Bridging Introducer January 2022

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GOLD STANDARD Following the business’ most successful year yet, SoMo talk about their approach to culture and relationships, and their ambitious plans for 2022

January 2022

EDITORIAL

COMMENT

Publishing Editor Ryan Fowler Ryan@mortgageintroducer.com Editor Jessica Bird Jessicab@sfintroducer.com Deputy News Editor Jake Carter Jake@mortgageintroducer.com Commercial Director Matt Bond Matt@mortgageintroducer.com Advertising Sales Executive Tolu Akinnugba Tolu@mortgageintroducer.com Advertising Sales Executive Jordan Ashford Jordan@mortgageintroducer.com Campaign Manager Esha Gossain Esha@mortgageintroducer.com Production Editor Felix Blakeston Felix@mortgageintroducer.com Head of Marketing Robyn Ashman RobynA@mortgageintroducer.com CEDAC Media Ltd Signature Tower 42 25 Old Broad Street London EC2N 1HN

Plus ça change

Contents

he start of a new year, and other than the sharp drop in temperatures that has me quite happy with home working and the lack of a frosty commute, it might be hard to spot the difference with the final months of last year.

Indeed, there is a sense of déjà vu when looking back to both 2021 and 2020 as well, if you want to be bleak about it. We are facing another wave of COVID and potential lockdowns, many have traipsed back from the office to home working, and I am feeling wary of my holiday plans later this year.

Short of being a clean break, January 2022 might feel like yet more of the same.

But there are positives to this. One thing that has stayed the same is the bullish strength of the bridging market, the growing popularity of – and respect for – specialist and short-term lending, and the plethora of business available to brokers.

A busy market means pain points – most notably for conveyancers, who are facing grueling postcompletion pipelines – but few would say they’d prefer the opposite.

Short-term finance is also, as ever, at the forefront of what change can be seen in the UK housing market, which is not to be sniffed at, ranging from EPC deadlines to the new face of our high streets.

So, while we might wish for a more exciting start to the year to keep our minds off the cold, there is plenty positive to be found in the old adage: plus ça change, plus c’est la même chose. B I

5 Jonathan Newman Recovery in an increasingly complex world

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7 Donna Wells Another busy year ahead 9 Jason Berry The changing nature of bridging 11 Brian Rubins Keeping it simple – fact or fiction?

12 Looking back, moving forwards Jessica Bird asks the bridging market what to expect from 2022 20 Positive steps This month’s round-table considers the importance of positive relationships and information sharing as we move into a new year 26 A golden year for SoMo Jessica Bird and Jamie Jolly discuss the business’ new face, and how it achieved its best year yet 30 Vic Jannels Bridging trends for 2022

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Recovery in a complex world Jonathan Newman senior partner, Brightstone Law

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here’s an old adage that lending money is easy – getting paid back is the difficult part. Anybody who has been involved in bridging lending in the last two years is likely to sympathise with this sentiment.

Last year, after many months of an enforcement moratorium, which restricted lender options and caused delays, we eventually entered a period of fewer constraints on recovery action.

However, ‘normality’ has not resumed, and it seems as though have entered a very interesting period of legal long COVID, particularly for the bridging market.

According to data from Brightstone Law, prior to the pandemic there was an average wait of six weeks between

claim and hearing – with an average enforcement period of six weeks. So, 12 weeks in total to get to the stage of being in position to seek a warrant for possession.

Now, post moratorium, the average is 11 weeks to review, a new interposed stage in the process at which not a lot seems to happen other than listing, then another seven weeks to possession hearing, with a similar enforcement period. So, the enforcement process is taking three times as long, before the final enforcement piece itself.

The months of deferred enforcement action have naturally increased loan balances and many borrowers have woken up to the realisation that their equity has been eroded and, in many cases, they have nowhere to go. As a consequence, we are seeing an increase in more complex, disputed litigation, with borrowers hoping to pick holes in the circumstances around their original loan agreement.

One particularly hot area is that of

Don’t slip up: Cover your business if you feel it is vulnerable to ambukance chasers

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secret and half-secret commissions.

This is a recurring issue in unregulated lending the result a well-publicised court judgment earlier this year has financial and regulatory significance to lenders and brokers.

The precise way in which brokers are remunerated by the lender varies between lenders and intermediaries. It can often be ‘creative’ and sometimes opaque; the very nature of what is what is and what isn’t a commission can be open to debate.

At the heart of the issue is the customer’s legal right to know, understand and consent to who is being paid what by whom in their transaction. It is, say the courts, only then that the customer can reach an informed decision as to whether their broker is acting in best interests.

It’s become apparent that ambulance chasing firms are setting their sights on the bridging market, and the disclosure of fees is undoubtedly one area upon which they have their sights.

So, there are a number of areas – from delays to claims companies to customers disputing litigation – that are making it more complex for bridging companies to recover their loans This puts much greater emphasis on lenders having the right documentation and process in place – and that involves engaging with the right counsel with the correct experience. An instinctive ability to identify potential weak points at an early stage can prevent a protracted battle further down the line. Lending money is easy. Doing so in a robust way that increases the probability and efficiency of repayment is made easier by partnering with the right people.

A working partnership with the right counsel – one that is willing to stick its neck out based on a sound grounding of knowledge and expertise – can prove invaluable in this complex environment. Post-Covid, the recovery landscape is evolving.

A cookie-cutter approach simply won’t work. The most successful lenders will be those harness guile and adapt quickly.

Loan recovery isn’t impossible in the current environment, but it’s certainly not as easy as it once was. B I JANUARY 2022

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The plan for 2022?

Keep it simple.

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Another busy year ahead Donna Wells director, First 4 Bridging

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s we look forward to another busy year in the bridging sector, I thought I would take this opportunity to review some of the talking points in 2021 and what changes we might, or might not, expect to see in 2022.

On entering 2021, it was clear that demand for short-term finance would hit new heights in Q1 due to increased time pressure on a growing number of property transactions as the stamp duty ‘deadline’ approached.

This was certainly true, although one thing I may have underestimated at the time was the sheer number of intermediaries who turned to packagers to help their clients meet the deadline that actually wasn’t. This need for additional support could have been down a) to the sheer volume of cases on their books; b) a lack of knowledge around the intricacies attached to short-term finance; c) increased trust in packagers; d) blind panic as the deadline draw close or e) some combination of the preceding points.

Of course, the deadline was extended and additional time was created for a range of transactions but these initial conversations and dealings with a variety of new introducers have since turned into relationships which will last way beyond any stamp duty deadline. This is a period which opened brokers eyes to how packagers can become a real extension of their business and this has been arguably one of the biggest bonuses of the year for all concerned.

Another observation I made when entering 2021 was that brokers need to be thinking about a time when mainstream residential business will not necessarily be beating down their door with such ferocity and that life will become even more complex, www.sfintroducer.com

as will the needs of borrowers. This growing complexity has been evident across the market and throughout the year, here at F4B, we’ve had to pick up the pieces from a number of cases where introducers approached us after their client had been left in limbo by their original lender.

Thankfully, we work closely with a number of lenders who have the ability, capacity and capability to step in at very short notice - when armed with a well-packaged case – and service the types of deals which could easily have resulted in huge cost implications for the borrower in question, through no fault of their own.

Lenders who will remain prominent in 2022.

“Brokers need to be thinking about a time when mainstream residential business will not necessarily be beating down their door with such ferocity and that life will become even more complex, as will the needs of borrowers” As I touched upon earlier, intermediary awareness and perception has risen around short-term finance throughout the year. In some ways, this has been more through necessity than choice but this is no bad thing as the benefits attached to this product type are now being much better understood from a practical sense.

The trust in packaging partners has also multiplied, and more brokers are now able to quickly recognise the property-related scenarios where bridging finance can be a viable and responsible solution.

This was exemplified in a study from Masthaven which showed that 71% say that awareness of bridging finance is growing across the market.

When asked about what is currently

fuelling this boom in bridging finance, brokers cited a number of key factors.

The pandemic has caused notable disruption to the housing market, and 41% of brokers said that chain breaks and mortgage delays were the most important reasons that drove customers to look for bridging finance.

There’s also been a boom in DIY and refurbishments, which just over a third (34%) of brokers cited as the main reason. These were followed by: borrowers buying at auction (28%), borrowers looking to raise capital (19%), and borrowers looking to rebridge (11%).

Over the course of the year, we’ve also experienced growing demand from experienced property investors and developers. This is a trend which is expected to continue in 2022, as highlighted in recent data from Shawbrook, which showed that 34% of landlords in the UK are planning to buy at least one property within the next 12 months.

Of the 34% of landlords that plan to buy at least one property within the next 12 months, 14% said they aim to buy more properties than they had initially planned, showing trust in the market moving forwards.

Though property values are already at unprecedented levels, there is confidence that this growth will continue over the next year, with over two-thirds (67%) saying that they have confidence in the market over the next 12 months.

Confidence is always a key factor within a healthy housing and mortgage market and with so many property professionals ready to tap into the potential on offer throughout the UK to extend their portfolios and buy in new areas, it remains high as we enter 2022.

This will translate into additional business across the specialist markets and provide the opportunity for brokers and packagers to cement the relationships they formed in 2021 and work even closer to provide extra value for their clients over the next 12 months. B I JANUARY 2022

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The changing nature of bridging Jason Berry group sales and marketing director, Crystal Specialist Finance

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OVID-19 meant that 2021, like its predecessor, was a year where flexibility, agility and an eagle-eyed focus on the changing nature of the bridging market was critical.

Despite the movable feast of restrictions and lockdowns, the property market saw a year of opportunity, with many lenders setting records for bridging and other shortterm finance products.

Demand flooded the market, and with it a competitive dynamic, as specialist lenders vied for attention, with consumers often enjoying recordlow pricing and rates.

This year, we expect this trend of economic growth and consumerfriendly products to continue.

TREND 1: REFURB AND DEVELOPMENT

There’s no doubt that Rishi Sunak’s stamp duty holiday extensions gave buoyancy to demand for bridging last year. However, with the government’s determination to avoid further restrictions – and with the permanent societal shifts to remote or hybrid work – we can expect demand to be broadly similar in 2022.

Buyers and property investors alike are seeing this year as an ideal time to pursue their goals – either through the development of more rural or coastal residential homes or buy-tolet (BTL) opportunities. This means refurbishment is no longer just a citycentric endeavour.

In addition, increased auction stock and the growing trend of developing previous office or commercial spaces into new residential stock will hopefully www.sfintroducer.com

see the beginning of rejuvenation of the nation’s neglected high streets.

There’s no doubt that 2022 will see a raft of opportunity for brokers to serve their clients with bespoke bridging solutions in order to bring their investment opportunities to fruition.

TREND 2: LEVELLING UP

With the array of products on offer, financial options will not be the issue; however, selecting the best short-term financial solution for the client may well be.

Despite the reputation of the bridging market radically changing in recent years, this does not mean that unscrupulous providers and extortionate rates are non-existent.

Thankfully, the past decade has led to the evolution of a more transparent and professional bridging sector, but it does not mean there are not some less than desirable lenders still operating in the marketplace.

Regulatory bodies and financial institutions are already engaged in conversations about the introduction of a specialist bridging loan qualification

to ensure ethical practice and fairness in the marketplace and provide reassurance to borrowers.

It is therefore important that brokers do their research and work with reputable and experienced providers to ensure their clients are on the best rates – which in some cases can save tens of thousands of pounds.

One way to achieve this is for brokers to partner with a specialist in the marketplace. With myriad options available, it can often be difficult for advisers to assess what the most relevant product is for their client.

In addition, bridging products are not all about rate. As speed is often of the essence, brokers are not necessarily aware of which providers can provide the finance the client needs within their – often tight – timeframes.

A specialist intermediary firm should be able to advise on the likelihood of getting a deal over the line with a specific provider, and if the lender is unlikely to be able to deliver, place the case with one who can.

As an award-winning bridging specialist, Crystal Specialist Finance can help select the best and often bespoke product from its panel of the UK’s best specialist lenders. It can mitigate the risk and stress for both broker and their client and, after the turmoil of the past two years, this can only be welcomed. B I

Speed is often of the essence in bridging

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Bridge rates from 0.55% Fast, people-led, decision making Loans from £100,000 to £5,000,000 LTV/LTC/Refurbishment costs 75%/85%/100% up to 24 months Rates from 0.55% with competitive procuration fees

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sancus.com Indicative criteria only, each loan application is considered on its merits. Sancus Lending (UK) Ltd is regulated by the FCA, firm reference number 593992.

Risk Warning: If you are co-funding you could lose part or all of your capital. Indicated returns, unless otherwise stated are shown before any provision for bad debts and may be subject to tax. Sancus do not provide private mortgages. Sancus Lending (UK) Ltd is incorporated under the laws of England and Wales, company number 7534003. Part of Sancus Group Holdings company no 57766 registered office Block C, Hirzel Court, Hirzel Street, St Peter Port, Guernsey GY1 2NL.

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Keeping it simple – fact or fiction?

Brian Rubins executive chairman, Alternative Bridging Corporation Limited

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y New Year’s resolution is to keep it simple, because simple is good. But will ‘simple’ happen? Sadly, this is unlikely, because ‘it’ is property finance and it just isn’t always simple!

This does not mean how we issue heads of terms and explain our offers need not be simple – in fact they can and must be, that’s being fair to our introducers and their clients.

Being clear and to the point must be a priority, with everything relevant included and nothing hidden in the small print. We offer simple loans with quick completions, and it is a proven fact that many loans are straightforward and can be processed without delay or complication. For example, why should a regulated first charge loan to Mr and Mrs on their home be anything less?

These regulated loans – by definition – must be completed in a consistent, defined way. However, delays are created by third-parties, solicitors and valuers, especially those unaccustomed to the nuances of bridging finance.

But suppose it is a regulated loan that includes a facility to fund an extension, refurbishment or even a replacement new house. Then we must satisfy compliance that the loan is sufficient, can be repaid within 12 months and is in the borrower’s best interest. Not all of this is simple, but for those who understand the process, it can be done without pain.

COMPLEX SCENARIOS

Let us consider those loans which are advertised as quick and simple but should never be considered so – except by those who have never previously experienced them! First, a look at commercial bridging loans. These are often ignored or lost by introducers because of their assumed complexity, www.sfintroducer.com

but if addressed properly on day one, lender and broker together can keep the application on track and avoid unnecessary delay.

When reviewing a commercial bridging loan, speed up the process by providing accurate, detailed information – a proper description of the property, details of the tenants, and the exit strategy. Dealing first with the property, Google Maps will generate a clear understanding of its location and probably photographs of the exterior and neighbouring properties, so a Google link will save a lot of words.

Then, the tenants – include their full names so that they can be credit checked, the expiry dates of the leases and the dates for any rent reviews or break clauses. If the loan is for an owner-occupier, an explanation of their activity in the premises and a copy of their accounts will help. For both owner-occupier or investment loans, if there is a previous valuation or estate agent’s particulars, these will provide valuable additional information and assist the lender to prepare and issue terms more quickly.

Going forward, the valuation will often take longer to complete than that for an owner-occupied house or flat, but then there are more moving parts to review and comparables are less easy to identify and interpret. Armed with good information, though, the valuer’s task is simplified. Remember also that the valuation fee will be higher than for a private dwelling, and that the lowest fee does not necessarily attract the best valuer or report. A cheap and cheerful valuation will generate more questions than answers and will rarely satisfy the lender.

Finally, the legal process needs a competent firm of solicitors acting for the borrower. The more experienced they are, the quicker they will provide the information needed to complete a detailed report on title. The person who did the borrower’s will or his house purchase may not be the right choice for a commercial bridging loan – quality will win through, save time and

in the long term provide better value.

Many bridging lenders have extended their remit to include residential development finance, some have years of experience and others are new to the game – you can guess which will provide the best service with the minimum fuss and bother! However, to do so, they require proper information.

Usually, the borrower will have a copy of the planning permission, site or location plan, and plans of the house types in PDF form on file and can share them with the lender. An alternative is to provide the name of the local authority and the case number.

DEVELOPER EXPERIENCE

Central to the process is for the lender to accurately assess the experience of the developer. This can best be done by providing details of the principles’ qualifications. Also, examples of recent similar projects with copies of sales brochures or failing that, details of the site name and location and the content of the projects, and when they were undertaken and by whom they were financed. Where there is no meaningful development track record, the quality of the professional team and the borrowers business or professional experience will influence the decision.

Development finance demands far more detail than a bridging loan.

This includes consideration of matters such as Rights of Light, Party Wall Agreements, contamination, the conditions contained in the planning permission, and so on.

Having gathered together the information pack and passed it to the lender, there is one certain short-cut, a face-to-face or Zoom meeting with the lender and borrower to explore and clarify the detail you have provided, and this applies as much to bridging loans as development finance.

So, what is the conclusion on ‘simple’? It must be that it is a misused adjective when applied to property finance, but ‘simpler’ can be achieved by providing accurate, detailed information on day one. B I JANUARY 2022 BRIDGING INTRODUCER

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LOOKING BACK, MO

Jessica Bird asks the industry what to expect for the year ahead, and whether the short-term market is set to face the challenges

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he end of 2021, despite rising concerns about a fresh variant and potential future lockdowns, brought with it a great deal of confidence in the bullish nature of the short-term finance market.

Nevertheless, there are more challenges around the corner, from the fallout of the pandemic to changing consumer needs, and from interest rates to the climate change crisis. So, what are market players preparing for in 2022, and how will short-term finance face the future?

IN RUDE HEALTH Adam Tyler, executive chairman of the Financial Intermediary and Broker Association (FIBA), notes that 2021 has been incredibly positive, all told.

He adds: “From a business perspective, the bridging and development finance sectors have actually done really, really well over the last two years. That puts the whole sector on a very, very good footing for the start of 2022. →

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MOVING FORWARDS

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2022 XXXXXXXXX “To elaborate on that, we have seen a number of new brokers get involved in the sector, and of course, we’ve seen a number of new lenders. We haven’t seen any consolidation, but we have seen plenty of capital available to people who want to borrow or lend in the short-term market across the whole of the UK.” Luke Egan, director of bridging and development at Pink Pig Loans, agrees: “The industry has shown great resilience and character to not only survive, but also flourish through the pandemic.”

Daniel yeo, managing director at Specialist Finance Centre (SFC), adds: “[The market] is in rude health.

The volume of liquidity in the market has generated a red-hot lending environment, meaning that rates are highly competitive, and we are seeing [loan-tovalues (LTVs)] rising in a responsible manner from a pricing and lending capacity.”

This does not just stretch to the products, as Yeo adds that the standing and reputation of the shortterm lending market is also strong.

“Professional standards also sit at an all-time high,” he explains. “As a sector, we can look forward with a huge amount of confidence and optimism.”

Vic Jannels, CEO of the Association of Short Term Lenders (ASTL), says: “Obviously I can only talk for the lenders of the ASTL, but it’s fair to say that all of them will report that they’ve had a good year.

“The figures which we delivered for the third quarter indicated that for the first time we were sitting with mortgages in excess of £5bn, and that new applications and completions were up, whilst redemptions and defaults were down.

“Therefore, we were looking at a very positive run to the end of the year, and I’d be really surprised if January wasn’t at least as good or better, because the lenders I’m talking to on a regular basis are reporting enhanced new business and the completions.”

One of the results of the bullish strength of the market, and rising demand for bridging, has been growth across the market.

Egan says: “Whilst we know it is far from over, we are definitely in a good position moving forward – standards are ever-improving, rates are lower than ever and there is a wide variety of lenders specialising in different areas. New entrants to the market also ensure sure no one rests on their laurels.”

This influx of new entrants to the market will continue to shape events moving into 2022, Tyler adds: “More brokers from a fully regulated background are becoming involved in the sector, and we’ve seen over the last two years that more residential mortgage brokers are now dealing directly in bridging and development, and pushing for bridging finance in particular. Some are working directly with the lender community, and some obviously still using the packagers.”

However, he also warns that the downside of this is having people enter the market that do not necessarily

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have the right knowledge and experience to deal with short-term finance, especially considering that this market is becoming increasingly complex.

“Bridging finance isn’t just a bridging loan anymore,” Tyler explains. “There are a wide variety of sub products, so you have to know what the whole procedure entails – and that’s where the education piece comes in.”

FIBA and the ASTL are both vocal on the importance of education in order to maintain standards as the industry grows. In time, this might evolve into something compulsory, but for now the aim is to provide a helping hand for those new to this market, which is becoming an increasingly integral piece of the UK property finance landscape.

Jannels says: “Part of the work that we’re looking to do in conjunction with FIBA is to encourage and educate all parties in the sector, to ensure that what we do is looking after the client first, because if we don’t do that we won’t have a market.”

Tyler adds: “We have all the components are in place, it’s just a matter of now of driving to the next step, which is really going to be about what the content actually looks like, and who’s going to fund it.”

IMMEDIATE AND LONGER-TERM In terms of what can be expected in the first quarter of 2022, Egan suggests that there are no great surprises on the horizon, and many of the same trends will continue as in the preceding months.

He says: “There will be the continuing rebuilding of the recovery of the housing market since the onset of COVID. In addition, we should see further stability following record house price peaks and the stamp duty deadlines, which caused unprecedented levels of demand within particular timeframes.

“We will also continue to learn to live with COVID and any potential further restrictions, particularly during the first quarter.”

Indeed, with mixed messages still emerging about the UK government’s approach to the Omicron variant, January 2022 has started with some trepidation.

However, Tyler is confident that even if the UK does see a return to lockdown measures, it will not have a major effect on this market, which has already proven its ability to cope in these circumstances.

Tyler says: “I think we’re in a much stronger place than we were in April 2020, and we were robust enough to survive then, so I think the same thing will apply now.”

Jannels adds: “Even allowing for the vagaries of the pandemic, the housing market has continued – in the main – to move forward. Prices have continued to rise, and if you look at the Halifax and national indices, you know we’re looking at potentially anything up to double-digit growth being predicted predicting in the future.

“If that’s the case, it means there’s still going to → www.sfintroducer.com

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2022 XXXXXXXXX be strong demand, while development in most areas is still growing, so there are more houses on the market.”

These trends, and the fact that banks are taking a more flexible approach to affordability, mean that there is likely to be a strong pipeline of activity going forward. Nevertheless, the unknown factor is likely to keep things somewhat unsettled through the beginning of the year.

Meanwhile, Tyler suggests that the interest rate rise at the end of 2021 is unlikely to have many ramifications for this market, but this might not be the case if rates go up again.

Egan adds: “There’s a lot of talk of rates going up, but I’d like to think we have learnt from previous mistakes, and so hope we can collectively avoid making knee-jerk decisions.

“I do find it ironic that the affordability process in currently under review, but at the same time one sees a general consensus of rates increasing, however slightly.”

He adds: “There has been speculation that the Bank of England is to consult on withdrawing its affordability test recommendation, which says borrowers should be able to afford their mortgage if their mortgage interest rate is 3% higher than their reversion rate, in the first half of next year.

“If this were to happen then we are set for a very interesting period for competition and rates.”

Jannels says: “I think in the medium-term interest rates will remain competitive. But [the Bank of England] has to be concerned that inflation is currently so high. So, the potential is that interest rates will rise in the new year, and that will affect all areas of the mortgage lending market.

“Interest rates are potentially bound to rise, but when you compare them to historical bridging rates, they’ll still be competitive.”

Tyler says that one of FIBA’s focuses as the year progresses will be on regulation and compliance, particularly around the subject of disclosure.

“We are also looking at to make sure that we’re ahead of any changes that the regulator may bring in during 2022,” he explains. “Everything is about making sure the sector is on top of everything and there are no surprises from regulator.”

For Jannels, it is time to look at what influences beyond the pandemic might come into play, such as Brexit, which he warns “isn’t dead yet” as a market force. As 2022 progresses, he predicts a certain amount of repositioning and harmonising with Europe, and a government that is somewhat under pressure as a result.

As the year goes on, housing stock and energy efficiency will both also likely be top of the agenda, with landlords facing down narrowing deadlines to update their rental stock, and the demand for new housing raising questions about modern methods of construction, infrastructure and planning, as it is not

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as simple as previous calls to “build, build, build” from Prime Minister Boris Johnson might make it seem.

Yann Murciano, CEO at Blend Network, says: “The next decade will be crucial for protecting the planet for future generations. Financial services, particularly specialist development finance lenders, have a critical role to play by helping deploy the financing of the changes required.

“One of our top predictions for this year is for the development finance market to become greener in 2022 and specialist lenders to play a key role in the transition to a greener economy.”

GROWING INFLUENCE Looking to the government’s influence on this market, 2022 will be Michael Gove’s first full year as Housing Minister. At the top of the market’s wishlist for Gove is the matter of planning.

Egan says: “I’d like to see him make the planning process easier. There are so many barriers to entry for developers – especially with rising material and labour costs – and a review of the planning process with a view to further simplification would be any easy win, not only to encourage more entrepreneurship but also help towards solving the housing crisis, in a single move.”

However, while Yeo agrees that a planning simplification would be ideal, he is not optimistic, saying: “I’m not holding out too much hope that we will see any major shake-up of this antiquated process. Or that any plans which are already in place will generate sufficient change anytime soon. I would love to be proved wrong, though.”

For the most part, though, at the front of everyone’s mind is simply the need for continuity and stability when it comes to the Housing Minister role.

“We have seen goodness knows how many Housing Ministers come and go in rapid succession over the years,” Yeo continues. “This is a very important role and needs to be treated as such.”

Tyler agrees, noting that he has seen perhaps 10 people pass through the role in the past 15 years, and that more continuity could help ensure that the important role of the housing market is given due respect.

This is even more important when it comes to specialist finance, which historically has not had its role in the UK economy fully recognised by the government, until the pandemic started shedding light on the matter.

“I would like to see them recognise all the work done by the specialist finance market,” Tyler explains.

“Just the acknowledgement would then give greater knowledge and access to the wider public, show that there is another market out there, and generate awareness of what we do.”

This awareness within the government ties in with greater understanding in the mainstream market, → www.sfintroducer.com

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FEATURE REVIEW

2022 XXXXXXXXX and among borrowers. Jannels notes that for the ASTL, 2022 will see a continuation of the focus on education and reaching out to the mainstream press, in order to boost understanding of bridging.

“It’s one thing having got to a point where the professional mortgage brokers are aware of the value and the reasons to use short-term lending, but we’re not so convinced that the general public has that same understanding,” he explains.

“What we want to try and do is marry the two together. We want to give the general public a feel as to how when, why, and what the usage for them would be, and to understand that actually it’s not the expensive product that maybe they have in the back of their minds.”

NEW NORMAL The past couple of years have made it very clear that predicting long-term trends can be futile, and that it is instead important to expect the unexpected.

Nevertheless, while direct events may be obscured, it is possible to see larger trends emerging.

For example, Egan says: “In the long-term, we hopefully will see more reliance being placed on packagers as mortgage advisers possibly concentrate writing more core business.”

Tyler outlines that ground-up developments are becoming increasingly popular, with the demand for housing and issues of low supply making it important to build houses and sell them on relatively quickly. In addition, he says that commercial developments, and therefore commercial bridging, will come to the fore.

The pandemic either kick-started or fuelled a number of trends in terms of the tastes and needs of the general public. For example, the push further towards online retail means that 2022 will likely see a greater need for warehouses over direct retail space.

The same might be said for the shift towards more hybrid styles of working, and in general it will be interesting to watch the UK’s changing relationships with offices, as well as high streets and living spaces.

Yeo notes that changes to permitted development (PD) rules will continue to fuel these changes, in particular adding to the number of commercial properties being converted into residential or semicommercial usage.

He adds: “With lingering COVID-related uncertainty in the air – which is likely to impact international travel plans throughout the year ahead – I also expect more properties to be used for holiday let purposes in certain areas of the UK. “This is a trend which may require short-term funding for upgrading and refurbishment projects to help maximise rental yields.”

While it is hard to say where these trends might end up, Tyler suggests that more combined live-work spaces might emerge in some areas, whereas others will see a rejuvenated high street as people work hard

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to get back to normal.

The exact nature of the change ahead may be difficult to predict, but the fact remains that it will create fertile ground for the specialist market.

“All these things could only be funded by specialist finance,” says Tyler.

“You’re not going to get a high street bank lending on this – it’s going to be the specialist providers. So, it’s going to help push our sector and help it to continue to grow, because the demand is only going to increase.”

For Paul Watson, head of lending at Blend Network, this demand is going to change the shape of the market itself.

He says: “One of the most important shifts we have seen in borrower demand in recent years is their need for more customized products and services. This trend will continue into 2022, forcing lenders to adapt to borrower’s changing needs and increasing demand for personalization.

“For lenders it is no longer enough to offer the highest gearing or the lowest rates in order to win a deal. It is about much more than that, it is about empowering property developers by helping them make informed decisions and giving them access to data and services that were previously only available to the big players.

In other words, it is about providing them with a comprehensive service that includes data, resources and tools that help them save time and focus on doing what they do best.”

Yeo agrees that the events of the past few years, and the uncertainty that lies ahead, will provide strong foundations to build on.

“It would take a brave person to look too far ahead after the tumultuous period we’ve all had to navigate in recent times,” he explains.

“However, the robust nature of the UK housing market – as exemplified during this period – suggests that plenty of opportunities will emerge for property professionals, and short-term finance will provide a viable and valuable solution in overcoming a number of obstacles and provide the ability to complete timesensitive transactions.

“In addition, the importance and value attached to packagers – when it comes to sourcing and securing the right types of solutions to maximise these opportunities – will rise as market complexity continues to intensify and a wider range of options become available.”

For 2022, short-term finance market will continue to show the strength that typified its performance in the year just gone, even in the face of unexpected challenges.

In order to make the most of the opportunities, and to ensure that the market is not caught unprepared, this must not just be a year of large transaction numbers and confident lending for the specialist market, but of education, communication and flexibility. www.sfintroducer.com

Lo

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Showcase your specialist finance expertise by featuring your business in the next Specialist Finance supplement - out with the June 2022 issue of Mortgage Introducer.

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ROUND-TABLE

MARKET

POSITIVE STEPS Bridging Introducer’s latest panel looks at trends for the year ahead, the importance of relationships, and why bridging will always be a human business

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here 2020 and and much of 2021 saw the market, and the world, focus almost all of its energy in adapting to the vagaries of the pandemic, the start of this year seems to strike a slightly different note.

COVID concerns are still around, but there is a sense of looking past them, and thinking about what comes next, whether that is a more sustainable housing market, life after Brexit, or simply the next steps in a growing and thriving sector.

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For its first round-table of the year, Bridging Introducer brought together experts from SoMo, Together, Movin Legal, Shawbrook Bank, LDNfinance and Assetz Capital to take a look at what is ahead.

PAST THE PANDEMIC For Jamie Jolly, managing director of SoMo, one of the most positive items at the start of this year is not having to face quite the same uncertainty as at the same time in 2021, which started with sending everyone back to www.sfintroducer.com

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“Technology is great, it’s a great tool and has lots of benefits, but there’s nothing that can solve an issue like picking up the phone or even seeing somebody face-to-face” ROB JOHNSON their home offices and kitchen tables.

Largely, he sees early 2022 as bringing a continuation of the same trends seen at the end of 2021, rather than any unexpected surprises. This means a buoyant market, overall.

Nevertheless, it is not one without its challenges, and although things seem to have relaxed somewhat.

Jolly says: “What we all do is difficult at the best of times, because we can only control what we’re in control of within our own businesses, but we’re having to rely on external partners – brokers, legal partners and valuers – and last year was particularly difficult, certainly for our legal partners.”

With players across the market working in new – and not always effective – ways, the past couple of years have seen new pain points emerge. While much of the market is returning to in-person work, these issues are yet to fully dissipate and will continue to shape 2022.

This is particularly an issue, Jolly adds, for a market that is so inherently linked to the idea of speed and service.

Emma Hall, key relationships director at Movin Legal, agrees that the remote working environment, while ideal for some, created problems within the conveyancing sector specifically.

“Technology can take us so far,” she explains. “This is still an industry that actually works better when together in an office.”

While the return to offices might help solve some of this, the legal industry is still facing problems caused by the pandemic, and this is unlikely to abate quickly.

Hall explains: “The challenge that they’re going to have this year is that the backlog of post-completion work is quite serious, and while it’s not going to affect anyone in this room at the moment, it is going to affect our lawyers and the Land Registry.

“If you completed in September last year, your property might not be registered till September next year.”

She adds that these ongoing delays should, of course, be of particular concern for the short-term finance world.

This is both a change and in many ways a continuation of the issues seen during the rush to complete within the stamp duty holiday deadlines, which saw both mainstream and specialist timelines become snarled.

Although delays with the Land Registry are likely www.sfintroducer.com

to continue longer-term, Hall is optimistic that old timescales will start to return as Q2 approaches, when the front end of the market gets back up to speed, and most people – COVID-19 allowing – have returned to their offices.

Indeed, Jolly is also positive, adding: “I think it’ll be better this year – the frustrations and difficulties should ease off.”

CHANGING TIDES Matthew Taylor, regional development manager at Shawbrook Bank, notes that 2022 is likely to see a continuation of the rising trend of commercial to residential transactions.

This, he explains, is a result of both a lack of stock and changing preferences.

“We’re looking for investors to be a bit more innovative in the properties that they’re seeking,” Taylor continues.

“There is a lack of stock on the market in the residential space, so we are seeing investors that were traditionally investing in residential property and refurb, looking at commercial.

“I think the commercial landscape will continue to change as high streets continue to evolve, and as we try and tackle the housing shortage that we’ve still got in this country.”

The other trend that sits as a backdrop to the changing face of the high street and UK housing stock is the matter of climate change, and more specifically Energy Performance Certificates (EPCs).

“It’s important for lenders to all offer something different, so when that broker comes to us, it’s because they know that we offer the right solution for the customer” MICHELLE WALSH “We’re heavily geared towards is the EPC changes that are on the horizon,” Taylor explains.

“They’re quite a way off, but actually there’s a lot of to arrange to improve properties, and want to see landlords starting to think about that now, rather than kick the can down the road.”

Michelle Walsh, business development manager – Wales at Together, agrees that this is going to be a significant focus for the year, adding: “In 2022 we’re going to continue to see landlords expanding their portfolio, but not just for the bog standard purchases, but also factoring in refits and refurbishment.

“At this stage, on day one they have to consider the improvements that they need to make in readiness → JANUARY 2022 BRIDGING INTRODUCER

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“It’s important that real people make real decisions. You can’t just put in the detail and have the computer say no” STEVE DOLMOR

for 2025, factoring in those project costs and overall costs of the property that they’re purchasing.”

REAL RELATIONSHIPS Although the pandemic brought with it a vast increase in the uptake of – and appreciation for – technology, it also reminded many of the importance of in-person interactions and real relationships.

For SoMo, this is a continuing focus in 2022, Jolly explains: “We’re going to continue to commit to building better relationships with our introducers – I think that’s key.

“It’s about working with the right introducers, people that understand the short-term space, because it’s a tricky market at the best of times.”

One of the key benefits to building positive, communicative relationships, is getting the right information at an early point in the process. This links back to issues around timescales, as well as the growing complexity of the products available in the short-term market.

“Get as much information as you can day one, and you can make a really well considered and rounded decision,” Jolly adds.

Walsh adds that building strong relationships, using technology as an enabler, will also help address some of the more complex challenges coming down the line, such as the need to retrofit large swathes of the UK’s housing stock, particularly for those landlords expanding or updating their portfolios.

“For those types of transactions, the information we need isn’t the same as a standard purchase bridge,” she explains.

“We need to know the costs, the contingencies, we need to understand what labor costs, and what experience they’ve got.

SoMo_IntroducerMag_Strip_Ads_Jan22.pdf 8 10/01/2022 “Lenders like ourselves will work with clients that

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haven’t necessarily done that type of project before, but it’s then important to understand the experience of the team behind them, to see whether or not actually this project is viable.”

Exit routes came under pressure in 2020 and 2021, a further reason to focus on forward planning and gathering as much information about a project as possible, says Walsh.

“It’s really about understanding a the experience of the individual, their plans, the exit strategy and making sure that factoring everything in is going to result in the exit plan that they’ve requested.

“This is where it’s imperative that in the bridging space we have experienced underwriters that brokers and customers can talk to directly, to discuss those complex structures, so that we can get the right information day one – all the bad, as well as all of the good – to make the right decisions as swiftly as possible.”

This all feeds into the need for specialist finance to be underpinned by human underwriters, says Colin Mottram, relationship director – bridging and intermediary at Assetz Capital.

He adds: “As much as we would like to think that we can automate all of the processes, for bridging there is no substitute for that human touch.

“What’s essential is getting the quality of information, and that the lender is clear on how they want to lend and what their lending mandate is, but also being confident enough to be able to lend outside those parameters in the right circumstances.

“There’s always a reason for an extension, and being able to have that conversation on the front-line with the introducer or the client directly is important.”

This contributes to the ongoing strength of the market overall, Mottram adds: “There’s quality of information, openness, transparency and a two-way

“Whereas technology has a part to play, in the short-term market a lot has to be said for the physical phone call – our computers can only take us so far” EMMA HALL

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MARKET flow of growth and learning as well, around the lending requirements and lending policies as the market changes.

“There’s always things emerging in the market, and I think that the mark of a good lender is to be able to react to them pragmatically and have the right balance between commercial reality and risk.”

The short-term and specialist lending market is set apart by its ability to consider the risks and merits of individual cases, which will only become more important as property and property finance become more complex.

Jolly adds that, in many ways, lenders’ specific criteria are simply a guide, and that therefore there is no substitute for relationships, communication and experience, as each deal and its matching product is unique.

Johnson adds: “I think it’s a balance – technology is great, it’s a great tool and has lots of benefits, but there’s nothing that can solve an issue like picking up the phone or even seeing somebody face-to-face.

“We always pride ourselves on being a solutionbased lender, so if we can get to the problems earlier rather than later, it will make everybody’s life a lot easier in terms of structuring the deal, and it will manage expectations of introducers and clients, instead of something cropping up halfway through.”

Steve Dolmor, head of new business at SoMo, says: “It’s important that real people make real decisions. You can’t just put in the detail and have the computer say no. We’re all real people, with real experience.

“It’s important our intermediaries feel confident to go and speak to any underwriter on any case at any point if they’re not sure about it.”

With this reliance on relationships and communication arises an equally important need to ensure that you are working with someone who has the right experience.

Hall explains that this can be a particular frustration on the legal side, as many borrowers stick with law firms they know, rather than ones which have the necessary expertise. This is where Movin Legal comes in.

“When it’s a bridge, when it’s short term, pick up the phone and tell us what the case is from day dot,” she says.

“Tell us what the client expectation is as to when they plan to exit, what they need to do, how long, and we will then source the lawyer.

“We’ll find the lawyer that can do it, but don’t presume SoMo_IntroducerMag_Strip_Ads_Jan22.pdf 9 10/01/2022 that the lawyer knows exactly what’s in your head.

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“We all have credit appetites, we all have funding sitting behind what we do. It’s about communicating what you do very well – finding our own place” MATTHEW TAYLOR “The more information we can get, the easier it is to take the case forwards. Whereas technology has a part to play, in the short-term market a lot has to be said for the physical phone call – our computers can only take us so far.”

James Palmer, associate director of LDNfinance, has direct experience of cases being declined and then brought back on track as a result of open communication with the underwriter.

“The key thing is communication,” he adds.

“Technology is great, we can streamline things to a certain extent, but it doesn’t fully understand the deal.

“Directly speaking to an individual and actually going through the case, dealing with the issues, means that problems can be resolved, by just having a simple conversation and understanding the problem from the lender’s perspective and from the client’s perspective.

“A broker’s job is to be the middleman and resolve the issues. There’s always a solution to a problem, it’s about understanding the different perspectives and trying to find some middle ground.”

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GETTING THE BEST DEAL The past few years have seen an incredible amount of increased competition in the bridging market, → which – along with other influences – has pushed rates to all-time lows.

This is, in theory, ideal for the consumer. However, Walsh explains, the cheapest deal is not always the best.

She says: “Last year there was a bidding war, with competition on who can be the cheapest in the bridging market.

“I’d be interested to see the lifespan of some of these newer bridging lenders, because certainty of funding is really key in this space, and making sure that you get those funds get the deal over the line.

“It’s important for us as lenders to make sure that →

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MARKET our brokers and customers know all of our USPs, and that we can all offer something different in the market, so that when that broker comes to us, it’s because they know that we offer the right solution for the customer.”

Walsh explains that, alongside price, brokers must factor in a plethora of other factors, such as time and cost-saving measures that can be included in an overall cost analysis, in addition to the certainty of working with the right people, for whom bridging is their bread and butter.

Taylor agrees: “Certainly that there does need to be some innovation in terms of product development.

It’s about being clear on what your appetite is and for what type of business.

“All too often we see some bridging lenders saying ‘just try us’, but it needs to have more substance than that, and I think we need to clearly communicate as a market and as individual lenders what type of business we want.

“We all have credit appetites, we all have funding sitting behind what we do. It’s about communicating what you do very well – finding our own place in the congested marketplace. There’s plenty of business out there.”

As competition within the market grows, some commentators have either called for or warned about increased regulation across those areas that are as yet unregulated.

While the bridging market can currently pride itself on having high standards of transparency and integrity, certainly among its key players, will there be a need for greater oversight as it grows?

“Personally, I don’t think we should be scared of regulation, and perhaps it’s something to consider to be ahead of the curve,” says Walsh.

“What’s the right thing for us to do by our business, and the right thing to do by our customers?”

“We’re going to continue to commit to building better relationships with our introducers – I think that’s key” JAMIE JOLLY

“

“What’s essential is getting the quality of information, and that the lender is clear on how they want to lend” COLIN MOTTRAM SoMo_IntroducerMag_Strip_Ads_Jan22.pdf

“

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Jolly agrees that there’s an element of futureproofing, in that while operating in a non-regulated market, SoMo has also seen the importance of focusing on compliance and getting the right practices in place.

Taylor adds: “Anything that drives up standards will underpin confidence in the market. It’s also driving standards to underpin consumer confidence and the performance of these products.”

Mottram, meanwhile, suggests that any future regulation in this market might also encompass introducers.

He adds: “You’ve got two types of brokers – the ones where you know that they would they would excel in that sort of environment, and then the ones that might fear it.

“If I were a consumer, a borrower, I know which one I would rather go and put my business in the hands of.

“It would be a positive step, and it’s not something we should fear. There’s a lot of benefits to be associated with [regulation] in ensuring the quality of the market that we’re serving.”

The discussion of increased oversight and regulation comes hand in hand with that of professional development and education, in boosting standards within the market.

Movin Legal introduced its own CPD qualified course last year, providing insight into the conveyancing aspect for brokers, while various trade bodies have called for increased education in the face of a wave of new entrants to the market.

However, Jolly suggests providing qualifications for new entrants is not a panacea, and that the market should bear in mind that “experience is everything.”

Mottram agrees that there has to be a mix, with long-serving and experienced market players being supplemented and boosted by fast-tracked, recently educated young blood who have been through a more

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MARKET formalised system in order to get them up to speed with the complex short-term market.

important lessons about unexpected delays over the course of the pandemic, says Walsh.

Delays are also taking place within the planning process, on top of issues with labour and materials.

Some panelists believe that the planning process will continue to evolve over the next year or so, similar to how relaxations to permitted development (PD) helped move the market along previously. However, this will not solve delays overnight.

CONTINGENCY PLANNING Looking ahead towards the key trends of 2022, Palmer notes that the most important way to cope with uncertainty is to plan more than one exit. This is particularly applicable to developers.

He says: “It’s important to have multiple exits, because especially in short-term bridging, although a lot of people say it’s going to be sale, there’s no guarantee you’re going to sell anything for the price you want.

“There’s no guarantee that there’s going to be the demand or that developers will get the same value they did 12 or 18 months ago. It’s about making sure you know you’re looking at more than one avenue.

“Again, when you’re choosing your broker, it’s key that you get people with experience and who understand

“A broker’s job is to be the middleman and resolve the issues. It’s about understanding the different perspectives and trying to find some middle ground” JAMES PALMER market, who actually understand you know the different aspects of the business, making sure that they can, they can deliver an exit as well.

“I think all lenders want confirmation that you’ve got clean exit, and more than one option – a back-up plan.”

For example, he says that brokers must take into account down valuations as something of an inevitability, and to factor this into their discussions with the client and the lender.

Walsh, who is based in Wales and therefore still subject to stricter restrictions, points to the need to take the changing nature of the current environment as yet more proof that contingency and exit planning must be at the forefront of brokers’ minds.

While some of the disruptions that arose during the pandemic around material costs and supply have started to ease, these are still likely to cause delays SoMo_IntroducerMag_Strip_Ads_Jan22.pdf 8 10/01/2022 through 2022. In general, the market learned some

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BRIGHT FUTURE Walsh says that 2022 is hopefully about enjoying a return to normal, while taking lessons from the changes made over the past two years.

She says: “Certainly for us, we have our underwriting teams working together, bouncing experience and bouncing knowledge off one another, and that works best in the office. But we also need to factor in restrictions depending on where you are, but also individuals’ choices depending on their circumstances.

“So, we’ve also got to embrace technology, and digital transformation is a key agenda item at Together.

“I am certainly a strong believer in not taking away the underwriting and human interaction on lending decisions, but we can still continue to do more and more from a technology perspective.”

This culture of learning and embracing the future is not just centred around tech – Walsh adds that this attitude will have to take hold when it comes to the next generation of borrowers, and their wants and needs when it comes to green finance, for example.

While planning for the worst is still the name of the game in many ways, the panel generally agrees that the market is seeing a return to normal, and will likely weather any further storms.

With offices and in-person events becoming more the norm once more, it is also starting to feel closer to the good old days, albeit with a few more lessons learned.

“I think 2021 was difficult for our industry, because collectively we’re very strong, and we work best when we work together,” Jolly concludes.

“When we work collectively and share experiences, ultimately there’s a good outcome.

“By and large we did that really well last year – we utilised technology and past experience, and we’ve come through an unknown.

“We’ve learned in a very short space of time how to navigate through that, and I’m really encouraged for this year.” B I

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A golden year for Jessica Bird sits down with Jamie Jolly, managing director of SoMo, to discuss the business’ rebrand, culture and how it achieved significant success in 2021 SoMo rebranded from BridgeCrowd

a year ago – can you give us a picture of the business up until that point?

Louis Alexander, our CEO and founder, started the business nine years ago, and it was a ‘round the table’ start-up. His insight meant he saw there was an opportunity to disrupt the market.

He pioneered a unique crowdfunding lending platform to bypass the banks, and created a more approachable business, not hiding it behind a portal or automated systems.

Our business is very personable – we’re all about conversations. We’ve got a very proactive sales team who are constantly on the phone and I like that, I think it’s really important to talk, to not bash out an email every time. This does two things – you get first-hand information, which means you can construct a proper offer, and you get under the skin of the deal, building both a reputation for really understanding a case and strong relationships.

The business has grown organically, with a steady increase year-on-year. This is where myself and Louis are very similar – we know what we need to do to grow the business in terms of people, products and distribution, but we won’t rush things, we take our time.

We’ve got lofty ambitions and big numbers to hit, but our growth has to be natural and organic.

That said, we’ve smashed so many records this year it’s difficult to keep track, but certainly most lent in a month and most lent in a year stands out and makes me feel very proud.

You undertook a feedback gathering exercise last year – how has this helped the business?

With some simple, open 15-minute phone calls, we gathered opinions, ideas and feedback that means we’ve changed the business for the better, for us, our colleagues, and for our customers and introducers. It was very powerful.

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It doesn’t matter if you’re a bridging company or selling coffee, you’re very naïve if you’re not open to engaging with your audience and listening to feedback, warts and all. It’s not always easy to hear, but a lot of the time, themes start to emerge and that’s when you know they’re real and not always something you yourself will see.

When you’re immersed in your business, it’s very difficult to challenge the idea that you’ve always done it that way, but it’s important to embrace change and challenge yourself.

For example, we implemented something called a ‘Day One Call’, which as the name suggests is a call from a SoMo case manager.

Occasionally the sales team’s interpretation of a case is slightly different from that of the broker. Now, on the back of a simple phone call, everybody can be on the same page in terms of what the deal is, what information is outstanding, and what the next steps are. It’s a small change that’s paid back and then some. One of many that has helped the business grow.

I’m so proud of two huge achievements: repeat business and conversion rates – we’ve now got repeat business up from just shy of 40% to 85% in the past 12 months, and we’ve got conversion rates up from around 20-22% to 50%.

I genuinely believe that the Day One Call was a crucial part of this. It costs nothing and takes up a tiny part of someone’s day, a small change that’s made a big difference.

We’re actually revisiting the feedback exercise this month to continue this two-way conversation and keep gathering this crucial feedback. Who knows where the next game-changing insight will come from!

It’s important not to stand still. There’s a lot of bridging lenders, and over the past two decades I’ve seen the market evolve from a few pioneers to more than 100 lenders. The business areas and product development just keep on growing.

For a borrower or broker, it’s fantastic because there’s a lot of choice; for SoMo, we’re constantly www.sfintroducer.com

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r SoMo challenging ourselves. So many lenders are similar in terms of rate and asset class, so what can you do to differentiate yourself, to stand out?

You can get to that point by doing basic things well – and that’s communication, how you interact with your brokers and introducers, and how you look at the business when it comes in.

Can you give us a sense of yourself and Louis Alexander, as key figures in the business?

I interviewed for a job at Together at just 19 years old and stayed for 15 years learning my craft. I then went to help set up a bank in Manchester – and again, what an amazing experience.

I’ve been very fortunate – I’ve worked alongside some brilliant people. I’m all about financial services – it’s never a dull day if you enjoy what you do, and I really am passionate about our sector.

It’s a fantastic industry. We’ve had our difficulties – from the Credit Crunch to navigating our way through the pandemic. It’s been tough, but we’ve got good people and a common goal to provide good lending solutions, work with one another and be accountable, with strong lines of communication and transparency.

I’m accessible at all times, and lead through experience. All the functions that make up a lender, I’ve worked in, directly or indirectly – you have to be accountable and have a real understanding about how all those moving parts fit together.

What we do is very difficult at the best of times, but if you’re open and transparent, and clear with people, that’s the right way to go about it.

As for Louis, he’s someone who believes in this too, and embeds it in his business. He’s a brilliant man, really well educated, passionate about the industry, really big on looking after people.

He’s got big ambitions to continue to grow this business, and knows the value in in bringing in good people. He sees a value in experience and is a brilliant mind with some amazing ideas.

We’re different but the same in many ways – when the CEO and managing director are a good foil for one another it just works.

Louis is very much a visionary, and he’s always looking at ways to to future-proof the business and keep innovating. He’s someone that understands the value of knowing tomorrow’s audience – the market is changing at pace. For example, with technological advancements we are seeing greater www.sfintroducer.com

ease of use, processes and communication. He sees that it’s a significant place to invest – for example, we were one of the first to invest in Open Banking technology.

What are the values that underpin the business?

We’re a brilliant and friendly melting pot of backgrounds and experience. It’s a bunch of people who love what they do and have a laugh whilst they do it. Our values are about being an open and transparent lender. I use the word ‘accountable’ often, and I’m not someone that uses words just because they sound nice. It’s a challenging market, so we are about ease of use, transparency, accountability and having a finger on the pulse. →

Jamie Jolly

COVER

INTERVIEW We try to be a reflection of the market at all times. You can have the most amazing lending products in the world, but if there’s no market for them, then it’s pointless.

We’re humble and human – you’ll find no egos in this business, we support one another very well and I’m proud of what we’ve got here in terms of the culture and the experience.

There’s a huge amount of value in experience, you can’t teach it. So when it comes to a qualification in bridging finance, I see some value in it, but there’s no substitute for experience. I would rather have someone with experience, and that’s why I coined the phrase ‘eight years young, but 150 years wise.’

We’re all extremely passionate about making sure that everybody in the business – top to bottom – is empowered to share their thinking. A good idea can come from anywhere. The only bad idea is the one that’s never shared.

If you look at the business, certainly over the past three years or so, we’ve got a really high retention rate and I think that speaks volumes.

What was the reasoning behind the rebrand?

Rebranding is difficult, because your name is the heart of your identity, the thing that your audience looks for. Historically, there was a bit of a legacy, but there were a lot of similar names in the space.

As proud as we were – and as big a fan of the brand – there was no real attachment to it.

It also felt right because, at the time of the relaunch, we were growing and moving offices.

Everything needed a little bit of a polish, and we wanted our broker network to reappraise us.

The abbreviation SoMo, derived from our parent company Social Money, says a little bit about what we do and has roots in our crowdfunding platfrom, our broker and investor family, and our relationships and partnerships.

We have two audiences, the first being the ones that have a strong historical relationship with us.

We took time out to explain to all of them on an individual basis what the rebrand meant.

For those not familiar wih us, something shiny and new was good, it created natural intrigue and many reached out to us to find out more. Brokers are not short of bridging lenders, but when you peel back a layer it’s not just about what’s on the outside but the team, the connection, their experience, ways of working, and what’s on the inside – our brand should bring the business to life.

What has the year been like since?

Well, 2021 started with me coming into the office and telling everyone to go home! So our carefully

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laid plans for 2021 were suddenly thrown up in the air – but with confidence and trust in our people and excellent tech we were working remotely within hours.

For those first few weeks of 2021, I had no idea what the year would look like for SoMo, but a positive attitude quickly turned into positive results.

Momentum began to grow early on, off the back of a really good end to 2020, and because we’re very good in terms of communication.

Whilst other lenders hesitated, we were proactive in reaching out and talking to brokers. I think we showed great empathy. Like us, our brokers were sat at home working from their kitchens, so it was important to talk – it wasn’t just about business.

We also launched ‘SoMo Family’ – our partnership scheme with our most valued brokers.

We invited 38 Founder Members and have kept things small and exclusive, for key introducers and brokers that are very prominent in this space, actively working within bridging finance.

This built a really good foundation for SoMo, a steady source of business. I know that 60% to 70% of the business I want to achieve this year will come from those 40 or 50 brokers, and it snowballs from there. Once you’ve got that snowball, it creates momentum.

We brought in some heavyweight experience in terms of our marketing team, made some additions to the business across underwriting and sales – people with experience, legacy and history, and they brought new people into the business.

2021 wasn’t without challenges. We were transparent with brokers and customers – if they had something that was time sensitive and we weren’t confident we could deliver, we would tell them. We won’t just get business in for the sake of it. If I think there’s a lender that’s more suitable because we can’t do it, I’ll make an introduction.

So, 2021 was probably the most significant year for the business, because there was a rebrand, recruitment, the launch of Family, an office move, and huge milestones, including a record amount of lending. The two things I’m most proud about is repeat business and conversions going up.

If we can get those two right, all the other things will take care of themselves.

What does the SoMo Family Scheme comprise?

Having thousands of brokers, when you’ve got a sales team of 10, is very difficult to manage. So, we looked at that and thought, where do we have business and what do we need to achieve?

We can get more business from fewer brokers – the right brokers, that understand short-term finance, operate within the space and actively look to get this type of business. www.sfintroducer.com

COVER

INTERVIEW We spent a time crafting the Family proposition and its key benefits, like an enhanced proc fee and guaranteed funds.

All our broker and introducer relationships are special, but some needed to be recognised more than others – a sort of club that stands out from the rest and has real, meaningful benefits. Just like a real family, when we stick together it pays back.

SoMo Family brokers also get access to senior people. The cynic in me thought our brokers would be more motivated by revenue, but actually, the biggest driver was dealing with key people.

They also get to share feedback with us, help us shape and mould our business. Over the summer I asked where they think we should be moving into product-wise – we talked about auction finance, about refurbishment, development.

It’s stuff that we’ve taken on board, like having a presence in the South East. We’re opening up in London, and that comes with its challenges, but we are embracing it and taking the challenge on.

I think you’ll see a lot of evolution within the business this year, and that’ll be into new markets – auction finance, London, refurbishment, and possibly development next year.

It costs nothing, and we’re so keen on ensuring that our colleagues and those in-house are empowered to to give feedback and share ideas and critiques. I’ve had plenty of difficult conversations with brokers over the past 12 or 18 months, but it comes from a good place and ultimately we all want the same thing. We want to lend money in a safe manner, for the benefit of a customer, it’s as simple as that.

What are the trends you’re preparing for in 2022?

We’ll see towns and high streets changing to a mixture of residential and commercial, meaning people are going to need money to convert properties.

On the back of the pandemic, there’s a lot of property going into auctions, so I think you’ll see a lot more interest in this sector.

We’ve already seen the evolution of the investment space, where there are a lot of investors moving away from individual buy-to-lets and towards houses in multiple occupation.

I still think there’s huge opportunity for refurbishments, because one thing the UK is lacking is property, while there is still a huge demand for it.

The single biggest change will be to planning, changing to support changing demographics.

Is there growing demand for specialist finance?

If you map the history of the market, then there’s www.sfintroducer.com

obviously been huge growth. But will bridging ever take over the high street? I don’t think it will in my lifetime. However, this has grown from from sub-£1bn to a multi-billion pound industry, and I think the reason is that bridging market is diverse – it’s short-term finance, which has evolved to now include refurbishment and development finance.

That will continue to evolve, and what’s good is that the lenders are quite nimble, and we react to our market. That’s also where the value is in having a good broker.

So, I can’t see it overtaking the mainstream, but I can see it becoming more prominent and, importantly, more credible. The industry will continue to flourish, the reason being that the lenders are giving credibility to alternative lending, being more flexible and more reactive, and even more creative.

I wouldn’t go as far as saying it’s bulletproof, but it’s a very resilient industry. Look at the Credit Crunch, the pandemic, Brexit – any one of them in isolation is huge, but through each of them, the industry has reacted, reshaped and continues to grow, which suggests to me that this is a strong industry. It’s largely down to the people within it and their experience as a collective.

Is there a particular message that you want to get across to brokers?

Again, it’s that phrase ‘eight years young and 150 years wise’. When you work with SoMo, you’re working with friendly, straight talking, experienced people that really know their stuff and love what they do.

With more than 250 completions under our belt and £180m lent, that combination of an open, accessible, experienced sales and underwriting teams, and our valuation and legal partners is very powerful. On average, we complete 20% more business than our competitiors, and I think this is largely down to this structure.

As we are now, there’s no portals, no systems.

We’re a small enough outfit to be able to extend that old school, relationship-centric way of interacting. I’m very conscious that the broker of today is very different to the one of 15 years ago, and so the broker of tomorrow will be very different again. SoMo has always moved at the same pace, keeping just ahead to meet and exceed expectations.

It’s important that people understand our message and that it resonates, so that people buy into what we’re about – which is having that experience and that culture.

We are a group of people that you can speak to about a loan for any purpose for any type of borrower, it’s that simple. B I JANUARY 2022 BRIDGING INTRODUCER

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REVIEW

ASTL XXXXXXXXX

Bridging trends for 2022 Vic Jannels CEO, ASTL

J

ust when we thought the future was looking more certain, the Omicron variant has served as a timely reminder that making predictions is fraught with pitfalls.

However, there are some trends that show a clear path of travel, whatever the external environment throws at them. Here are five trends that we think it’s safe to expect in the shortterm lending market in 2022.

BRIDGING GETS MORE INTEGRAL

In 2021 we saw the value of bridging loan books top £5bn for the first time, as short-term property lending continued to grow.

Feedback from the market is that more brokers are recognising the uses of bridging loans for their clients and, with rates coming down, the pricing is making bridging finance more accessible to a wider group of customers.

Increasingly, therefore, bridging can be seen as an integral cog in the workings of the wider property market – saving transactions from falling through, enabling investors to buy, convert and refurbish otherwise unmortgageable property and providing a fast and flexible means of raising capital.

This ‘cog’ is only going to become larger and more influential as more people discover the benefits of bridging and competition continues to result in low rates and greater product innovation.

ROBUST UNDERWRITING IS VITAL

Low rates are certainly a good thing for customers, but the secret to any sustainable lending is balancing risk and reward. Those lenders that sacrifice margin at the same time as loosening underwriting standards

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JANUARY 2022

could find that they are left exposed financially.

The rate paid by a customer should always be proportionate to the risk undertaken by the lender and that requires robust underwriting. As we enter another year of pandemic and continued uncertainty, nobody knows how easy it will be to secure an exit on a bridging loan, either by sale or refinance onto a term mortgage, in the future. Robust underwriting today will mitigate against problems further down the line.

PROCEDURES UNDER SCRUTINY

We know that ‘ambulance chasing’ claims companies are currently assessing the bridging market, looking for areas where they may be able to secure compensation for customers, and a revenue stream for their business.

With this in mind, it’s more important than ever than lenders, and intermediaries for that matter, are confident that they have robust and fair policies in place and that their procedures and documentation reflect those policies.

“As we enter another year of pandemic and continued uncertainty, nobody knows how easy it will be to secure an exit on a bridging loan, either by sale or refinance onto a term mortgage, in the future. Robust underwriting today will mitigate against problems further down the line” One area of interest will undoubtedly be the issue of undisclosed commissions and the outcome of a court case last year makes it clear that if a lender has paid a commission to a broker which has not been disclosed to the borrower, that lender is now more at risk of the

entire loan being set aside.

Where a loan is set aside, this can mean that a lender will have to make a substantial payment to the borrower and, in some cases, the lender might also be required to pay damages.

This will clearly be high on the agenda for the claims companies so it’s important for businesses in our sector to ensure they have watertight, customerfocused policies.

EMPHASIS ON EDUCATION

As was announced towards the end of last year, the Financial Intermediary & Broker Association (FIBA) and the ASTL have collaborated to launch a proposal for an ongoing programme of education for the commercial property finance industry, which includes bridging, short-term finance, development finance and specialist buy to let.

We are working with The London Institute of Banking & Finance (LIBF) on the creation of a series of optional e-learning modules that will be recognized through the award of an LIBF digital badge and accredited for continued professional development (CPD) purposes and, as an industry, we believe there will be a much greater emphasis on ongoing education as we proceed through the year.

TRADE ASSOCIATION CO-OPERATION

Our co-operation with FIBA on the education programme for the industry is just one example of greater cooperation between trade associations and I am hopeful that, during 2022 this will become even more evident in collaboration with both the Association of Mortgage Intermediaries (AMI) and the National Association of Commercial Finance Brokers (NACFB), too. Greater co-operation between trade associations, on those issues where we are aligned, simply makes sense as it amplifies our voice and gives us all greater influence, and this is definitely an ongoing trend to watch in 2022. B I www.sfintroducer.com

New year, new rates.

With our residential bridging rates now starting from 0.60% pcm and LTVs up to 75%, talk to us when your client needs standard resi-bridging, auction finance or development exit.

Our flexibility, speed and reliability allow us to provide real world residential bridging solutions for SMEs. *Please note Assetz Capital does not offer regulated mortgage contracts

Colin Mottram, Relationship Director: Bridging

Real world lending 0800 470 0430

assetzcapital.co.uk/bridging Assetz SME Capital Limited is a company registered in England and Wales with company number 08007287. Assetz SME Capital Ltd is authorised and regulated by the Financial Conduct Authority in respect of its peer-to-peer lending platform only. ’Assetz Capital’ is a trading name of Assetz SME Capital Ltd. Assetz SME Capital is registered with the Office of the Information Commissioner (Reg No: Z3338899) for data protection purposes.

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