for.

DECEMBER 2019 BRIDGING INTRODUCER

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Year in Review

Review of the year 2019 A detailed look at the year gone by

The year is dominated by talk of Brexit with ‘will we or won’t we leave the EU?’ As three leave dates come and pass by again as playground politics continues in Westminster, as does the speculation all year ad nauseam.

With floods one minute and record temperatures the next, school pupils strike repeatedly as part of a global campaign for action on climate change while Extinction Rebellion brings a number of cities to a halt.

Meanwhile the bridging industry is just ‘getting on with things’ with demand for bridging loans rising ever higher, a raft of new lenders continues to enter the market, seeking higher returns than they feel they may achieve elsewhere.

as the Met Office records 21.2°C in London, as wild fires take hold across the UK. Despite political shenanigans and temperature fluctuations, the ASTL reports bridging lenders are “growing in confidence” about the long-term prospects for the UK. The trade body’s sentiment survey showed 57% of lenders were now confident, compared to just 27% a year before; 75% of bridging lenders expected to grow their business volumes in the next six months.

Growing business volumes are clearly luring more lenders into the market as Brightstone Law reports the number of short-term lenders entering the market was up by 50% in 2018 over 2017.

March

January We kick-start the year with MPs backing an amendment to the Finance Bill, to limit the Treasury’s powers in a no-deal Brexit scenario.

Theresa May’s government survives a no-confidence vote by 325 to 306t In the bridging world the ASTL reports the bridging market grew by 15% in 2018 as members wrote more than £4bn of bridging loans for the first time. Hope Capital clearly bucks the trend and announces it more than doubled its lending in the past year. It also announces the appointment of Gary Bailey as MD to drive growth still further.

March deadline comes and goes and the UK is still in the EU. MPs reject Teresa May’s withdrawal bill for the third time and so a three month extension is requested – eventually the EU agrees a withdrawal date of 31 October.

For the first time in many years, an existing bank, CYBG, owner of Clydesdale, enters the bridging market with a pilot scheme. But Bridging Introducer reports that “some lenders are pulling in their oars as they await the outcome of our exit from Europe [while] others are capitalising on the slow down to pick up business they may not usually have seen”.

February

April

February starts with hundreds of schools closed across England and Wales as icy weather hits Britain. In a complete about-turn, the month ends with a heatwave; the UK winter temperature record is broken

The steam rises in April with the hottest Easter Monday on record, the Met Office reporting 25°C in Heathrow, Northolt and Wisley.

The temperature is not the only thing to rise; the National Living

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BRIDGING INTRODUCER

DECEMBER 2019

Wage increases 4.9% from £7.83 to £8.21. More chaos in central London as Extinction Rebellion cause disruption and 1000 people are arrested.

Jonathan Sealey chief executive, Hope Capital

May After a tumultuous few months, Teresa May announces her resignation effective from 7 June, while Labour expel Alastair Campbell from the party.

The UK’s first 5G mobile network goes live, while both Jamie Oliver’s restaurant group and British Steel go into administration. In more serious issues, the UK finishes in last place in the Eurovision Song Contest with a score of just 11.

While everything was rising in April, some things were on the down this month. One report showed bridging loan interest rates fell to their lowest level since 2015, down to just 0.74%, with LTVs decreasing to 51.3% in the first quarter of the year, a 5.7% decrease from Q4 2018. Following the theme of low rates, Hope Capital launches its lowest ever interest rate at just 0.69%.

The ASTL reported bridging loan completions were also down - to the lowest level since Q3 2017, although the value of bridging applications hit a record high in Q1 of this year at £5.96bn.

June In a good month for football, the first all-English UEFA Champions League Final since 2008 saw Liverpool defeat Tottenham Hotspur 2–0 in Spain.

In politics Donald Trump has a three-day visit to the UK and Teresa May’s turbulent time as prime minister finally comes to an end.

Before she goes she announces a www.specialistfinanceintroducer.com

Year in Review

new legally binding target to reach net-zero greenhouse gas emissions by 2050, making the UK the first major industrialised nation to propose this goal.

Peer-to-peer lending hits the headlines and not in a good way, as Lendy enters administration, threatening to damage the reputation of all around it. The bridging industry hopes that, after such good work in the past few years to raise its reputation, that it is not tarnished by the collapse.

July Boris Johnson becomes Conservative Party leader and Prime Minister and appoints Esther McVey as housing minister - the twentieth in twenty years.

The conversation in the bridging industry is about recruiting and retaining the best people. With a dearth of trained and experienced underwriters, much is made of the need to bring in younger people and those from outside of the bridging industry to train up a new generation of underwriters.

August The government announces an extra £2.1bn of funding to prepare for a no-deal Brexit, doubling the amount of money it has set aside for 2019, and taking the total since June 2016 to £6.3bn.

Demonstrations are held across the UK in protest at Boris Johnson’s decision to suspend parliament, while more than 100 MPs write to the Prime Minister demanding a recall of Parliament to debate concerns that the UK faces “a national emergency” over Brexit.

The ASTL reveals that more than £1bn of bridging loans were written in Q2 2019, an increase of 14.4% over the same quarter last year, with bridging loan applications hitting a record 12 month high of £22.13bn – a £9.5bn annual increase.

September In an eventful month in politics, Boris Johnson states his opposition www.specialistfinanceintroducer.com

to calling a General Election, and urges MPs not to vote for “another pointless delay” to Brexit. He then withdraws the whip from 21 Conservative MPs who voted against the government, and the government loses its majority in the House of Commons after Conservative MP Phillip Lee joins the Liberal Democrats, and Boris’s brother Jo resigns as an MP stating he is “torn between family and national interest”.

Thomas Cook collapses after 178 years in business, triggering the largest ever peacetime repatriation as 150,000 holidaymakers are left stranded.

Hope Capital launches a new bridging product to help residential property purchases called the Hope Seven 5 with a rate of 0.75%, up to 75% LTV and on loans up to £750k.

There are calls from MPs, in response to the Treasury Select Committee report ‘The Work of the Financial Conduct Authority: The Perimeter of Regulation’ to give the FCA further powers to regulate the whole bridging industry. While some feel that this will create a level playing field, others are vociferously against it. There is also a growing call for transparency in the bridging market, particularly of fees.

October Boris Johnson publishes his Brexit plan, which includes proposals to replace the Irish backstop.

However, after a special Saturday sitting of Parliament, the first since the Falklands conflict, held to debate the revised European Union withdrawal agreement, Boris is forced to send a letter to the EU requesting an extension to Article 50, but refuses to sign it. MPs vote 438 to 20 in favour of a general election on 12th December.

The Office for National Statistics reports that 726 homeless people died in England and Wales in 2018, a 22% rise from 2017 and the highest increase since records began.

Lendy administrators take legal action against borrowers and make PII claims to recoup investor losses.

Hope Capital appears on the front cover of Bridging Introducer for the sixth year running – and wins a prestigious award for Equality Employer of the Year. The subject of women in finance both in bridging and across the wider industry has been gathering momentum all year, with clear recognition the industry needs to do more to encourage more women to enter and progress.

November Parliament is dissolved in preparation for the general election, while Sir Lindsay Hoyle, MP for Chorley, is elected Speaker of the House, replacing John Bercow who stepped down after ten years in the role. Clydesdale withdraws from the bridging market again after launching its pilot scheme in February.

Hope Capital doubles its lending term from one year to 24 months.

ASTL reveals bridging loan applications rose 17% in Q3 to reach £6.1bn as the total loan books for members reached £4.3bn, 5% up on the same period last year.

December While the election has not been held at the point of writing, a tongue-in-cheek look into the future reveals no clear majority for any party and so now we go into Christmas with the parties continuing to battle it out in order to form a coalition.

The bridging industry looks likely to end the year on a high having had what looks like its most successful year to date, despite the turbulence. While sentiment has clearly been affected by the ‘will we, won’t we?’ of Brexit, the resilience of both the industry and the population at large is remarkable.

After three years of wrangling, developers and borrowers of all types appear to be getting on with things, which bodes well for 2020.

Whatever the final outcome of Brexit, businesses and borrowers appear to just want a clear outcome so that they can now plan for the future.

DECEMBER 2019 BRIDGING INTRODUCER

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07/02/2019 09:33

Year in Review

What next for bridging?

Looking forward to 2020

The Association of Short Term Lenders recently found that despite the current political uncertainty, over three quarters of lenders expected business growth in the bridging sector in the first 6 months of 2020.

The healthy competition in the bridging market has seen the average monthly interest rate for bridging loans fall by over 0.06% from January to November. The bridging market is currently in a good position to continue the growth it experienced toward the end of this year, with AVMs and dual legal models reducing the costs of applications and bridging products providing opportunities to a wide variety of investors even in uncertain times.

Trends in the 2019 bridging market

During 2019, Shawbrook saw a growth in the amount of bridgeto-let applications, which looks likely to continue to increase next year. With landlords and property investors struggling to receive the same return on investment from their portfolios in recent years, investors are looking to diversify.

Bridge-to-let - where investors can secure a property they may otherwise find difficult to finance with a traditional mortgage, that also has the added benefit of a reliable exit onto a term mortgage, is a product attracting a wide range of customer profiles. Whilst some are landlords looking to diversify into HMOs to benefit from the better return on investment, others include developers looking for a more secure strategy until the market settles.

As mentioned, high yielding investment types such as HMO’s are presenting a great opportunity www.specialistfinanceintroducer.com

09:33

for property investors in 2019. A bridging loan with this type of exit can be used to lightly refurbish a property, whether the client would like to convert it into a HMO without facing major structural or licensing challenges, or just help to improve its general condition to increase the rental yield.

With the uncertainty in today’s market, some investors are temporarily changing their investment strategy to hold until the market is less turbulent. Bridging loans tend to be a flexible source of finance that can allow developers and property investors to secure a property that they would be unable to finance elsewhere. With this uncertainty continuing into 2020, this type of bridging loan looks set to continue its strong growth.

Innovations

Although switching from a bridging mortgage to a term mortgage may sound like a complex process, many lenders, including Shawbrook, offer a simple and hassle-free process.

This is also the case for the typical bridging application, once seen as an expensive and time-consuming last resort. Applications can now be completed in a very small window, with Shawbrook recently completing a large and complex £11.5m permitted development bridge in just 6 weeks.

Automated Valuation Models (AVMs), a database that uses mathematical modelling to provide property valuations, is helping to make bridging even more costeffective and one of the reasons for driving growth in this market in 2019. An algorithm is used based on local market data to estimate the current value of the property requiring a bridging loan - a level of confidence is then applied to

Gavin Seaholme head of sales, property finance, Shawbrook Bank

this. AVMs are particularly useful in assessing the value of a property portfolio.

Another reason for the reduced costs of a bridging loan in 2019 was the growing use of the dual legal model. This cost saving method is put into practice where a client and seller both use the same solicitor for their bridging mortgage. As the legal firm do not need to communicate externally and handle all the processing internally, it is likely to make the process faster and cheaper. With an increasing amount of lenders opting for this and AVMs, the bridging process becomes significantly cheaper and an attractive option for clients.

Challenges

Even with these positive developments in the bridging market, there are still challenges that brokers must be aware of, in order to manage the client’s expectations. With regulation potentially getting tighter, clients using a bridge-to-let product may qualify as a portfolio landlord which may result in stricter requirements around affordability and debtservice coverage ratio, meaning a higher rate of decline for these applications.

DECEMBER 2019 BRIDGING INTRODUCER

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Making New Year resolutions How to make sure you are fully prepared for 2020

When I was approached to write this article, I put myself in a broker’s shoes and asked myself what New Year’s resolution should I make to ensure I’m fully prepared for 2020?

Without a shadow of a doubt, the single most important thing you can do in the New Year is to promise yourself to get the training you need to ensure they can continue to meet their customers’ needs.

The buy to let market has gone through an enormous upheaval in recent times and one of the biggest challenges for brokers is the amount of knowledge they now need to know. With education now arguably more important than ever, you should place it at the heart of their business and set aside a certain amount of time every week solely dedicated to it.

Not only is it essential to growing your team’s knowledge, confidence

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Year in Review

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and ability to provide solutions, it can help produce a more positive attitude in the office, grow the team and help them to become more productive.

So now you’ve made your New Year’s resolution, what do you do next? To start with, I would get as many meetings with business development managers booked into your diary as soon as possible.

Business development managers can add real value to your business.

Ask them to send over a training plan showing which topics they cover and choose the ones which fill in the gaps in your knowledge, whether that’s about products or criteria. If you arrange for them to visit you, they will come in and provide targeted education-based training that can give your business the edge.

Take residential mortgages, for

Roger Morris director of sales, Precise Mortgages

example. When was the last time you did some training on how to read customers’ accounts? Do you know what income can be taken into consideration? What are net retained profits? Can you read accounts with confidence or would you like to have a refresher on how to read company accounts?

Or how about the growing interest in HMO properties? With more investors keen to explore the opportunities HMOs can provide, are you up to date with the planning laws and permitted development rights (PDRs) that surround them?

When a customer purchases a property, what will the property be classified as when it’s occupied?

Is the customer’s intention to rent it to one family as a C3 dwelling house or are they going to rent it to three or more unrelated people as a C4 House in Multiple Occupation (HMO)? Are they planning to convert it from a C3 to a C4 using permitted development rights?

If they are, is the property in an area covered by an article four order which will need planning permission? If they are to rent to seven or more people comprising of two or more families, will this need planning permission?

If you’re not sure about the answers to these questions, the chances are your customers aren’t either. We’ve expanded the team considerably in the last two years which means that wherever you’re based, one of our business development managers is never far away if you need support.

We also hold regular workshops and training sessions in locations around the country to educate brokers about the products and criteria that can help you and your customers to keep pace in a fastmoving marketplace.

DECEMBER 2019 BRIDGING INTRODUCER

15

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Year in Review

Reflecting on 2019 Three major trends have been seen in the bridging industry

This article is ostensibly a review of the bridging sector in 2019 and so it’s a little bit odd that at the time of writing it the thing that will prove to be the biggest event of the year for our industry – and indeed every other sector of the UK economy – is something that hasn’t even happened yet: the General Election.

Without doubt, December’s vote will be the most important General Election for generations. The result, by a distance, will be the biggest development within the bridging sector in 2019. If Boris Johnson stays in Number 10, and with a decent enough majority, then our sector will be able to breathe a sigh of relief.

But if Jeremy Corbyn gets in, 2019 could go down as a dark and ominous year for the bridging sector, for the simple reason that we would have a Prime Minister who is absolutely opposed to any form of wealth creation. Rest assured that the property market, like many other areas of the economy, will be right in the line of fire.

The impact of a Labour win, or Labour-led coalition, on the property market could be immediate and pronounced. I was at a Savills event a month or two back and some of its experts were predicting valuations in some areas could be cut by as much as 20% overnight in the event of Corbyn taking up residence in Downing Street. That’s how serious it is.

Anyway, by the time you’re reading this, the hope is that Corbyn won’t be in power and, better still, will be out of the cabinet altogether having been given the heave-ho.

If he is in power, then you, like me, will probably be piling up the sandbags and waiting for whatever comes next, Christmas port in hand.

Moving onto what actually has www.specialistfinanceintroducer.com

15:11

happened to the bridging market in 2019, I’d say there have been three major trends. The first is the sharp growth in the number of refurbishment bridges, both light and heavy. There are two main reasons why this is happening: landlords manufacturing value and being forced to compete with PRS. An example of landlords manufacturing value in 2019 is the conversion of many houses into multiple units, and bigger houses, once planning permission is secured, into HMOs. HMOs offer particularly strong yields and so in the current environment, with margins under pressure, are proving very attractive.

The other reason why refurbs have been a major force in the bridging sector during 2019 is the game-changing growth of the Private Rented Sector (PRS). To cut a long story short, PRS has upped the bar in the rental market significantly and is putting massive pressure on professional portfolio landlords to up their own games.

The second major trend in 2019, without a doubt, has been the continued growth in developer exit finance, which didn’t even exist as little as two years ago. Its rapid takeup is understandable enough: with units taking longer to shift, the extra time and reduced cost developer exit loans offer is proving a real lifeline to developers.

The third trend we’ve seen, which is especially pertinent for the Bridging Introducer readership, is how loans are taking a lot longer, on average at least, to complete. The reason for this, surprise surprise, has been Brexit, which is causing many specialist lenders, lawyers and valuers to be extra cautious when processing loans.

To improve the chances of a

Jonathan Samuels chief executive, Octane Capital

quick completion time, at various roundtable events throughout 2019 our valuation, legal and credit experts have been recommending that brokers and borrowers ask solicitors to carry out their searches much sooner than they traditionally would. This can cost as little as £200 but save a lot of time further down the line.

Another way to speed transactions up is to contact valuers as early into the process as possible. That way, if an early view comes in below what your client was expecting, they can respond accordingly and take action. This could be getting a second opinion from a different valuer or rethinking their strategy more generally.

To put it another way, what we’ve seen take place in 2019 is savvy and switched on brokers looking a lot further ahead into a transaction and seeking to pre-empt any potential road bumps, typically downvaluations and surprises in the searches. In a year of such political uncertainty, the more proactive you have been, the more control on deals you have had.

DECEMBER 2019 BRIDGING INTRODUCER

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Year in Review

2019 bridging trends The bridging market is showing its strength in difficult times

It’s hard to write a review of 2019 without mentioning the B-word, but while the news agenda has been dominated by stories of uncertainty, the bridging market has shown why it is so robust and sustainable.

The great benefit of short-term lending is that, during times of change, its uses can be adapted to help clients react to the changing landscape, and amidst the political gloom, the bridging market has recorded another strong year. So, what have been three of the main trends we’ve seen?

Development exit loans

A consequence of a stagnant housing market is that we’ve seen a significant increase in the demand for development exit loans, which help developers to manage their cash flow while they market a completed scheme.

A developer’s options once they have completed a scheme, depend on their intentions. Those who are retaining the development to let out will usually refinance onto a longerterm solution at this stage.

And, for developers who want to sell the properties that they have developed, a development exit loan is a crucial tool to buy more time when sales stall, which explains why the product has been so popular this year.

Development exit loans are usually charged at a lower rate than a developer’s initial development finance facility and so this can provide a saving on interest payments and give them more time to achieve the best sales price.

But they can also help developers to manage their cashflow and many investors also use development exit loans to release equity from their scheme to use towards funding the first stage of future projects. www.specialistfinanceintroducer.com

Longer-term products

Another consequence of the uncertain environment in 2019 has been the rise in the popularity of longer-term products. With timeframes stretching out on transactions, a growing number of clients are opting for loan terms of two or three years and there could be times when a longer-term of five, or even 10 years, provides a client with the space and time they need to secure the most opportune exit.

There are obviously considerations about how long a client may be tied into a loan with early repay-

and the products can even include the flexibility to sell an agreed percentage of the properties during the ERC period, giving the client a product that works on their terms.

Bespoke technology Marcus Dussard sales director, Castle Trust

“The great benefit of short-term lending is that, during times of change, its uses can be adapted to help clients react to the changing landscape, and amidst the political gloom, the bridging market has recorded another strong year” ment charges (ERC) before they can exit without cost, but in an environment of subdued purchase, longer term short-term products can prove a very useful tool for brokers and their clients, particularly if they offer flexibility alongside certainty.

This is why, at Castle Trust, we launched development exit products that are available on a threeyear term with a 2-year ERC. These products provide developers with the extra time they need to properly market their scheme and achieve the best possible price, without the inconvenience and cost of having to refinance after 12 or 18 months.

Developers are also able to repay the loan without penalty any time after two years if they are able to do so

As the bridging market has matured, lenders have invested in technology to deliver brokers with better systems. The problem is that few lenders claim to take a onesize-fits all approach and there’s a big emphasis on tailored products and bespoke solutions to match the individual circumstances of clients.

However, technology platforms are often an off-the-shelf package, purchased from a technology provider. There is nothing wrong with this per se and a lot of the off-the-shelf packages have been fine-tuned across several iterations with different lenders and are pretty comprehensive. But, while they can be adapted to match individual lender requirements, they are not bespoke and so do not necessarily align smoothly with lenders that offer a bespoke service.

This year we have started to see the emergence of bespoke technology to support lenders that take a bespoke approach. At Castle Trust, for example, we launched a number of significant enhancements to our broker portal in 2019, and we chose to develop these changes in-house in line with feedback from our brokers and input from our experienced team. It would certainly have been easier to buy an off-the-peg package, but that would not have given us experience that we wanted to offer to our brokers. This bespoke technology has therefore helped to shape the way we have worked with brokers this year and so has been one of the key trends we’ve seen in 2019.

DECEMBER 2019 BRIDGING INTRODUCER

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Year in Review

Putting our own house in order Let’s aim for funding delivered on time at an affordable rate

As we reach the end of another year and settle into the ‘relaxing’ holiday period with family and friends, most of us would be forgiven for already looking forward to what 2020 holds for the sector. I won’t begin to go into the wider political and economic situation which we might be looking at from January, just our own part of the lending market.

One of the areas which is going to be part of the debate around the bridging sector next year will inevitably centre around regulation.

There is no doubt that the sector is out of line with the rest of the lending market.

Having a two speed compliance structure offering different conditions for commercial and noncommercial business was always going to come back under the spotlight at some point.

Once the regulator has sorted its ‘cleanliness issues’ out, 2020 looks likely to be the year it comes back to the table.

However, to my mind, as a sector we are probably not helping ourselves by the way in which disparity still exists in two main areas.

Firstly, the different ways in which some lenders lack transparency about their terms and conditions and secondly, the way in which complaints from advisers about lending practice can be ignored.

Are these big problems? Probably not among major lenders however, with the current ease with which new bridging lenders can set up shop, standards of disclosure of terms, particularly around exit conditions and charges for late repayment, are not universally transparent.

In an ideal world, broker www.specialistfinanceintroducer.com

complaints would also be handled in a spirit of mutual respect and co-operation.

The sector could help itself by putting its own house in order and show the regulator that it already has a template which could be adopted to address these and other issues, such as mandatory training for advisers via suitable exam and qualification procedures.

The importance of relationship building

It is often said that the lending business is essentially a people business and, while we believe we are particularly sophisticated today, it is worth reiterating the vital nature of the relationships that make businesses like ours successful.

Good communication and partner engagement remain essential in the forging of strong relationships within the specialist lending arena.

It’s evident that by speaking to, and more importantly listening to, an array of brokers that we continue to build a better picture of what is required on the front line.

It’s fair to say that all providers have had to get closer to brokers and a variety of strategic partners in order to ensure the right levels of service and offerings are being provided.

This is especially so for those operating within the short-term lending arena.

Thankfully, strong relationships have long formed the backbone of this particular sector. It’s a real positive not only to see these continue to flourish, but also to observe such passion in the championing of the benefits attached to short term finance, as well as professional standards being

raised across the board. All of which bodes well for the year ahead and for even more positive statistical data to emerge.

All that glitters…

Narinder Khattoare chief executive, Kuflink

One of my personal concerns is the use of teaser rates by some lenders, which understandably attract brokers who want the best deal for their clients, but are in many cases just a method to draw clients in.

As time is always a factor in bridging, time is allowed to elapse, excuses are made as to why that case does not fit the criteria, and a different rate is then offered when there is less chance of switching to a different lender.

Of course, the new rate bears no resemblance to the headline rate originally advertised.

Leading on from that is the growing phenomenon of slow bridging, which should really be a contradiction in terms. The number of clients who come to us because of their chosen lender’s lack of speed or reluctance to provide an offer (in many cases until it is too late) is becoming more common and is a hard and costly lesson for a client to learn.

However, the good news is that there are bridging lenders who still believe that speed and service are more important than unobtainable ‘pie in the sky’ headline rates.

Their clients will often be better served by ditching some of the show ponies of the bridging market and coming straight to those lenders who understand the importance of delivering a sustainable product offering backed by service which delivers what their clients need. Strictly short term funding, delivered on time, at an affordable rate.

DECEMBER 2019 BRIDGING INTRODUCER

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Year in Review

A look back at 2019 Rising housebuilding and the growth of the reluctant landlord

It’s fair to say that 2019 has not exactly been the quietest of years.

We haven’t left the EU after all, we’ve had a change of Prime Minister and are closing out the year with the small matter of a General Election.

Given the political and economic turmoil, there’s no doubt the property market has faced an interesting time. So how have things developed?

A strong year for housebuilding

One thing that we have seen up close has been the strong performance of property developers.

According to the most recent statistics from the Ministry for Housing, Communities and Local Government, in the first half of the year more than 87,000 new homes were completed in England alone.

You have to go back to 2007 to see a better first six months on the homebuilding front, an excellent sign that some progress is being made towards ramping up our housing production.

The Help to Buy scheme has been a big driver here, making these new build homes more affordable ‒ and therefore attractive ‒ to a new generation of homebuyers.

It’s also notable that this increase has taken place against a backdrop of uncertainty, where plenty of developers are putting projects on hold in order to see what happens with Brexit.

Once that situation is cleared up, one way or the other, then we should see an even more substantial increase in new homes coming to the market.

The rise of the reluctant landlord However, it’s impossible to ignore that the overall market has continued to slow over the last 12 months.

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BRIDGING INTRODUCER

The provisional figures from HMRC suggest that in the first three quarters there were just under 883,000 transactions involving residential properties.

That’s not just down by 8,000 on the same period last year, it’s the lowest figure for that period seen since 2013.

This is having a very real knock on effect for developers, who are faced with far fewer potential buyers once their projects come to an end.

Where once they may have had the entire development sold off once the building was concluded, now they could be left holding onto the keys for a handful of homes.

As a result, we have seen a rise in what you might term the reluctant landlord.

These investors would previously have chosen to sell the property as soon as it was finished, but whether due to a lack of buyers or the need to bring in a couple of years of rental income in order to boost the overall profitability of a project, they are now opting to hang onto the property as a landlord, at least in the short term.

Going pro

This has only added to the trend of increasing professionalism in the buy-to-let sector. While there is still some interest in property investment from people who see it as a nice sideline, to supplement their existing job or pension planning, the clear direction of travel is for buy-to-let to be mainly the preserve of property professionals.

Understandably, given the tax changes we’ve seen, limited company borrowing remains incredibly attractive to these borrowers.

Data from Mortgages for

DECEMBER 2019

Matthew Tooth chief commercial officer, LendInvest

Business has highlighted that in the second quarter of this year, limited company deals accounted for 52% of all completed buy-to-let loans, which would have been unthinkable just a few years ago.

Even if landlords are buying in their own names, rather than through a company, the move is towards the professional with a larger portfolio.

Paragon for example cited its survey of landlords which found that 10% of large-scale landlords are looking to expand next year, compared to just 1% of small-scale landlords.

This move towards the professional landlord is only likely to continue, irrespective of what happens with Brexit and the results of the general election.

Embracing technology

Finally, over the past year we have seen further advances in the way that the mortgage market makes use of technology.

Whether it’s the growth of online advice, the incorporation of open banking or online identity verification, the last year has seen a variety of developments on the technology front, all of which make the mortgage process slicker and ultimately more satisfactory for everyone involved.

There will always need to be a human element to mortgages ‒ it’s simply too big a commitment for all parties to rely entirely on algorithms.But there is so much heavy lifting that can be taken on by sensible implementation of technology, allowing staff members to focus their energies on where they can make the biggest difference.

Here’s hoping that trend continues in 2020 and beyond. www.specialistfinanceintroducer.com

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Comment News

The end of an era Reflecting on the past seven years

My time as chief executive of the ASTL is drawing to a close and, on 1 January, I am pleased to be able to hand over the reins to Vic Jannels who will write the next chapter for this great association. I have every confidence that Vic will continue the good work of the ASTL, giving fresh impetus to our image and membership, and I wish him all the best in the role.

For now, however, I would like to reflect on the past seven years, during which time, it has been my pleasure and vocation to help the ASTL to grow and prosper; both financially and in terms of membership and strength of profile.

Back in 2012, when I first took the role at the ASTL, annual bridging completions were at £885m. The most recent lending figures show that, in the 12

months leading up to the end of Q3 this year, completions totaled more than £4bn, and the pipeline looks strong going into 2020.

Applications hit record levels in Q3, breaking through £6bn. So, how have we achieved this?

The first thing I did when I joined was to visit each lender member individually, to see what they wanted from the Association.

I wanted to change the ASTL from an exclusive club to one which was more representative of the industry and had a clear purpose to improve standards and encourage sustainable growth of the sector.

Where there were members who were critical of how things were being run, I invited them to stand for election as directors in order to bring them inside the tent.

Benson Hersch chief executive, Association of Short Term Lenders

The image of the bridging lending industry has much improved since that time.

This must at least partially be attributed to the work done by the ASTL and its collaboration with trade publications, with whom we have worked closely, contributing comment and articles.

Representation with the FCA, HM Treasury and other regulatory bodies has also increased, and we have arranged regular meetings with other trade bodies, including a successful series of joint lender/broker meetings in conjunction with FIBA. In addition, we have provided our members with preferential access to fraud prevention schemes, facilitated the confidential sharing of best practice amongst underwriters and BDMs and continued to keep the industry well-informed with updates, data and events.

As a result, the ASTL now stands in a stronger financial position, with a loyal membership that totals nearly double what it was in 2012. This, however, does not mean that we can afford to rest on our laurels.

The wider political and economic environment remains challenging and fierce competition between lenders is putting pressure on the resource pool as well as pricing and underwriting.

In order to maintain sustainable growth, we must continue to focus on a collaborative approach to standards and training.

I know that this is high on Vic’s agenda and that the future of the ASTL is in safe hands.

DECEMBER 2019 BRIDGING INTRODUCER

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Round-table

Our panel looks at how the bridging sector performed in 2019

The year that was Jessica Nangle: How has 2019 been for the property sector?

Terry Pritchard: For different lenders it’s been completely different. Some lenders have embraced the difficulties the bridging market has had in the past 12 months and there’s the peer-to-peer front. The general public have changed their view after so much publicity about that. I don’t know what we do about that going forward. I think people such as the ASTL will have something to say about what happens there.

Mark Posniak: For us in particular the market has been business as usual. I think people forget that bridging is non-cyclical. In markets that are doing well bridging performs well because people need money quickly. In markets that aren’t doing so well whether there’s an element of uncertainty around, bridging can fill that void that is required to keep the liquidity flowing.

I think you’ve seen a shift in 2019 with far more bridging and finance being done outside of the capital as developers and investors go searching for opportunity and yield. We’ve seen a slow-moving market which to me means development exit finance is coming to the fore. It’s been a big year for developer exit finance for Octane and I’m sure other lenders too, and also for people looking to manufacture value. The growth areas for us have been on refurbishment and capitalising on a slow-moving property market with developer exits. Bridging is non-cyclical and from our point of view it’s been a very good year.

TP: That’s from your view. I’ve noticed a lot of the smaller lenders out there have struggled.

Damien Druce: I’ve been at two small lenders, albeit for only a couple of weeks now but those smaller newer lenders have really struggled to grow their market share in bridging against those more established players.

TP: Is that a good thing or bad thing?

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BRIDGING INTRODUCER

DECEMBER 2019

MP: Well we’ve been lending for two years.

DD: That makes it hard. They’ll have to do some reengineering of their proposition to get that market share next year. I can’t see it changing easily for them.

Gavin Seaholme: It can’t be a race to the bottom with rates.

DD: It can’t be. That’s why I said proposition and not price. Price is the obvious one and isn’t good for anybody.

MP: I think 2019 has brought back some of the unscrupulous practices back from those smaller lenders who can’t compete and think ‘I’ll price things at levels that shouldn’t be priced at, but I’ll do an incorrect term because I’ll catch up using unscrupulous default interest charges and unscrupulous exit fees’. And it’s not just the smaller lenders playing that game, some of the larger lenders trying to compete with these guys are. It’s dangerous and it’s taking our industry back to where we don’t want to be.

TP: And I don’t think the public have not noticed it either. I saw a confidential survey that featured a question: ‘how likely are you to use bridging finance to solve problems?’ and the previous year that was something like 65%, but it’s gone down to 48% this year. There was a question underneath asking why and the answers went back to the same thing, the publicity surrounding the market over the past 12 months. They said it was an independent survey.

MP: They’re right.

JNangle: Some people say publicity in the industry has really improved, trying to make the industry more reputable. The story that sticks out for me at Mortgage Introducer and Bridging Introducer was from the bridging lender, BridgeCrowd that thought it was appropriate to release an advert about their low rates where the advert suggested rates couldn’t get any lower and the image was off a lady unbuttoning her shirt. The reaction was surprising as everyone was absolutely aghast by it and couldn’t believe it was still happening. I wonder if anyone else can add to this point of publicity. Do you think it’s on a good level or do you think 2019 has seen quite a lot of negative publicity?

DD: I think the quality that lenders position and portray themselves has really improved. It’s at a much better level and feels more mainstream, the messaging and the branding, the PR. Everything that is external, customer/ broker facing is at a very high standard but you just get let down by those odd occurrences. www.specialistfinanceintroducer.com

Round-table

From L to R: Mark Posniak, Octane; Gavin Seaholme, Shawbrook Bank, Emma Cox, Shawbrook Bank; Vic Jannels, Impact Specialist Finance, Phil Mabb, Bridging Development; Terry Pritchard, Charter HCP; Damien Druce, representing InterBridge; Arwel Griffith, Robert Sterling; Jonathan Newman, Brightstone Law

Emma Cox: I think we’ve all been committed to professionalising this market on the basis we’re looking to serve customers who are professionals in their own right. Back when we first entered the bridging market we had a tough job trying to convince professional property investors who would otherwise use their own finances to use alternative finance. I think we overcame that, and the reputation of short-term lending has much improved and I think everyone is committed to continuing to deliver to those high standards.

MP: We have to stamp this out the people who hide default interest charges as discounted interest and people who charge 5% the day the loan goes beyond term. It’s not fair. I’ve highlighted this on LinkedIn on a number of occasions and FIBA has grabbed the baton but we’ll still waiting for them to publish the information. I know from speaking to a number of lenders that some have changed the way they operate to be more transparent and treating the customer fairly. Until we stamp out those grubby practices our sector will be left behind. I feel really passionate about it and raise it all the time. Ultimately if we can protect our industry and have better practices for all we’ll all be better off. www.specialistfinanceintroducer.com

Vic Jannels: Isn’t it education throughout the whole piece? There are a lot of people coming to the market at the moment who would only do bridging once.

They’re downsizing, it’s a means to an end on a property that needs refurbishment. It’s a matter of ensuring they’re educated properly. The competition has driven down rates so there are more lenders in the marketplace and there is an issue of more lenders are trying to grab market share. And I think there’s a regulatory issue here as well. The regulator’s stance across the whole mortgage piece has always been they don’t have an issue of what the lender offers to the open market, as long as the customer fully understands what they’re entering into and it’s their responsibility to do that. It doesn’t necessarily say that’s bad practice or it’s not, because it often is, but there’s an education piece. And it’s something Jonathan (Newman) highlighted at the conference last week, that is the client, who is the the ultimate arbiter of all this, being given the full information and do they understand exactly what they’re walking into?

Jonathan Newman: In a way these kind of practices are a symptom of the success of the bridging loan  DECEMBER 2019

BRIDGING INTRODUCER

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Round-table

industry. Lenders you might not approve of or their practices you might not approve of, are piling into this market because of its success and traction. That’s why they’re being attracted to it. It’s for the stakeholders within the bridging loan industry to deal with that.

MP: Vic makes a huge point about education because some brokers just want to get a quick paycheck and move on and don’t understand the ramifications of not getting a client out. It’s a quick win and big proc fee compared to what the mainstream mortgage market pays. Six months down the line when that loan hasn’t redeemed on time because that six month term wasn’t enough, the client then all of a sudden goes from 0.7% a month to 3% a month and goes ‘hang on, you said you were going to get me out, now what?’.

JNewman: We hear about education, education, education. My main point at the ASTL was we’re too business to business focussed, we’ve kind of done that. We have our associations looking after their lenders and press looking after the brokers and lenders and the whole networking environment going on but we’re not getting that message out to the public and that’s why the public finds themselves with these unscrupulous lenders because the message isn’t

getting out there to the public about what bridging is available to them so they are ending up with the wrong types of lenders so the focus needs to be change in 2020.

Arwel Griffith: I agree with what Mark was saying. I spent the first couple of hours this morning trekking through acres of farm in Essex. I was there because yesterday at 4:30 we had a call, saying an exit has to happen tomorrow on a particular case which would cost this chap about 3% of his loan. It would cost him a lot of money so everything is urgent. So, at 4:30 yesterday I had an instruction, I was there this morning and it’ll go later today but I reckon I’ll downvalue it.

What’s that going to impact because it was done by somebody else a year ago? I don’t think it’s worth what it was valued at the time so the whole thing about whether clients are fully aware of what they’re getting into, is very important. Because a lot of them probably don’t because they come in because they’re desperate for the money. This guy this morning was desperate to get out and get the money.

MP: That’s scary when people are desperate to get out. They shouldn’t have been put in if there was no exit fee.

GS: It’s not what it was designed for.

MP: This isn’t a pointing a finger exercise at brokers.

This is an education across the sector as a whole.

There are plenty of brokers who are there from start to finish and work with you throughout the life cycle of the loan. But those who come in and don’t deal with bridging lenders everyday need the education and handholding to know that what they are putting their clients into will reflect back to them six, nine or however many months down the line when that term expires and there’s no viable exit?

AG: What happens to a broker if they take them to something that’s not the right place to be?

“These default interest rates do happen and the repercussions are not great. Is it everybody’s job to educate? I think it is” Gavin Seaholme

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JNangle: As a broker Phil I’d like to hear what you think about 2019 and to give a perspective on what everyone’s been saying?

Phil Mabb: I’ll validate what everyone else has been saying. It’s been a bit sticky. I think lenders have derisked it by perhaps lowering the LTVs. They’ve been a bit more selective. I’ve had a guy today with an IVA of

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almost six years and lenders have said, ‘it’s not six years, it’s five years and 11 months, we’ll pass on it’.

That’s the sort of thing, fine, it’s conservative, there’s probably other things going on in the background, I’ll find somewhere else. But this issue of where people are finding themselves at the end of a term, even I can see a problem for someone like me who took a deal last year at 70% and coming to an end, perhaps they were going to refinance it or sell it and they haven’t and so where do they go, because if 70% is the mark today, you might find yourself at 65% or maybe even 60%, where do I go because someone like Aspen offers at 80% but it’s not 80% of over market value it’s 80% over 180 or maybe even 190 day. It’s a problem.

You have to explain everything at the beginning, the pros and cons. Whilst I’m an FCA regulated credit broker I don’t work in the regulated sector and don’t have a CeMAP. But I still have that attitude of ‘here’s the good bits and here’s the bad bits’. I’m seeing developer exits that started in 2016 now being different things. There’s a lot this year and in 2018 in that classic situation of 70%, 75%, rolled interest, no cash, they didn’t sell because they weren’t prepared to take 90p in the pound and they have nowhere else to go.

You’ll see big lumpy schemes of 40 units a block that’ll probably end up in administration to force a sale. That could be decent developers. Was that the broker’s fault? Probably not. Was that the market conditions?

Probably not. Was it the client for not taking a sale?

Probably not, but it’s all of everything so I think there are a few problems to come out next year on that developer exit product.

“Brokers looking into the next 12 months saw an awful lot of opportunity and felt their businesses would grow” Emma Cox

MP: Do they get exacerbated when you start charging 2%, 3%, 4% a month?

PM: That’s another thing in itself.

JNewman: It’s not the broker’s fault if they got them the best deal available. It’s the broker’s fault if they sold them a mortgage where they could’ve got much better terms elsewhere at the time. In answer to Arwel’s question that’s a mortgage with technically that’s a mortgage mis-sale potentially, practically nothing will happen because nobody has the ware nor the wish to start paying lawyers to take that kind of claim on because they’re already on their knees as a result of failing to exit their bridging loan.

EC: I think we see within our broker community brokers who are entering the world of a bridging

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product with their customer, already discussing the potential exit. Many don’t even offer a bridge unless they know how they’re going to exit the customer.

That’s where we see brokers embracing the diversity of customers have these days but making sure they do it in a sustainable way and good customer outcomes are at the forefront of that. I think it’s really hard to turn around and say to the broker, ‘that was a mis-sold product’, yes if they hadn’t already thought of the exit and planned that, but if the broker is unexperienced and not in the world of bridging, they are more likely to fall into the hands of the grubby bridgers, as Mark calls them, without having the forethought of how to get them out of it, so I think it then comes back to Vic’s point of education.

JNewman: It also comes back to the lender because why are they dealing with these brokers if they don’t have the experience and knowhow?

EC: Absolutely.

PM: You can’t have a crystal ball and see where we’re going with the market and who knows where we’ll be this time next year? But if you ask for proper leverage you have to be responsible for the outcome sometime in the future. Occasionally I hear from some lenders, 

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“The trade body can be the intermediary in ensuring the people get the education or desire to get the education” Vic Jannels ‘Phil, we’ve got an 18-month term, what’s the exit route?’. I reply: ‘we haven’t built the thing yet, good luck to you if you think you can second guess the market in 18 months’ time’. There are some very strange questions. In a way the lender has to take responsibility. We can’t look at hindsight but if you have any doubts you have to lower the lend at the beginning. We all work together. Nobody wants a problem, it just creates a headache. And hopefully we won’t have a crisis like in 2008, 2009.

VJ: I’d agree with that. And putting my broker hat on we’re seeing a lot of networks actually pulling back the permissions they give to their ARs, so they don’t actually want them to get involved in the bridging world.

TP: The numbers I see that actually don’t have a clue of what they’re doing when you start talking about bridging finance is huge. I reckon only about a third of brokers are good enough to work in bridging. The rest, I’ve sat with them talking with clients and they’re not good enough to do this.

VJ: I think Mark made a good point about the broker chasing the fast buck. It’s easy to actually place a

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bridging loan on a reasonable loan-to-value on the understanding the client will either develop and sell or turn into a buy-to-let or live in themselves. But if you did that without examining the exit route and proving it you’re a fool because the likelihood is it’ll come back to bite you.

This particular case with Mark is where the client was simply not aware of the penalties that would come onboard in the event of them not repaying and it’s a very expensive and punitive exercise. And I can’t see them finding a way out unless the lender relents. And the other side of this is in 2019 there are a lot of high net worth individuals who have money they don’t know what to do with and to find somebody who is a relatively small player wanting to expand in the bridging market where they can see a vast return on their money, as against leaving it in the bank, are being encouraged to come into this world. And I’m not sure if that’s right because we’ll begin to see in the course of this coming year a lot of these people who simply can’t exit because the valuation was wrong and lenders who are bigger, quality players in the market, are taking far more time to put the deal in front of the client, so a secondary not so visible and perhaps not so professional lender is a fix for them. And I think that’ll be a problem as well.

JNewman: In my personal experience the amount of loans that go bad are statistically small. But in the cases I’ve been involved in that have gone bad, I have not seen borrowers say they did not understand what they were being charged or were unaware of the terms. So, in terms of the lenders I act for, transparency is not a primary issue.

DD: I wanted to go back onto the education piece. At the buy-to-let roundtable the same subject was mentioned. It seems to transcend the specialist market much broader than just bridging so we shouldn’t give ourselves such a hard time on the education issue.

And I’d like to see that change quite dramatically over the next 12 months.

JNangle: What would you like to see from the industry, from associations or anyone you think could solve some of the issues we’ve seen facing the industry in 2019?

PM: Start with a Conservative government with a working majority. Anyone in financial services would be sorted.

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JNangle: It’d also be good to hear from an industry perspective rather than a political perspective?

from bad practice, and continue to drive the market through our customer base and find opportunity and add incremental opportunity. I’d like to see where those opportunities are at the periphery to find solutions that add incremental growth and not just cannibalise and all fight for the same pot. We’ve seen more lenders enter the market than ever with a market that’s fairly stagnant. So, I think we really need to get out there and think about how we attack the market next year.

GS: I think it does need to be more transparent and this is the biggest thing. There are a lot of lenders and smaller lenders. These default interest rates do happen and the repercussions are not great. Is it everybody’s job to educate? I think it is, but I don’t think it’s a quick fix. It’ll be a lot longer road than everyone thinks.

JNangle: One of the biggest things noted at the ASTL conference was they want a higher membership. Is there an argument to be made that some of these problems would go away with a more monitoring approach?

DD: I’d quite like to see the ASTL, FIBA and NACFB actually collaborate and test a broad sample of the market and feed that back to lenders rather than Shawbrook sampling a few thousand. If you take NACFB and ASTL as a group they probably have a much greater sample of the market and can test a larger chunk of it and feed that and share those results and that should highlight areas of improvement for lenders and what brokers are looking for.

TP: There is, and I think from my point of view it’s an important thing for you to look at in 2020. There’s nothing else going on. We talk about these things for years. Two years we’ve had these same questions and have been talking about default interest, education, changes, and nothing has happened. I remember that question of default interest rates coming up five years ago and nothing has changed. We sit and talk and no one does anything about it.

EC: I think that’s a really good idea.

JNangle: What, if any, progress has been made to prepare for any challenges that come our way?

Or is it too spontaneous to prepare for?

MP: Any industry body worth it’s salt needs to have teeth and both FIBA and ASTL don’t have it or don’t show it.

MP: I think we should prepare for some consolidation and there will be some casualties next year. I think  some more of the P2P lenders will disappear and more

TP: Do they not show it or is it they haven’t been strong enough to date?

MP: I get it. From an industry point of view next year, we want some certainty. You need to get Brexit done, I voted remain but I’m sick of it, I just want some certainty and some market normality. Ultimately, I think the industry needs to get back into action and get the wheels flowing again and get on with life.

EC: I think that’s quite interesting because from our broker poll, the sentiment from our broker community is while there is definitely uncertainty looking into the next 12 months, they saw an awful lot of opportunity and felt their businesses would grow. So next year I’d like to see keeping to the high standards of professionalisation, we should continue to shout about that and support that more and give plenty examples of what is good practice and call out bad practice and actually get behind the customer who ultimately suffers

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“I think we’ll see more predominantly resi brokers moving into specials lending over the coming years” Damien Druce

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of these new entrants with no experience who don’t take adequate risk. There are some that are really teetering at the moment and you have to prepare yourself for some negative stories in 2020.

TP: Because when reading it people don’t differentiate between funding lines and P2P lending. They still don’t get that. And all the time you get these negative stories coming up they think it’s the whole market.

DD: It’s not necessarily how these guys are funded, it’s their approach to credit risk and it could be an institutionally funded lender but the P2P one will polarise it.

TP: An institutionally funded lender has several layers of underwriting in there whereas P2P, they get the money.

JNewman: I think Damien’s right, it’s about the people, not the funding line. It’s about the experience within the organisation.

TP: I’m not disagreeing with that but just talking about the public perception.

DD: The top part of the P2P market and having worked in it for a couple of years recently, you have the investors you need to remunerate to attract them to deploy funds and deposit funds on the platform. That creates a price point for borrowing that really attracts and appeals for lenders or borrowers of last resort who would be attracted to that, although I don’t like using that phrase. º TP: Your cost of funds is higher and therefore they go higher up the risk curve.

DD: I know some of them are trying to approach it calling themselves marketplace lenders rather than P2P. These are lenders with a multitude of funding lines and rather than just relying on pure retail deposits are looking at institutions and family offices etc.

That might make those lenders more robust and safer but those lenders who have relied purely on P2P retail deposits are the ones with massive issues.

GS: In the next 12, 18 months the book of a lot of these new entrants will mature and that’s when you’ll see the fallout of what they’ve been lending in.

TP: Chip shops in Southend.

DD: Some of them have had a really heavy reliance on development finance and those P2P lenders will probably be okay because you can kind of spot what’s coming down the line there.

TP: Nightclub in a Welsh village, unbelievable.

PM: That same lender had a deal that went pop and the same investors get an invitation to put some money for a drawdown in and they think ‘hang on I’m losing on the left hand, why should I put on the right hand?’. I’ve chosen not to go down the P2P route because I’ve never found them any price competitive.

A simple bridge is one thing, it goes on a platform, you get your money, but when you get a developer and have to keep revisiting some are not as good.

DD: Some of them do it very well.

MP: There are some very good lenders in the P2P space. You can’t tar everybody with the same brush and I’m not saying that every P2P lender or institutionally backed lender will experience difficulties but there are more smaller lenders who don’t have the relevant experience who haven’t gone through a downturn who think it’s easy and will come unstuck.

TP: I’ve never seen The Peer-to-Peer Finance Association. At the moment they are getting kicked all over the place about a few firms but don’t seem to be doing anything. We should be talking to these people.

DD: A toothless trade body.

JNangle: In terms of the election a lot of the forecasts are predicting a Conservative majority.

Is everyone feeling positive or nervous moving into this December election?

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MP: I’m pretty vocal about it because I’m petrified about Labour getting in and every opportunity I get I’m talking about trying to influence where possible because every vote counts. I think there are so many people who are disillusioned with both the Labour and Conservative parties and that will have a huge potential www.specialistfinanceintroducer.com

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to let Labour in the back door. And that is why despite not wanting Labour and thinking Boris and the Conservatives are a joke as well, unfortunately it’s the lesser of two evils.

DD: You did a LinkedIn post urging people to vote.

You probably can’t do that at Shawbrook because of regulatory and compliance viewpoint of what you can and can’t post but there’s nothing stopping us who can, to educate the market and get the message out there.

MP: I didn’t say vote for them, I said specifically ‘please use your vote carefully, it’s all about not wasting your vote.’

JNangle: What is the biggest concern if Labour came to power?

DD: Attack on the high net worths.

EC: Continued attack on landlords.

MP: It’s rent controls, increased corporation tax, increased income tax, it’s a run on the pound.

JNewman: This talk about taking over and controlling the broadband is a very sinister move. It’s all about control and it’s a massive shift in where this country has been and it’s dangerous.

JNangle: There is this increase in specialist finance appeal which can be for a variety of reasons. Do you believe this appeal for specialist finance will continue in 2020 or will there will be a shift and is this something to be more careful of?

DD: I think we’ll see more predominantly resi brokers moving into specialist lending over the coming years as mainstream mortgages become more direct to consumer through robo advice and open banking.

I think it’ll minimise opportunities to resi brokers.

Some won’t be ready to pack off and move to their holiday home wherever it may be, so they’ll need to diversify.

I don’t see them leaving the market and their knowledge behind so I can see a shift towards specialist lending from that market so the education we’ve spoken about and collaboration with trade bodies will become even more important.

GS: The specialist market is driven by what customers want as well. Customers aren’t stupid, the clients are innovative and are looking at the next ways of evolving so the markets that fund that need to evolve and move with them.

JNewman: We keep talking about educating. Who’s going to do the educating and who’s qualified to do so?

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“ I think there are a few problems to come out next year on the developer exit product” Phil Mabb VJ: The trade body itself will not be able to provide the financial clout to do the education but it can be the intermediary in ensuring the people get the education or desire to get the education.

DD: I’m not sure because if those trade bodies do collaborate and pull their skills and endeavours together, they can approach government for funding.

Rob Jupp keeps talking about a bridging certificate.

There used to be a certificate in commercial mortgages in 2006, 2007, part of the IFS and that was disbanded in 2010, 2011 I think. There is an education but it needs to sit well above brokers, so they do it really well. Tony Sutton from Specialist Commercial and Jo Breeden from Crystal do some good workshops.

Lenders do it but to have gravitas, it has to sit with the trade bodies.

VJ: By agreement across them as well.

MP: The specialist finance market as a whole has become so much more mainstream. It is so competitive; pricing has been driven well down. People have to innovate and I think that’ll continue. It’s becoming far more market norm than specialist finance just because of the way the world has evolved since the global crisis. Now specialist finance is just finance and is seen alongside mainstream mortgages and buy-to-let.

JNewman: It’s bound to grow because of the execution and flexibility that it provides. High street banks just can’t compete, they don’t have the people and resources and experience built up and developed and just can’t get back into that market so I think the onus is good.  DECEMBER 2019

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The dynamic Jessica Nangle speaks to Emma Cox and Gavin Seaholme at Shawbrook about how 2019 was for the bank, key challenges and what their priorities are for 2020 Shawbrook Bank is a relatively new entrant to the marketplace, arriving in 2011 to offer new propositions and a fresh take on the specialist market. The past year has been a challenging time politically thanks to uncertainty affecting consumer attitude. However with marketleading propositions and exciting plans for 2020, Shawbrook is set to retain their market share and grow in these tumultuous times.

A year in review

Emma Cox has been at the bank since inception and, as sales director, she has an honest and frank view of the year gone by.

“2019 has been an interesting year,” Cox says. “We have had lots of change, which in itself brings new opportunities but also challenge in terms of the aspirations that we have and how we bring our people and brokers on that journey with us.” Shawbrook is constantly evolving according to Cox, with change being viewed as the norm.

The bank grew its commercial team, with Rob Lankey and his team from Amicus joining back in February.

“This was excellent,” says Cox. they bought into the Shawbrook culture

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straight away and there was a lot of synergy there. We have already seen the positive impact they have had, and this is testament to their skill set and expertise in what is a fundamentally complex space.” It is these new hires and the hunger for change which Cox argues were a source of “strength and capability” in 2019 and what puts them in good stead for the year ahead.

In terms of growth Gavin Seaholme, head of sales at Shawbrook who has been at the bank for six years, claims that they have seen a strong performance in regards to their books, which Cox agrees with. “We have had good growth which is all I think you could really expect from the markets we operate in – unless you are looking  to extend your risk

“If we can remain at the forefront of technology and product innovation as well as being able to service the need from clients, I think we will have a strong year next year”

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curve or drop your pricing. We have kept it steady which has allowed us to reap some reward,” she says.

Product innovation has also been a highlight in 2019, with new products coming to market that identified gaps in the marketplace and soon became front of mind for brokers. “All in all it has been a good year, ,” Cox says. “Some of the changes we have gone through means we have put ourselves in a good position for a great year next year.”

Key challenges

Despite the positive steps forward taken by the bank in 2019, key challenges they have faced have been around their service proposition, which Cox claims is a result of a variety of reasons. “We are a rapidly growing organisation, and one of the side effects of this growth was that we missed some opportunities to invest to ensure we continued to meet our service aspirations,” she claims. In addition, Shawbrook has had to adjust to more complex underwriting needs by making sure they have the right people, with the right talent in the right areas of the bank. “This is something we have seen throughout 2019,” Cox says. “In terms of the challenges overall, we have been keen to restore and improve upon our overall service proposition. This has been the key driver to the other changes that we have implemented.”

Looking forward to 2020 and facing current or new challenges that await, Cox is optimistic that they will see not only their service 

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Emma Cox and Gavin Seaholme

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proposition achieve new heights from both a customer and broker perspective, but also that they will embrace new ways of doing things. “I think people will start to recognise a slightly different feel to how we are approaching process, experience and the use of technology,” she says. “We now have a really good handle on areas that we need to look at in 2020 which is really exciting.” The specialist market is no longer seen as a niche area, and is arguably becoming more mainstream every year. With competitive rates and a saturated market, Cox argues that delivery is paramount. “A key differentiator in the specialist market is making sure we deliver,” she says. “We are at a premium price point and we need to be able to stand behind that.

Whilst challenges are there, we need to view them as opportunities.”

Seaholme is in agreement, arguing that it is important to create a solution that stands out. “The bridging market is very liquid, there is a lot of money, lenders and choice,” he says. “It’s about making sure that you face that challenge by ensuring you have a customercentric solution that you can deliver on.”

Know your customer is a phrase that many businesses use to ensure that customer requirements remain at the forefront and at Shawbrook there is no exception. “One of the main things for the bank in 2020 is to make sure customers are firmly brought back into the room, by which we mean both brokers and clients,” Seaholme says. Innovation is also seen as a key priority to cater for a specialist market that changes and evolves quickly. “If we can remain at the forefront of technology and product innovation as well as being able to service the need from clients, I think we will have a strong year next year.” Cox views this time as one of opportunity rather than caution, with fundamental priorities she would like to see delivered in the New Year. “It is about staying dedicated to the execution of a solution-led approach,” she says.

“I think that when the market is

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stagnant for all of the reasons we know, we should be trying to create new opportunities. Specialist is now the new norm.” Shawbrook is keen to push boundaries by looking at customer need and creating a proposition that serves this need and supports the market in a sustainable way, without increasing the risk curve or lowering pricing to compete with the low rates on offer. For example, the bank has undertaken a short-term loan bridging report which hopes to identify the specific needs of

“A computer saying yes or no when looking at complex cases is not the correct use of technology” the customer to aid growth and development. “Fundamentally, we want to be easier to do business with,” says Seaholme. “The market will grow next year despite the challenges.” Cox agrees. “By putting the broker and customer first and becoming thought leaders in our specialist markets, this helps remove some of the obstacles.”

New propositions

The past year has seen a variety of new propositions from Shawbrook including a buy-to-let refresh and a realignment of their shortterm loan proposition to provide solutions to customers creating value out of their existing property stock. The buy-to-let refresh was about simplifying their proposition and making it easier to understand according to Cox. “This refresh was to declutter our appetite so people would have a clear understanding of what we want as a bank,” she says.

“This feeds back to the fact that we want to be easier to do business with.” Seaholme refers to recent statistics by the Association of Short-Term Lenders (ASTL), which revealed that over half of lenders suggested refurbishment was one of the main reasons for using bridging finance or short-term loans. “We knew it was a big market, but by

DECEMBER 2019

helping cash flow we hit the ground running,” he says. “When it comes to a bank, you have to realise that it is not three shareholders sitting around the table making decisions so being able to get products out and move quickly is one of the key parts.”

Despite a key aim being about simplifying their proposition when bringing new products to market, Cox outlines the risk of doing so.

“The balance we had to strike was that we didn’t oversimplify our proposition to end up falling into the more generic specialist markets,” she argues. “We broadened the statement of our appetite to make it easier to understand, and this action also gave us a strong base from which we could apply it to encompass more in the market.”

A win in 2019 for Cox was the publishing of Shawbrook’s buyto-let lending criteria to brokers.

“I never thought I would see the day that the policy to which our underwriters refer for reference across their caseload would be made public to brokers,” she says.

“Our brokers can now see the criteria and the policies that relate to them which delivers even more transparency across the piece.”

Seaholme emphasises that in bridging, the reasoning behind new propositions must be customer driven rather than profit orientated, and this is something that will remain the bank’s focus in 2020.

Testing times

The uncertain climate is one that has affected all firms in the sector at one point in time and thanks to a December General Election being called, it appears the uncertainty is likely to continue. However in regards to Brexit, Seaholme argues the initial caution has been and gone. “Anecdotally you would think it would create some nervousness,” he says. “Considering Brexit has gone on for three years, the nervousness has come and passed.

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Cox argues that the market is a bit of a mixed picture. “Overall the market has slowed significantly, but you have also got those who see the opportunity. There is a mixed response to the uncertainty, you get a sense that everyone is waiting,” she says. “The moment some of these uncertainties start to evaporate, we need to draw a line. I think then the market will begin to react more positively.”

The average time to sell a property is 17 weeks, with figures remaining relatively unchanged since 2018. Seaholme uses this statistic to prove that opportunities still exist. “There is a softening in the market, but there is a fallacy about the market that properties don’t sell – they do but they are selling more slowly. Money is still attractive to investors.”

Looking forward

For many, a new year means a new start, and Seaholme believes the areas that need attention are clear.

“Transparency is a key point,” he says. “I think as an industry we are very transparent and have been for a long time, but better understanding and education is needed.”

Seaholme references the industry as one which is antiquated, emphasising how important technology can be to help processes. Cox argues the use of technology needs to considered carefully however. “I think the use of technology in a specialist market is interesting,” she says. “A machine or computer saying yes or no when looking at complex cases is not the correct use of technology.

The value here is doing the heavy lifting of the more manual tasks that underpin the case in terms of money laundering, background checks and so on. It can also be used for the automation of the case being processed very quickly without having to use a paper process.” A full reliance on technology moving forward can affect the depth of knowledge you have about a customer, or whether you are truly providing the right solution for them according to Cox. “You become so detached and so far removed from the customer need in the marketplace. I think by www.specialistfinanceintroducer.com

using technology in an appropriate way both as a bank and a specialist you can deliver more effectively.

The role of the broker is absolutely key to that, and we are very much focused on getting the right balance of people and automation with underwriters being hands on wherever needed.”

Education has been a talking point in the specialist market throughout the year, with some looking towards an introduction of examinations whilst others place the onus on the industry members themselves. “We are all very keen on an educational approach,” says Seaholme. “For example, we release video case studies rather than just written ones to bring real scenarios to life a little more.” Continued innovation alongside education is paramount to Cox and Seaholme to cater for people who are “constantly evolving”. “Property investors are smart people,” Seaholme says. “If you can retain that relationship over a period of time, you can begin to understand their strategy and plans which is key for growth.”

Challenging the norm is a theme at Shawbrook, with Cox keen to maximise opportunity by looking at the relationship between themselves and the brokers. “A key priority for 2020 personally is that we have a team on the ground that become more consultative in their approach,” Cox says. “Rather than just having boots on the ground where they go to visit a broker to talk about holidays and football results over a cup of tea and asking if they have a case for them whilst walking out the door, we need to understand the broker need more. We need to act as an extension of their own business.”

Cox highlights the caution needing to be taken as a bank to ensure the relationship remains a healthy one, however praises her current team of business development managers (BDMs). “We have got a great team of BDMs out there, but the focus for 2020 is how do we raise our proposition back to our brokers and deliver that in the field.”

Seaholme agrees, and believes in the importance of visiting the client

to get the best results. ”There is nothing better than going to the site and speaking with both broker and client to further your understanding,” he says. “You can physically see things from a risk perspective which is helpful for when you position it to the bank, but you also understand the client strategy and how key the broker is because you see first-hand just how much they contribute to that relationship. You begin to understand that everyone is different – everyone has different needs, different clients and different models.”

Adapting is a key message for 2020 from the pair. “When we are looking at how we can be most effective with a broker, it is imperative to understand that, for example, a big packager would need different things from a lone broker that works from home,” Cox claims. “What can we do to support them in that? We have to adapt what we do to ensure that we are most effective for the relationships that we have.”

A seamless broker journey is important to Shawbrook, with the focus as much on support as it is on progression. “We have to make sure that we remain focussed on support whilst maintaining a progressive approach,” says Cox. “That requires the sales team to understand a broker and their business, but also for that BDM to have an intimate knowledge of the case and almost act as a quasi-underwriter. The marriage of the two components together is perfect.”

The next year is set to be an exciting one, with investment going into both resource and capability whilst ensuring that delivery and execution is exactly what is promised. Shawbrook may  be adept to change, however 2019 appears to have given those in the business not only the tools to deal with that change, but to thrive from it to become market leaders.

It certainly seems like a case of watch this space as the bank continues to go from strength to strength.  DECEMBER 2019

BRIDGING INTRODUCER

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Comment

Make time for time management Look to time management as a New Year resolution

“Sorry I forgot”, “did not get around to it”, “I’m snowed under”, “I’m doubled booked”, and many more are often the sad refrains of people who struggle to manage their time for the sake of their business.

With the advent of intrusive technology an increasing number of people are now 24/7 active, but still find themselves strapped for time.

That is because they claim that all would be ok if they could do 25/7.

A silly statement perhaps but I do think it puts the pressure on our time into some perspective.

For some time now I have had a time management session in my portfolio but must admit to my failure to convince enough clients that it will improve their bottom line. Most agree they could improve but struggle to convince themselves that they must find the time…is that you?

Two particular quotes from well known, successful business entrepreneurs drive the message home much better than I can; “The great dividing line between success and failure can be expressed in 6 words; “I did not have the time” Duncan Bannatyne “Time flies, you have to be the navigator” Richard Branson I find it bazar that when I do a business SWOT, without exception the management team always highlight two things, internal communication and time management, as weaknesses that can turn into a threat, but over time these are the two aspects of many businesses that show only a modest improvement, even though they should be two of the priorities that will drive their growth ambitions.

Competitive advantage is achieved when a business is considered to be more efficient

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than the competition not just quicker. Spending quality time to communicate to all staff how those efficiencies are to be achieved is an important element of management but regrettably it is all too often squeezed in and not given the profile it requires.

Time management starts with the commitment to change. It is easy if you commit to action. You can train others and improve your own time management through better planning; prioritising; delegating; controlling your environment; understanding yourself and identifying what you will change about your habits, routines and attitude.

The key to success is planning and then protecting the planned time. People who say that they have no time, do not plan or fail to protect planned time. If you plan what to do and when, and then stick to it, then you will have time.

This involves conditioning, or reconditioning your environment. For people who have demands placed on them by others, particularly other departments, managers, customers, etc, time management requires diplomatically managing the expectations of others. It is chiefly about conditioning your environment, rather than allowing your environment to condition you. If you tolerate and accept without question, the interruptions and demands of others then you effectively encourage these pressures to continue.

As the Christmas period approaches now would be a good time to review your approach to time management. I finished my Christmas shopping on the 20th November but how many of us will still be running around on the 24th? You may say it is easier for me

DECEMBER 2019

Alan Dring director, MAD Approach

because I am semi-retired. It is not.

I still need to prioritise my time.

Wait till you have 5 grandchildren living in 2 different cities 60 miles from me.

Below is a model of some things that may improve your time management. I would suggest that if you want to have a more relaxed time over the holiday and do some preparation to see how your time can be better managed in 2020 you take a look and hopefully put many of the suggested elements into practice… make it a New Year resolution.

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