Specialist Finance - Your Guide to the Market

SPECIALIST FINANCE YOUR GUIDE TO THE MARKET

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CONTENTS

Changing with the times

T

he UK borrower profile is becoming more diverse every day. On the residential side, self-employment and complex incomes were becoming more commonplace even before the seismic disruption brought about by the pandemic, which ravaged credit scores and realigned our understanding of what made for a stable employment history.

Meanwhile, property chains faced unprecedented pressure as lockdown social distancing put paid to many people’s plans, and the stamp duty holiday stretched turnaround times to their snapping point.

But the specialist market is not just about catering to individual house movers who don’t fit into the mainstream – it covers all manner of sins, and is an integral part of the entire UK housing market and economy.

Increased diversity is also being seen in many other borrower segments that feed into this space.

On the development side, this might be the rising tide of small to medium enterprise (SME) housebuilders, which may hold the key to addressing the UK’s housing crisis. Across the market, we are also seeing an increasing number of individuals and businesses concerned with meeting sustainable standards in the face of a growing climate emergency, which will likely inform progress within development, and all specialist lending areas, on a permanent basis.

For commercial lenders, the shape of the market looks set to change as well. Historically sound retail tenants have been rocked by the pandemic, changing the very definition of a ‘safe bet’, as well as the shape of high streets across the country.

Meanwhile, changing lifestyles and working patterns throughout the population are boosting demand for holistic, mixed-use and live-work properties more than ever before.

If the pandemic has proven one thing, it is that specialist lenders in all their forms are versatile and quick to adapt.

While the change and uncertainty still being felt across the country and stretching into future might seem daunting, these unpredictable times also bring with them the prospect of continued growth, and the chance to innovate and improve a market that will be integral to the UK’s recovery. 

4 Feature: Steadfast, surge or slowdown?

Natalie Thomas considers how various specialist sectors have fared over the past year, and what they can expect from the future 9 Adam Tyler FIBA and specialist finance 10 Interview Damien Druce, commercial director of Black & White Bridging, on the direction of travel for both the business and the wider specialist market 13 Bridging finance 23 Development finance 31 Commercial finance 33 First charge 35 Asset finance 37 Secured loans 41 Buy-to-let 44 What can Black & White do for me?

A new lender with an established foundation, Black & White Bridging outlines its culture, goals, and the value of its people 46 Legal sector

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MARKET Feature

Steadfast, surge or slowdown?

Natalie Thomas takes a look back at how some specialist sectors have fared over the past year, and what the market might expect from the future

W

hile the past 12 months have presented challenges, they have also brought opportunity, opening up the specialist market to brokers who might previously have shied away from it.

Just like the mainstream market, the specialist sector is formed of several subsections, each with their own separate identity.

So, how have these strands fared over the events of the past year?

BUOYANT BRIDGING The bridging sector is one of the specialist domains which has benefited the most from the recent disruption to the mainstream market, as well as measures such as the stamp duty holiday.

Jonathan Sealey, chief executive officer of Hope Capital, says: “After the initial shutdown of the market last March, we have been seeing unprecedented levels of demand and have had some of our best ever months.

“We have seen an increase in both the number and value of enquiries and completions, and as a result, our loan book was 221% bigger in February this year than in the same month last year.”

While seeing an upsurge in demand – such as the rush to complete before the stamp duty deadline – might normally bring concerns of a subsequent dip, specialist lenders are cautiously optimistic that the end of the holiday will not mean an end to demand.

Sealey says: “We don’t envisage the stamp duty holiday coming to an end having a huge impact on bridging lenders. The market for bridging continues to be strong, particularly for property investors. We are sensibly optimistic for the bridging market based on the last year of lending.

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“There is still more demand for housing than there is supply, and as a result, investors will continue to look to property as a safe investment for some time to come.”

Figures from the Association of Short Term Lenders (ASTL) show new bridging applications reached £7.49bn in Q1 2021, an increase of more than 25.5% on the same period in 2020. Meanwhile, the value of new bridging applications in Q1 2021 was 12.0% higher than in Q4 2020, and 17.9% higher in the 12-month period ending 31 March 2021 compared with the previous year.

However, in the same 12 months, completions were down by 24.1%, with the ASTL saying this reflects the period of low activity during last year’s lockdowns.

Marios Theophanous, credit manager at London Credit, says: “The market has been very busy. You only have to look to the ASTL figures to see that application numbers bounced back quickly to pre-COVID levels.”

In particular, the bridging market has seen an increase in demand from those looking to buy at auction in a bid to beat the stamp duty deadline, as well as those involved in refurbishment projects.

“The market will continue to be strong, but it will also continue to evolve as the environment changes and new opportunities develop,” says Theophanous.

SUBDUED SECOND CHARGES While the bridging sector has strengthened, the second charge market seems to have experienced the opposite effect.

Lending volumes have started to stabilise after seeing a monthly fall of 80% at the height of the first lockdown in May 2020, but the latest data from the Finance & Leasing Association (FLA) shows new business

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volumes of £88m in March 2021 – down 30% on March 2020.

Fiona Hoyle, head of consumer and mortgage finance at the FLA, says: “Like other sectors, the second charge market was severely impacted by the crisis.

“Looking back on its performance during 2020, the quarterly rate of contraction eased progressively throughout the year, with new business volumes falling by 73% in Q2 2020, by 52% in Q3 2020, and by 30% in Q4 2020 compared with the same periods in 2019.

“We’re still in a relatively quiet period.

The figures for Q1 2021 show a stable picture which reflects the circumstances – consumer confidence is certainly returning, but we’re not quite out of the lockdown yet.”

She adds: “FLA members are increasingly optimistic about the outlook, and we expect to see a strong rebound in demand over the next year.”

Craig Collins, wholesale director at Optimum Credit, is also positive about the sector’s prospects, with demand for home improvement and debt consolidation loans proving popular.

“We are seeing more customers drawn to the flexibility of a second charge mortgage, particularly given some of the restrictions in the first charge market,” he says.

“I am optimistic for the outlook. We are seeing more brokers engage with the sector, as it’s providing their clients with the flexibility they need in this current environment, and those brokers will continue to offer second charges to their clients as they realise how easy the process can be, and the customer outcome it can deliver.”

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries (AMI) and Association of Finance Brokers (AFB), believes the drop in business could in part be because of high demand in other areas.

“Mortgage brokers are very busy doing first charge mortgages and protection business at the moment, and the sticky cases that are on the corner of their desk that they need more time to think about might not be going anywhere – many of which will be second charge cases,” he says.

Sinclair does expect some improvement in lending figures when business in the mainstream mortgage market starts to slow, but does not envisage it returning the figure it once reached.

“Seconds have a place,” he says. “There are borrowers who are tied into some very good long-term, fixed rate mortgage deals or lifetime trackers which they won’t want to upset, or there might be a need for a borrower to consolidate debt through a second charge.

“The size of the market, however, is probably never going to be the £6bn it was back in the day, but will I expect increase from the £1bn it is today – although perhaps not above £2bn.”

Paul McGerrigan, chief executive of Loan. co.uk, adds that for the market to return to such strength, considerable internal changes might have to occur.

He says: “In my opinion, the products from the lenders are getting better all the time and we appreciate the effort they are putting in, but from a broker point of view, I don’t think it’s performing very well at all – although I’m sure many of the high fee charging brokers will disagree with me.

“High-charging brokers aren’t going to give up their fees easily. Either the Financial Conduct Authority [FCA] will step in and regulate fee structures and potentially introduce years of client rebates – as happened with payment protection insurance – or brokers will reassess what they are doing.

“A second charge is currently a niche product that should become mainstream, →

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because it can genuinely satisfy a number of consumer needs where other products and services can’t.

“Most of the actual second charge mortgage products are competitive and great products, with low rates that help consumers who fall outside the standard remortgage, but the high fee charging brokers ruin the overall product.”

McGerrigan feels there are some brokers who might not even consider steering clients towards a second charge, saying: “A lot of mortgage brokers remain loath to recommend second charge mortgages as they perceive all brokers are the same as the high fee charging ones, which is just not the case.

“I suspect this will continue while the majority of fees remain in excess of 10%.

Fortunately, the FCA is already investigating questionable practices where advisers prioritise their own incomes rather than truly valuable consumer advice.

“To my mind, this investigation is long overdue, and it will be interesting to see what is recommended as a result of it.”

BOOMING BTL Matt Hardman, director at The Buy to Let Broker, says that the buy-to-let (BTL) space is incredibly buoyant at the moment.

He explains: “A number of converging forces have combined to shake up the property market, which has given a welcome boost to transaction levels.

“Those facets include the ability to work from home for many, which has changed the game in terms of location, with certain pockets of the UK generating significantly higher demand than pre-pandemic.”

Like other parts of the mortgage market, Hardman says stamp duty savings have boosted BTL transaction levels, and that for many, the events of the past year have made property investment a greater reality.

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“Lockdown has enabled some to have higher levels of disposable income, and in many ways, property has become the magnet,” he says.

“It’s become more attainable for both residential and BTL purchasers, since there has been little else to spend appreciating disposable income on.

“Couple this set of unique circumstances with the fact that BTL lenders which had pulled back from – and in some cases out of – various markets during the initial lockdown have now in the main re-entered with vigour.

Funding options are therefore plentiful for landlords and portfolio landlords of all types, investing in houses in multiple occupation, standard dwellings, semi-commercial property, multi-unit blocks – through personal and limited company vehicles.”

Paul Brett, managing director of intermediaries at Landbay, thinks the recent rush in activity has aided brokers and their knowledge of the products.

He says: “The market has held up very strongly, with remortgage activity remaining buoyant and the introduction of the stamp duty holiday giving purchase activity a shot in the arm.

“The intermediary community has become more skilled and knowledgeable about the different types of BTL products out there.

The increase in BTL investors setting up limited companies means more brokers are understanding the different ways to structure borrowing, whether it’s via the special purpose vehicle route or trading limited company alternative. This is down to the work lenders are doing to help educate brokers to the opportunities out there.

“I’m heartened that intermediaries are engaging with specialist BTL lenders and are not just looking at sourcing systems. They are also looking at criteria systems and working

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hard to understand the idiosyncrasies of the more complex and specialist BTL lending.”

While Brett thinks purchase activity may calm a little following the stamp duty relief period, he predicts that remortgage activity will remain strong.

However, a source of frustration for brokers and landlords during the last 10 months has been the significant lender and conveyancing delays in the purchasing chain, says Hardman.

“In many ways this has been unavoidable, and it has been an ‘all hands on deck’ scenario for many, but this is something that we predict will plague the market, certainly until the stamp duty incentive ends,” he states.

Nevertheless, Hardman is upbeat overall about the sector’s prospects, despite the fact that much remains unknown. “�uite how the market will pan out in the short and medium-term is unknown, but despite government borrowing being at war-time levels, the economic indicators are surprisingly incredibly positive,” he says.

“Furlough ending will likely create the biggest waves, so we need to work our way out of the pandemic carefully and reignite the hospitality and entertainment industries, bringing those back into gainful employment, if possible.”

RISING COSTS IN DEVELOPMENT A perpetual shortage of housing stock in the UK would suggest there should be a strong demand for development finance.

James Bloom, director at Alternative Bridging Corporation (ABC), says that while things are not that straightforward, the market is holding its own.

He explains: “There’s been continued demand for development finance, but COVID-19 has presented a number of challenges for developers. The delays caused by multiple national lockdowns have made

it much harder for developers to complete a scheme within the timeframe and budgeted cost planned at the outset, for example. Social distancing requirements also add complexity to a construction site. Supply lines have been impacted by a combination of both the pandemic and Brexit, and so it’s taking longer for the delivery of many materials, the price of which has been increasing.”

Developers have seen their cashflow put under strain and have been looking for costeffective ways of achieving greater leverage.

While high demand should see the sector remain steady, it will not be without its challenges, says Bloom: “Changes to Help to Buy and the ending of the stamp duty holiday mean that sales programmes are likely to be extended, and this will further lock up developers’ working capital.”

However, he adds: “The market is performing very strongly, and given the ending of lockdown we are likely to see elevated demand and opportunity.

“It is increasingly important for brokers to work with lenders that are able to help their clients overcome the challenges and continue to realise the opportunities in this changing environment.”

Guy Murray, head of development finance at West One Loans, thinks the bridging market is aiding success on the development side, saying: “The development market has even surprised myself with how well it has held up.

There is plenty of liquidity in the market from lenders for new development sites, as well as strong appetite from the bridging market for development exit products. This has supported development finance lenders in having viable exit options.

“The sales market has also continued to perform well, with sales values across our portfolio being on average 5% higher than valuation levels.”→

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Coping with COVID Jason Berry group sales and marketing director, Crystal Specialist Finance

M

obilising disaster recovery plans last March now seems like a distant memory, but it is certainly one that will not be forgotten, and which has delivered many legacies.

Having worked in specialist finance for over 20 years, I know the sector demonstrates resilience, determination and hard work, but the last 14 months has gone from ridiculous to sublime.

I’m sure everybody connected with the specialist market wondered at the end of Q1 2020 whether they would have a job or a business.

Cash reserves were vital, so having a good business which had previously traded profitably provided initial confidence and edge, but then generous government loans meant that even the most borderline of businesses could trade through the uncertain times.

As lenders retreated, stopped lending or simply stripped their criteria down to the bare bones, our specialist sector continued to innovate.

Thankfully, we never reached a ground zero point where no applications, no offers or no completions were evident.

Murray believes the market should continue to perform well, albeit with a slight slowdown in sales once the stamp duty holiday is over.

He says: “We are also seeing slight increases in build costs across the board, likely the result of difficulties with supply of materials and labour as a result of Brexit changes funnelling through. But generally, we have a positive view of the market over the next 12 months.”

Incredibly, increasing consumer demand for mortgages in H2 2020 continued into 2021, no doubt spurred on by the excellent stamp duty and permitted development initiatives.

Although the home continues to act as the substitute for the office, business surges have not caused productivity and efficiencies to decline.

The flexible working agenda has been on the table for many years, and I’m sure there will be ongoing compromises shown up and down the country as we press forwards.

Similarly, video meetings have been embraced.

I’m sure this would have occurred over time, but the acceptance of this technology has been accelerated. Nothing will ever beat a face-to-face meeting, but the virtual world has a place, and can deliver both efficiency and cost savings, which any business leader will always take.

Looking to the future, a lending marketplace which has specialist business front and centre is a given. I would forecast that mainstream lenders continue to cherry-pick ‘vanilla’ customers and mitigate their risks further by incorporating the Mortgage Guarantee Scheme.

This means huge opportunities for specialist lenders and brokers. Excellent financial solutions will be needed for an increasing number of customers who have simply experienced a life event which has created a slightly unusual circumstance for consideration.

DIFFERENT TIMES While the specialist sectors may all have their own identity, many of the same conditions that are fuelling the mainstream market are also increasing demand.

Unlike in previous downturns, mortgage lenders are not struggling with the same liquidity issues, and this should help keep the specialist sector on track too. 

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A way ahead for specialist finance Adam Tyler executive chairman, FIBA

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ncreased regulatory oversight in 2021 will affect us all, more than just through changes to fee disclosure from the Financial Conduct Authority (FCA).

The form this increased oversight might take is now a strong topic of discussion, as we aim to get ahead of the consequences by proactively looking at areas which need addressing, and implementing changes before having the conditions thrust upon us fully.

The sector would definitely benefit from an impartial complaint reporting process.

Currently, there is no formal central point to report dubious practice in any aspect of the industry. In the absence of a dedicated facility within bridging, FIBA and others provide an informal resource to respond to complaints from members’ issues with the way brokers, lenders, or customers have been treated.

While the sector has significantly improved its standing, and we have a voluntary Code of Professional Ethics and Standards, a formal procedure should be put in place where issues can be recognised and complaints about difficult experiences can be dealt with.

FIBA has been working on template which, with the cooperation of the whole sector, is more than capable of providing such an independent and impartial mechanism.

The value of expanding this initiative is that it would provide further evidence that the bridging market has the ability to prepare for the future and, in so doing so, would also increase transparency and confidence.

It would be a very positive demonstration to those who could eventually influence the way in which we have to conduct our industry.

Regulation is creeping forward. As an example, we all now take the Senior Managers and Certification Regime (SMRC), as part

of all our normal reporting routines. It didn’t seem that long ago that we were providing significant support to our members in making the transition.

More recently, the FCA has started asking brokers about how they use their regulatory permissions as they take a wider view of the credit market. Initially this pilot is to just 300 authorised credit broking firms out of the 32,000 that hold permissions.

Once the pilot is complete, the survey will be sent by the regulator to all firms with those permissions. There is further comment in this narrative about the use of current regulatory permissions, but the selection for the pilot has been made to include a broad range of firms holding credit broking permissions, looking at current and projected regulated transactions.

Following on from this, there are some proposals in the latest FCA quarterly consultation paper about new powers to cancel or vary permissions under the ‘use it or lose it’ initiative. This is something that was expected following previous HM Treasury publications.

It looks like this will focus on firms that have not used their regulatory permissions to earn income for the last 12 months, to reduce the risk of firms having a permissions purely to add credibility to their unregulated activities.

We will all need to keep an eye on this, but I believe it will be of most interest to consumer credit firms which may hold permissions only for the occasional transaction. It will be a case of emphasising to these firms the importance of engaging with communications from the FCA, even if they rarely do regulated business.

This all leads to the consideration of possible industry training, and the implementation of an industry standard for all aspects of commercial lending. These discussions are already taking place with industry colleagues on the topic of support for an independent source to consider the issues from our members and their customers.

We are heading in the right direction, but it is up to all of us to be prepared for the possibility of a more regulated environment.

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INTERVIEW Black & White Bridging

No grey areas Damien Druce, commercial director at Black & White, on the direction of travel for both the business and the specialist market There’s been a new kid on “Not at all”, says Druce. “We the bridging block over the past should be an easy first choice for few months...or so you may be people who want to do business forgiven for thinking. in the South West, but we also Black & White Bridging have the ability to span across hit the market with aplomb other parts of the country. We’re back in April, announcing the spreading our wings, not leaving appointment of industry veteran the nest.”

Damien Druce Damien Druce as commercial director, and a new brand identity.

TRANSPARENCY But those who thought that Black & The other key driver behind the rebrand White was just the latest new lender through was the firm wanting to push what it sees as the revolving doors of the bridging market one of its major selling points: transparency. were missing a trick. The firm comes with When lenders look to expand and grow pedigree. their books, they often have to look at either Launched as Bath & West Finance back going up the risk curve or down the price in 2013, the lender has been providing curve. short-term non-regulated loans to property Druce, however, says that whilst Black & professionals across the South of England for White Bridging will be competitive on both almost a decade. fronts, they want to push the businesses’ “do So, why the change and what’s the what it says” mentality to the fore. difference between Bath & West and Black & “I want us to be regarded as one of those White? lenders who just do what they say – a lender that doesn’t mess around with deals,” he says.

NATIONALLY FOCUSED “We won’t be changing prices, rates, One of the major drivers behind the rebrand maturity of the deal, etcetera we’ll be honest was to drive home the message that Black & and open from the outset.”

White is anything but a Southern focused He adds: “That’s the reasoning behind the brand. name. It’s there in Black & White, pardon Druce, a proud Mancunian, says the the pun. relaunch was all about making it clear that the He adds: “I want the name to reflect the brand is a national one. values, I want the values to reflect the people; “We’d been pigeonholed as a lender that and I don’t just mean people within the operates in the South West,” says Druce. office, but every person involved within the “That’s changed since the rebrand. We transaction, from the borrower to our legal are dealing with brokers in Scotland, brokers partners and the surveyor, to the people in the in London. We are dealing with cases from back office who pull it all together.” across the whole of the UK.” But as a business rooted in the West CLEANING UP Country, will this newfound national outlook Transparency is something that has been on detract from its existing business? the bridging agenda for years. But whilst many 10

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INTERVIEW Black & White Bridging

talk the talk, is it really the case that they do not walk the walk?

Druce says that despite the market having cleaned up its act over the years, there is still a rogue element out there that pushes into those grey areas.

He says: “I know a few brokers who have been really disappointed by the acts of lenders, such as the ones who ran for the hills at the first sight of trouble.

“This could be related to their funding lines, or it could be their attitude towards risk, you can never really tell how an industry is going to react until it happens.

“Some lenders stick with the market and push forward during times of trouble, but some row back and leave.

“We’re a lender that will be sticking with the market and supporting our stakeholders should there be any signs of trouble in the future.”

READY, SET, GO The messaging is there, the branding is in place and the business has been quietly staffing up.

So what now? How does Druce plan to push the brand to the next level?

“I’ve challenged the team to think big,” he says. “We will continue to evolve; we will continue to bring in more people and to add further experience to the business.

“I don’t intend on us being just another bridging lender.

“We plan on having a whole suite of products, including term ones.”

And he’s not just calling on his team to think big, but also the wider broker community, saying: “I’d call on brokers to come to us with new product ideas. Let’s have a conversation.

“We’re here to work together with our partners to create the best outcomes.

“Brokers, and indeed all stakeholders, should always feel they can come to us with ideas.”

EYE ON THE FUTURE Looking ahead, one place where Druce envisages growth in the near future is in the move of brokers that have traditionally only operated in the first charge space into bridging.

“I do think we will see even more mortgage brokers move into the specialist space, yes,” says Druce. “It’s great for borrowers, as it gives them more choice and more opportunity.

“It’s also good for lenders who are trying to grow, such as Black & White, as these brokers will not have the same relationships as the existing specialist brokers and will be more willing to try different lenders which can often lead to better outcomes.”

A WORD OF ADVICE So, does Druce have any sage words for the brokers looking to take the leap from a fix on a flat to a fixer upper for a landlord?

Indeed, he does: “Brokers don’t always give lenders the full picture.

“Intermediaries must get under the surface of a deal and give the lender enough information.

“There is nothing worse, from the lender’s side, than a deal looking straightforward only to find that there are credit issues, issues with the property or other parties to the loan.

“This can suggest that there has not been honesty and integrity from the broker.”

Despite the warning, it is for this reason that he believes mortgage brokers can be a hit in the specialist space.

“Residential brokers have to go through a very in-depth fact find as part of their regulated framework, so if they can transfer that across, I don’t see any reason why they wouldn’t do well in this space,” Druce says.

“Every deal should be treated as regulated, that’s something that we do at Black & White as standard, and we would encourage brokers to do the same.”

SO WHY BLACK & WHITE? Having learnt a little about the brand it is clear that Druce and the team have ambitions to show national pedigree.

Any last messages for brokers? Druce concludes: “Give us a try. If you want truly transparent lending with no grey areas and a lender that values you as people, then work with us. You won’t regret it.”

Maybe the future is bright, maybe the future is Black & White... 

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BRIDGING & DEVELOPMENT Data

Despite bridging’s reputation hinging on fast turnarounds, the average time to completion is increasing, albeit largely due to factors outside of lenders’ control. For development, with lifestyles changing, and possibilities opening around conversions, it looks to be an interesting future for this market.

53 days Average time to completion for bridging loans in Q1 2021, up from 50 in Q4 2020 and 49 days in Q1 2020 – Bridging Trends

£7.4bn Potential market value of the estimated 25,000 homes that could be developed from unused high street properties – Keller Williams

£4.4bn Total bridging loan book at the end of Q1 2021, a 1.7% decrease on Q4 2020 and a 3.5% drop year-on-year – ASTL

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Go on.

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BRIDGING Together

Plans change, so should lenders Sundeep Patel director of sales, Together

L

ockdowns and social distancing have made aspects of property investment more complicated, expensive and time-consuming, from refurbishments to viewings. A project that may previously have taken eight weeks could instead stretch to eight months.

With the typical bridging loan being 12 months long, many facilities will have reached term since the first lockdown hit. We have spoken to many reaching the end of their term and being unable to exit because their plans have been delayed, if not changed entirely.

We make a point of speaking with borrowers throughout the life of a commercial bridging loan, ensuring it doesn’t go past term if it can be avoided. We call on the day of funding, and schedule catch-ups at key milestones.

This reinforces the importance of the exit strategy, and we find out sooner if things aren’t going to plan. In essence, everything we do is to ensure the customer feels like they are in safe hands before, during and after funding.

Our common-sense underwriting means customers eligible for bridging products may also qualify for one of our long-term facilities, like a buy-to-let (BTL) mortgage; the fact we’re not a dedicated ‘bridging’ lender and have a range of products means we can support customers in a broader set of circumstances.

A BORROWER’S SAFETY NET This is a lesson we can carry forward. There are some unavoidable facts about the effects of the last 18 months, one of which is an increase in the number of properties coming to the market. Some developers will be looking for opportunities wherever they present themselves, and that may mean taking on a different kind of project than they’re used to.

The news is awash with retailers in trouble, but the pandemic has simply accelerated changes that were already happening. There’s still a role for local high streets, but we expect to see a lot of vacant units going through conversion to residential dwellings – especially given recent permitted development changes.

Many businesses are also reconsidering their relationship with the office, and some out-ofuse commercial buildings will continue to be converted, as before the pandemic.

Many workers will want to return to the camaraderie after an extended period working from home; however, it remains to be seen if there will be a softening of commercial property prices thanks to a glut of unused space, creating opportunities for developers.

Developers might find that this differs from the average residential refurbishment, leading to unexpected delays, even without the prospect of another lockdown. So, the option to refinance out of a bridge onto a term product may provide welcome peace of mind.

MAXIMISING YOUR BUSINESS Our relationship with brokers remains incredibly important. Bridging is driven by customer service, and will continue to require a broker for a long period of time to come.

Individuals looking for a residential mortgage can now apply online, but generally bridging still requires that human touch.

There are benefits to checking in with customers during the lifetime of their loan.

It demonstrates interest in their success, and creates an opportunity to build the relationship as someone who can help both in sourcing a bridging loan and solving a problem should the project timeline slip.

All this could help to maximise the life expectancy of the customer relationship.

Often, lenders and brokers will look at a bridge as a single transaction, but if you can establish yourself as the broker of choice with an investor who regularly flips or buys at auction, for instance, you could complete 20 to 30 transactions a year. 

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15

For introducer and professional property trader use only.

Less ordinary

More extraordinary Bridging | Refurbishment | Auction Commercial | Development | Buy-to-Let

At Roma, we like to be extraordinary.

Because of this, we stick to our decisions, meaning our intermediary partners are never left feeling uncertain.

Lending less ordinary

Lender Index 2021 Advert - Roma Finance May21.indd 1

romafinance.co.uk 20/05/2021 22:28:59

8:59

BRIDGING Roma Finance

Why we need a green revolution Scott Marshall founder and managing director, Roma Finance

T

he mortgage market is going green.

This is driven by three things.

First, we can’t ignore the climate emergency any longer.

Second, the government’s ‘Net Zero by 2050’ goal is ambitious, as is the target to accelerate this by cutting carbon emissions by 78% by 2035. That’s only 14 years away.

Third, there is pressure from consumers.

According to the Intermediary Mortgage Lenders Association (IMLA), 14% of brokers have customers who have asked about a green mortgage, and three-quarters of lenders expect demand to grow in the next few years.This isn’t a trend, it’s an irreversible shift.

The carbon footprint of the housing market is large, and we face a challenge to cut it. Not just lenders, but all stakeholders, including government, housebuilders, trade bodies, estate agents, landlords and homeowners.

Building a home and moving materials requires a tremendous amount of energy. Once built, there’s the ongoing impact to consider.

We can build beautiful homes with incredible environmental credentials, but we also face a housing crisis. We need to build quality homes at scale, quickly and affordably, and make them green. It is no mean feat, but it’s non-negotiable.

BUILDING BETTER HOMES A combination of rules and incentives is creating a greener housing market, while building the homes the UK desperately needs.

At Roma, an increasing number of our projects include energy-efficient features.

In fact, we recently funded one of the first carbon neutral Passivhaus homes in Scotland, and we’ve seen been a noticeable rise in applications to fund green property projects.

We’ve also seen an increase in converting commercial properties into residential homes.

Permitted development (PD) rules have made this easier, and we will see more of this, reshaping our urban landscape.

The finance market is rising to the challenge, with a raft of green mortgages launched since the turn of the year. Both high street banks and specialist lenders are now in this market, which means we can be sure green mortgages are not going away.

Specialist lenders are agile enough to react quickly. Our personal approach also means we can, and do, consider the green credentials of an application as part of our underwriting.

This will only become more prevalent in the short-term finance market.

But we need to remember that affordable homes are in demand, too. Energy-efficient homes are more expensive to build and buy, but cheaper to run. Modern methods of construction are one way, but government support is also needed, such as funding to help owners increase their Energy Performance Certificate (EPC) rating, especially now the Green Homes Grant has been scrapped.

We also need more government assistance to clean up brownfield sites, so lenders have more assurance and developers have the confidence to invest.

DIRECTION OF TRAVEL The green revolution is happening with or without us. At the same time, we need to put our own houses in order, and that starts from the top down.

Business leaders must set ambitious targets for their organisations, from reducing carbon footprints to funding more environmentallyfriendly property projects.

The government also has a huge role to play, from ensuring there’s enough electricity supply from renewables, to providing sufficient tax breaks to enable investment in green technology. Often the end products are more expensive than conventional ones, and we need to find ways to change this. 

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17

Bespoke, non-regulated bridging finance for the UK Property market. We lend using a diverse funding base including our own funds, enabling our experienced team to provide flexible finance that is matched specifically to the needs of the client.

Why use us?

•

Lending to Personal clients, Partnerships, Limited Companies, SIPP’s, SASS, Offshore Companies, Expatriates and Trusts.

•

Lending on residential, semi-commercial and commercial property (trading or let) in England and Wales. Minimum loan of £50,000 and maximum loan of £10m

Meet The Team: Rick Davey – Senior Relationship Manager looking after the whole of the North of England: Mobile: 07508 537162

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1st and 2nd charge lending

•

No exit fees or early repayment charges.

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Terms from 3 months to 24 months.

•

Speak directly to the decision makers who will happily provide credit back terms on any cases agreed.

•

We use valuers with local knowledge of the area and property.

•

Adverse information is considered on a case by case basis.

•

PG’s not always required on limited company applications.

•

Online application form, to help speed up the process

•

We are not just here for the vanilla deals.

As long as the exit is logical, then we are happy to consider and tailor the lending

Email: r.davey@bridging.group

Sarah Bennett - Relationship Manager for London and South England Mobile: 07508 536727 Email: s.bennett@bridging.group

Tarlochan Singh Sethi - Relationship Manager for London and South East England Mobile: 07882 495653 Email: t.Sethi@bridging.group

Dawn Trustam - Joint MD Mobile: 07908 748020 Email: d.trustam@bridging.group

Jagtar Singh Sethi - Owner and Joint MD Mobile: 07528 530010 Email: j.sethi@bridging.group

BRIDGING The Bridging Group

What about other relationships? best interests, which gives our brokers that extra confidence that we are a lender of action.

Dawn Trustam joint managing director, The Bridging Group

W

e lenders love the relationships we have built with our broker partners, without which we wouldnt have a busines.

Nevertheless, there are other relationships that are crucial to our business, especially when it comes to less straightforward deals.

I’m talking about those complex cases where it’s not just a valuation that’s needed to make the decision on whether you can lend or not. I don’t like calling them complex, they just require a little more logic, thought and decent relationships throughout the process.

For example, a case we completed on recently took everyone to finalise – the client’s solicitor, our solicitor, the valuer, broker, client and ourselves all worked together.

WARTS AND ALL We trust our brokers to provide a fully packaged case, warts and all, so we can iron out any concerns early on. The last thing anyone wants is to not have all the information at the start, which could cause a deal to progress slower, or even be declined.

Our brokers, in turn, trust us to review everything and make logical, responsible decisions, even if it is maybe that we cannot progress. Honesty is by far the best policy.

We need to be involved throughout the whole process, and we like to be copied into every email that is sent between solicitors.

That’s a lot of emails, I hear you say, especially when you have a pipeline to manage, but we wouldn’t have it any other way. The main reason we ask for this is to resolve issues immediately and early on, allowing the case to run smoothly through to completion.

There is trust between ourselves and the solicitors that we are working together in their

MANY MOVING PARTS In the example mentioned before, a complex case only happened the way it did due to the strength of our relationships, and because multiple parties were working closely towards a viable solution.

For this case to complete, surveyors needed to look at a site differently, as most would have needed a residual and we didn’t – which made the deal work in the first place.

Solicitors worked endless hours to make sure all bases were covered, as we had to handle air and light indemnity issues, ransom strips, and consents not being provided as some works were not completed.

The client’s solicitors were driving to late in the evening to provide advice and gain signatures in order to save time.

There were indemnities for those things that we just couldn’t get comfortable with, and brokers worked with the previous lender to provide additional time to allow us to get over the ever-increasing hurdles.

We also worked with the clients to gain additional information, and everyone came together to finalise and allow the client to move forward with their plans.

SATISFACTORY RESULTS The deal completed with a very happy customer, two relieved solicitors, a content broker, and a lender in need of a holiday! I kid.

The reason this case happened – and trust me, I have not mentioned all of the issues at play – was because everyone worked together, trusted each other and collectively solved the many issues that kept arising.

I know there are some that would prefer a lot more of the bridging process to become automated, but in most cases this will definitely not be a valid route.

Human thought process and relationships will always triumph where logic, common sense, and care to do a job right are key. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

19

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As we look forward to brighter times ahead, we continue to invest in the best people and technology to support our broker partners.

UTB - specialist lending you can depend on.

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BRIDGING United Trust Bank

Providing versatile solutions Gavin Diamond, director – bridging, United Trust Bank

A

ccording to Nationwide, property prices are rising faster than at any time in the last seven years. A surge in demand following the relaxation of pandemic restrictions is largely responsible for prices rising by 10.9% in May. A buoyant market is generally good news, but greater competition for developers and investors acquiring properties with potential to add value demands an ability to move quickly.

Bridging has rightly gained a reputation for being the most versatile of property funding solutions, and the speed and flexibility has seen its use in the property development and improvement sector grow rapidly.

United Trust Bank (UTB) was one of the first lenders to spot this opportunity, and it has become a significant stream of business.

Over the last few years we have refined the product and enhanced our service, with considerable investment in FinTech and streamlined processing. Although lockdown undoubtedly accelerated some of these improvements, we had already become adept at assessing and agreeing proposals swiftly.

Our most recent innovation, FastTrack, enables us to issue offers on more straightforward cases within a day or so, sometimes hours. This is particularly relevant for time-sensitive transactions.

Bridging’s flexibility can be important at the end of the project, as well as the start.

There may be several possible exits, adapted during the term if circumstances change. For some, the exit will be via sale, or for others a combination of sale or refinance on to a buyto-let (BTL) or other investment loan.

One client, for example, had intended to sell two apartments created from redundant office space, but mid-project instead arranged to

let them. When his initial facility came to an end, UTB was able to provide a medium-term facility to accommodate.

Developers often choose to use bridging over traditional development finance because of the size of the loan, the product flexibility, the range of securities that can be considered, the speed at which it can be obtained, and therefore the attractive relative cost.

We’ve often provided a bridging loan or structured property finance secured against existing assets to fund an acquisition, to then convert to a full development finance facility once planning was obtained and construction ready to start.

The bank’s structured finance division recently provided Apex Capital Partners with £5.3m for the purchase of a commercial property as part of a site assembly plan, with the potential to create 156 new apartments in South London. We are now in talks to provide development funding to complete the scheme.

One of our most successful and regular customers, Bruce Burkitt of PropertyExperts. co.uk, has found the speed of bridging essential to success in a competitive market.

On one occasion, Burkitt had identified a three-storey house in South Croydon with potential to convert to seven self-contained flats, to be added to his company’s growing BTL portfolio.

The improvement works required were extensive. As well as internal remodelling, the plan was to excavate the basement and add a single storey extension to the rear.

By providing UTB with a charge over three unencumbered properties within his portfolio in addition to the Croydon house, Burkitt kept cash requirements to a minimum. The proceeds provided him with a day one amount to buy the property and then fund 100% of the total cost of works in tranches. As a specialist property bank with strong development, bridging and structured property finance teams, we can find quick solutions to suit most clients’ needs, whatever the type and scale of project they’re planning. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

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WITH YOU EVERY STEP OF THE WAY We’re more than just a principal lender.

We have the in-house expertise to support your clients whether it is their first project or if they are seasoned property professionals

At Pivot we are passionate about providing our clients with the financial independence they require to meet the business objectives they desire. For more information please contact +44 (0)20 3695 5511 or visit pivotfinance.co.uk

F IN AN C E TO E N A B LE P R O G R E SS

DEVELOPMENT Pivot

Planning in advance is pivotal Brian West head of commercial operations and marketing, Pivot

A

s euphemisms go “rollercoaster ride” probably doesn’t begin to do justice to the unprecedented peaks and troughs experienced by the specialist finance industry over the last 18 months.

The development sector has felt this as keenly as any area of the market, and anyone hoping for quieter times ahead will most likely be disappointed.

As we head into summer, housebuilding, commercial development, infrastructure projects and home DIY are all booming as we steadily emerge from lockdown.

With a glut of liquidity, the lender rate war has also resumed with a vengeance.

Throw government stimuli into this mix, and it’s not hard to see why the UK construction sector is growing at its fastest rate in over six years. Indeed, May’s Purchasing Managers Index (PMI) also showed new order volumes growing at their fastest pace since the monthly survey began over 24 years ago.

If all this seems too good to be true, it’s because it probably is. As usual in life, there is a sting in the tail!

MATERIAL COSTS RISING Unprecedented demand for raw materials across the globe has resulted in a shortage, compounded by the dramatic decline in production in early 2020.

Brian Berry, chief executive of the Master Builders Federation, recently stated: “We can’t build our way to recovery from the pandemic if we don’t have the materials.”

Of course, the laws of supply and demand are further exacerbating the problem, with shortages giving rise to sharp price increases.

By March 2021, building materials had increased by 7% to 8% compared to a year

earlier, with timber prices up over 50% and steel 17.6%. Cement is up 30% in recent months and paint by a similar amount. Labour rates have also skyrocketed in some areas, particularly where Eastern European workers went home after Brexit.

COLLABORATION IS KEY The net result for developers is that now more than ever, it is harder to accurately schedule works and to project build costs and cashflow.

Contingency funds of up to 10% of total build costs are now more common, but uncertainty can still surround the budget and whether it’s sufficient to get the scheme built.

This is the point at which the best brokers and specialist development lenders come into their own. At Pivot, we move quickly and collaboratively to analyse the viability of every single development enquiry we receive, large or small. Our origins as a successful developer mean we can offer a unique market insight.

We have all learned a great deal since March 2020, not least of all the increased sensitivity around timelines. With second fix supplies in short supply, stock now needs to be ordered up to six months in advance to ensure the continuity of a build, and with costs changing daily, certainty of funding is key.

As a lender we are known for our market knowledge, the strength of our analytical skills and for our use of cutting-edge software. It is this attention to detail and understanding of different geographies, planning legislation, commercial into residential permitted development rights (PDR), air space deals and so much more that enables us to write deals others will shy away from.

With the imminent end of government support schemes, ongoing concerns about COVID-19 mutations, lengthened supply lines, congestion at the ports and so much more to add into the mix, the value of working with a lender that genuinely understands the space should never be underestimated.

Together in partnership we can plan and build our way to success. 

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Find out more about funding your project with speed, ease and certainty from our Specialist Property Team on 020 3012 0166

DEVELOPMENT CrowdProperty

Together we build, build, build…

Mike Bristow CEO and co-founder, CrowdProperty

A

round this time last year, Prime Minister Boris Johnson exclaimed: “We will build, build, build… build back better, build back greener, build back faster.” An exciting rhetoric, but as always, the challenge is in the implementation.

The planning system has been a major barrier for small to medium enterprise (SME) property businesses in building more homes.

Over the past 12 months, however, we’ve seen initiatives such as the Green Home Grant scheme, new planning laws which remove unnecessary, and new permitted development rights (PDR) , as well as the stamp duty holiday seeking to tackle taxation barriers.

This is a very real opportunity to finally build enough homes in this country. Failing to build just one home not only exacerbates housing under-supply, but also means that £100,000 to £200,000 less is spent on labour, materials and services. 100,000 fewer homes costs the economy £10bn to £20bn.

CrowdProperty’s research, which includes the largest survey ever conducted amongst SME residential property developers, shows that 42% believe that better sources of funding would be the best driver to build more homes.

We talk quite a bit about the remarkable decline in SME developer housing output – from 60,000 homes in 2008 to 20,000 in 2017, in a context where the country built only 200,000 in each of those years, considerably less than the 300,000 required. For the SME segment to be a material part of the answer, not only do we need to significantly increase output, but also reverse this declining trend.

Building the best SME property project lender in the market was the genesis behind CrowdProperty – addressing the many issues that have progressively choked this segment

over the last decade. There’s never a more powerful raison d’être for a business than solving fundamental market pains that the founders have felt personally.

Extensive hands-on property investment and development experience are key to understanding the needs of SME developers.

This includes selecting the right project as efficiently as possible, understanding which to pass on, getting the best deal by delivering speed and certainty to vendors, and speedily assessing and releasing drawdowns.

We know what’s important to developers and the project, we understand how market demand is changing and the funding products needed, and we deliver with speed, ease, certainty and transparency.

The pandemic revealed that most funders in the market were exposed, with single sources of capital, and that even those with multiple sources were vulnerable, as those sources had the same underpinning exposures to equity market volatility and lending attitudes.

CrowdProperty’s uniquely diverse sources of capital, across multiple major institutions, funds, family offices, high net worth individuals and private investors, has proven a sustainable and reliable source of finance through the toughest of economic backdrops.

CrowdProperty’s unique ‘property finance by property people’ proposition, and reputation as the best specialist property development lender in the market, has further step changed applications for finance, now running at over £250m per month.

CrowdProperty has funded the development of 1,438 homes worth over £270m, originating over £160m of agreed facilities, lending £133m, and unlocking over £120m of spend on labour, materials and services.

It has never been more important to work with a lender which understands a developer’s vision and needs. A nimble, rapid and valueadding approach means developers have a higher chance of success in their project and grow their property businesses quicker – benefiting all parties. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

25

Institutional firepower.

For serious property developers.

Atelier Capital Partners provides bespoke short-term lending solutions to professional property developers. Whatever your finance needs, we create custom loans to fit.

From simple bridging to complex development facilities, our solutions are structured around you and your needs.

Atelier Capital Partners. Better property finance, by design.

To find out more, contact our Origination Team: martin.gilsenan@acp.co.uk simon.joseph@acp.co.uk

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020 3786 1170 www.acp.co.uk

04/06/2021 15:04

DEVELOPMENT Atelier Capital Partners

A little leverage goes a long way Martin Gilsenan director of origination, Atelier Capital Partners

B

y any measure, it has been a whiteknuckle ride. After coming to a virtual standstill during the first national lockdown, the residential property market has roared back to life.

Figures from HMRC show that 191,000 homes were sold across the UK in March, more than double the number from the same month in 2020, even as property prices soared.

Meanwhile, the Bank of England reports that mortgage lenders grew net lending to individuals by £11.8bn in March – the biggest monthly jump on record – as demand surged.

Development lenders have also been through an extraordinary year, but the changes have been a little less abrupt. As lockdown first took hold, developer demand cooled and many lenders overhauled their attitude to risk.

With average loan-to-values (LTVs) shrinking, the market quickly lost steam and projects in distress became opportunities for acquisition.

If you were a developer with strong liquidity or a good funding partner, you could deliver these sites at a discount. If not, well, that was just too bad. With many lenders unwilling to go above 50% LTV, claims that lending was still going on rang increasingly hollow.

On the front line, brokers often joked that the reality was “pretend, not lend.” The more diplomatic version they told their clients was “business, but not business as usual.”

Fast forward to the present, and sentiment among both developers and brokers is on a roll, with lending taps once again open.

But a stop-start attitude to lending does the sector no favours. Rather than running with the herd, Atelier Capital Partners has always preferred to focus on experienced developers with an achievable schedule and a clear exit – in good times and bad.

That’s why, even in the darkest days of last year’s lockdown, we were still writing deals at up to 65% LTV. True, we rejected many more projects than we accepted, and we looked longer and harder under the bonnets of those we selected than other lenders might have done, but in the 15 months following our formal launch at the end of January, we funded more than £150m.

For us lending is always more than a transaction, it’s a partnership. We build deep and strong relationships with our borrowers, because we understand and support what they’re trying to achieve.

We also know that for the right borrower, a little extra leverage goes a long way. That’s why we are willing to lend up to 70% LTV on the right deal. By allowing the developer to stretch their senior debt to this level, we can often spare them the additional cost and hassle of mezzanine finance. This in turn makes it easier for them to attract a joint venture partner if they need to share the equity load.

Put simply, I’d rather be at 70% LTV with the right borrower than at 50% with someone less durable.

The current strength of developer demand is sparking a ‘race to the bottom’, with some lenders competing on lower-rate, higherleverage combinations. At times like these, risk-adjusted pricing can be an afterthought.

Not at Atelier. We ask our borrowers questions that are searching and, at times, challenging, to both assess risk and fully understand their project, not just tick boxes.

When we lend, we do so from a position of trust and understanding. We’ve looked beyond the headline plan and costings, and can decide to lend at higher leverage than mainstream or less well-capitalised lenders can.

The principles of sound, well-researched and properly underwritten lending are as true now, as the market booms, as they were when the world seemed to be closing down last spring. For us, and the developers we choose to partner with, a little extra leverage always goes a long way. 

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15:04

27

Development Finance We provide residential property development loans to experienced individuals and housebuilders with knowledge of the market.

What we can lend: · You must have planning consent · We lend at up to 75% of costs · We will fund new builds, renovations or conversions · Drawings are against a Quantity Surveyors’ certification · From £500,000 to £3m · Rates and fees by negotiation

Please speak to the team or contact us on 01799 582886 | developmentenquiries@saffronbs.co.uk

v2

Saffron Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register no. 100015) except for Commercial and Investment Buy to Let Mortgages and Will Writing. Registered office: Saffron House, 1a Market Street, Saffron Walden, Essex CB10 1HX.

DEVELOPMENT Saffron Building Society

The year to lay foundations Peter Owen head of property development, Saffron Building Society

O

ffice for National Statistics (ONS) UK Construction Output figures show that construction sectors have continued to see respectable, almost pre-pandemic levels since in July 2020.

In the report, new housing figures show that £2.9bn was injected into the UK economy in December from developments in the private sector. A phenomenal amount compared to the £426.6m invested in the public sector.

The government’s target to build 300,000 additional affordable homes every year is the driver for such investment. Whilst some of the large, private-home construction companies are reaping the rewards, capitalising on the construction industry maintaining momentum and protecting the economy during the pandemic, there is one other construction sector that can and should be benefiting: small to medium enterprise (SME) developers.

SME construction companies are often the purveyors of quality, affordable homes in the UK. Taking advantage of smaller plots and concentrating on family and first-time buyer (FTB) homes, they can turn around three to six houses in a relatively quick time.

However, it has never been the construction that has held them back, but planning and red tape. Local authority planners can make it difficult for any development to get off the ground, more so for smaller developers with little clout and limited experience in dealing with the authorities. The government has made waves to improve the planning system for renovation and change of use, but newbuilds remain logistically tough.

With high street buildings currently sitting empty, the government has focused on new permitted development rights (PDR), which will help streamline the ability to change

the use of a property from commercial to residential, due in summer 2021.

The UK government knows that local planning needs modernisation and improvement. Many believe that we will see more changes come later in 2021 – definitely a reason for optimism for smaller developers.

FIRST-TIME BUYERS 2020 saw an unpredictable anomaly for the property market, which concluded negatively for FTBs, with 90% loan-to-value (LTV) products almost vanishing from the market.

From the onset of the pandemic, FTBs surprised the market by continuing to provide the demand, but many were left to wait.

What the industry has now is a raft of available products across multiple lenders and a renewed interest from FTBs. For property developers, creating affordable first homes could provide much more opportunity than has been available for many years.

Unlike other mortgages, lending for property development is structured lending, where funds are advanced in stages to meet the cashflow needs of the developer throughout the construction phase.

The lender is there to support you, and specialist lenders have the experience, knowledge and understanding to handhold you through the process.

YOUR SHARE OF THE PIE Suppose you are serious about starting in property development, or are already a developer and aspire to begin your next project in 2021 – now could be your chance to strike.

The most significant bit of advice I can give is to speak to peers and have a conversation with a broker or a specialist lender to see what your options are.

As more first-time buyers are seeking their first step onto the ladder, and lending is now available to them to buy, all they need now is homes. Frankly, we have not, as a country, got the stock to fulfil their needs right now.

So, strike now while the iron is hot. 

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29

DEVELOPMENT Brickflow

Digitalising development Ian Humphreys co-founder and head of lending, Brickflow

W

ith demand for UK housing continuing to outstrip supply, it’s no surprise that the Royal Institution of Chartered Surveyors (RICs), in its April/May survey, reported the construction sector’s biggest workload increase in five years. Private residential construction experienced the highest rise, followed by infrastructure. Build to rent is also enjoying a boost, with 6,937 new homes gaining full planning permission in Q1.

Recent changes to planning permission systems, with a greater reliance on digital and map-based services, will also undoubtedly help projects deliver faster. This all sounds great in theory, but I fear the vision for supply meeting demand will sadly remain a pipe dream unless we make it easier for borrowers to access development finance.

We know there’s a problem, otherwise the UK wouldn’t have a housing deficit of around 1.2 million homes. Studies call for up to 340,000 new-builds each year for at least 10 years, and despite the government committing to supplying 300,000 new homes per year by the mid 2020s, the most we’ve managed is 177,000 in 2019.

It’s vital we encourage more small and medium businesses (SMEs) to get involved.

Having started to address the planning barriers, it’s vital we tackle the financial issue.

The Federation of Master Builders’ 2020 Housebuilders Survey found that 42% of developers had sites stall or fall through due to issues with securing finance, up from 39% in 2019, and ratings for SME residential development lending conditions dropped to 1.98 out of 5, down from 2.15.

Cumbersome lending models are clogging up the system, and it’s time for change.

30

THE CHALLENGE Many borrowers either do not have the visibility to secure the best deal or are only aware of high street names, which have significantly reduced appetites around SME developer funding. The non-banking sector has risen admirably to fill this gap, but most developers don’t know they exist or how to approach them.

Every lender will have a different criteria when it comes to loan size, deposit, geography, asset type and borrower profile; in addition, leverage and pricing can vary substantially across each of these components.

By contacting more lenders, borrowers can significantly improve their chances of securing the right funding, yet it would take months to do this for every new project – time and resources developers don’t have. Time is being wasted researching sites that may never yield results due to the inability to find the right funding partner.

With borrowers unable to access the tools to shop around – unlike with other financial products – they’re likely to agree to less competitive funding offers.

For lenders, the inefficiencies are just as frustrating; marketplace ignorance means they’re inundated with inappropriate enquiries, which the lender has to spend time and resources scrutinising. Frustratingly, lenders advise their loan conversation rate from enquiries received is often less than 5%.

THE ANSWER At Brickflow we’re on the cusp of a revolution, having created the UK’s first development finance search engine, giving real-time access to the lending market, with tools to complete the loan process in six weeks and a 90% conversion rate.

Borrowers can spend less time researching unviable sites, while lenders will have to check fewer ineligible projects.

The more efficient both sides become, the greater the gains for the UK as a whole: more housing at a higher standard. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

COMMERCIAL Pitch 4 Finance

Commercial finance trends Miranda Khadr founder, Pitch 4 Finance

P

itch 4 Finance officially launched to brokers in April, providing brokers with a platform, supported by a full helpdesk, for sourcing the best solutions in bridging, development, commercial term loans and complex buy-tolet (BTL). Within two weeks, the platform processed more than £66m worth of enquiries..

Here are some of the trends we have seen in recent weeks, based on cases that have been processed through the platform and the latest in lender criteria.

SMALLER COMMERCIAL LOANS We have seen a number of enquiries for commercial loans, combined with numerous criteria changes amongst lenders.

There are certainly more lenders dipping their toe into funding mixed-use properties, but options on commercial properties are limited when it comes to smaller loan sizes.

In fact, despite demand from borrowers, smaller commercial units of less than £100,000 are finding fewer lenders in the marketplace at competitive prices. There seems a real gap in funding at this end of the market OWNER-OCCUPIER COMMERCIAL With the pandemic raising questions over commercial property prices in the short-term, some businesses have identified an opportunity to purchase their own premises, particularly as the longer-term outlook for commercial property remains positive.

For businesses that currently rent, buying can reduce costs and provide an additional asset to strengthen the balance sheet.

There is also a growing appetite for owneroccupied commercial assets amongst lenders, with a number of challenger banks and

alternative finance providers showing signs of an increased appetite in this area.

This is good news for businesses that are looking at buying, but also those that already own their building, as there may be opportunities to refinance at a better rate.

HIGHER LEVERAGE Over the past few months more lenders, including new entrants into the market, have been happy to consider higher leveraged residential development funding transactions.

This includes a greater number of mezzanine providers that are considering mezzanine as well as alternative finance lenders offering stretch senior solutions on residential, and it’s meeting the greater demand from developers who want access to greater leverage as the costs and timescales of completing a scheme increase.

The geographical location of the scheme holds great importance to a number of lenders, given the perceived risks of selling finished units in non-urban environments or areas where there are concerned over the potential demand of the scheme.

DEMAND FOR SECOND CHARGES Another trend we’ve seen is high demand for second charge commercial finance, with borrowers happy to leave a balance with their existing lender and raise extra capital with an additional charge.

Often this is down to the sheer pace at which a second charge loan can be arranged.

Some borrowers have been happy to opt for a second charge even where it would have been most cost effective to refinance the whole balance on a first charge basis.

OPPORTUNITIES IN HOSPITALITY There are still opportunities to secure finance on hospitality venues – you just need to know where to look.

For example, there are a number of lenders on the Pitch 4 Finance platform that are happy to lend on the purchase of a hotel. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

31

Tired of tick box lending?

Norton Home Loans offers a common sense approach.

No credit scoring Credit repair products Non-standard construction considered Range of incomes considered Manual underwriting Every customer is treated as an individual and not a number. We pride ourselves on Real Life Lending.

Want to work with us?

01709 441926 www.nortonhomeloans.co.uk

THIS INFORMATION IS FOR INTERMEDIARIES ONLY AND SHOULD NOT BE DISTRIBUTED TO POTENTIAL BORROWERS.

FIRST CHARGE Norton Home Loans

Right to Buy in 2021 Helen Marshall marketing manager, Norton Home Loans

W

hen COVID-19 hit, the mortgage market faced many challenges; this included the Right to Buy market, which saw a 39% decrease in sales in April to June 2020 compared with the same period in 2019.

Lenders began to pull products from their offerings, and the specialist end contracted the most drastically. However, Norton Home Loans continued to consider Right to Buy throughout the height of the pandemic, having improved its offering in January 2020, allowing customers to add both lender and broker fees to the 100% discounted purchase price.

CASE STUDY The following example concerns a single applicant, a council valuation of £95,000, discount price of £49,062 and loan-to-value (LTV) of 51.4%.

The client had several small defaults from 2019, and was one month into a six-month probation period in a new job.

The broker had a restricted choice of lenders, due to the restrictions across the market associated with the pandemic. There was a timescale issue, as the council offer was due to expire in six weeks.

NHL SOLUTION Many lenders have a minimum valuation and loan size. However, Norton Home Loans’ minimum loan amount is £3,000 and there is no minimum property value.

We thoroughly investigated the defaults, but were satisfied that this was a one off and occurred due to extenuating circumstances – the customer had no further issues since, which was a big positive. The broker referred the case with a full breakdown of employment

over the last three years, and we could see the risk was low, as the client had stayed in the same industry, one not affected by the pandemic, and had moved for a better opportunity with more money.

Due to our manual underwriting, our advisers were able to fully investigate if this mortgage was feasible for the customer.

REAL LIFE LENDING This case championed our approach to ‘real life lending’, helping someone buy a house they might have otherwise missed out on.

Stephen Lawrence, group national sales manager, says: “Norton Home Loans has been lending since 1983; it is a specialist in the field. The Right to Buy first charge mortgage products and lending criteria have been designed to allow tenants with impaired credit to purchase their council property and benefit from a generous local authority discount.

“A Right to Buy first charge mortgage from Norton Home Loans has also proven to be a lifesaver to many ex-tenants, as it has allowed them to repair their credit history – which provides the opportunity to remortgage at a later date to a high street lender and benefit from the best mortgage deals available in the market – and purchase their council property and normally after five years benefit from the discounted purchase price.”

Tania Morris, department manager at Norton Home Loans, adds: “I am delighted to see how successful our Right to Buy offering has been. Despite all the uncertainty and financial implications coronavirus has brought, between January and April 2021 Right to Buy mortgages have accounted for more than 13% of our first charge lending compared to just 4% during the same period last year, and this trend is set to continue.

“A contributing factor to our success is that we manually package and underwrite all our cases, so we can work with brokers and find solutions to complicated and unique applications, enabling our customers to purchase their much loved home.” 

Guide to Specialist Finance – brought to you by Mortgage Introducer

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FIRST CHARGE Impact Specialist Finance

No shame in applying Dale Jannels managing director, Impact Specialist Finance

A

recent study by Aldermore Bank showed that first-time buyers are more likely to be rejected for a mortgage than they were a year ago.

Unfortunately, more than two in five had been rejected more than once, compared with fewer than one in five before the pandemic.

The top reason for mortgage applications being rejected was due to a poor credit history (41%) and more than a quarter of prospective first-time buyers were worried about their credit history, with more than a third currently seeking to improve their credit score.

An oft-repeated mistake is for first-time buyers with any kind of complexity or poor credit to seek a mortgage via their bank first, which will often result in rejection.

Specialist finance brokers and distributors are experienced in helping such customers.

This is demonstrated by our partnership with Mojo Mortgages, which is referring its complex customers to us as we have vast experience and a range of options not available direct to customers and other broker firms.

The relationship we have with some specialist lenders ensures that some will allocate an on-site underwriter to our offices – during normal times – who will purely look at impact’s cases. This ensures certainty of decision and underwrite, and in return the lender receives volume, quality business and increased completion conversions.

With some high street lenders encouraging clients to cut out the original broker, especially with product transfers, now more than ever is a good time look at the specialist arena.

As furlough draws to an end and many customers struggle on a monthly basis, this area is sure to be in demand, as highlighted further by the Aldermore survey.

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Significant credit issues are becoming more prevalent, with nearly a quarter (23%) having an account handled by collection agencies, 14% having taken out a payday loan, 12% having a County Court Judgement (CCJ) and 9% having a bankruptcy in their past.

These findings are echoed in our day-to-day dealings with brokers and their customers. It’s clear the pandemic has impacted the finances of many, but that need not mean that they cannot obtain a mortgage.

APPETITE TO LEND Lenders have an appetite, and we’ve seen that recently with many different product launches into the specialist arena, including Help to Buy, shared ownership, limited company buyto-lets, 95% loan-to-value (LTV) lending, bridging, houses in multiple occupation (HMOs), all types of adverse, all manner of property types, and so much more.

Knowing that you have access to more than 20 specialist lenders in one place, without the need to rekey data into 20 different systems, is time saving in the current climate. Systems should have the ability to seamlessly link in with market-leading sourcing and criteria systems, such as Iress and Knowledge Bank, and automatically store and update evidence of research, as well as any produced key facts illustrations (KFIs) or European Standardised Information Sheets (ESIS).

Any specialist packager partner you deal with should make the processing journey as simple and as slick as possible – most importantly, adding value to your relationship with your clients.

The more thorough and better prepared brokers are from the onset, the less time is spent firefighting issues further down the line, meaning less stress will be placed on the client.

By enlightening customers to the many options available, no matter what their circumstances, we can all help to remove the supposed stigma and shame of having poor credit, and help make customers’ homeownership dreams a reality.

Guide to Specialist Finance – brought to you by Mortgage Introducer

ASSET FINANCE Data

Successive lockdowns throughout 2020 had an understandable adverse impact on British businesses, and in turn the asset finance market.

Now, with recovery on the horizon and businesses across the UK reopening and in need of funds, a rebound can clearly be seen in asset finance new business.

80% Growth of total asset finance new business (primarily leasing and hire purchase) in April 2021 compared with the same month in 2020 – FLA

15% Increase in new business in Q1 2021 compared with the same period in 2020 – FLA

140% Growth of new business in the vehicle finance sector in April 2021 compared with April 2020 – FLA

Guide to Specialist Finance – brought to you by Mortgage Introducer

35

ASSET FINANCE B2B Capital Partners

The super deduction tax scheme Robin Tarling managing director, B2B Capital Partners

A

he super deduction, announced by the Chancellor in March 2021, has been put in place to help stimulate business investment and promote growth through a temporary increase in tax relief when purchasing assets.

This article looks at how this might inform the decision to acquire an asset via hire purchase rather than finance leasing.

WHAT IS THE SUPER DEDUCTION? The super deduction allows a limited company to claim 130% of the amount they spend on new equipment against taxable profits in the year of purchase. To illustrate, a company spending £100,000 on qualifying new equipment will be able to claim a deduction of £130,000 within their corporation tax calculation for that year, giving corporation tax relief at 19% of £24,700.

If there aren’t sufficient profits in the year to benefit from the full deduction, then, as with normal capital allowances, a ‘loss’ is created which can be carried forward to use against future profits – or back under the new temporary three year loss carry back rules.

The scheme is in place for two years and applies to expenditure incurred between 1 April 2021 and 31 March 2023.

In simple terms, the super deduction will enable companies to cut their tax bill by almost 25p for every £1 they invest, and it provides significantly faster tax relief for qualifying investments, thereby helping businesses to invest and grow.

Unlike the Annual Investment Allowance, there is no limit or cap on the amount of capital investment that can qualify.

The types of assets which qualify for the tax break are essentially the plant and machinery 36

that ordinarily qualify as ‘main pool assets’ for the Annual Investment Allowance.

These include, for example: computer equipment and servers; office tables and chairs; vans, lorries and tractors – but not company cars; cranes, ladders and drills; foundry equipment; compressors; refrigeration units; and solar panels.

Assets must be new and unused, and plant and machinery which is purchased in order to be leased out will not qualify.

In addition to the super deduction, there is also a 50% first year allowance for qualifying special rate assets, namely those assets ordinarily qualifying for the 6% ‘special rates pool’, including integral features in a building and long-life assets.

HIRE PURCHASE VERSUS LEASING The super deduction adds a further dimension to the hire purchase versus leasing debate.

For many businesses, finance leasing is an attractive option, for several reasons.

For example, the monthly cost is generally lower than with hire purchase, if the equipment breaks or needs updating then a replacement is often provided by the leasing company, and the asset itself acts as security, meaning that personal guarantees may not be required.

However, with a finance lease the assets are never actually owned and they therefore do not qualify for the super deduction, whereas with most hire purchase agreements they will.

The opportunity to use the super deduction tax relief may therefore act to tip the scales in favour of hire purchase, although it is important to always complete a financial assessment over the full life of any agreement before proceeding.

Before making any final decision about acquiring new assets via hire purchase or leasing, it will therefore be important to ascertain beforehand whether or not the super deduction can be claimed. A good finance broker or accountant should be able to assist clients with this. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

SECURED LOANS Data

Despite seeming to show a month-on-month drop in the value of new business, Loans Warehouse data actually denotes steady growth in the market, while completion times remain steadily low. While the most popular use of second charges is for debt consolidation, borrowers are also putting this money towards home improvements.

£77.6m Total secured lending during April 2021, down from £91.4m the previous month, but a 5.2% increase in terms of working day completions – Loans Warehouse

278% Increase in completions in April 2021 compared with April 2020 – Loans Warehouse

12.8 days Average time to completion in April 2021, 0.1 days slower than March 2021 – Loans Warehouse

Guide to Specialist Finance – brought to you by Mortgage Introducer

37

COMPLEX SECURED LOANS? We’re the experts.

High LTV case?

Buy-to-Let property?

Poor credit score?

Pay a Tax Bill?

Let-to-Buy?

Over the last 48 years, we’ve seen it all. So, when you come to us, you know it’s Expertise You Can Trust.

Want to work with us?

01709 321 665 www.nortonbrokerservices.co.uk

THIS INFORMATION IS FOR INTERMEDIARIES ONLY AND SHOULD NOT BE DISTRIBUTED TO POTENTIAL BORROWERS.

.

SECURED LOANS Norton Home Loans

Why consider a secured loan?

Lisa Muscroft head of loan broking, Norton Home Loans

S

econd charge lending has been increasing steadily since the pandemic hit, which may prompt questions about the benefits of these loans in servicing pent-up demand. So, when should a second charge loan be considered?

FIXED RATE, LOW INTEREST OR INTEREST-ONLY A remortgage may not be in the best interest of the customer if their mortgage is fixed, low interest or interest-only. This is because it could mean paying hefty early redemption charges to be released from the contract, or otherwise could increase monthly payments.

However, a second charge loan would allow the original mortgage to remain in place until a more appropriate time to remortgage.

CREDIT SCORE NEEDS HELP Second charge lenders are often considered to be more sympathetic when it comes to a less than perfect credit history.

If a customer were to take out a second charge and make all the payments on time, it should help to start rebuilding their credit score. This, in turn, means that should the customer look to take out finance once the loan is paid off, or refinance their current loan in the future, they should be able to obtain cheaper funding.

RECENTLY SELF-EMPLOYED The finance market does not always look kindly on self-employment, as it can be higher risk than traditional employment.

Second charges, however, have a wide range of options. Some lenders will consider applicants who have been self-employed for as little as 12 months.

LOANS FOR ANY LEGAL PURPOSE One of the most popular second charge uses is debt consolidation. Many first charge lenders will cap a remortgage at 75% loan-to-value (LTV) for debt consolidation, which is where second charges really come into their own.

Some lenders will look at 100% LTV, or even more depending on the circumstances.

However, consolidation isn’t the only use.

We get applications for home improvements, holidays, wedding expenses, paying a tax bill and deposits for additional properties, just to name a few. This range gives secured loans a better standing to help a wider range of people.

DAY ONE SECURED LOANS If a customer has purchased a house but wants to do home improvements and has nothing left within their mortgage budget, some second charge lenders will facilitate a loan with less than a month’s mortgage history, so customers are able improve the value and eventually refinance to consolidate the debt.

LIMITED INCOME Income can be a good indicator of affordability, but some lenders won’t consider overtime, bonuses or benefits. Many secured lenders will consider a range of incomes, some up to six times loan-to-income (LTI), and others will use an income and expenditure to determine if the loan is affordable.

This could be a better option if income is a struggling point for a remortgage or further advance with a first charge lender.

PROVIDING SOLUTIONS The second charge market will continue to develop and grow, providing solutions where others fall short. Plus, as the country reopens and holidays are reintroduced, the demand for finance will increase month-on-month, meaning more customers may look to second charges for the perfect solution.

This growth will find the second charge market surpassing pre-COVID levels, as it is a genuine solution to a vast range of needs. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

39

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BUY-TO-LET Data

Every UK region except London has seen rent increases year-on-year.

With the chance for strong yields and the stamp duty holiday providing an opportunity to buy at a discount – a relief where recent years have seen landlords penalised by tax changes – the buy-to-let sector looks set to grow post-pandemic.

12% Proportion of sold homes bought by landlords in Great Britain in 2020, down from 16% in 2015 – Hamptons

4.4 million Privately rented households in England in 2020, 0.5 million less than the 2017 peak, despite total housing stock increasing – Hamptons

6.4% Yearly increase in average rent prices, excluding London which brings the increase down to 4.0% – Homelet Rental Index

Guide to Specialist Finance – brought to you by Mortgage Introducer

41

BUY-TO-LET Brightstar Financial

Opening up new opportunities Michelle Westley head of marketing, Brightstar Financial

L

ast July, the temporary stamp duty holiday on purchases up to £500,000 kickstarted an ongoing boom of buyer demand. But that wasn’t the first time, and it’s unlikely to be the last.

On 1 April 2016, a 3% surcharge was added to the stamp duty payable on investment properties, leading to a boom of buy-to-let (BTL) purchases, many with 5-year fixed rates, meaning this year there’s a surge of potential remortgage business.

Ambitious investors will look to raise additional capital to fund new opportunities.

Increasingly, landlords are looking for opportunities that can deliver greater returns than standard BTL. So, what are the options?

HMOS AND MUFBS A house in multiple occupation (HMO) is a building of occupants from two or more households who share one or more basic amenities. Traditionally, an HMO might be a student house, but it’s becoming more common for young professionals to live in HMOs near to city centres, for example.

A multi-unit freehold block (MUFB) is split into flats and held under a single freehold title. Investors can increase the value still further by investing in creating individual titles for each of the residences.

The key difference is that with an MUFB each unit is self-contained, with its own private entrance and separate Assured Shorthold Tenancy (AST).

HOLIDAY LETS Holiday lets are increasingly popular with investors, given the rise of booking platforms and the pandemic-driven explosion of demand for self-contained staycation accommodation.

42

In order to qualify, a property must be available for lettings 210 days a year and actually let for 105. Any period where a tenant is in the property for 31 days or more cannot be counted, and if lettings exceeding 31 days cumulatively exceed 151, the property cannot be classed as a holiday let.

A furnished holiday let is treated as a trading business, and there are many differences in taxation compared to BTL, which can prove attractive to investors.

COMMERCIAL Commercial investment mortgages fund commercial or mixed-use properties purchased for rental return and capital gain. With the right property, investors can earn a good yield on a full repairing lease, with tenants generally tied in for longer periods than a standard AST. PROPERTY REFURBISHMENT A growing number of investors are realising they can generate better returns by buying a run-down property and renovating it to achieve either higher resale or rental income.

Refurbishment finance can be arranged on a flexible short-term basis up to 24 months, during which time an investor can purchase a property and carry out work to increase its value, before deciding whether to refinance onto a longer-term solution or sell.

Each of these areas presents a new opportunity for greater returns, and each requires a different area of lending expertise.

Working with a specialist distributor gives you the opportunity to access this expertise and secure the best lending solution to help clients achieve their objectives. At Brightstar Financial, we have sector specialists who are experts in their own fields and can work collaboratively to ensure the best result.

If you have BTL clients who are due to remortgage, find out what objectives they have for their portfolio, and whether they want to release capital to open new opportunities. If you don’t have the specialist expertise, partner with someone who does. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

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A common-sense approach to development finance Capital is the key ingredient for every successful development, whether it’s a new build, part-build or conversion. You need an experienced and reliable finance lender with a common-sense approach who can work alongside you and who can access funds quickly. At Black & White we can strengthen your position by arranging short-term finance on competitive terms and will work side by side with you throughout the period of the loan, ensuring that you only pay for the capital you use.

Loan Size

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Up to

Loans from

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0117 937 4333 enquiries@blackandwhitebridging.co.uk www.blackandwhitebridging.co.uk

month terms

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ADVERTORIAL Black & White Bridging

What can Black & White do for me?

A

ccording to the Association of Short Term Lenders (ASTL), new bridging applications rose to £7.49bn in Q1 2021, up 25.5% on the same period in 2020. The industry is also attracting funding at an increasing rate.

Far from deterring outside investors, the pandemic has had no visible effect on the flows of new money looking for a home in the bridging market.

Of course, it would be logical to assume there will come a time when we shall reach a funding saturation point, but at the moment intermediaries and their customers have never had such choice between so many different lenders and propositions.

Choice can be a two-edged sword, though.

How do you know which offering is best?

Also, if you prefer to use an independent packager or distributor, does that guarantee a successful outcome?

The regulatory go-to answer is to search for the cheapest cost to the client. That is important, but as any seasoned intermediary knows, there are other criteria to be considered, especially in bridging.

That is why we have made the whole experience of dealing with Black & White Bridging one which not only delivers funding your clients want, but provides a process that has been designed to deliver consistency of service – something which has proved to be extremely variable across the industry.

One of the industry’s main boasts has been speed, but the reality can be very different, such as delaying an application before announcing that it doesn’t fit criteria, but miraculously will at a higher rate.

Cases like this are agreed in principle and make the broker and client believe they are close to a successful resolution, so they tend not to seek a second source. By the time a final decision is made with a higher rate, brokers have no time to look elsewhere.

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With so many lenders also entering the market with untested procedures and personnel, few match expectations on a consistent basis. Even those with longer track records can become victims of their own success, with service suffering in the face of volume business.

At Black & White, we have a sound foundation thanks to our parent, Bath & West Finance, a respected name in the sector.

We start from a position of strength, with the infrastructure in place for underwriting, administration and business development.

What we are doing is changing brokers’ perceptions of service, by offering introducers a proposition that delivers every time:  Settled funding lines provide continuity to the intermediary sector, and we are actively seeking new investor partnerships as we anticipate a strong business pipeline.  New technology, introduced this month, complements and enhances the experience of our underwriters and administration team, already proving its value in faster throughput and consistent service levels.  Between them, commercial director Damien Druce and founder and managing director Martyn Smith have over 60 years of experience in the bridging sector.

Along with fresh ideas on service and transparency, we are taking an already respected lending platform, building to create a national presence, and bringing our particular style to a wider broker audience.

So, when you deal with Black & White Bridging, what is going to make us stand out?

In a nutshell, it is our blend of experience, advanced technology, proven process and settled funding lines, allied to a service that delivers on every level, with no grey areas, and accepts no compromise on the quality of its proposition.

Black & White – setting the bar for bridging excellence. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

ADVERTORIAL Black & White Bridging

What our new people say about joining Black & White

A

lender’s success is judged on the quality of the personnel it attracts, and we have been quick off the mark to seek out individuals whose skills and experience are second to none in order to propel Black & White to be a leading short-term lender.

Heather Hancock – senior underwriter, joined in March “Martyn and Damien were very welcoming and I love the drive everyone has to get deals through and make them work. Black & White has a strong reputation and I enjoy the collaboration between the clients, intermediaries, investors and ourselves. It has a different atmosphere to places I have worked previously, whilst still being very focused. I most like the buzz that we have between us all, and the relationship we have with everyone we deal with.

“We are always looking to go the extra mile to help brokers and their clients to make deals work.”

Oli Bland – relationship manager, joined in March “B&W’s predecessor already had a strong reputation for delivering a quality product, however was restricted by the regional focus.

“The prospect of working here, with their ambition of becoming a national player and increasing the loan book by orders of magnitude, and helping scale the business from both a credit and sales perspective was one I could not turn

down. Escaping London during the midst of a lockdown and pandemic was also highly appealing!”

Nicholas Goss – head of investments and capital markets, joined in May “What attracted me to Black & White was the opportunity of joining an established and experienced company that is now looking to embark on an aggressive growth strategy. Knowing that I can directly assist in this and am working closely with like-minded, ambitious colleagues makes me feel inspired and engaged as I have never felt before.

L** ******n – head of underwriting, joining soon “I see this opportunity as head of underwriting to help contribute to the growth of a fast moving business like Black & White.

“My skills are particularly well suited to the position based on my experience built up over many years in the lending industry, coupled with my pragmatic approach to lending and empathetic approach to both intermediaries and colleagues. I am excited by this new position, which will allow me to write good quality business serving our intermediaries and helping build many more and much needed new homes!”

To find out more about our new appointment, follow us on social media or register with us at www.blackandwhitebridging.co.uk. 

Guide to Specialist Finance – brought to you by Mortgage Introducer

45

LEGAL Movin’ Legal

Never say never again John Ahmed chief executive, Movin’ Legal

M

ortgage and property fraud is now more prevalent in the specialist finance market than you would think. A quick google search will find recent headlines about cloning, buyer redirection fraud, property hijack and land disputes. Prevention and caution is better than the resulting disputes and damage to reputations caused after the event.

What if you had been the broker or solicitor or lawyer involved? Could any of this have been avoided? More than likely yes, but that would have taken some extra due diligence.

Property, mortgage and land fraud has and always will be an issue for us all to contend with at some point. Due to the intricacies of some of the deals in the specialist finance market, more so than normal.

It could be a standard investment deal, bridging, development finance, mezzanine finance, short-term, secured, or maybe just raising extra cash. Foreign investors from the EU, Russia, the Arab States or indeed UK buyers. The opportunities for fraud, and mostly to launder cash, are huge.

We all have to be on top of our game. The legal firms on panel with Movin’ legal are intermediary focused and friendly, and all use their fraud checking procedures to help and assist our intermediaries.

The most common examples of fraud checks are a matter of routine, and I would advise all brokers, whether you use Movin’ Legal or not, to be vigilant. These are just some very simple checks that could make the difference.

KNOW YOUR CLIENT At application level, this includes the likes of panel solicitors and lawyers being able to prove and verify simple things such as identity, 46

where they are, their source of savings, the value of the property, the price to be paid and whether any payments have been or will be made directly between the seller and purchaser and so on....simple things really.

A LICENCE TO THRILL Of course, this is not quite James Bond, but if brokers don’t get on board, it might well be ‘A View to a Kill’, especially where regulation is concerned. There’s no ‘Casino Royale’ when it comes to mortgage fraud, and you definitely don’t want to be the dealer in an expensive game for both you and your client.

This is certainly ‘No Time to Die’ when it’s so easy to check on-boarding and applications.

The more you know your client, then the more you know how much you can help them, too!

Unfortunately with criminals there’s always a way to forge most of this, so it’s easy for all involved to get hoodwinked.

The level of fraud sophistication at the moment is truly unparalleled. That means it’s easy for some of the obvious tricks to be missed and for all to be taken along for a ride.

Over the last 40 years I have been involved with a successful brokerage and prominent network that is still successful to this day.

Everyone involved in a transaction has to realise that they, too, are at risk of finding themselves in a fraud situation so easily, and will be involved in the resulting fall out.

O

THE GOLDEN GUN Due diligence – believe me, from a regulatory point of view, it’s as important for brokers as it is for legal firms to be careful. We live in an ever-increasing society of interconnectivity, and incidences of fraud will only increase as our lives become more entangled.

We won’t all be living our lives on smartphones just yet when it comes to buying property. But until we do, my advice is pure and simple: deal with professionals you know, and use your best advice.

It is, of course, what consumers pay you for.

Use your instinct. Use you. Use us! 

Guide to Specialist Finance – brought to you by Mortgage Introducer

*Pi

Bridging loans from experienced property finance professionals Black & White Bridging offers bespoke bridging loans from £50,000 to £10,000,000 over 3 months to 18 months. As experienced property professionals we can offer a more flexible approach to our lending than many less experienced companies including second charge lending. We are able to make immediate decisions over the phone and provide funding, when required, in a matter of days.

Loan Size

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Up to

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0117 937 4333 enquiries@blackandwhitebridging.co.uk www.blackandwhitebridging.co.uk

month terms

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BRIDGING 85 Great Portland Street, London, W1W 7LT

All it takes is a phone call.

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CLASSIFIEDS

DEVELOPMENT

At Pivot we are passionate about providing our clients with the financial independence they require to meet the business objectives they desire. For more information please contact +44 (0)20 3695 5511 or visit pivotfinance.co.uk

FIN A N C E TO E NA BL E PRO GRESS

Property finance by property people Speak directly to our Specialist Property Team on 0203 012 0166 contact info@crowdproperty.com or apply in just 5 minutes at www.crowdproperty.com/apply

Better property finance, by design.

Contact our Origination Team: martin.gilsenan@acp.co.uk simon.joseph@acp.co.uk

020 3786 1170 www.acp.co.uk

CLASSIFIEDS

If you would like to discuss your project further, please contact us on: 01799 582886 developmentenquiries@saffronbs.co.uk saffronbs.co.uk Saffron Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register no. 100015) except for Commercial and Investment Buy to Let Mortgages and Will Writing. Registered office: Saffron House, 1a Market Street, Saffron Walden, Essex CB10 1HX.

SECOND CHARGE

COMPLEX SECOND CHARGE?

We’re the Experts.

LEGAL

www.nortonbrokerservices.co.uk 01709 321665 broker.services@norton-finance.co.uk THIS INFORMATION IS FOR INTERMEDIARIES ONLY AND SHOULD NOT BE DISTRIBUTED TO POTENTIAL BORROWERS.

Truly Transparent Lending Bridging finance with no grey areas.

If you’re looking for short-term bridging finance, whether it’s for a bridging loan or development finance, for a property purchase at auction or funds for refurbishment, it’s essential you choose a lender that has all the necessary experience, resource and quality of service to provide funds quickly and without fuss.

That’s where Black & White Bridging can help.

Our products:

Bridging | Development | Refurbishment | Auction | Negotiable commissions

enquiries@blackandwhitebridging.co.uk

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0117 937 4333

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www.blackandwhitebridging.co.uk