NACFB Magazine - July 2017

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Issue 48 July 2017

E

The magazine for the National Association of Commercial Finance Brokers

Another year of breaking records In this issue

Business confidence hangs in the balance The industry reacts to the general election results

The effects of GDP fluctuations UK economic growth and the property sector

Talking points for the North What’s driving the increasing interest in this market?

2

LOGO

P RO P E RT Y F I N A N C E D I V I S I O N | CO M M E RC I A L | S P E C I A L I S T BT L | CO M M E RC I A L I N V E S T M E N T | S T L & R E F U R B | T R A D I N G B U S I N E S S

SPECIALISTS IN GOOD SENSE

REGULAR SHAWB ROOK B ANK LIMITED SHAWB ROOK GROUP PLC

Our business is built on relationships, and we rely on the support of our Broker Partners to deliver transparent lending solutions to the professional investor, landlord and SME community.

A flexible approach to both client and security: n

Short Term lending from 0.55%

n

Term lending from 2.99% above 3 month LIBOR*

n

Ltd companies, LLPs & Individuals

n

Broad range of security including HMOs & multi-lets

S TA C K E D ( S M A L L U S E ) SHAWB ROOK B ANK LIMITED SHAWB ROOK GROUP PLC

*Shawbrook Bank applies a minimum floor of 0.75% to the LIBOR rate

D I S C U S S YO U R C A S E S TO DAY

0330 123 4521 or email cm.broker@shawbrook.co.uk

Welcome | NACFB OFFSHORE

When we prepared In this July issue our budget for 2017, we anticipated a NACFB News Spotlight small, but steady fall4-6 In the news 28-30 Bridging & Commercial off in Member and 7 Notes from our sponsor Awards 2017 Commercial Finance Special Features Patron numbers due I N T E R N AT I O N A L ( J E R S E Y S U B S I D IEssential ARY ) 8-9 news bites 32-34 Business confidence hangs to two factors: the in the balance S H AW B R O O K I N T E R N AT I O N A L L I M I T E D Top Story 36 Alternative players to the unstable political 10 PCF Bank to relaunch with rescue of niche sectors enhanced broker offering climate, and the 38-40 The effects of GDP fluctuations on the Introducing Association’s own property sector 12 Just Cashflow launches 42 Taking another glance at tightening of our highly flexible loan product portfolio buy-to-let criteria and stronger Case Studies Industry Guides 14 Equity bridge supports 44-46 Talking points for the focus on compliance. digital advertising business As our finance director, David Newborough, shared with a packed hall on 21st June, the Association is far ahead of where we thought we would be. Membership is down only a little from its all-time peak, and Patron numbers have remained very strong.

I’d like to remind all our Members and Patrons how grateful we are for your continued support.

However, we are only halfway through the year, and if we thought the first six months of 2017 were politically uncertain, the next 18 months are liable to redefine the word ‘challenging’. Our goal will be to carry on offering them more under the NACFB banner. NACFB Compliance Services and MyNACFB are critical Member benefits which bring us strength in a period when we may need it most.

It is another bumper issue this month, but the cover story is our Commercial Finance Expo – our biggest ever venue, our busiest ever crowd. Pictures and coverage begin on page 20.

Best regards,

www.shawbrook.co.uk

Norman Chambers MD NACFB

Norman Chambers MD, NACFB

growth 16-17 Mixed-use repurposing helps revive derelict hotel 18 Seven limited company buy-to-lets, three locations

Cover Story 21-23 CFE 2017 Another year of breaking records

Patron Profile 24-25 Kuflink Bridging From fringe to mainstream

North 48-49 Is it time to look at asset finance from a new perspective?

Opinion & Commentary 50 52 54

Interest-only regulation could work Technology or tradition?

Let’s aim for both Regulation: who is responsible?

Ask the Expert 26

Graham Hill, vehicle finance director at the NACFB

For further information Robin Skuse, press officer t. 020 7101 0359 Hamilton House, 1 Temple Avenue London EC4Y 0HA Email: admin@nacfb.org.uk Vera Sugar, editor t. 0203 818 0171 71 Gloucester Place, London W1U 8JW Email: vera@medianett.co.uk

ADVERTISING & EDITING: Medianett 0203 818 0163 www.medianett.co.uk DESIGN & PRODUCTION: Carbide Finger Ltd t. 0845 812 8206

THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS

NACFB Magazine | 3

2

LOGO

P RO P E RT Y F I N A N C E D I V I S I O N | CO M M E RC I A L | S P E C I A L I S T BT L | CO M M E RC I A L I N V E S T M E N T | S T L & R E F U R B | T R A D I N G B U S I N E S S

SPECIALISTS IN GOOD SENSE

REGULAR SHAWB ROOK B ANK LIMITED SHAWB ROOK GROUP PLC

Our business is built on relationships, and we rely on the support of our Broker Partners to deliver transparent lending solutions to the professional investor, landlord and SME community.

A flexible approach to both client and security: n

Short Term lending from 0.55%

n

Term lending from 2.99% above 3 month LIBOR*

n

Ltd companies, LLPs & Individuals

n

Broad range of security including HMOs & multi-lets

S TA C K E D ( S M A L L U S E ) SHAWB ROOK B ANK LIMITED SHAWB ROOK GROUP PLC

*Shawbrook Bank applies a minimum floor of 0.75% to the LIBOR rate

D I S C U S S YO U R C A S E S TO DAY

0330 123 4521 or email cm.broker@shawbrook.co.uk

Welcome | NACFB OFFSHORE

When we prepared In this July issue our budget for 2017, we anticipated a NACFB News Spotlight small, but steady fall4-6 In the news 28-30 Bridging & Commercial off in Member and 7 Notes from our sponsor Awards 2017 Commercial Finance Special Features Patron numbers due I N T E R N AT I O N A L ( J E R S E Y S U B S I D IEssential ARY ) 8-9 news bites 32-34 Business confidence hangs to two factors: the in the balance S H AW B R O O K I N T E R N AT I O N A L L I M I T E D Top Story 36 Alternative players to the unstable political 10 PCF Bank to relaunch with rescue of niche sectors enhanced broker offering climate, and the 38-40 The effects of GDP fluctuations on the Introducing Association’s own property sector 12 Just Cashflow launches 42 Taking another glance at tightening of our highly flexible loan product portfolio buy-to-let criteria and stronger Case Studies Industry Guides 14 Equity bridge supports 44-46 Talking points for the focus on compliance. digital advertising business As our finance director, David Newborough, shared with a packed hall on 21st June, the Association is far ahead of where we thought we would be. Membership is down only a little from its all-time peak, and Patron numbers have remained very strong.

I’d like to remind all our Members and Patrons how grateful we are for your continued support.

However, we are only halfway through the year, and if we thought the first six months of 2017 were politically uncertain, the next 18 months are liable to redefine the word ‘challenging’. Our goal will be to carry on offering them more under the NACFB banner. NACFB Compliance Services and MyNACFB are critical Member benefits which bring us strength in a period when we may need it most.

It is another bumper issue this month, but the cover story is our Commercial Finance Expo – our biggest ever venue, our busiest ever crowd. Pictures and coverage begin on page 20.

Best regards,

www.shawbrook.co.uk

Norman Chambers MD NACFB

Norman Chambers MD, NACFB

growth 16-17 Mixed-use repurposing helps revive derelict hotel 18 Seven limited company buy-to-lets, three locations

Cover Story 21-23 CFE 2017 Another year of breaking records

Patron Profile 24-25 Kuflink Bridging From fringe to mainstream

North 48-49 Is it time to look at asset finance from a new perspective?

Opinion & Commentary 50 52 54

Interest-only regulation could work Technology or tradition?

Let’s aim for both Regulation: who is responsible?

Ask the Expert 26

Graham Hill, vehicle finance director at the NACFB

For further information Robin Skuse, press officer t. 020 7101 0359 Hamilton House, 1 Temple Avenue London EC4Y 0HA Email: admin@nacfb.org.uk Vera Sugar, editor t. 0203 818 0171 71 Gloucester Place, London W1U 8JW Email: vera@medianett.co.uk

ADVERTISING & EDITING: Medianett 0203 818 0163 www.medianett.co.uk DESIGN & PRODUCTION: Carbide Finger Ltd t. 0845 812 8206

THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS

NACFB Magazine | 3

NACFB | in the news

Welcome to your dedicated lending toolkit.

Association news and updates for July 2017

An update from our MD MD Norman Chambers met with eight Patrons and four potential new Patrons during the month of May. When meeting lenders who wish to work with the NACFB, we strive to establish the lender’s attitude towards compliance and to understand how they plan to support our brokers, with specific focus on their USPs. We continue to turn down patronage applications from those lenders who cannot demonstrate their ability to fit in with our commitment to meeting and exceeding regulatory requirements across the field.

intermediaries.lendinvest.com

Get a quote for your next bridging loan online in seconds, as well as:

Compliance services Our new Membership Welcomes James Hinch As of 1st June, NACFB Compliance Services has a third full-time employee.

James Hinch joins us from his previous position in BrightHouse Limited, where he specialised in compliance monitoring. James has worked in compliance within the consumer credit sector for a number of years, working with lenders and credit brokers, supporting and ensuring they fulfil their regulatory requirements.

He brings invaluable experience and a broad skillset to the growing compliance team.

Service gaining popularity NACFB Compliance Services has received lots of positive interest since the launch of our website, and we are signing new subscribers daily. We have developed a full, bespoke suite of documents available, aimed at the commercial finance broker. These are free to all NACFB Compliance Services subscribers. Feel free to look at our website at:

www.nacfbcompliance.co.uk.

Online calculators

Brochure

Product guides

The NACFB has produced a new Membership Brochure for 2017/18.

The new brochure sets out, over eight pages, the reasons why a broker should consider joining the NACFB, and represents the most visible of the many actions we are taking to bolster membership numbers and to spread the word about what the NACFB logo stands for today.

Helping F

und UK B

Case studies Dedicated events

usiness

Members hip brochure www.nac

fb.org.uk

LendInvest is registered at 8 Mortimer Street, London W1T 3JJ (Company No.08146929), and is authorised and regulated by the FCA, no FSCS. Your property may be repossessed if you do not keep up repayments on your mortgage.

For intermediaries only.

4 | NACFB Magazine

NACFB | in the news

Welcome to your dedicated lending toolkit.

Association news and updates for July 2017

An update from our MD MD Norman Chambers met with eight Patrons and four potential new Patrons during the month of May. When meeting lenders who wish to work with the NACFB, we strive to establish the lender’s attitude towards compliance and to understand how they plan to support our brokers, with specific focus on their USPs. We continue to turn down patronage applications from those lenders who cannot demonstrate their ability to fit in with our commitment to meeting and exceeding regulatory requirements across the field.

intermediaries.lendinvest.com

Get a quote for your next bridging loan online in seconds, as well as:

Compliance services Our new Membership Welcomes James Hinch As of 1st June, NACFB Compliance Services has a third full-time employee.

James Hinch joins us from his previous position in BrightHouse Limited, where he specialised in compliance monitoring. James has worked in compliance within the consumer credit sector for a number of years, working with lenders and credit brokers, supporting and ensuring they fulfil their regulatory requirements.

He brings invaluable experience and a broad skillset to the growing compliance team.

Service gaining popularity NACFB Compliance Services has received lots of positive interest since the launch of our website, and we are signing new subscribers daily. We have developed a full, bespoke suite of documents available, aimed at the commercial finance broker. These are free to all NACFB Compliance Services subscribers. Feel free to look at our website at:

www.nacfbcompliance.co.uk.

Online calculators

Brochure

Product guides

The NACFB has produced a new Membership Brochure for 2017/18.

The new brochure sets out, over eight pages, the reasons why a broker should consider joining the NACFB, and represents the most visible of the many actions we are taking to bolster membership numbers and to spread the word about what the NACFB logo stands for today.

Helping F

und UK B

Case studies Dedicated events

usiness

Members hip brochure www.nac

fb.org.uk

LendInvest is registered at 8 Mortimer Street, London W1T 3JJ (Company No.08146929), and is authorised and regulated by the FCA, no FSCS. Your property may be repossessed if you do not keep up repayments on your mortgage.

For intermediaries only.

4 | NACFB Magazine

NACFB NEWS

NACFB NEWS

Notes from our sponsor

An insight into property development

Karen Bennett Managing director of commercial mortgages Shawbrook Bank

LendInvest, in partnership with the NACFB, will be hosting one-day Property Development Academy courses on 27th September and 22nd November in London. The programme will be aimed at those looking to gain more knowledge of the property development process.

W

orking with the NACFB to promote the importance of education when it comes to the various challenges faced by our industry remains an important goal for Shawbrook.

Key topics that will be discussed: Searching, evaluating and acquiring your site

We regularly conduct our own research into the market to try and uncover the more pressing concerns faced by the broker community. However, independent research is always more powerful and we were pleased to discover that after commissioning an independent report, our own internal findings were largely validated. We worked with the Centre for Economics and Business Research to produce a comprehensive analysis of the private rented sector (PRS) and in particular the BTL market.

Prospecting for sites Understanding the valuation process and planning Structuring your professional team and getting your scheme built Streamlining the legal process Financial analysis and securing finance

Learn more and register at https://intermediaries.lendinvest.com

Announcing the NACFB’s new CEO On 1st July 2017 Graham Toy became the Association’s new CEO. Graham will join the NACFB after serving as head of commercial lending at Norwich & Peterborough Building Society.

He previously also worked with Barclays and Abbey Commercial, and has spent years working closely with the commercial broker community.

The official announcement was made at the Commercial Finance Expo – and you can read all about the day on page 20.

6 | NACFB Magazine

When we set out to define the scope of the research, our aim was not only to provide a snapshot of the PRS and how this key component of UK housing and the economy was likely to trend moving forward, but also to analyse specific issues in more depth, such as the changing tax regime and the impact of the recent affordability changes.

We knew that these issues were at the forefront of professional landlords’ and investors’ minds, but the question remained as to how big an impact they would have on the prospects of the PRS, relative to the equally well-publicised challenges of increasing house prices and owner occupied affordability. Will they materially change the investment case for landlords and thereby remove an important supply of housing provision? Is it too simplistic to assume lost landlord supply will be replaced by increased home ownership?

The report covers the renaissance of the PRS and its link to the BTL market, the London-centric nature of this industry and the impact of this across the UK, and the effects of the changing tax landscape. We also look at the rise of

the commercial landlord as a result of some of these changes, as well as the broader impact of the tightening of BTL underwriting standards. The report also analyses demographic trends, migration and the knock-on impact of leaving the European Union for the wider housing market.

We believe that this type of research provides valuable insight for the broker community and I would encourage you to visit the Shawbrook website where the report is available for download.

There is still a job to do with regards to clarifying the impact of these changes and it falls to lenders, brokers and industry bodies such as the NACFB to assume this responsibility. Providing this learning to pockets of the market where an understanding may be lacking will be hugely beneficial in the long run as the various interventions begin to bite.

Finally, it’s worth mentioning that our research shows an overarching sense of optimism with many brokers and landlords predicting growth over the remainder of the year. The more we can do now in support of a sustainable future for our market the better, and I am pleased to work with peers and colleagues towards the attainment of this goal.

Dates for your diary Broker Day When: 19th September Where: London, venue TBC Patrons’ Day When: 26th September Where: 280 Bishopsgate, London NACFB and Barcadia Commercial Finance Roadshows When: 17-20th October Where: East, various locations TBC AGM at the Park Plaza When: 30th November Where: Park Plaza Westminster Bridge, London Gala Dinner and Industry Awards When: 30th November Where: Park Plaza Westminster Bridge, London

NACFB Magazine | 7

NACFB NEWS

NACFB NEWS

Notes from our sponsor

An insight into property development

Karen Bennett Managing director of commercial mortgages Shawbrook Bank

LendInvest, in partnership with the NACFB, will be hosting one-day Property Development Academy courses on 27th September and 22nd November in London. The programme will be aimed at those looking to gain more knowledge of the property development process.

W

orking with the NACFB to promote the importance of education when it comes to the various challenges faced by our industry remains an important goal for Shawbrook.

Key topics that will be discussed: Searching, evaluating and acquiring your site

We regularly conduct our own research into the market to try and uncover the more pressing concerns faced by the broker community. However, independent research is always more powerful and we were pleased to discover that after commissioning an independent report, our own internal findings were largely validated. We worked with the Centre for Economics and Business Research to produce a comprehensive analysis of the private rented sector (PRS) and in particular the BTL market.

Prospecting for sites Understanding the valuation process and planning Structuring your professional team and getting your scheme built Streamlining the legal process Financial analysis and securing finance

Learn more and register at https://intermediaries.lendinvest.com

Announcing the NACFB’s new CEO On 1st July 2017 Graham Toy became the Association’s new CEO. Graham will join the NACFB after serving as head of commercial lending at Norwich & Peterborough Building Society.

He previously also worked with Barclays and Abbey Commercial, and has spent years working closely with the commercial broker community.

The official announcement was made at the Commercial Finance Expo – and you can read all about the day on page 20.

6 | NACFB Magazine

When we set out to define the scope of the research, our aim was not only to provide a snapshot of the PRS and how this key component of UK housing and the economy was likely to trend moving forward, but also to analyse specific issues in more depth, such as the changing tax regime and the impact of the recent affordability changes.

We knew that these issues were at the forefront of professional landlords’ and investors’ minds, but the question remained as to how big an impact they would have on the prospects of the PRS, relative to the equally well-publicised challenges of increasing house prices and owner occupied affordability. Will they materially change the investment case for landlords and thereby remove an important supply of housing provision? Is it too simplistic to assume lost landlord supply will be replaced by increased home ownership?

The report covers the renaissance of the PRS and its link to the BTL market, the London-centric nature of this industry and the impact of this across the UK, and the effects of the changing tax landscape. We also look at the rise of

the commercial landlord as a result of some of these changes, as well as the broader impact of the tightening of BTL underwriting standards. The report also analyses demographic trends, migration and the knock-on impact of leaving the European Union for the wider housing market.

We believe that this type of research provides valuable insight for the broker community and I would encourage you to visit the Shawbrook website where the report is available for download.

There is still a job to do with regards to clarifying the impact of these changes and it falls to lenders, brokers and industry bodies such as the NACFB to assume this responsibility. Providing this learning to pockets of the market where an understanding may be lacking will be hugely beneficial in the long run as the various interventions begin to bite.

Finally, it’s worth mentioning that our research shows an overarching sense of optimism with many brokers and landlords predicting growth over the remainder of the year. The more we can do now in support of a sustainable future for our market the better, and I am pleased to work with peers and colleagues towards the attainment of this goal.

Dates for your diary Broker Day When: 19th September Where: London, venue TBC Patrons’ Day When: 26th September Where: 280 Bishopsgate, London NACFB and Barcadia Commercial Finance Roadshows When: 17-20th October Where: East, various locations TBC AGM at the Park Plaza When: 30th November Where: Park Plaza Westminster Bridge, London Gala Dinner and Industry Awards When: 30th November Where: Park Plaza Westminster Bridge, London

NACFB Magazine | 7

Commercial Finance

ArchOver granted full FCA authorisation

ArchOver has secured full authorisation from the FCA to operate as a P2P lending platform.

The platform has facilitated over £35m of investment since launching in September 2014 and hopes authorisation will help to attract new lenders.

As an authorised platform, ArchOver can focus on expanding its investor community to achieve its aim of facilitating £500m of lending within the next five years.

Barclays opens London fintech space

Barclays has opened Rise London, which it claims is Europe’s largest co-working space dedicated to fintech.

The site in Shoreditch will bring together over 40 fintech companies, including start-ups from around the world, along with Barclays’ corporate clients and other experts to help create the future of financial services.

The space will be used for co-creating new products, services and platforms.

Assetz Capital reaches £250m lending milestone Assetz Capital has now lent over £250m to UK businesses since launching four years ago.

The alternative finance platform is currently providing secured loans totalling as much as £25m per month to SMEs and housebuilders.

Assetz Capital has surpassed the £250m mark after lending more than £55m in 2017 to date.

Housing developer partners with Uber

8 | NACFB Magazine

Two banks roll out 45-minute CRE lending decisions

Timbercreek Asset Management has created an Irish commercial property lending business.

The Canadian property investment firm has made €200m (approximately £172m) available to support property investment projects across Ireland.

The team will be led by Paul Roddy and will provide loans for office, retail, rental apartments and hotels in Dublin and the regions.

A new, automated lending model now allows NatWest and RBS to make commercial real estate lending decisions of up to £2m in just 45 minutes.

The process was rolled out nationwide following a successful pilot in Liverpool and London.

The new process covers all new applications for up to £2m for commercial and residential investment as well as residential development.

Major bank appoints new property head

Bridging applications increase by 123%

Lloyds Bank Commercial Banking has appointed a new head of property for the North East of England and Yorkshire.

Paul Varley will lead one of Lloyds Bank’s largest regional real estate teams, helping its relationship managers to support clients in buying, refinancing and developing commercial and residential investment properties.

His appointment follows nearly 30 years of service with the group.

Members of the Association of Short Term Lenders saw a 123% surge in bridging applications in Q1 2017 compared with Q1 2016.

The value of applications increased by 13.9% in Q1 2017 compared with Q4 2016, and the amount of loans written were 11.4% higher.

The size of the overall loan book was up 45% compared with March 2016.

Property developer Moda Living has partnered with Uber in a bid to reduce car ownership in the UK’s largest cities.

Under the proptech partnership, Uber will offer Moda residents - who agree not to have a car parking space within a development - up to £100 of credit per month via the Moda resident app.

The move will allow the developer to swap the parking space for amenities such as fitness centres and media rooms.

New commercial property lender launches in Ireland

Close Brothers’ loan book boosted by strong property finance quarter

Close Brothers Group’s banking division has reported a 4.1% yearly rise in its loan book following a strong period of growth in property finance.

The loan book stood at £6.7bn as of 30th April 2017, up from £6.2bn at the same time last year.

The announcement follows the group’s acquisition of legal sector finance provider Novitas Loans earlier this month.

UK P2P platform signs major agreement with European bank

MFS starts £20m property investment drive

HTB posts first annual profit since relaunch

Hampshire Trust Bank (HTB) has reported its first annual profit since relaunching in 2014.

The specialist challenger bank posted a pre-tax profit on continuing activities of £4.4m for the year ended 31st December 2016, up from a loss of £3.1m in 2015.

HTB’s property finance loan book more than doubled to £207.5m, while its commercial mortgages division grew its lending to £101.3m.

European bank BNI Europa has announced plans to lend £45m each year via P2P finance platform MarketInvoice.

The announcement follows a £28.3m trial investment last year, after which the bank has signalled its full confidence in the MarketInvoice proposition.

Institutional investment via the platform has almost doubled over the last three years, from £96.1m to £176.2m.

Specialist bank enters northern development market Bridging lender Market Financial Solutions (MFS) has launched a £20m property investment drive for refurbishments.

The fund is dedicated to UK investors seeking to support their refurbishments and property turnaround strategies.

The move follows a study from MFS, which found that 11.5 million investors consider the next 24 months opportune for a short-term investment strategy.

Together bolsters auction finance offering with EIG partnership

Specialist lender Together has partnered with Essential Information Group (EIG) to launch a portal which provides buyers with property auction information.

The new portal will feature information on searching for residential, commercial and semi-commercial property in the auction market, and include hints, tips and case studies on how auction finance works.

FCA agrees fintech partnership with Hong Kong regulator

Liverpool named number one BTL hotspot

Liverpool has been named the UK’s number one BTL hotspot.

Analysis from Private Finance found the city offers rental yields of 8% once mortgage costs are taken into account, benefiting from low average house prices and strong rents.

Nottingham and Coventry were in second and third place, earning yields of 5.6% and 5.4% respectively. Blackpool, Cardiff and Lincoln were also named in the top 10.

The FCA has entered into a co-operation agreement with the Securities and Futures Commission (SFC) in Hong Kong.

Under this new agreement, the FCA and SFC will share information and referrals of innovative firms seeking to enter each other’s respective markets.

The FCA now has agreements with a number of key regulators in Hong Kong.

Challenger bank acquires BTL mortgage portfolio for £579m

Paragon Bank has announced the appointment of a new relationship director for development finance.

Mick Howard brings 30 years of experience from a variety of banking, development and commercial finance roles, including spells at Bibby Financial Services and, most recently, BLG Development Finance.

In his new position, Mick will be responsible for building relationships with developers across the North of England.

Metro Bank plc has purchased a portfolio of UK mortgages for £596.7m from Cerberus European Residential Holdings B.V. According to the challenger bank, the portfolio is made up of around 92% BTL mortgages, with the remainder being owner occupied.

The weighted average LTV is approximately 70% with a current expected pay rate of circa 1.6%, principally linked to the Bank of England base rate.

NACFB Magazine | 9

Commercial Finance

ArchOver granted full FCA authorisation

ArchOver has secured full authorisation from the FCA to operate as a P2P lending platform.

The platform has facilitated over £35m of investment since launching in September 2014 and hopes authorisation will help to attract new lenders.

As an authorised platform, ArchOver can focus on expanding its investor community to achieve its aim of facilitating £500m of lending within the next five years.

Barclays opens London fintech space

Barclays has opened Rise London, which it claims is Europe’s largest co-working space dedicated to fintech.

The site in Shoreditch will bring together over 40 fintech companies, including start-ups from around the world, along with Barclays’ corporate clients and other experts to help create the future of financial services.

The space will be used for co-creating new products, services and platforms.

Assetz Capital reaches £250m lending milestone Assetz Capital has now lent over £250m to UK businesses since launching four years ago.

The alternative finance platform is currently providing secured loans totalling as much as £25m per month to SMEs and housebuilders.

Assetz Capital has surpassed the £250m mark after lending more than £55m in 2017 to date.

Housing developer partners with Uber

8 | NACFB Magazine

Two banks roll out 45-minute CRE lending decisions

Timbercreek Asset Management has created an Irish commercial property lending business.

The Canadian property investment firm has made €200m (approximately £172m) available to support property investment projects across Ireland.

The team will be led by Paul Roddy and will provide loans for office, retail, rental apartments and hotels in Dublin and the regions.

A new, automated lending model now allows NatWest and RBS to make commercial real estate lending decisions of up to £2m in just 45 minutes.

The process was rolled out nationwide following a successful pilot in Liverpool and London.

The new process covers all new applications for up to £2m for commercial and residential investment as well as residential development.

Major bank appoints new property head

Bridging applications increase by 123%

Lloyds Bank Commercial Banking has appointed a new head of property for the North East of England and Yorkshire.

Paul Varley will lead one of Lloyds Bank’s largest regional real estate teams, helping its relationship managers to support clients in buying, refinancing and developing commercial and residential investment properties.

His appointment follows nearly 30 years of service with the group.

Members of the Association of Short Term Lenders saw a 123% surge in bridging applications in Q1 2017 compared with Q1 2016.

The value of applications increased by 13.9% in Q1 2017 compared with Q4 2016, and the amount of loans written were 11.4% higher.

The size of the overall loan book was up 45% compared with March 2016.

Property developer Moda Living has partnered with Uber in a bid to reduce car ownership in the UK’s largest cities.

Under the proptech partnership, Uber will offer Moda residents - who agree not to have a car parking space within a development - up to £100 of credit per month via the Moda resident app.

The move will allow the developer to swap the parking space for amenities such as fitness centres and media rooms.

New commercial property lender launches in Ireland

Close Brothers’ loan book boosted by strong property finance quarter

Close Brothers Group’s banking division has reported a 4.1% yearly rise in its loan book following a strong period of growth in property finance.

The loan book stood at £6.7bn as of 30th April 2017, up from £6.2bn at the same time last year.

The announcement follows the group’s acquisition of legal sector finance provider Novitas Loans earlier this month.

UK P2P platform signs major agreement with European bank

MFS starts £20m property investment drive

HTB posts first annual profit since relaunch

Hampshire Trust Bank (HTB) has reported its first annual profit since relaunching in 2014.

The specialist challenger bank posted a pre-tax profit on continuing activities of £4.4m for the year ended 31st December 2016, up from a loss of £3.1m in 2015.

HTB’s property finance loan book more than doubled to £207.5m, while its commercial mortgages division grew its lending to £101.3m.

European bank BNI Europa has announced plans to lend £45m each year via P2P finance platform MarketInvoice.

The announcement follows a £28.3m trial investment last year, after which the bank has signalled its full confidence in the MarketInvoice proposition.

Institutional investment via the platform has almost doubled over the last three years, from £96.1m to £176.2m.

Specialist bank enters northern development market Bridging lender Market Financial Solutions (MFS) has launched a £20m property investment drive for refurbishments.

The fund is dedicated to UK investors seeking to support their refurbishments and property turnaround strategies.

The move follows a study from MFS, which found that 11.5 million investors consider the next 24 months opportune for a short-term investment strategy.

Together bolsters auction finance offering with EIG partnership

Specialist lender Together has partnered with Essential Information Group (EIG) to launch a portal which provides buyers with property auction information.

The new portal will feature information on searching for residential, commercial and semi-commercial property in the auction market, and include hints, tips and case studies on how auction finance works.

FCA agrees fintech partnership with Hong Kong regulator

Liverpool named number one BTL hotspot

Liverpool has been named the UK’s number one BTL hotspot.

Analysis from Private Finance found the city offers rental yields of 8% once mortgage costs are taken into account, benefiting from low average house prices and strong rents.

Nottingham and Coventry were in second and third place, earning yields of 5.6% and 5.4% respectively. Blackpool, Cardiff and Lincoln were also named in the top 10.

The FCA has entered into a co-operation agreement with the Securities and Futures Commission (SFC) in Hong Kong.

Under this new agreement, the FCA and SFC will share information and referrals of innovative firms seeking to enter each other’s respective markets.

The FCA now has agreements with a number of key regulators in Hong Kong.

Challenger bank acquires BTL mortgage portfolio for £579m

Paragon Bank has announced the appointment of a new relationship director for development finance.

Mick Howard brings 30 years of experience from a variety of banking, development and commercial finance roles, including spells at Bibby Financial Services and, most recently, BLG Development Finance.

In his new position, Mick will be responsible for building relationships with developers across the North of England.

Metro Bank plc has purchased a portfolio of UK mortgages for £596.7m from Cerberus European Residential Holdings B.V. According to the challenger bank, the portfolio is made up of around 92% BTL mortgages, with the remainder being owner occupied.

The weighted average LTV is approximately 70% with a current expected pay rate of circa 1.6%, principally linked to the Bank of England base rate.

NACFB Magazine | 9

Top | story Our pick of the latest Patron news

PCF Bank to relaunch with enhanced broker offering Private & Commercial Finance Group has announced its relaunch as PCF Bank as it moves towards mobilising as a bank over the coming month.

Scott Maybury CEO PCF Bank

T

he company claims the relaunch will allow it to have a broader and more attractive offering to brokers, as well as to expand its vehicle and asset finance operations.

Robert Murray, managing director of PCF Bank, said: “We are delighted that our transition to a bank will allow us to offer enhanced terms to our brokers, at competitive rates which were previously beyond our reach.

“We look forward to updating our existing broker contacts on PCF Bank’s new offering, as well as introducing ourselves to those whom we haven’t dealt with before.”

Scott Maybury, CEO of PCF Bank, added: “Our business continues to grow organically as our strong network of broker contacts recognises the quality of our work, and it is time to expand that offering.”

PCF Bank says it will also be able to offer more attractive rates in the prime segments of the market while maintaining its existing offerings and high standards of service.

The process of mobilising the bank will allow the company to take deposits from retail customers, which will in turn reduce the cost of funds for PCF Bank itself and allow it to lend competitively and with enhanced terms, at rates which were previously uneconomic.

PCF Bank says that it will remain focused on its core markets of consumer motor and SME asset finance initially, with the intention of scaling up its loan portfolio to £350m over the next three years

and £750m over the next five years.

Robert added: “PCF’s extremely strong relationships across our network are a key strength of the company, and have been developed as a result of our high level of very personal service.”

Our business philosophy and reputation are very important to us, and we remain focused on our key areas of consumer car finance and SME asset finance where there are significant opportunities for us to increase our market share.”

Private & Commercial Finance is a longestablished finance company. The group has been offering asset-backed finance solutions in the vehicle, plant and equipment markets for over 20 years and has supported the broker sector continuously over that period.

PCF Bank will be holding launch events for its new products to both its existing network of brokers and new contacts in the coming months. The first event takes place in Leeds on 11th July.

As for reasons behind the licence application, Scott highlighted the

reduced dependence the licence will provide on wholesale bank funding.

“During the financial crisis, there were a lot of banks cutting back on lending to finance providers, as well as SMEs generally, and so we wanted to secure an alternative source of funding which has the added benefits of coming at a lower cost to us and enabling us to grow our portfolio at a faster rate,” he added.

“The banking licence has been two years in the making, and following a successful ‘friends and family’ trial last month, we expect to take our first retail deposits later this month.

“The process of becoming a bank is an extremely complex task and has required hard work from all of our staff. We are extremely proud to be achieving this milestone, all without neglecting our dayto-day obligations and compromising our reputation or relationship with brokers.

Access to the retail deposit market is transformational for PCF Bank and these are very exciting times.”

Associate Lender Association of Bridging Professionals

10 | NACFB Magazine

Helping Fund UK Business

Top | story Our pick of the latest Patron news

PCF Bank to relaunch with enhanced broker offering Private & Commercial Finance Group has announced its relaunch as PCF Bank as it moves towards mobilising as a bank over the coming month.

Scott Maybury CEO PCF Bank

T

he company claims the relaunch will allow it to have a broader and more attractive offering to brokers, as well as to expand its vehicle and asset finance operations.

Robert Murray, managing director of PCF Bank, said: “We are delighted that our transition to a bank will allow us to offer enhanced terms to our brokers, at competitive rates which were previously beyond our reach.

“We look forward to updating our existing broker contacts on PCF Bank’s new offering, as well as introducing ourselves to those whom we haven’t dealt with before.”

Scott Maybury, CEO of PCF Bank, added: “Our business continues to grow organically as our strong network of broker contacts recognises the quality of our work, and it is time to expand that offering.”

PCF Bank says it will also be able to offer more attractive rates in the prime segments of the market while maintaining its existing offerings and high standards of service.

The process of mobilising the bank will allow the company to take deposits from retail customers, which will in turn reduce the cost of funds for PCF Bank itself and allow it to lend competitively and with enhanced terms, at rates which were previously uneconomic.

PCF Bank says that it will remain focused on its core markets of consumer motor and SME asset finance initially, with the intention of scaling up its loan portfolio to £350m over the next three years

and £750m over the next five years.

Robert added: “PCF’s extremely strong relationships across our network are a key strength of the company, and have been developed as a result of our high level of very personal service.”

Our business philosophy and reputation are very important to us, and we remain focused on our key areas of consumer car finance and SME asset finance where there are significant opportunities for us to increase our market share.”

Private & Commercial Finance is a longestablished finance company. The group has been offering asset-backed finance solutions in the vehicle, plant and equipment markets for over 20 years and has supported the broker sector continuously over that period.

PCF Bank will be holding launch events for its new products to both its existing network of brokers and new contacts in the coming months. The first event takes place in Leeds on 11th July.

As for reasons behind the licence application, Scott highlighted the

reduced dependence the licence will provide on wholesale bank funding.

“During the financial crisis, there were a lot of banks cutting back on lending to finance providers, as well as SMEs generally, and so we wanted to secure an alternative source of funding which has the added benefits of coming at a lower cost to us and enabling us to grow our portfolio at a faster rate,” he added.

“The banking licence has been two years in the making, and following a successful ‘friends and family’ trial last month, we expect to take our first retail deposits later this month.

“The process of becoming a bank is an extremely complex task and has required hard work from all of our staff. We are extremely proud to be achieving this milestone, all without neglecting our dayto-day obligations and compromising our reputation or relationship with brokers.

Access to the retail deposit market is transformational for PCF Bank and these are very exciting times.”

Associate Lender Association of Bridging Professionals

10 | NACFB Magazine

Helping Fund UK Business

Introducing New and refreshed offerings for NACFB brokers on behalf of Patrons and Members

Just Cashflow launches highly flexible loan product Specialist lender Just Cashflow has announced the launch of Business Builder - a new loan product with enhanced tailoring capabilities for all business needs.

John Davies Director Just Cashflow PLC

T

he new structure provides brokers and intermediaries with the ability to work with clients to design the loan product that best suits their business needs and growth plans.

The product suits both short- and long-term loan requirements with fixed or variable repayments and with access to funds from £10,000 to £500,000.

Because of its malleable nature, features such as payment holidays, early repayment without penalties or loan extensions can be worked into the design. Use of funds can range between anything from a new vehicle or printing press to a new lease or shop. It also provides borrowers with certainty about the term of the loan and knowing the structure of future monthly repayments.

The product comes in addition to the lender’s existing revolving credit facility, which acts exactly like a traditional bank overdraft.

John Davies,

director at Just Cashflow, provided some further details on the product: “We appreciate that businesses have different finance needs that reflect their growth plans, [such as] seasonality of income and a range of other factors.

facility works really well when businesses have to prepare for inevitable bumps in the road that will impact their all-important cash flow.

However, this isn’t always the ideal solution when capital expenditure needs to be made.

“This has driven the creation of our new product, along with recognition that professional brokers and intermediaries are ideally-placed to work with their business customers to design the most suitable loan facility.

“Seasonality of income was another strong theme. A lot of businesses know how this is going to impact them and would welcome the flexibility and relief that payment holidays can provide.

“We have taken on board feedback from existing customers and the brokers we regularly deal with. A strong theme has been that our revolving credit

“Businesses rely on the expertise of professional brokers and intermediaries, and our flexible financial solutions will allow them to work with their clients to provide a tailored product.

“The most successful businesses are ones that can quickly adapt to new challenges and opportunities, and our thinking is that our finance facilities should reflect and encourage this.

“For example, if things change and a business has the ability to repay their loan early, why should they be penalised for it?”

We have taken on board feedback from existing customers and the brokers we regularly deal with

How additional funding can help successful businesses grow Did you know it’s not the fastest, the quickest or the fittest that survive in business? It’s those that are most adaptable. Businesses need to make sure they have adaptability built in to their plans and part of this is making sure they have got the funding in place to support those adaptable plans.

If brokers and intermediaries can help their clients embrace and prepare for change, then they will be ready to adapt when they need to and stand a much better chance of success.

Here is a case study of a business that has done just that. Drewitts Events Limited have turned an opportunity into a thriving successful family business. This is how they did it.

The Drewitt family are now in their third generation as entertainers with Pauline and Tony Drewitt now running the business and involving their four children. Tony found a derelict horse bus in 1973 and set about restoring it. A big break came in 1979

Drewitts Events was recently provided the opportunity of a restoration project. The project involved restoring a 1911 carriage, the last horse drawn London Omnibus to be built. Successful completion of the project meant that the carriage would take part in the Lord Mayor’s Parade in London in November 2017, taking the carriage back to the Mansion House it would have visited in 1911.

In order to facilitate this project additional funds were required by the business to purchase materials, parts and other equipment to be able

Tony Drewitt approached Just Cashflow about the Revolving Cash Fund. Because it works in a similar way to an overdraft facility it meant that Tony had the comfort of knowing he had funds available as and when he need it. This enabled him to proceed with his restoration project, knowing that should a specialist part or service be required, he would have the funds immediately available to proceed.

Of Just Cashflow, Tony says “It was very simple and straightforward”. He went on to say “the experience was like speaking with your old fashioned bank manager, in that they took the time to really understand my business needs and requirements”. www.drewitts-events.com The team at Just Cashflow know it is important to provide fast and flexible funding for their customers and with a bit of foresight and planning, businesses can prepare themselves for growth and success by ensuring they have funding available to grab opportunities as and when they arise.

The team at Just Cashflow know it is important to provide fast and flexible funding for their customers to ensure that everyone is able to unlock more deals for business growth and success.

The final piece in the puzzle - a loan you can design yourself As a professional broker or intermediary you’ll be used to seeking fast and flexible funding for your clients.

Just Cashflow knows that every business is different and our new loan products enable us to offer you tailored financial solutions to meet the requirements of your clients.

Now you can design a loan with your Client that can give them access to funds from £10,000 to £500,000 in a way that exactly fits with their business needs.

Blend a short term and long term loan, pay it off without penalties, add in a payment holiday - a Just Cashflow loan can do it all.

The application process is really simple and straightforward and our underwriting team will support you and help you complete the picture for your clients.

Just call us now

Alternatively, find out more

0121 418 5037

justcashflow.com/partner

FS668057

12 | NACFB Magazine

when the restored bus was booked to appear in the 150th birthday parade in Hyde Park, London. The bus worked that summer transporting passengers from Baker Street Underground Station to The London Zoo. Since the summer of 1979 a great deal of work has been done with the bus and it has reached its 30th appearance in The Lord Mayors Show in the City of London. Other carriages have been added to the collection of bygones including a hearse, wedding carriage and two magnificent horse drawn fire engines.

to do a magnificent job fit for the occasion. Not only was there a time critical element, but having the carriage ready in time would mean a fantastic marketing opportunity for their business.

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB, under Company number 08508165 © Just Cash Flow PLC 2017

Introducing New and refreshed offerings for NACFB brokers on behalf of Patrons and Members

Just Cashflow launches highly flexible loan product Specialist lender Just Cashflow has announced the launch of Business Builder - a new loan product with enhanced tailoring capabilities for all business needs.

John Davies Director Just Cashflow PLC

T

he new structure provides brokers and intermediaries with the ability to work with clients to design the loan product that best suits their business needs and growth plans.

The product suits both short- and long-term loan requirements with fixed or variable repayments and with access to funds from £10,000 to £500,000.

Because of its malleable nature, features such as payment holidays, early repayment without penalties or loan extensions can be worked into the design. Use of funds can range between anything from a new vehicle or printing press to a new lease or shop. It also provides borrowers with certainty about the term of the loan and knowing the structure of future monthly repayments.

The product comes in addition to the lender’s existing revolving credit facility, which acts exactly like a traditional bank overdraft.

John Davies,

director at Just Cashflow, provided some further details on the product: “We appreciate that businesses have different finance needs that reflect their growth plans, [such as] seasonality of income and a range of other factors.

facility works really well when businesses have to prepare for inevitable bumps in the road that will impact their all-important cash flow.

However, this isn’t always the ideal solution when capital expenditure needs to be made.

“This has driven the creation of our new product, along with recognition that professional brokers and intermediaries are ideally-placed to work with their business customers to design the most suitable loan facility.

“Seasonality of income was another strong theme. A lot of businesses know how this is going to impact them and would welcome the flexibility and relief that payment holidays can provide.

“We have taken on board feedback from existing customers and the brokers we regularly deal with. A strong theme has been that our revolving credit

“Businesses rely on the expertise of professional brokers and intermediaries, and our flexible financial solutions will allow them to work with their clients to provide a tailored product.

“The most successful businesses are ones that can quickly adapt to new challenges and opportunities, and our thinking is that our finance facilities should reflect and encourage this.

“For example, if things change and a business has the ability to repay their loan early, why should they be penalised for it?”

We have taken on board feedback from existing customers and the brokers we regularly deal with

How additional funding can help successful businesses grow Did you know it’s not the fastest, the quickest or the fittest that survive in business? It’s those that are most adaptable. Businesses need to make sure they have adaptability built in to their plans and part of this is making sure they have got the funding in place to support those adaptable plans.

If brokers and intermediaries can help their clients embrace and prepare for change, then they will be ready to adapt when they need to and stand a much better chance of success.

Here is a case study of a business that has done just that. Drewitts Events Limited have turned an opportunity into a thriving successful family business. This is how they did it.

The Drewitt family are now in their third generation as entertainers with Pauline and Tony Drewitt now running the business and involving their four children. Tony found a derelict horse bus in 1973 and set about restoring it. A big break came in 1979

Drewitts Events was recently provided the opportunity of a restoration project. The project involved restoring a 1911 carriage, the last horse drawn London Omnibus to be built. Successful completion of the project meant that the carriage would take part in the Lord Mayor’s Parade in London in November 2017, taking the carriage back to the Mansion House it would have visited in 1911.

In order to facilitate this project additional funds were required by the business to purchase materials, parts and other equipment to be able

Tony Drewitt approached Just Cashflow about the Revolving Cash Fund. Because it works in a similar way to an overdraft facility it meant that Tony had the comfort of knowing he had funds available as and when he need it. This enabled him to proceed with his restoration project, knowing that should a specialist part or service be required, he would have the funds immediately available to proceed.

Of Just Cashflow, Tony says “It was very simple and straightforward”. He went on to say “the experience was like speaking with your old fashioned bank manager, in that they took the time to really understand my business needs and requirements”. www.drewitts-events.com The team at Just Cashflow know it is important to provide fast and flexible funding for their customers and with a bit of foresight and planning, businesses can prepare themselves for growth and success by ensuring they have funding available to grab opportunities as and when they arise.

The team at Just Cashflow know it is important to provide fast and flexible funding for their customers to ensure that everyone is able to unlock more deals for business growth and success.

The final piece in the puzzle - a loan you can design yourself As a professional broker or intermediary you’ll be used to seeking fast and flexible funding for your clients.

Just Cashflow knows that every business is different and our new loan products enable us to offer you tailored financial solutions to meet the requirements of your clients.

Now you can design a loan with your Client that can give them access to funds from £10,000 to £500,000 in a way that exactly fits with their business needs.

Blend a short term and long term loan, pay it off without penalties, add in a payment holiday - a Just Cashflow loan can do it all.

The application process is really simple and straightforward and our underwriting team will support you and help you complete the picture for your clients.

Just call us now

Alternatively, find out more

0121 418 5037

justcashflow.com/partner

FS668057

12 | NACFB Magazine

when the restored bus was booked to appear in the 150th birthday parade in Hyde Park, London. The bus worked that summer transporting passengers from Baker Street Underground Station to The London Zoo. Since the summer of 1979 a great deal of work has been done with the bus and it has reached its 30th appearance in The Lord Mayors Show in the City of London. Other carriages have been added to the collection of bygones including a hearse, wedding carriage and two magnificent horse drawn fire engines.

to do a magnificent job fit for the occasion. Not only was there a time critical element, but having the carriage ready in time would mean a fantastic marketing opportunity for their business.

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB, under Company number 08508165 © Just Cash Flow PLC 2017

Case Studies

Market Financial Solutions Bridging with finesse

Completion highlights from a selection of our Patrons and Members

Equity bridge supports digital advertising business growth In May 2017, Capital Step completed an investment in Londonbased Admedo, a high-growth ad tech business, specialising in the automated purchasing of targeted digital advertising.

Rael Sarembock Co-founder Capital Step

A

dmedo has achieved impressive recent growth, having developed a custom-built platform that allows digital media buyers to manage multiple advertising exchanges through a single, highly customisable interface.

Further to the significant investment in its platform to date, Admedo approached Capital Step in search of additional liquidity to support and accelerate the business’s growth trajectory beyond cash flow breakeven.

Once heads of terms were agreed, Capital Step moved quickly to define a focused due diligence scope of work. A phased approach ensured that any issues could be flagged immediately, providing transparency and efficiency at all times.

Commercial, financial and legal diligence was completed within approximately three weeks, with final terms agreed shortly thereafter. Capital Step’s standardised documentation helped facilitate a smooth investment process, managing to meet the timing challenges initially presented.

The Admedo transaction represents what we term an equity bridge investment, whereby companies use

...Companies use our non-dilutive capital solution to avoid raising expensive equity at a relatively low valuation today In many of the funding opportunities presented, there is often limited capacity for traditional debt, or additional debt, in the capital structure of an SME. This may be a result of low/negative profitability or asset-light balance sheets.

The equity capital alternative is extremely expensive for founders and shareholders, especially in highgrowth companies, while investment processes can take months to complete – even where existing venture capital or private equity backers are involved.

This alignment of interests with owner-managers represents one of the core pillars of the Capital Step investment thesis.

Capital Step’s funding will allow Admedo to continue to invest in business development through the rollout of its platform to a growing and increasingly high-profile client base.

T

he timeframes achieved in completing the transaction further reinforce Capital Step’s

Nick Moutter, founder and CEO of Admedo, said: “Admedo are excited to be partnering with Capital Step; the model used is extremely innovative in the market and allows companies like Admedo to grow through cash injection and without cap table dilution. Equity is becoming more and more expensive for companies like us, so to have other options, such as royalty finance, really benefits founders and existing shareholders.”

Jonathan Schneider, co-founder of Capital Step, added: “We are thrilled to be supporting a dynamic entrepreneur in Nick as he and the Admedo team continue to grow their exciting and disruptive business. The company’s emphasis on transparency and a great user experience resonates strongly with us at Capital Step, while our nondilutive solution means that existing shareholders maintain economic and strategic control. We look forward to an exciting new partnership.”

As both the team and portfolio of Capital Step continue to grow, we’re increasingly focused on a wide variety of deals across a host of sectors, including management buy-outs/ buy-ins, various growth capital opportunities and acquisition financing.

We continue to work closely with a host of debt and equity funding partners as well as brokers, corporate finance advisors and a variety of professional services, often acting as a non-dilutive alternative where funding gaps exist due to insufficient debt availability.

Expertise

in assisting clients seamlessly

Transparency from the outset

Simplicity

Speed

of application process

in providing a decision

Flexibility

Efficiency

tailored to the client

get things done fast

CONTACT A MEMBER OF THE MFS TEAM TO FIND OUT HOW WE CAN SUPPORT YOUR BRIDGING STRATEGY

T: 020 7060 1234 | E: info@mfsuk.com | W: mfsuk.com Berkeley Square House, Berkeley Square, Mayfair, London W1J 6BD, United Kingdom

Associate Lender

In this example, Admedo also required a decision within weeks in order to capitalise on some of the significant near-term growth opportunities available.

our non-dilutive capital solution to avoid raising expensive equity at a relatively low valuation today. As a result, any subsequent increase in the business’s equity value accrues, in full, to the existing shareholders.

ability to move quickly and work efficiently. In conjunction with a co-operative and motivated management team, the process was executed on time and as planned.

WE PROVIDE SOLUTIONS FOR OUR CLIENTS THAT ARE FAST, FLEXIBLE AND EFFICIENT

Association of Bridging Professionals

14 | NACFB Magazine

Case Studies

Market Financial Solutions Bridging with finesse

Completion highlights from a selection of our Patrons and Members

Equity bridge supports digital advertising business growth In May 2017, Capital Step completed an investment in Londonbased Admedo, a high-growth ad tech business, specialising in the automated purchasing of targeted digital advertising.

Rael Sarembock Co-founder Capital Step

A

dmedo has achieved impressive recent growth, having developed a custom-built platform that allows digital media buyers to manage multiple advertising exchanges through a single, highly customisable interface.

Further to the significant investment in its platform to date, Admedo approached Capital Step in search of additional liquidity to support and accelerate the business’s growth trajectory beyond cash flow breakeven.

Once heads of terms were agreed, Capital Step moved quickly to define a focused due diligence scope of work. A phased approach ensured that any issues could be flagged immediately, providing transparency and efficiency at all times.

Commercial, financial and legal diligence was completed within approximately three weeks, with final terms agreed shortly thereafter. Capital Step’s standardised documentation helped facilitate a smooth investment process, managing to meet the timing challenges initially presented.

The Admedo transaction represents what we term an equity bridge investment, whereby companies use

...Companies use our non-dilutive capital solution to avoid raising expensive equity at a relatively low valuation today In many of the funding opportunities presented, there is often limited capacity for traditional debt, or additional debt, in the capital structure of an SME. This may be a result of low/negative profitability or asset-light balance sheets.

The equity capital alternative is extremely expensive for founders and shareholders, especially in highgrowth companies, while investment processes can take months to complete – even where existing venture capital or private equity backers are involved.

This alignment of interests with owner-managers represents one of the core pillars of the Capital Step investment thesis.

Capital Step’s funding will allow Admedo to continue to invest in business development through the rollout of its platform to a growing and increasingly high-profile client base.

T

he timeframes achieved in completing the transaction further reinforce Capital Step’s

Nick Moutter, founder and CEO of Admedo, said: “Admedo are excited to be partnering with Capital Step; the model used is extremely innovative in the market and allows companies like Admedo to grow through cash injection and without cap table dilution. Equity is becoming more and more expensive for companies like us, so to have other options, such as royalty finance, really benefits founders and existing shareholders.”

Jonathan Schneider, co-founder of Capital Step, added: “We are thrilled to be supporting a dynamic entrepreneur in Nick as he and the Admedo team continue to grow their exciting and disruptive business. The company’s emphasis on transparency and a great user experience resonates strongly with us at Capital Step, while our nondilutive solution means that existing shareholders maintain economic and strategic control. We look forward to an exciting new partnership.”

As both the team and portfolio of Capital Step continue to grow, we’re increasingly focused on a wide variety of deals across a host of sectors, including management buy-outs/ buy-ins, various growth capital opportunities and acquisition financing.

We continue to work closely with a host of debt and equity funding partners as well as brokers, corporate finance advisors and a variety of professional services, often acting as a non-dilutive alternative where funding gaps exist due to insufficient debt availability.

Expertise

in assisting clients seamlessly

Transparency from the outset

Simplicity

Speed

of application process

in providing a decision

Flexibility

Efficiency

tailored to the client

get things done fast

CONTACT A MEMBER OF THE MFS TEAM TO FIND OUT HOW WE CAN SUPPORT YOUR BRIDGING STRATEGY

T: 020 7060 1234 | E: info@mfsuk.com | W: mfsuk.com Berkeley Square House, Berkeley Square, Mayfair, London W1J 6BD, United Kingdom

Associate Lender

In this example, Admedo also required a decision within weeks in order to capitalise on some of the significant near-term growth opportunities available.

our non-dilutive capital solution to avoid raising expensive equity at a relatively low valuation today. As a result, any subsequent increase in the business’s equity value accrues, in full, to the existing shareholders.

ability to move quickly and work efficiently. In conjunction with a co-operative and motivated management team, the process was executed on time and as planned.

WE PROVIDE SOLUTIONS FOR OUR CLIENTS THAT ARE FAST, FLEXIBLE AND EFFICIENT

Association of Bridging Professionals

14 | NACFB Magazine

CASE STUDIES

CASE STUDIES

Future plans

Mixed-use repurposing helps revive derelict hotel In a market where new lenders arrive as swiftly as they depart, there is increasing need for quality from brokers and borrowers alike.

Dominic Gibson Fund manager Octopus Property

V

ery few lenders can genuinely provide the speed, certainty and flexibility that clients need and this is perhaps more acute in commercial lending than any other part of the market.

The reasons are multi-faceted but the consistent challenges in commercial lending can be distilled down to transaction timelines, borrower structure and asset complexity.

Since entering the market in 2009, Octopus Property, formerly Dragonfly Property Finance, has built its reputation on directly addressing this trifecta of challenges and consistently delivering for its borrowers.

16 | NACFB Magazine

A recent example of this came when one of our long-standing introducers brought us an urgent requirement for acquisition bridge funding on a derelict city centre hotel.

The borrower had secured a purchase option on the site before successfully obtaining planning consent for the development of a mixeduse commercial scheme. He had previously extended the purchase

option to allow for planning delays but was faced with a two-week completion deadline and substantial additional option fees.

In order to hit the required timeline, Octopus Property had to fully understand both the asset and the borrower. As with all of our commercial loans, we invited the broker and his client to meet the team and discuss the loan in detail, because there’s no one

We needed to understand the borrower’s relationship with the vendor and get comfortable with the overseas special purchase vehicle structure

The derelict city centre hotel

better versed in their own scheme or structure than borrowers themselves.

We place huge importance on understanding our borrowers and their structures for both risk mitigation and regulatory reasons. We lend to a huge variety of structures but always ensure that the ultimate beneficiary has robust experience or a strong professional team around them. Having developed a variety of high-quality branded hotels across the UK and borrowed from Octopus Property on two previous occasions, we knew that, in this case, the borrower had both.

Regardless of our previous loans, we needed to understand the borrower’s relationship with the vendor and get comfortable with the overseas special purchase vehicle structure. We also wanted to establish how much equity the borrower had invested when securing both the purchase option

and the planning consent. Having evidenced the project expenditure to date, we were able to include these costs in our assessment of the purchase price and increase our loan accordingly.

F

rom the moment we received the enquiry it was clear that the borrower had identified an exceptional opportunity and achieved an extremely valuable planning consent (circa £55.9m GDV) for the development of a branded 131-bed hotel and 66 further residential units which would benefit from use of the leisure, restaurant and retail offerings.

With the benefit of our commercial team being run by experienced chartered surveyors, who have total discretion over our funds and our flexible lending parameters, we were able to assess the deliverability of the scheme, confirm the appropriate

valuation methodology and understand the depth of market demand that would provide the future exit to our loan.

Our site inspection confirmed the initial understanding of the asset and the micro market, so when the independent valuation report came in it made for a swift review and approval, enabling us to focus on the wider underwriting process and move rapidly towards completion.

In line with our day one commitment to the borrower, the loan completed with time in hand, highlighting the value of partnering with a lender who can offer speed, certainty and flexibility in all that it does.

NACFB Magazine | 17

CASE STUDIES

CASE STUDIES

Future plans

Mixed-use repurposing helps revive derelict hotel In a market where new lenders arrive as swiftly as they depart, there is increasing need for quality from brokers and borrowers alike.

Dominic Gibson Fund manager Octopus Property

V

ery few lenders can genuinely provide the speed, certainty and flexibility that clients need and this is perhaps more acute in commercial lending than any other part of the market.

The reasons are multi-faceted but the consistent challenges in commercial lending can be distilled down to transaction timelines, borrower structure and asset complexity.

Since entering the market in 2009, Octopus Property, formerly Dragonfly Property Finance, has built its reputation on directly addressing this trifecta of challenges and consistently delivering for its borrowers.

16 | NACFB Magazine

A recent example of this came when one of our long-standing introducers brought us an urgent requirement for acquisition bridge funding on a derelict city centre hotel.

The borrower had secured a purchase option on the site before successfully obtaining planning consent for the development of a mixeduse commercial scheme. He had previously extended the purchase

option to allow for planning delays but was faced with a two-week completion deadline and substantial additional option fees.

In order to hit the required timeline, Octopus Property had to fully understand both the asset and the borrower. As with all of our commercial loans, we invited the broker and his client to meet the team and discuss the loan in detail, because there’s no one

We needed to understand the borrower’s relationship with the vendor and get comfortable with the overseas special purchase vehicle structure

The derelict city centre hotel

better versed in their own scheme or structure than borrowers themselves.

We place huge importance on understanding our borrowers and their structures for both risk mitigation and regulatory reasons. We lend to a huge variety of structures but always ensure that the ultimate beneficiary has robust experience or a strong professional team around them. Having developed a variety of high-quality branded hotels across the UK and borrowed from Octopus Property on two previous occasions, we knew that, in this case, the borrower had both.

Regardless of our previous loans, we needed to understand the borrower’s relationship with the vendor and get comfortable with the overseas special purchase vehicle structure. We also wanted to establish how much equity the borrower had invested when securing both the purchase option

and the planning consent. Having evidenced the project expenditure to date, we were able to include these costs in our assessment of the purchase price and increase our loan accordingly.

F

rom the moment we received the enquiry it was clear that the borrower had identified an exceptional opportunity and achieved an extremely valuable planning consent (circa £55.9m GDV) for the development of a branded 131-bed hotel and 66 further residential units which would benefit from use of the leisure, restaurant and retail offerings.

With the benefit of our commercial team being run by experienced chartered surveyors, who have total discretion over our funds and our flexible lending parameters, we were able to assess the deliverability of the scheme, confirm the appropriate

valuation methodology and understand the depth of market demand that would provide the future exit to our loan.

Our site inspection confirmed the initial understanding of the asset and the micro market, so when the independent valuation report came in it made for a swift review and approval, enabling us to focus on the wider underwriting process and move rapidly towards completion.

In line with our day one commitment to the borrower, the loan completed with time in hand, highlighting the value of partnering with a lender who can offer speed, certainty and flexibility in all that it does.

NACFB Magazine | 17

CASE STUDIES

To make it easier for the broker ... the underwriting team took on the responsibility of scanning and linking all the relevant documents

Seven limited company buy-to-lets, three locations Bob Young CEO Fleet Mortgages

T

he taxation and regulatory changes around the buy-to-let mortgage market have meant that landlords (and their advisers) have sought out limited company vehicles in order to shield themselves from some of the greater costs involved. Recent research from Moneyfacts showed just how far the limited company buy-to-let sector has progressed with 313 limited company products available today, up from 133 this time last year.

As a specialist buy-to-let lender, we have been (and remain) highly active in the limited company sector, not only in terms of those landlord borrowers purchasing new properties through special purpose vehicles, but also those moving properties held in their individual names into limited companies.

One recent case we completed brings together aspects of limited company lending coupled with the needs of portfolio landlords as they seek to refinance. This particular landlord had over 10 properties within his limited company but was only seeking refinance across seven, having previously moved these into the company from his individual name.

All of the seven properties the landlord wanted to refinance were based in

18 | NACFB Magazine

three different locations, and all were in purpose-built complexes. These flats were both one- and two-beds and the company was seeking to raise equity in order to put deposits down on other properties.

The company had been established in 2012 following the sale of a highvalue, single-occupancy property which had only a 2% yield. Following the sale, the company was established off the proceeds in order to buy lower-cost apartments that offered a better rental yield – between 4-5%.

What made this case unique was the fact that three units were in the same block of flats, two in another, and a further two in yet another. Indeed, the complexity was heightened slightly by the fact that one of these units was a large block of flats (up to 10 storeys) and was inside the M25.

L

imited company buy-to-let is part of our core offering; however, there were a couple of issues to be resolved with this case. First was the exposure levels for us as a lender in terms of both loans and multiple postcodes.

Our criteria allows us to lend up to 20% of the units in the block, and as the company was refinancing multiple flats in the same building, this process would take some time to validate. Our underwriters overcame this hurdle by reviewing all the valuation reports at the same time, allowing them to develop an informed view of the whole picture when it came to build an offer that met the client’s requirements.

FLEXIBLE BRIDGING LOANS FOR PROPERTY PROFESSIONALS

Second, as the loan was over £1m, it also had to go to our credit committee.

To prevent any unnecessary delay, the case was reviewed by the team leader to ensure all necessary documents and validation had been correctly completed. This attention to detail ensured that the offer was signed off by our credit committee within 24 hours. To make it easier for the broker, they were only asked to submit the documents once, and the underwriting team took on the responsibility of scanning and linking all the relevant documents to each property that formed part of the offer.

Third, we needed to vet all the individual applicants and the company to check they had sufficient landlord experience – not a problem in this case, given the number of properties within the company. Additionally, we required a strong credit score and specific SIC codes for the company.

We have very experienced underwriting staff who were able to handle this case and its complexities right the way through the process and, by the end, we were happy to provide the £1.5m required by the limited company.

This goes to show that, even with cases somewhat removed from the norm, advisers should be confident in the ability of a specialist like Fleet Mortgages to work the case and provide the right result for all concerned.

Business Products Innovation of the Year

CASE STUDIES

To make it easier for the broker ... the underwriting team took on the responsibility of scanning and linking all the relevant documents

Seven limited company buy-to-lets, three locations Bob Young CEO Fleet Mortgages

T

he taxation and regulatory changes around the buy-to-let mortgage market have meant that landlords (and their advisers) have sought out limited company vehicles in order to shield themselves from some of the greater costs involved. Recent research from Moneyfacts showed just how far the limited company buy-to-let sector has progressed with 313 limited company products available today, up from 133 this time last year.

As a specialist buy-to-let lender, we have been (and remain) highly active in the limited company sector, not only in terms of those landlord borrowers purchasing new properties through special purpose vehicles, but also those moving properties held in their individual names into limited companies.

One recent case we completed brings together aspects of limited company lending coupled with the needs of portfolio landlords as they seek to refinance. This particular landlord had over 10 properties within his limited company but was only seeking refinance across seven, having previously moved these into the company from his individual name.

All of the seven properties the landlord wanted to refinance were based in

18 | NACFB Magazine

three different locations, and all were in purpose-built complexes. These flats were both one- and two-beds and the company was seeking to raise equity in order to put deposits down on other properties.

The company had been established in 2012 following the sale of a highvalue, single-occupancy property which had only a 2% yield. Following the sale, the company was established off the proceeds in order to buy lower-cost apartments that offered a better rental yield – between 4-5%.

What made this case unique was the fact that three units were in the same block of flats, two in another, and a further two in yet another. Indeed, the complexity was heightened slightly by the fact that one of these units was a large block of flats (up to 10 storeys) and was inside the M25.

L

imited company buy-to-let is part of our core offering; however, there were a couple of issues to be resolved with this case. First was the exposure levels for us as a lender in terms of both loans and multiple postcodes.

Our criteria allows us to lend up to 20% of the units in the block, and as the company was refinancing multiple flats in the same building, this process would take some time to validate. Our underwriters overcame this hurdle by reviewing all the valuation reports at the same time, allowing them to develop an informed view of the whole picture when it came to build an offer that met the client’s requirements.

FLEXIBLE BRIDGING LOANS FOR PROPERTY PROFESSIONALS

Second, as the loan was over £1m, it also had to go to our credit committee.

To prevent any unnecessary delay, the case was reviewed by the team leader to ensure all necessary documents and validation had been correctly completed. This attention to detail ensured that the offer was signed off by our credit committee within 24 hours. To make it easier for the broker, they were only asked to submit the documents once, and the underwriting team took on the responsibility of scanning and linking all the relevant documents to each property that formed part of the offer.

Third, we needed to vet all the individual applicants and the company to check they had sufficient landlord experience – not a problem in this case, given the number of properties within the company. Additionally, we required a strong credit score and specific SIC codes for the company.

We have very experienced underwriting staff who were able to handle this case and its complexities right the way through the process and, by the end, we were happy to provide the £1.5m required by the limited company.

This goes to show that, even with cases somewhat removed from the norm, advisers should be confident in the ability of a specialist like Fleet Mortgages to work the case and provide the right result for all concerned.

Business Products Innovation of the Year

Cover Story | feature An overview of the Association’s most successful CFExpo to date

CFE 2017: Another year of breaking records

The 8th Commercial Finance Expo took place on 21st June at a new, larger venue in the NEC in Birmingham, demonstrating skyrocketing interest in the commercial finance sector and the continued, inexorable rise of alternative players.

W

ith a record number of 127 exhibitors and over 1,600 attendees, the Expo again broke all records compared with last year’s event.

Due to the rise in interest, the event was moved to a larger venue – Hall 3a – to make space for all interested parties.

With stalls ranging from traditional to extravagant, lenders from all over the UK came together to demonstrate their offerings to attending brokers, investors and other finance professionals.

Exhibitors included a wide range of firms, from high street banks through P2P lenders to smaller, niche players.

The NACFB began the day with several important news updates, including the

20 | NACFB Magazine

formal announcement of the appointment of its new CEO, Graham Toy, who joined on 1st July. The Association also provided an in-depth update on its road map, setting out future goals for the rest of 2017 and 2018, which include a full code of practice review and further enhancing the NACFB to continue to raise and uphold professional standards.

The NACFB confirmed it currently works with 137 Patron firms and over 800 Member firms. The Association currently also has over 40 applications for membership in the pipeline. Norman Chambers, managing director, highlighted the value placed on longevity and stability from Members and Patrons, adding: “We are not afraid to make big decisions to enhance the NACFB.”

Norman also highlighted the Association’s strong focus on fee earners, or registered individuals, within Member firms to ensure membership fees are transparent across the board.

An update on compliance from Roger Deane, MD of NACFB Compliance Services, revealed that nearly 450 Member visits have been completed to date, with highly successful results. All firms visited so far were found to be operating within their permissions, and all those currently not meeting a standard have demonstrated action plans to resolve this. As a result of the follow-ups, 90% of companies visited have taken action to meet requirements.

Following the Association’s update, the day saw several Patron panels debating the current, key issues of commercial finance, including Brexit, the buy-to-let sector, what makes specialist lending special as well as meeting professional standards for businesses.

At the Meet the Experts stage, audiences were introduced to a wide variety of offerings from Patrons and governmental bodies alike, including Kuflink Bridging, the British Business Bank, Capital Step and the Department of International Trade.

Exhibitors and attendees were conducting business from 9.30 am to 4.30 pm.

NACFB Magazine | 21

Cover Story | feature An overview of the Association’s most successful CFExpo to date

CFE 2017: Another year of breaking records

The 8th Commercial Finance Expo took place on 21st June at a new, larger venue in the NEC in Birmingham, demonstrating skyrocketing interest in the commercial finance sector and the continued, inexorable rise of alternative players.

W

ith a record number of 127 exhibitors and over 1,600 attendees, the Expo again broke all records compared with last year’s event.

Due to the rise in interest, the event was moved to a larger venue – Hall 3a – to make space for all interested parties.

With stalls ranging from traditional to extravagant, lenders from all over the UK came together to demonstrate their offerings to attending brokers, investors and other finance professionals.

Exhibitors included a wide range of firms, from high street banks through P2P lenders to smaller, niche players.

The NACFB began the day with several important news updates, including the

20 | NACFB Magazine

formal announcement of the appointment of its new CEO, Graham Toy, who joined on 1st July. The Association also provided an in-depth update on its road map, setting out future goals for the rest of 2017 and 2018, which include a full code of practice review and further enhancing the NACFB to continue to raise and uphold professional standards.

The NACFB confirmed it currently works with 137 Patron firms and over 800 Member firms. The Association currently also has over 40 applications for membership in the pipeline. Norman Chambers, managing director, highlighted the value placed on longevity and stability from Members and Patrons, adding: “We are not afraid to make big decisions to enhance the NACFB.”

Norman also highlighted the Association’s strong focus on fee earners, or registered individuals, within Member firms to ensure membership fees are transparent across the board.

An update on compliance from Roger Deane, MD of NACFB Compliance Services, revealed that nearly 450 Member visits have been completed to date, with highly successful results. All firms visited so far were found to be operating within their permissions, and all those currently not meeting a standard have demonstrated action plans to resolve this. As a result of the follow-ups, 90% of companies visited have taken action to meet requirements.

Following the Association’s update, the day saw several Patron panels debating the current, key issues of commercial finance, including Brexit, the buy-to-let sector, what makes specialist lending special as well as meeting professional standards for businesses.

At the Meet the Experts stage, audiences were introduced to a wide variety of offerings from Patrons and governmental bodies alike, including Kuflink Bridging, the British Business Bank, Capital Step and the Department of International Trade.

Exhibitors and attendees were conducting business from 9.30 am to 4.30 pm.

NACFB Magazine | 21

COVER STORY

COVER STORY

“The fact my colleagues rapidly had to replenish their stock of business cards is testament to the fact that the Commercial Finance Expo is the show that people clearly come to do business at.

“Despite the heat and the busyness of the event it’s been a fantastic day today.

We’ve had record numbers over at our stand, lots of interest in our platform and our sponsorship of Lendy Cowes Week as well. We’ve had some really, really interesting conversations with brokers and some investors actually, who were quite interested in what we do.

“It was a great opportunity to put faces to names and make new business contacts - easily the most productive show of the year.

“This event is the big one for the year it’s the one to be at, the one to be seen at and we’ve thoroughly enjoyed it.

We’ve had a great time and it’s gone quickly. We’ve met lots of good competitors here as well – there’s a great inter-team dynamic which is good. We’ve really enjoyed it, so thank you to the NACFB.”

“It was good to see strong interest in our new product (launching in early July) and to have the opportunity to explain, first hand, how it’s designed to help build businesses.”

John Davies Director, Just Cashflow “The new venue at the NEC was impressive, with better facilities, and from the feedback we got on the stand the move was well-received by exhibitors and attendees.

“On behalf of the Shawbrook commercial team, I’d like to extend my congratulations to the NACFB for hosting yet another hugely successful Commercial Finance Expo.”

“We had an excellent show. Our stand attracted a steady stream of brokers and it was clear that neither the change in venue nor the hot weather had deterred what looked like an even bigger attendance than last year. We chose the NACFB Expo specifically to announce our new range of P2P products and were pleased by the positive response from brokers after our seminar session and on the stand during the day.

Karen Bennett Director of commercial mortgages, Shawbrook Bank

“It was a very successful day, bigger and better than last year. I think, for us, there was a lot of interest in our product which I think will have a lot of good follow-up business. We’re very pleased and congratulations to the NACFB on a great conference.”

Rael Sarembock Co-founder, Capital Step

22 | NACFB Magazine

“Funding Circle thoroughly enjoyed exhibiting at the NACFB’s Commercial Finance Expo in Birmingham this year.

The venue and event itself provided a lively environment for collaboration with lots of new and familiar faces from the introducer community.

“My panel on specialist lenders was a personal highlight. Funding Circle was set up in 2010 at a time when small businesses were suffering a crisis of access to finance. The panel gave me a great platform to talk directly to a crowd of introducers about how we’re able to fill the funding gap to support their clients’ ambitions.”

“Thanks to the weather, our ice cream stand did brisk business and we were delighted that the Kuflink message found favour with such a knowledgeable and interested audience.”

Narinder Khattoare Director, Kuflink Bridging

Paul Riddell Head of marketing & communications, Lendy

Tom Shave BDM, Funding Circle

“Today has been, from our point of view, a good investment of time.

We’ve met a lot of new contacts that could potentially turn into some good business opportunities and also reacquainted ourselves with lots of contacts that we’ve known.”

Lee Gilmore BDM, Bridging Finance Solutions

“All of the team from Together who attended the Commercial Finance Expo really enjoyed the event. The exhibition was excellent and it was great to see so many brokers and lenders coming together to share their knowledge and insights at the conference, with some really interesting debates.”

Marc Goldberg Commercial CEO, Together

NACFB Magazine | 23

COVER STORY

COVER STORY

“The fact my colleagues rapidly had to replenish their stock of business cards is testament to the fact that the Commercial Finance Expo is the show that people clearly come to do business at.

“Despite the heat and the busyness of the event it’s been a fantastic day today.

We’ve had record numbers over at our stand, lots of interest in our platform and our sponsorship of Lendy Cowes Week as well. We’ve had some really, really interesting conversations with brokers and some investors actually, who were quite interested in what we do.

“It was a great opportunity to put faces to names and make new business contacts - easily the most productive show of the year.

“This event is the big one for the year it’s the one to be at, the one to be seen at and we’ve thoroughly enjoyed it.

We’ve had a great time and it’s gone quickly. We’ve met lots of good competitors here as well – there’s a great inter-team dynamic which is good. We’ve really enjoyed it, so thank you to the NACFB.”

“It was good to see strong interest in our new product (launching in early July) and to have the opportunity to explain, first hand, how it’s designed to help build businesses.”

John Davies Director, Just Cashflow “The new venue at the NEC was impressive, with better facilities, and from the feedback we got on the stand the move was well-received by exhibitors and attendees.

“On behalf of the Shawbrook commercial team, I’d like to extend my congratulations to the NACFB for hosting yet another hugely successful Commercial Finance Expo.”

“We had an excellent show. Our stand attracted a steady stream of brokers and it was clear that neither the change in venue nor the hot weather had deterred what looked like an even bigger attendance than last year. We chose the NACFB Expo specifically to announce our new range of P2P products and were pleased by the positive response from brokers after our seminar session and on the stand during the day.

Karen Bennett Director of commercial mortgages, Shawbrook Bank

“It was a very successful day, bigger and better than last year. I think, for us, there was a lot of interest in our product which I think will have a lot of good follow-up business. We’re very pleased and congratulations to the NACFB on a great conference.”

Rael Sarembock Co-founder, Capital Step

22 | NACFB Magazine

“Funding Circle thoroughly enjoyed exhibiting at the NACFB’s Commercial Finance Expo in Birmingham this year.

The venue and event itself provided a lively environment for collaboration with lots of new and familiar faces from the introducer community.

“My panel on specialist lenders was a personal highlight. Funding Circle was set up in 2010 at a time when small businesses were suffering a crisis of access to finance. The panel gave me a great platform to talk directly to a crowd of introducers about how we’re able to fill the funding gap to support their clients’ ambitions.”

“Thanks to the weather, our ice cream stand did brisk business and we were delighted that the Kuflink message found favour with such a knowledgeable and interested audience.”

Narinder Khattoare Director, Kuflink Bridging

Paul Riddell Head of marketing & communications, Lendy

Tom Shave BDM, Funding Circle

“Today has been, from our point of view, a good investment of time.

We’ve met a lot of new contacts that could potentially turn into some good business opportunities and also reacquainted ourselves with lots of contacts that we’ve known.”

Lee Gilmore BDM, Bridging Finance Solutions

“All of the team from Together who attended the Commercial Finance Expo really enjoyed the event. The exhibition was excellent and it was great to see so many brokers and lenders coming together to share their knowledge and insights at the conference, with some really interesting debates.”

Marc Goldberg Commercial CEO, Together

NACFB Magazine | 23

THE TEAM FOR COMMERCIAL LOANS

COVER STORY

WE C

M

COMMERCIAL

RETAIL

INDUSTRIAL

SHOPS

DO

AST’S

INVESTMENT

RESIDENTIAL

HOTELS

IT

OFFICES

FACTORIES

OWNER OCCUPIERS

INVESTORS

ALL!

Y

CM

MY

CY

“The day has been really good. We’ve met quite a few good prospective brokers, and the whole event has been organised really well.”

Tiba Raja Market Financial Solutions

CMY

K

Let’s Talk!

COM M ERCIAL

24 | NACFB Magazine

•

020 8349 5190 finance@alternativebridging.co.uk @ABC_Bridging

RESIDENT I AL

•

A PRINCIPAL LENDER

DEVELOP ME N T

THE TEAM FOR COMMERCIAL LOANS

COVER STORY

WE C

M

COMMERCIAL

RETAIL

INDUSTRIAL

SHOPS

DO

AST’S

INVESTMENT

RESIDENTIAL

HOTELS

IT

OFFICES

FACTORIES

OWNER OCCUPIERS

INVESTORS

ALL!

Y

CM

MY

CY

“The day has been really good. We’ve met quite a few good prospective brokers, and the whole event has been organised really well.”

Tiba Raja Market Financial Solutions

CMY

K

Let’s Talk!

COM M ERCIAL

24 | NACFB Magazine

•

020 8349 5190 finance@alternativebridging.co.uk @ABC_Bridging

RESIDENT I AL

•

A PRINCIPAL LENDER

DEVELOP ME N T

Patron | profile

Kuflink Bridging From fringe to mainstream Narinder Khattoare Sales & marketing director Kuflink Bridging

Kuflink Bridging is an award-winning, thriving and forward-thinking company, fully regulated to transact short-term lending in the regulated and unregulated spheres.

But the story of our rise from fringe player to mainstream provider started just six years ago.

26 | NACFB Magazine

L

aunched as Alpha Bridging Solutions in 2011, the business was headquartered in Gravesend, Kent, as it still is today – though the company moved to larger, purposebuilt premises in 2016 to accommodate growing numbers of team members and its P2P platform, Kuflink.

Having previously lent against luxury items and property, Alpha only moved into exclusively lending against property in 2013. It had become clear that lending against luxury assets, while attractive as an alternative to bricks and mortar, would require particularly large resources to enable us to persuade intermediaries to use what to them and their clients was a largely unknown method of raising capital.

However, it was clear that while there was a growing number of lenders

in the bridging space, there was definitely room for another lender dedicated to the broker market, able to deliver the right solutions in a timeframe that suited the client and their circumstances.

minister Stephen Hammond and local MP Adam Holloway and attended by over 60 guests. We also became fully authorised that year, to add to the unregulated bridging offering we have had since inception.

As a relatively unknown brand, we had already developed a strong business stream, lending from our own, private resources based on personal service and delivering funds quickly and efficiently. Our reputation as a lender which got things done and was able to quickly handle cases which bigger players would consider, confer on, think about, waste time with and then reject, began to attract new support.

T

The change of name to Kuflink Bridging took place in 2016, along with a move to larger premises in Gravesend, opened by treasury

he last 18 months have seen the arrival of Tarlochan Garcha as CEO in October 2015 following a 17-year career in banking with NatWest and Barclays. His remit was to develop systems and controls and to oversee applications to the FCA for both Kuflink Bridging and also for our new P2P platform, Kuflink.

It had become clear to us that we didn’t want to be reliant on just one source of funding and we soft-launched our new P2P proposition in August 2016, as we aimed to bed in our systems and take on new staff. At the same time,

we applied for full authorisation from the FCA for the P2P platform, which we obtained just eight months after our initial application. Kuflink is now one of only a handful of P2P platforms in the property sector to be fully authorised and regulated by the FCA. One of our key USPs for P2P investors is that on our SelectInvest product, Kuflink Bridging takes the initial 20% in each deal onto our own balance sheet, thereby providing investors with a measure of security that is unparalleled in the P2P space. We are the only P2P lender in the UK property arena that does this.

We therefore now have a highly effective and complementary source of funding for our short-term lending proposition via Kuflink Bridging. We are not at the mercy of corporate

funders whose commitment to the market wavered, as we saw, after the Brexit vote. Not only is Kuflink Bridging able to provide a solid platform for consistent, competitive lending facilities to the broker market, but Kuflink’s P2P proposition provides ordinary investors with the opportunity for strong returns (up to 7.2% gross per annum), backed up by the best safeguards in the industry.

We have plenty more projects in the pipeline, but the core strategy is to provide bridging facilities that are accessible, good value for money and delivered on time, every time. Our aim is to be a top player in the bridging market and, so far, we are right on course.

NACFB Magazine | 27

Patron | profile

Kuflink Bridging From fringe to mainstream Narinder Khattoare Sales & marketing director Kuflink Bridging

Kuflink Bridging is an award-winning, thriving and forward-thinking company, fully regulated to transact short-term lending in the regulated and unregulated spheres.

But the story of our rise from fringe player to mainstream provider started just six years ago.

26 | NACFB Magazine

L

aunched as Alpha Bridging Solutions in 2011, the business was headquartered in Gravesend, Kent, as it still is today – though the company moved to larger, purposebuilt premises in 2016 to accommodate growing numbers of team members and its P2P platform, Kuflink.

Having previously lent against luxury items and property, Alpha only moved into exclusively lending against property in 2013. It had become clear that lending against luxury assets, while attractive as an alternative to bricks and mortar, would require particularly large resources to enable us to persuade intermediaries to use what to them and their clients was a largely unknown method of raising capital.

However, it was clear that while there was a growing number of lenders

in the bridging space, there was definitely room for another lender dedicated to the broker market, able to deliver the right solutions in a timeframe that suited the client and their circumstances.

minister Stephen Hammond and local MP Adam Holloway and attended by over 60 guests. We also became fully authorised that year, to add to the unregulated bridging offering we have had since inception.

As a relatively unknown brand, we had already developed a strong business stream, lending from our own, private resources based on personal service and delivering funds quickly and efficiently. Our reputation as a lender which got things done and was able to quickly handle cases which bigger players would consider, confer on, think about, waste time with and then reject, began to attract new support.

T

The change of name to Kuflink Bridging took place in 2016, along with a move to larger premises in Gravesend, opened by treasury

he last 18 months have seen the arrival of Tarlochan Garcha as CEO in October 2015 following a 17-year career in banking with NatWest and Barclays. His remit was to develop systems and controls and to oversee applications to the FCA for both Kuflink Bridging and also for our new P2P platform, Kuflink.

It had become clear to us that we didn’t want to be reliant on just one source of funding and we soft-launched our new P2P proposition in August 2016, as we aimed to bed in our systems and take on new staff. At the same time,

we applied for full authorisation from the FCA for the P2P platform, which we obtained just eight months after our initial application. Kuflink is now one of only a handful of P2P platforms in the property sector to be fully authorised and regulated by the FCA. One of our key USPs for P2P investors is that on our SelectInvest product, Kuflink Bridging takes the initial 20% in each deal onto our own balance sheet, thereby providing investors with a measure of security that is unparalleled in the P2P space. We are the only P2P lender in the UK property arena that does this.

We therefore now have a highly effective and complementary source of funding for our short-term lending proposition via Kuflink Bridging. We are not at the mercy of corporate

funders whose commitment to the market wavered, as we saw, after the Brexit vote. Not only is Kuflink Bridging able to provide a solid platform for consistent, competitive lending facilities to the broker market, but Kuflink’s P2P proposition provides ordinary investors with the opportunity for strong returns (up to 7.2% gross per annum), backed up by the best safeguards in the industry.

We have plenty more projects in the pipeline, but the core strategy is to provide bridging facilities that are accessible, good value for money and delivered on time, every time. Our aim is to be a top player in the bridging market and, so far, we are right on course.

NACFB Magazine | 27

Ask | the expert Answers and help from among the most knowledgeable of NACFB associates

The truth about personal contract purchase Graham Hill, director at the NACFB, clears up the confusion surrounding PCP agreements

O

ver the past few weeks, the press has been alive with vehicle finance stories following the announcement that an investigation was to be carried out by the FCA into the misselling of vehicle finance and, in particular, personal contract purchase agreements (PCP).

As a result, I have been commenting, on behalf of the NACFB, in national newspapers and trade journals – from the FT and Mail through to Mail Online and AutoExpress. Following an interview with Reuters, my comments have now been read as far afield as Malaysia and India – the NACFB goes global.

Sadly, most of what is being reported is total bunkum. Several journalists have compared PCPs with sub-prime lending, suggesting that those taking out PCP agreements can ill afford the payments, creating a financial bubble about to burst – as happened with mortgages in 2008.

So, I intend to put the record straight and answer questions that may arise when one is thinking of taking out a PCP agreement or is currently under such a contract. Incidentally, don’t come to me for a PCP. As a broker, I concentrate on personal contract hire (PCH) – a better and invariably cheaper product.

Q A

Is PCP available to those with poor credit?

Definitely not. The funder, normally the manufacturer’s own finance arm, takes a relatively small deposit and

28 | NACFB Magazine

can charge as little as £250 per month for a £25,000 motor car. With that level of extreme exposure by the leasing company, if you think you don’t have to be totally squeaky clean to be approved for finance, you must think the lender is nuts. It simply doesn’t make commercial sense. So no, PCP is not for the credit-challenged.

Q A

Is it a good product?

Yes it is. With over 85% of new cars financed by consumers on PCPs, it is clearly a hit with those who may only have been able to drive a two- or three-year-old car for the same down payment and monthly repayment. As more people drive new cars the environment improves, drivers enjoy lower running costs, better MPG and the great feeling of driving a brand new car.

Q A

What are the catches?

Sadly, the profit motive has taken over in many dealerships with very little regard to their FCA obligations, hence the reason for an investigation. Dealers are under pressure to sell more new cars by the manufacturer - and to sell them on finance, earning them more profit out of each customer. Take a guess as to which finance product earns most profit? Indeed, it’s PCP. First, make sure you are indeed signing a PCP agreement. There has been a lot of concern over hire purchase agreements with a balloon payment being sold as PCP. The big difference here is that you must pay the

final balloon payment, and have no right to return the car at the end of the agreement.

It means the customer takes the risk in the final balloon payment, not the lender.

Moneysavingexpert.com has revealed that 80% of all cars on PCP are returned at the end of the agreement but many are still taking out a PCP rather than a cheaper PCH because it gives you the option to buy the vehicle, which PCH doesn’t.

They then give the car back anyway while paying more per month – daft!

Giving the car back can present another set of challenges. First, there are endof-lease charges which I don’t think are always unfair. Excess over the contracted mileage results in the car now being worth less than expected – not unreasonable.

Repairing dents may be a cost to you but had you owned the car and part exchanged it, the dealer would have knocked money off his offer – same difference.

Finally, there are the unforeseen extra charges. For example, if you can’t find the spare key that came with the car you will be charged for a replacement. This can cost up to £600. Missing service history, not having the car serviced on time or at a main dealer can result in charges. Even a missing wheel lock nut can end up costing £30.

So, for those considering a PCP: do some research, know exactly what you are signing and shop around.

Most of all, be realistic about annual mileage and take care of the car.

Faster, simpler short term lending You can now get a quote in under 60 seconds and an offer in 2 minutes.

om r f s Rate

% 5 6 0.

Call us on 0161 933 7103 or visit togethermoney.com/

This advertisement is intended for professional intermediary use only and must not be distributed to potential clients.

Ask | the expert Answers and help from among the most knowledgeable of NACFB associates

The truth about personal contract purchase Graham Hill, director at the NACFB, clears up the confusion surrounding PCP agreements

O

ver the past few weeks, the press has been alive with vehicle finance stories following the announcement that an investigation was to be carried out by the FCA into the misselling of vehicle finance and, in particular, personal contract purchase agreements (PCP).

As a result, I have been commenting, on behalf of the NACFB, in national newspapers and trade journals – from the FT and Mail through to Mail Online and AutoExpress. Following an interview with Reuters, my comments have now been read as far afield as Malaysia and India – the NACFB goes global.

Sadly, most of what is being reported is total bunkum. Several journalists have compared PCPs with sub-prime lending, suggesting that those taking out PCP agreements can ill afford the payments, creating a financial bubble about to burst – as happened with mortgages in 2008.

So, I intend to put the record straight and answer questions that may arise when one is thinking of taking out a PCP agreement or is currently under such a contract. Incidentally, don’t come to me for a PCP. As a broker, I concentrate on personal contract hire (PCH) – a better and invariably cheaper product.

Q A

Is PCP available to those with poor credit?

Definitely not. The funder, normally the manufacturer’s own finance arm, takes a relatively small deposit and

28 | NACFB Magazine

can charge as little as £250 per month for a £25,000 motor car. With that level of extreme exposure by the leasing company, if you think you don’t have to be totally squeaky clean to be approved for finance, you must think the lender is nuts. It simply doesn’t make commercial sense. So no, PCP is not for the credit-challenged.

Q A

Is it a good product?

Yes it is. With over 85% of new cars financed by consumers on PCPs, it is clearly a hit with those who may only have been able to drive a two- or three-year-old car for the same down payment and monthly repayment. As more people drive new cars the environment improves, drivers enjoy lower running costs, better MPG and the great feeling of driving a brand new car.

Q A

What are the catches?

Sadly, the profit motive has taken over in many dealerships with very little regard to their FCA obligations, hence the reason for an investigation. Dealers are under pressure to sell more new cars by the manufacturer - and to sell them on finance, earning them more profit out of each customer. Take a guess as to which finance product earns most profit? Indeed, it’s PCP. First, make sure you are indeed signing a PCP agreement. There has been a lot of concern over hire purchase agreements with a balloon payment being sold as PCP. The big difference here is that you must pay the

final balloon payment, and have no right to return the car at the end of the agreement.

It means the customer takes the risk in the final balloon payment, not the lender.

Moneysavingexpert.com has revealed that 80% of all cars on PCP are returned at the end of the agreement but many are still taking out a PCP rather than a cheaper PCH because it gives you the option to buy the vehicle, which PCH doesn’t.

They then give the car back anyway while paying more per month – daft!

Giving the car back can present another set of challenges. First, there are endof-lease charges which I don’t think are always unfair. Excess over the contracted mileage results in the car now being worth less than expected – not unreasonable.

Repairing dents may be a cost to you but had you owned the car and part exchanged it, the dealer would have knocked money off his offer – same difference.

Finally, there are the unforeseen extra charges. For example, if you can’t find the spare key that came with the car you will be charged for a replacement. This can cost up to £600. Missing service history, not having the car serviced on time or at a main dealer can result in charges. Even a missing wheel lock nut can end up costing £30.

So, for those considering a PCP: do some research, know exactly what you are signing and shop around.

Most of all, be realistic about annual mileage and take care of the car.

Faster, simpler short term lending You can now get a quote in under 60 seconds and an offer in 2 minutes.

om r f s Rate

% 5 6 0.

Call us on 0161 933 7103 or visit togethermoney.com/

This advertisement is intended for professional intermediary use only and must not be distributed to potential clients.

Spotlight Unmissable industry coverage

Bridging & Commercial Awards 2017 The 2017 Bridging & Commercial Awards once again honoured the outstanding achievers in the bridging, commercial and development finance sectors.

The event – sponsored by Titlesolv – was once again held at the Hurlingham Club in Fulham on 8th June.

Hosted by Mo Mulki, CEO and Caron Schreuder, managing director of Medianett, as well as Beth Fisher, editor of Bridging & Commercial, 620 guests attended to celebrate the industry’s finest.

Sponsors Together and Precise Mortgages supported the post-event drinks by arranging the post-awards bar and after party respectively.

Meanwhile, Wonka bars containing three hidden golden tickets were handed to lucky guests, with prizes donated by Kuflink.

Rosetrees were the charitable beneficiary for the event, in association with development finance lender Regentsmead.

With this year’s theme centring on Willy Wonka and the Chocolate Factory, the venue was transformed into a giant chocolate factory – complete with Oompa-Loompas.

22 prestigious awards were handed out to the winning nominees, with Together claiming both the bridging and commercial lender of the year awards.

Best Commercial Broker Winner: Watts Commercial Finance Highly Commended: Enness Private Clients

Service Excellence Award – Brokers Winner: Adapt Finance Highly Commended: Enness Private Clients

Commercial Lender of the Year Winner: Together Highly Commended: Shawbrook

Best Bridging Partner Winner: Lightfoots Solicitors Highly Commended: Robert Sterling Surveyors

Specialist Bank of the Year Winner: Shawbrook Bank Highly Commended: Charter Savings Bank

Regulated Lender of the Year Winner: Precise Mortgages Highly Commended: Masthaven

Best Bridging Lender Newcomer Winner: Avamore Capital Highly Commended: Ashley Finance

Best Development Broker Winner: Crystal Specialist Finance Highly Commended: Adapt Finance

Marketing Campaign of the Year Winner: Masthaven Highly Commended: Hope Capital

Bridging Lender of the Year Winner: Together Highly Commended: Precise Mortgages and Octopus Property

Best Use of Fintech Winner: Shawbrook Bank Highly Commended: Together

Underwriter of the Year Winner: Eddie Boakye – Funding 365 Highly Commended: Claire Wasbrough – Masthaven

Development Lender of the Year Winner: Octopus Property Highly Commended: Amicus Property Finance

Personality of the Year Winner: Richard Deacon – Masthaven

Best Bridging Broker Winner: Pure Commercial Finance Highly Commended: Adapt Finance

Best Specialist Distributor Winner: Brightstar Highly Commended: Crystal Specialist Finance

Alternative Lender of the Year Winner: LendInvest Highly Commended: Lendy

Specialist Product of the Year Winner: Ortus Secured Finance – NI product range Highly Commended: Castle Trust – Flex mortgage

Lender Relationship Manager of the Year Winner: Sundeep Patel – Precise Mortgages Highly Commended: Dawn Trustam – Funding 365

Service Excellence Award – Lenders Winner: Precise Mortgages Highly Commended: Roma Finance

30 | NACFB Magazine

Outstanding Contribution – Individual Winner: Jonathan Newman – Brightstone Law Outstanding Contribution – Company Winner: Together

NACFB Magazine | 31

Spotlight Unmissable industry coverage

Bridging & Commercial Awards 2017 The 2017 Bridging & Commercial Awards once again honoured the outstanding achievers in the bridging, commercial and development finance sectors.

The event – sponsored by Titlesolv – was once again held at the Hurlingham Club in Fulham on 8th June.

Hosted by Mo Mulki, CEO and Caron Schreuder, managing director of Medianett, as well as Beth Fisher, editor of Bridging & Commercial, 620 guests attended to celebrate the industry’s finest.

Sponsors Together and Precise Mortgages supported the post-event drinks by arranging the post-awards bar and after party respectively.

Meanwhile, Wonka bars containing three hidden golden tickets were handed to lucky guests, with prizes donated by Kuflink.

Rosetrees were the charitable beneficiary for the event, in association with development finance lender Regentsmead.

With this year’s theme centring on Willy Wonka and the Chocolate Factory, the venue was transformed into a giant chocolate factory – complete with Oompa-Loompas.

22 prestigious awards were handed out to the winning nominees, with Together claiming both the bridging and commercial lender of the year awards.

Best Commercial Broker Winner: Watts Commercial Finance Highly Commended: Enness Private Clients

Service Excellence Award – Brokers Winner: Adapt Finance Highly Commended: Enness Private Clients

Commercial Lender of the Year Winner: Together Highly Commended: Shawbrook

Best Bridging Partner Winner: Lightfoots Solicitors Highly Commended: Robert Sterling Surveyors

Specialist Bank of the Year Winner: Shawbrook Bank Highly Commended: Charter Savings Bank

Regulated Lender of the Year Winner: Precise Mortgages Highly Commended: Masthaven

Best Bridging Lender Newcomer Winner: Avamore Capital Highly Commended: Ashley Finance

Best Development Broker Winner: Crystal Specialist Finance Highly Commended: Adapt Finance

Marketing Campaign of the Year Winner: Masthaven Highly Commended: Hope Capital

Bridging Lender of the Year Winner: Together Highly Commended: Precise Mortgages and Octopus Property

Best Use of Fintech Winner: Shawbrook Bank Highly Commended: Together

Underwriter of the Year Winner: Eddie Boakye – Funding 365 Highly Commended: Claire Wasbrough – Masthaven

Development Lender of the Year Winner: Octopus Property Highly Commended: Amicus Property Finance

Personality of the Year Winner: Richard Deacon – Masthaven

Best Bridging Broker Winner: Pure Commercial Finance Highly Commended: Adapt Finance

Best Specialist Distributor Winner: Brightstar Highly Commended: Crystal Specialist Finance

Alternative Lender of the Year Winner: LendInvest Highly Commended: Lendy

Specialist Product of the Year Winner: Ortus Secured Finance – NI product range Highly Commended: Castle Trust – Flex mortgage

Lender Relationship Manager of the Year Winner: Sundeep Patel – Precise Mortgages Highly Commended: Dawn Trustam – Funding 365

Service Excellence Award – Lenders Winner: Precise Mortgages Highly Commended: Roma Finance

30 | NACFB Magazine

Outstanding Contribution – Individual Winner: Jonathan Newman – Brightstone Law Outstanding Contribution – Company Winner: Together

NACFB Magazine | 31

Special | features

Business confidence hangs in the balance On 9th June, the UK woke up startled to a hung parliament after no party managed to secure the 326 seats needed for a Commons majority, yet again sinking the confidence of the lifeblood of the country’s economy.

W

hile Theresa May’s shock snap general election was intended to strengthen the Conservative hold in advance of Brexit negotiations, her party instead lost seats to the opposition.

Following the election result last month, Mrs May stated that having secured the largest number of votes and the greatest number of seats, it was “clear” that only the Conservative party had the ability to provide the country with certainty by commanding a majority in the House of Commons.

However, a poll of almost 700 members of the Institute of Directors (IoD) has revealed that 57% are now either quite or very pessimistic about the UK economy over the next 12 months.

UK economy. Only 2% felt it would be a positive for their primary organisation.

“It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could – if not addressed immediately – be disastrous for the UK economy,” said Stephen Martin, director general of the IoD. “The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new government.

Only 1% were “very optimistic”.

“It was disheartening that the only reference the prime minister made to prosperity in her Downing Street statement was to emphasise the need to share it, rather than create it in the first place.

A staggering 92% of business leaders also believed uncertainty over the make-up of the government was a concern for the

“With global headwinds and political uncertainty at the front of business leaders’ minds, it would be wise for

32 | NACFB Magazine

this administration to re-emphasise its commitment to a pro-business environment here at home.

“If we thought we had uncertainty before, the floodgates of uncertainty have [now] well and truly opened.”

“The last thing business leaders need is a parliament in paralysis, and the consequences for British businesses and for the UK as an investment destination would be severe.”

Industry reactions Paul Goodman, NACFB chairman, said that whatever government emerges from the ashes of this election – and whoever is leading it – it is vital that the UK economy “exudes strength”.

Despite the uncertainty over the structure of the government, 59% of business leaders think another election later this year would be “somewhat” or “very” unwelcome.

“If the [Conservative/DUP deal] doesn’t hold, there’s the prospect of a challenge from a Labour [government] comprising pretty much everyone else in Westminster except the Tories and the DUP,” said Harley Kagan, group managing director at United Trust Bank.

It has been debated whether another election before the year end is a possibility.

“Business owners need to be reassured that the economy remains a key focus and is not forgotten amid the political infighting that’s surely set to come.

“Thankfully, the UK economy is in a good place at present.

“It will certainly need to draw on all its reserves in the weeks and months ahead.”

Echoing this, Piotr Twaits, sales director at Synergy Commercial Finance, said: “Fundamentally, the economy was performing well prior to the

NACFB Magazine | 33

Special | features

Business confidence hangs in the balance On 9th June, the UK woke up startled to a hung parliament after no party managed to secure the 326 seats needed for a Commons majority, yet again sinking the confidence of the lifeblood of the country’s economy.

W

hile Theresa May’s shock snap general election was intended to strengthen the Conservative hold in advance of Brexit negotiations, her party instead lost seats to the opposition.

Following the election result last month, Mrs May stated that having secured the largest number of votes and the greatest number of seats, it was “clear” that only the Conservative party had the ability to provide the country with certainty by commanding a majority in the House of Commons.

However, a poll of almost 700 members of the Institute of Directors (IoD) has revealed that 57% are now either quite or very pessimistic about the UK economy over the next 12 months.

UK economy. Only 2% felt it would be a positive for their primary organisation.

“It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could – if not addressed immediately – be disastrous for the UK economy,” said Stephen Martin, director general of the IoD. “The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new government.

Only 1% were “very optimistic”.

“It was disheartening that the only reference the prime minister made to prosperity in her Downing Street statement was to emphasise the need to share it, rather than create it in the first place.

A staggering 92% of business leaders also believed uncertainty over the make-up of the government was a concern for the

“With global headwinds and political uncertainty at the front of business leaders’ minds, it would be wise for

32 | NACFB Magazine

this administration to re-emphasise its commitment to a pro-business environment here at home.

“If we thought we had uncertainty before, the floodgates of uncertainty have [now] well and truly opened.”

“The last thing business leaders need is a parliament in paralysis, and the consequences for British businesses and for the UK as an investment destination would be severe.”

Industry reactions Paul Goodman, NACFB chairman, said that whatever government emerges from the ashes of this election – and whoever is leading it – it is vital that the UK economy “exudes strength”.

Despite the uncertainty over the structure of the government, 59% of business leaders think another election later this year would be “somewhat” or “very” unwelcome.

“If the [Conservative/DUP deal] doesn’t hold, there’s the prospect of a challenge from a Labour [government] comprising pretty much everyone else in Westminster except the Tories and the DUP,” said Harley Kagan, group managing director at United Trust Bank.

It has been debated whether another election before the year end is a possibility.

“Business owners need to be reassured that the economy remains a key focus and is not forgotten amid the political infighting that’s surely set to come.

“Thankfully, the UK economy is in a good place at present.

“It will certainly need to draw on all its reserves in the weeks and months ahead.”

Echoing this, Piotr Twaits, sales director at Synergy Commercial Finance, said: “Fundamentally, the economy was performing well prior to the

NACFB Magazine | 33

SPECIAL FEATURES

election. The current government and opposition cannot forget business or this will simply undermine confidence and [potentially] see businesses deferring investment programmes.

“This would not be good for the economy.

“The business rate review is an example and remains a real concern.

“This was on the back burner prior to the election.

“Our clients regularly comment on the impact [on] their businesses and [are concerned that] this will not be high on the agenda of the government…”

Business leaders believed that reaching a new trade agreement with the European Union should be an immediate priority for the new government, with UK economic conditions (53%) and uncertain trading status with the EU (46%) topping the key factors having a negative impact on businesses.

Mike Cherry, chairman of the Federation of Small Businesses (FSB), stated that the UK must be seen to remain open for business, with a government committed to supporting enterprise.

“It is important to go into the Brexit talks from a position of strength, focused on getting the best deal possible for trade and access to workers and skills.

“FSB secured a number of important commitments for small business in many of the party manifestos in this election, and we believe there will be strong support in the new parliament for many of our asks – on business rates reform, on protecting the self-employed from unfair tax rises and on tackling late payments by big companies to their small business suppliers.”

Delivering a competitive and fair post-Brexit economy that works for everyone seems to be businesses’ main wish for the next government.

“This can only be achieved if the next government doesn’t put the brakes on business, remains open to the world and sets out a pro-enterprise vision,” said Carolyn Fairbairn, director-general of CBI. “We need to move much faster to fix the foundations of the UK economy and our productivity problem.

“More than ever, the new government

34 | NACFB Magazine

Theresa May was unsuccessful in increasing the Conservative majority in parliament must work together with business to make the most of the opportunities ahead.

“Firms can provide the evidence, ideas and solutions from the shop, office and factory floor to secure our future prosperity.”

Colin Stanbridge, chief executive of London Chamber of Commerce and Industry, said that a hung parliament was a “hugely frustrating” result for businesses, creating more uncertainty on top of the recent impact of the EU referendum vote, increasing costs and currency fluctuation.

“There is no time to waste in establishing a good deal for London in the Brexit negotiations and protecting the country’s economy but [also] protecting the capital’s economy.

“Pivotal to that is infrastructure investment in London, securing the rights of EU nationals in the UK as well as ensuring we have access to skills in the necessary numbers to protect our workforce.

“We must also look to equip the next generation with the skills it needs to succeed.”

A new hope?

Despite further uncertainty, the impact of a hung parliament could result in a softer Brexit – something many businesses have been campaigning for.

“May has experienced a serious backlash after calling this tactical general election and, as a result, faith in the Conservative party has withered for the future,” said Tim Mycock, development director at bridging lender Reditum Capital.

“The prospect of a possible softer Brexit on the cards – with [Jeremy] Corbyn leading the negotiations – could ensure a healthy relationship with the EU, however, it’s at this point we will find ourselves [questioning] whether the UK is still an attractive investment for international investors to set up shop in.” “’Be fearful when others are greedy and greedy only when others are fearful’ is an investment mantra which has served Warren Buffet very well over the past 50 years and it’s an attitude many individuals and businesses will choose to adopt in the face of current events,” stated Harley.

“Some of the greatest opportunities present themselves in times of uncertainty.”

John Davies, director at Just Cash Flow PLC, added that SMEs were extremely resilient and more focused on day-today issues impacting their businesses as opposed to what politicians may or may not be promising.

“This was recently proved when we saw a significant increase in applications immediately after the Brexit vote when pundits were predicting business would be on hold.

An open mind + Millions ready to invest = Problem solved Backed by the might of the Tavistock Group, Ashley Finance has millions to invest in small businesses that need a hand.

We say yes more than other lenders because we look for the positives, rather than the negatives, in every business.

When things don’t add up, Ashley puts together a simple solution that solves your clients’ funding problem.

Just ask ashleyfinance.co.uk

“I think this election result provides businesses with some valuable lessons. It never pays to be over confident or to stop listening.”

Beth Fisher Editor Bridging & Commercial

Problem solved

SPECIAL FEATURES

election. The current government and opposition cannot forget business or this will simply undermine confidence and [potentially] see businesses deferring investment programmes.

“This would not be good for the economy.

“The business rate review is an example and remains a real concern.

“This was on the back burner prior to the election.

“Our clients regularly comment on the impact [on] their businesses and [are concerned that] this will not be high on the agenda of the government…”

Business leaders believed that reaching a new trade agreement with the European Union should be an immediate priority for the new government, with UK economic conditions (53%) and uncertain trading status with the EU (46%) topping the key factors having a negative impact on businesses.

Mike Cherry, chairman of the Federation of Small Businesses (FSB), stated that the UK must be seen to remain open for business, with a government committed to supporting enterprise.

“It is important to go into the Brexit talks from a position of strength, focused on getting the best deal possible for trade and access to workers and skills.

“FSB secured a number of important commitments for small business in many of the party manifestos in this election, and we believe there will be strong support in the new parliament for many of our asks – on business rates reform, on protecting the self-employed from unfair tax rises and on tackling late payments by big companies to their small business suppliers.”

Delivering a competitive and fair post-Brexit economy that works for everyone seems to be businesses’ main wish for the next government.

“This can only be achieved if the next government doesn’t put the brakes on business, remains open to the world and sets out a pro-enterprise vision,” said Carolyn Fairbairn, director-general of CBI. “We need to move much faster to fix the foundations of the UK economy and our productivity problem.

“More than ever, the new government

34 | NACFB Magazine

Theresa May was unsuccessful in increasing the Conservative majority in parliament must work together with business to make the most of the opportunities ahead.

“Firms can provide the evidence, ideas and solutions from the shop, office and factory floor to secure our future prosperity.”

Colin Stanbridge, chief executive of London Chamber of Commerce and Industry, said that a hung parliament was a “hugely frustrating” result for businesses, creating more uncertainty on top of the recent impact of the EU referendum vote, increasing costs and currency fluctuation.

“There is no time to waste in establishing a good deal for London in the Brexit negotiations and protecting the country’s economy but [also] protecting the capital’s economy.

“Pivotal to that is infrastructure investment in London, securing the rights of EU nationals in the UK as well as ensuring we have access to skills in the necessary numbers to protect our workforce.

“We must also look to equip the next generation with the skills it needs to succeed.”

A new hope?

Despite further uncertainty, the impact of a hung parliament could result in a softer Brexit – something many businesses have been campaigning for.

“May has experienced a serious backlash after calling this tactical general election and, as a result, faith in the Conservative party has withered for the future,” said Tim Mycock, development director at bridging lender Reditum Capital.

“The prospect of a possible softer Brexit on the cards – with [Jeremy] Corbyn leading the negotiations – could ensure a healthy relationship with the EU, however, it’s at this point we will find ourselves [questioning] whether the UK is still an attractive investment for international investors to set up shop in.” “’Be fearful when others are greedy and greedy only when others are fearful’ is an investment mantra which has served Warren Buffet very well over the past 50 years and it’s an attitude many individuals and businesses will choose to adopt in the face of current events,” stated Harley.

“Some of the greatest opportunities present themselves in times of uncertainty.”

John Davies, director at Just Cash Flow PLC, added that SMEs were extremely resilient and more focused on day-today issues impacting their businesses as opposed to what politicians may or may not be promising.

“This was recently proved when we saw a significant increase in applications immediately after the Brexit vote when pundits were predicting business would be on hold.

An open mind + Millions ready to invest = Problem solved Backed by the might of the Tavistock Group, Ashley Finance has millions to invest in small businesses that need a hand.

We say yes more than other lenders because we look for the positives, rather than the negatives, in every business.

When things don’t add up, Ashley puts together a simple solution that solves your clients’ funding problem.

Just ask ashleyfinance.co.uk

“I think this election result provides businesses with some valuable lessons. It never pays to be over confident or to stop listening.”

Beth Fisher Editor Bridging & Commercial

Problem solved

SPECIAL FEATURES

Business-boosting loans up to £500,000

Alternative players to the rescue of niche sectors Peter Hudson Director, property finance Sancus

T

he year ending April 2017 revealed that transactions involving commercial property have hit a nineyear high. Despite Brexit and the falling value of sterling, the market is ripe for investors as confidence remains resilient.

However, accessibility of funding from traditional sources is still under pressure and alternative funders are making their presence felt. Basel III and the requirement to put capital aside has had a major impact on bank lending policies, with facilities harder to come by.

Bad bank loans in the commercial property sector fell to £846m of write-offs in 2015/16, down 63% from £2.27bn the previous year, suggesting that lending continues to be less risky as banks demand lower LTVs. The tightening up of bank lending criteria means high-quality property investments and developments, especially in the SME arena, are now unable to secure funding as they don’t meet the banks’ increasingly stringent requirements.

This is paving the way for alternative lenders – among them crowdfunders and peer-to-peer lenders – to capitalise on unserved needs. As we’re already seeing, these firms can be more flexible when underwriting transactions, offering higher LTVs. Initially focused on buy-to-let properties and bridging finance, but now often offering purchase and development finance too, they also focus on niches in the underserviced regional SME sector.

Additionally, they can respond quickly, often completing a transaction within

10 days, rather than the average three months taken by the banking sector.

To ensure investor protection, the FCA currently requires funders to be provided with clear information about the risks associated with their investment and the action to take should defaults occur.

This regulation looks set to increase as further protection is put in place.

A report written by Andy Davis for the Centre for the Study of Financial Innovation recently concluded that technology has

Fixed rate loans with no set up fees or early repayment charges Security may be required. Product fees may apply.

Over 18s only. Business turnover of up to £2 million.

Excludes refinance and Commercial Real Estate Finance.

two pieces of land with planning consent.

Our client intended to develop but wanted to seek a planning enhancement on one of the sites first. They needed to urgently secure the land while they negotiated for mainstream senior debt finance. We supported the land bridge in principle, but we still needed to conduct due diligence to protect our co-funder’s position by ensuring that we had a firm exit route. This was done by manually reviewing the viability of the eventual development schemes and the experience and financial covenants of the client, gaining a more holistic view. The

Initially focused on buy-to-let properties and bridging finance, but now often offering purchase and development finance too, [alternative lenders] also focus on niches in the underserviced regional SME sector improved the accessibility of funding to the SME market and that it will drive improvements to customer experience and speed of delivery, but that some things will remain constant. The involvement of humans to assess the level of risk and appropriate pricing, underwrite transactions and the need to balance cost of acquisition with lifetime value will remain. The Sancus platform mirrors this finding: an experienced credit team manages the funders’ risk, protecting both their exposure and, in turn, the sector’s reputation.

A

recent example of peer-to-peer funding in the commercial property sector was a £4.6m advance made by Sancus to a Liverpool developer to fund the purchase of

deal was funded by a combination of both Sancus’ own capital and funds from our portfolio of co-funders. It was completed in 21 days after we mobilised our team to visit the projects to understand their context as part of our credit assessment.

Sancus underwrote the deal first before bringing in its co-funder base. We believe this is the way forward for the peer-topeer/crowdfunding market as it provides total confidence to the developer that if they comply with the terms of the offer, a funder will always be there to support their business transaction.

Email us at brokerteam@natwest.com ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.

36 | NACFB Magazine

SPECIAL FEATURES

Business-boosting loans up to £500,000

Alternative players to the rescue of niche sectors Peter Hudson Director, property finance Sancus

T

he year ending April 2017 revealed that transactions involving commercial property have hit a nineyear high. Despite Brexit and the falling value of sterling, the market is ripe for investors as confidence remains resilient.

However, accessibility of funding from traditional sources is still under pressure and alternative funders are making their presence felt. Basel III and the requirement to put capital aside has had a major impact on bank lending policies, with facilities harder to come by.

Bad bank loans in the commercial property sector fell to £846m of write-offs in 2015/16, down 63% from £2.27bn the previous year, suggesting that lending continues to be less risky as banks demand lower LTVs. The tightening up of bank lending criteria means high-quality property investments and developments, especially in the SME arena, are now unable to secure funding as they don’t meet the banks’ increasingly stringent requirements.

This is paving the way for alternative lenders – among them crowdfunders and peer-to-peer lenders – to capitalise on unserved needs. As we’re already seeing, these firms can be more flexible when underwriting transactions, offering higher LTVs. Initially focused on buy-to-let properties and bridging finance, but now often offering purchase and development finance too, they also focus on niches in the underserviced regional SME sector.

Additionally, they can respond quickly, often completing a transaction within

10 days, rather than the average three months taken by the banking sector.

To ensure investor protection, the FCA currently requires funders to be provided with clear information about the risks associated with their investment and the action to take should defaults occur.

This regulation looks set to increase as further protection is put in place.

A report written by Andy Davis for the Centre for the Study of Financial Innovation recently concluded that technology has

Fixed rate loans with no set up fees or early repayment charges Security may be required. Product fees may apply.

Over 18s only. Business turnover of up to £2 million.

Excludes refinance and Commercial Real Estate Finance.

two pieces of land with planning consent.

Our client intended to develop but wanted to seek a planning enhancement on one of the sites first. They needed to urgently secure the land while they negotiated for mainstream senior debt finance. We supported the land bridge in principle, but we still needed to conduct due diligence to protect our co-funder’s position by ensuring that we had a firm exit route. This was done by manually reviewing the viability of the eventual development schemes and the experience and financial covenants of the client, gaining a more holistic view. The

Initially focused on buy-to-let properties and bridging finance, but now often offering purchase and development finance too, [alternative lenders] also focus on niches in the underserviced regional SME sector improved the accessibility of funding to the SME market and that it will drive improvements to customer experience and speed of delivery, but that some things will remain constant. The involvement of humans to assess the level of risk and appropriate pricing, underwrite transactions and the need to balance cost of acquisition with lifetime value will remain. The Sancus platform mirrors this finding: an experienced credit team manages the funders’ risk, protecting both their exposure and, in turn, the sector’s reputation.

A

recent example of peer-to-peer funding in the commercial property sector was a £4.6m advance made by Sancus to a Liverpool developer to fund the purchase of

deal was funded by a combination of both Sancus’ own capital and funds from our portfolio of co-funders. It was completed in 21 days after we mobilised our team to visit the projects to understand their context as part of our credit assessment.

Sancus underwrote the deal first before bringing in its co-funder base. We believe this is the way forward for the peer-topeer/crowdfunding market as it provides total confidence to the developer that if they comply with the terms of the offer, a funder will always be there to support their business transaction.

Email us at brokerteam@natwest.com ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.

36 | NACFB Magazine

SPECIAL FEATURES

The effects of GDP fluctuations on the property sector

38 | NACFB Magazine

SPECIAL FEATURES

Following last year’s Brexit vote, UK economic growth performed better than most expected. However, the results of Q1 GDP in 2017 have indicated that this has now started to plateau.

NACFB Magazine | 39

SPECIAL FEATURES

The effects of GDP fluctuations on the property sector

38 | NACFB Magazine

SPECIAL FEATURES

Following last year’s Brexit vote, UK economic growth performed better than most expected. However, the results of Q1 GDP in 2017 have indicated that this has now started to plateau.

NACFB Magazine | 39

SPECIAL FEATURES

In the event that GDP growth continues to slow or even decline in the following quarters, a knock-on effect would likely be felt within the industry

R

ecent events and uncertainty in the UK have adversely impacted the economy in various ways: Brexit, the general election, the increasing deficit between rising inflation and wages, and affordability in the housing market being close to an all-time low in certain parts of the country. Because of this, it’s no surprise that households have tightened the purse strings and we have experienced a drop in economic growth. Despite predictions for the overall growth for the year being upgraded by the British Chambers of Commerce from 1.1% to 1.4%, it is still expected to remain well below its longterm average over the forecast period.

Quarterly GDP is often subject to revision and Q1 has been slow on growth for the last couple of years, followed by a stronger Q2, so it may be slightly premature to make any definitive

conclusions about what the future may hold.

Once political events and the recent changes to taxation finally settle, we might start to get a clearer picture of how the UK economy will be able to move forward. However, with Brexit negotiations likely to go on for the next two years, we could be a long way from seeing what the exact impact is.

With regards to the UK property market, recent statistics have indicated that mortgage applications are down in conjunction with a slowdown in house price growth, the biggest contributor to this being the greater London region.

Despite this, it’s still too early to conclude if this decline will continue. Q1 2016 also saw a rush in activity when investors and second home buyers were frantically trying to complete their purchases to avoid the changes in ownership and taxation, and this could explain some of the disparity we have seen. Although the property industry has been dealt a fair few blows, including recent changes to the buy-to-let industry, overall demand is still outweighing supply and rock-bottom interest rates have ensured a continued slow but steady increase in prices throughout the country (bar London), which in turn is supporting the appetite for lenders and developers to remain fairly active within the industry.

In the event that GDP growth continues to slow or even decline in the following quarters, a knock-on effect would likely be felt within the industry. We could see lenders readdress their appetites and home owners battle further with

40 | NACFB Magazine

the negative impact of rising inflation and stagnant wages. While the credit markets remain fairly liquid at the moment, it would be very much expected to see a correlation between negative GDP and a slowing credit market, which in turn could lead to a slowdown in the development sector.

L

ike most markets, the housing and development industry is extremely cyclical and has experienced strong growth over the past few years. But we now find ourselves at a fragile point in the market where political and economic factors could slow the industry and result in continued poor GDP results like we have seen in Q1.

While we are in a period of such unprecedented uncertainty in the UK, it is practically impossible to predict any sort of outcome. But looking at the bigger picture, the UK’s population is growing and the general consensus is that demand for housing still outweighs supply, therefore creating a solid, long-term base for the industry over the years to come.

Rishi Passi Founder and CEO Oblix Capital

SPECIAL FEATURES

In the event that GDP growth continues to slow or even decline in the following quarters, a knock-on effect would likely be felt within the industry

R

ecent events and uncertainty in the UK have adversely impacted the economy in various ways: Brexit, the general election, the increasing deficit between rising inflation and wages, and affordability in the housing market being close to an all-time low in certain parts of the country. Because of this, it’s no surprise that households have tightened the purse strings and we have experienced a drop in economic growth. Despite predictions for the overall growth for the year being upgraded by the British Chambers of Commerce from 1.1% to 1.4%, it is still expected to remain well below its longterm average over the forecast period.

Quarterly GDP is often subject to revision and Q1 has been slow on growth for the last couple of years, followed by a stronger Q2, so it may be slightly premature to make any definitive

conclusions about what the future may hold.

Once political events and the recent changes to taxation finally settle, we might start to get a clearer picture of how the UK economy will be able to move forward. However, with Brexit negotiations likely to go on for the next two years, we could be a long way from seeing what the exact impact is.

With regards to the UK property market, recent statistics have indicated that mortgage applications are down in conjunction with a slowdown in house price growth, the biggest contributor to this being the greater London region.

Despite this, it’s still too early to conclude if this decline will continue. Q1 2016 also saw a rush in activity when investors and second home buyers were frantically trying to complete their purchases to avoid the changes in ownership and taxation, and this could explain some of the disparity we have seen. Although the property industry has been dealt a fair few blows, including recent changes to the buy-to-let industry, overall demand is still outweighing supply and rock-bottom interest rates have ensured a continued slow but steady increase in prices throughout the country (bar London), which in turn is supporting the appetite for lenders and developers to remain fairly active within the industry.

In the event that GDP growth continues to slow or even decline in the following quarters, a knock-on effect would likely be felt within the industry. We could see lenders readdress their appetites and home owners battle further with

40 | NACFB Magazine

the negative impact of rising inflation and stagnant wages. While the credit markets remain fairly liquid at the moment, it would be very much expected to see a correlation between negative GDP and a slowing credit market, which in turn could lead to a slowdown in the development sector.

L

ike most markets, the housing and development industry is extremely cyclical and has experienced strong growth over the past few years. But we now find ourselves at a fragile point in the market where political and economic factors could slow the industry and result in continued poor GDP results like we have seen in Q1.

While we are in a period of such unprecedented uncertainty in the UK, it is practically impossible to predict any sort of outcome. But looking at the bigger picture, the UK’s population is growing and the general consensus is that demand for housing still outweighs supply, therefore creating a solid, long-term base for the industry over the years to come.

Rishi Passi Founder and CEO Oblix Capital

SPECIAL FEATURES

Taking another glance at portfolio buy-to-let The BTL market in Britain is going through nothing less than a transformation, possibly the biggest in its history. Not only have the last 12 months brought about changes to tax relief for BTL landlords but the new stamp duty levy on investment properties, announced in the 2015 summer Budget, also became a reality.

Andy Hallett Director of real estate finance Metro Bank

W

hat’s more, Brexit and the general election, as well as affordability changes proposed by the PRA, have added a further layer of uncertainty to an already complex landscape.

When it comes to the implications of these changes on the portfolio BTL market, it may well be too soon to say. The key is to plan, take professional advice and act accordingly.

With calls to abolish the so-called tenant tax

March Budget was uncharacteristically but noticeably neutral on the topic. According to the National Landlords Association, there has been a 500% increase in the number of landlords setting up limited companies.

The trade body also revealed that over the last year, more than 100,000 landlords formed limited companies in order to beat the tax changes. Alongside this, a significant number of landlords are beginning to look towards commercial loans to fund purchases. Solutions and work-arounds are being found.

In property hotspots and commuter towns, we continue to see demand for properties outstrip supply, even with the easing of

than buying – another potential opportunity for portfolio landlords to expand.

When it comes to the shake-up in stamp duty, most landlords see it as a cost of doing business that can be offset during the course of the investment – though whether these costs are passed on to the tenants, resulting in higher rents and heavier tenant deposits, remains still to be seen.

At Metro Bank, we have responded to these changes by refreshing our professional BTL range to meet the needs of an even broader range of customers - from a first-time, single property investor to a professional landlord with a portfolio of rental properties.

When it comes to the shake-up in stamp duty, most landlords see it as a cost of doing business that can be offset during the course of the investment

and to reverse the stamp duty surcharge on investment properties and second homes falling on deaf ears, for many professional landlords the ‘denial’ phase is well and truly over, and the reality of closer management, particularly around management costs, has hit home.

There has been some concern in professional landlord quarters that the tax treatment for special purpose vehicles may be reviewed by the Treasury to address any drop in tax revenues due to lack of activity. In reality, it is extremely complicated to change tax arrangements for corporations. The

42 | NACFB Magazine

permitted development rights. This has resulted in additional properties entering the rental and first-time buyer markets.

According to the Halifax Price Index, overall UK house price growth has stalled recently (average house prices across the country actually fell by 0.2% in the three months to April 2017 – the first quarterly fall since 2012) and with the added constraints of stricter affordability criteria, housing market activity and prices are likely to be weighed down somewhat over the coming quarters.

However, this slowdown should feed through into improved demand in the rental sector, as occupiers gravitate towards renting rather

Our loans are available to individuals as well as limited companies, and through our dedicated relationship management and individual underwriting approach we remain strongly committed to this sector and keen to support both existing and potential customers with their borrowing requirements.

SPEED MEETS FLEXIBILITY 020 7655 3388

FAST PROPERTY FINANCE At Commercial Acceptances speed alone is not enough.

Speak straight to decision makers: a quick & personal service. No arrangement fees, no extension fees and no end fees.

Interest charged from only 0.75% per calendar month.

Your property may be repossessed if you do not keep up on your mortgage repayments or any other debt secured on it. A rate from 0.75% will be chargeable on the amount borrowed every calendar month. However rates are subject to change and will increase or decrease in line with movements in 3m LIBOR (The London Inter-Bank Offered Rate For Three Month Sterling Deposits). Rates will be adjusted on each calendar month anniversary of the facility. The overall cost for comparison is 10.6% APR.

SPECIAL FEATURES

Taking another glance at portfolio buy-to-let The BTL market in Britain is going through nothing less than a transformation, possibly the biggest in its history. Not only have the last 12 months brought about changes to tax relief for BTL landlords but the new stamp duty levy on investment properties, announced in the 2015 summer Budget, also became a reality.

Andy Hallett Director of real estate finance Metro Bank

W

hat’s more, Brexit and the general election, as well as affordability changes proposed by the PRA, have added a further layer of uncertainty to an already complex landscape.

When it comes to the implications of these changes on the portfolio BTL market, it may well be too soon to say. The key is to plan, take professional advice and act accordingly.

With calls to abolish the so-called tenant tax

March Budget was uncharacteristically but noticeably neutral on the topic. According to the National Landlords Association, there has been a 500% increase in the number of landlords setting up limited companies.

The trade body also revealed that over the last year, more than 100,000 landlords formed limited companies in order to beat the tax changes. Alongside this, a significant number of landlords are beginning to look towards commercial loans to fund purchases. Solutions and work-arounds are being found.

In property hotspots and commuter towns, we continue to see demand for properties outstrip supply, even with the easing of

than buying – another potential opportunity for portfolio landlords to expand.

When it comes to the shake-up in stamp duty, most landlords see it as a cost of doing business that can be offset during the course of the investment – though whether these costs are passed on to the tenants, resulting in higher rents and heavier tenant deposits, remains still to be seen.

At Metro Bank, we have responded to these changes by refreshing our professional BTL range to meet the needs of an even broader range of customers - from a first-time, single property investor to a professional landlord with a portfolio of rental properties.

When it comes to the shake-up in stamp duty, most landlords see it as a cost of doing business that can be offset during the course of the investment

and to reverse the stamp duty surcharge on investment properties and second homes falling on deaf ears, for many professional landlords the ‘denial’ phase is well and truly over, and the reality of closer management, particularly around management costs, has hit home.

There has been some concern in professional landlord quarters that the tax treatment for special purpose vehicles may be reviewed by the Treasury to address any drop in tax revenues due to lack of activity. In reality, it is extremely complicated to change tax arrangements for corporations. The

42 | NACFB Magazine

permitted development rights. This has resulted in additional properties entering the rental and first-time buyer markets.

According to the Halifax Price Index, overall UK house price growth has stalled recently (average house prices across the country actually fell by 0.2% in the three months to April 2017 – the first quarterly fall since 2012) and with the added constraints of stricter affordability criteria, housing market activity and prices are likely to be weighed down somewhat over the coming quarters.

However, this slowdown should feed through into improved demand in the rental sector, as occupiers gravitate towards renting rather

Our loans are available to individuals as well as limited companies, and through our dedicated relationship management and individual underwriting approach we remain strongly committed to this sector and keen to support both existing and potential customers with their borrowing requirements.

SPEED MEETS FLEXIBILITY 020 7655 3388

FAST PROPERTY FINANCE At Commercial Acceptances speed alone is not enough.

Speak straight to decision makers: a quick & personal service. No arrangement fees, no extension fees and no end fees.

Interest charged from only 0.75% per calendar month.

Your property may be repossessed if you do not keep up on your mortgage repayments or any other debt secured on it. A rate from 0.75% will be chargeable on the amount borrowed every calendar month. However rates are subject to change and will increase or decrease in line with movements in 3m LIBOR (The London Inter-Bank Offered Rate For Three Month Sterling Deposits). Rates will be adjusted on each calendar month anniversary of the facility. The overall cost for comparison is 10.6% APR.

Industry | guides

Talking points for the North The appetite to get on the property ladder in the North is greater than ever. Following a £556m cash injection from the government for investment and regeneration in the area, the opportunities are attracting a growing number of prospective developers.

I

n particular, it’s an interesting time to talk to developers who have traditionally built portfolios of projects solely located in London and the South. Increasingly we are observing these same developers tuning into the depth and variety of housing stock and viable development land available in the North. Our quarterly Buy-to-let Index reports regularly rank northern cities, such as Liverpool and Manchester, very highly for their rental yield potential, and recent reports show capital gains outpacing those in London and the South East.

44 | NACFB Magazine

So what is prompting this surge in northern English property potential?

Undoubtedly, it’s driven by business and the economy. Initiatives such as the Northern Powerhouse – set up to encourage the coming together of the great cities, towns and more rural communities of the North of England to stimulate the UK economy – have been generating interest and demand for property in the area.

Big business continues to migrate to Northern cities too. As more head offices set up shop in the area, the economy seems to be benefiting from the boost. In Manchester, for

example, Salford’s Media City, which is currently home to over 2,300 BBC staff, has prompted the proliferation - or relocation - of vast numbers of media, creative industries and technology businesses to Salford in recent years, putting this area firmly on the business sector’s map. Returning to the Salford example again, it was promising to see in June the news that two further Grade A office blocks, comprising 350,000ft of brand new space, have been commissioned in the area, estimated to be worth over £100m.

More commerce will no doubt lead to more demand for homes.

NACFB Magazine | 45

Industry | guides

Talking points for the North The appetite to get on the property ladder in the North is greater than ever. Following a £556m cash injection from the government for investment and regeneration in the area, the opportunities are attracting a growing number of prospective developers.

I

n particular, it’s an interesting time to talk to developers who have traditionally built portfolios of projects solely located in London and the South. Increasingly we are observing these same developers tuning into the depth and variety of housing stock and viable development land available in the North. Our quarterly Buy-to-let Index reports regularly rank northern cities, such as Liverpool and Manchester, very highly for their rental yield potential, and recent reports show capital gains outpacing those in London and the South East.

44 | NACFB Magazine

So what is prompting this surge in northern English property potential?

Undoubtedly, it’s driven by business and the economy. Initiatives such as the Northern Powerhouse – set up to encourage the coming together of the great cities, towns and more rural communities of the North of England to stimulate the UK economy – have been generating interest and demand for property in the area.

Big business continues to migrate to Northern cities too. As more head offices set up shop in the area, the economy seems to be benefiting from the boost. In Manchester, for

example, Salford’s Media City, which is currently home to over 2,300 BBC staff, has prompted the proliferation - or relocation - of vast numbers of media, creative industries and technology businesses to Salford in recent years, putting this area firmly on the business sector’s map. Returning to the Salford example again, it was promising to see in June the news that two further Grade A office blocks, comprising 350,000ft of brand new space, have been commissioned in the area, estimated to be worth over £100m.

More commerce will no doubt lead to more demand for homes.

NACFB Magazine | 45

GUIDES

With business comes employment too, and we are seeing a surge in interest for commuter towns in northern areas. While the large city centres are performing well, due to the influx of jobs in recent times, the surrounding countryside has much to offer investors. Most notably, we see property investors with a national scope looking to northern commuter areas for better-value housing projects.

For example, the towns and villages of Cheshire, such as Altrincham, Prestbury and Cheadle, offer fantastic housing for both families and professionals with many homes being developed into large, desirable family homes. With the ability to reach London in just a few hours by train,

these leafy suburbs are now becoming commutable distances to the south for some people, many of whom need to commute to London only occasionally for their roles. And for those after more access to the countryside, the Peak District National Park is in easy reach, offering visitors breath-taking views and fantastic opportunities for cycling, walking and wildlife watching.

A

t LendInvest, we’re actively working with developers in all these areas to bring their projects to life. There are, of course, many reasons why post-financial crisis appetite to property investment and development has been slower to spread in the north, in comparison with the south. One distinctive reason is the

Location

Current tendering condition

Dublin

Hot

Amsterdam

Hot

London

Hot

Madrid

Warm

UK North

Warm

Warsaw

Warm

Munich

Warm

Paris

Warm

UK Central

Warm

UK South

Warm

Future market outlook

challenge presented by connectivity in the region. While HS2 promises to further boost connectivity between the North and London, to the extent that commuting between the north and south might be a realistic option for even the most lethargic among us, it’s still far too difficult to navigate within the region itself. Take, for instance, the journey between Sheffield and Manchester - two seats of the North’s industrial power. Quick access is not even poor, it’s practically non-existent.

This means that there will be no quick fixes and the speculative property investors and developers in the North must take a long-term view.

With various large-scale transport and regeneration schemes currently underway or planned, not just in the North but around the whole of the UK for the next couple of years, now is the time for both brokers and developers to do their research.

Choosing the right location to build new housing is one of the single most important decisions to be made in the development process, and the North is currently looking like a golden opportunity.

Matthew Tooth Chief commercial officer LendInvest

Warm

Zurich N. Ireland

Lukewarm

Scotland

Lukewarm

Moscow

Cold

Region

Market

Europe

Dublin Moscow London

Source: The International Construction Market Survey 2017, Turner & Townsend

Cost inflation in 2016

Forcast cost inflation in 2017

7.0% 6.0% 5.0%

Warsaw

4.0%

UK Central

3.8%

UK South

3.5%

Amsterdam

3.0%

8.0% 5.0% 4.1% 2.0% 3.5% 2.0% 3.0%

UK North

2.9%

Scotland

2.3%

2.3%

Munich

1.9%

2.0%

Northern Ireland

A FS GROU P

1.8%

brokerinabox.finance

3.6%

2.0%

Zurich

0.5%

1.0%

Madrid

0.3%

0.5%

Paris

0.0%

0.5%

WE’VE GOT YOU COVERED

STRONGER TOGETHER

visit brokerinabox.finance for more information 46 | NACFB Magazine

Asset Finance Solutions (UK) Ltd and Synergy Commercial Finance Limited are an Appointed Representative of AFS Compliance Ltd, which is Authorised and Regulated by the Financial Conduct Authority under number 625035.

GUIDES

With business comes employment too, and we are seeing a surge in interest for commuter towns in northern areas. While the large city centres are performing well, due to the influx of jobs in recent times, the surrounding countryside has much to offer investors. Most notably, we see property investors with a national scope looking to northern commuter areas for better-value housing projects.

For example, the towns and villages of Cheshire, such as Altrincham, Prestbury and Cheadle, offer fantastic housing for both families and professionals with many homes being developed into large, desirable family homes. With the ability to reach London in just a few hours by train,

these leafy suburbs are now becoming commutable distances to the south for some people, many of whom need to commute to London only occasionally for their roles. And for those after more access to the countryside, the Peak District National Park is in easy reach, offering visitors breath-taking views and fantastic opportunities for cycling, walking and wildlife watching.

A

t LendInvest, we’re actively working with developers in all these areas to bring their projects to life. There are, of course, many reasons why post-financial crisis appetite to property investment and development has been slower to spread in the north, in comparison with the south. One distinctive reason is the

Location

Current tendering condition

Dublin

Hot

Amsterdam

Hot

London

Hot

Madrid

Warm

UK North

Warm

Warsaw

Warm

Munich

Warm

Paris

Warm

UK Central

Warm

UK South

Warm

Future market outlook

challenge presented by connectivity in the region. While HS2 promises to further boost connectivity between the North and London, to the extent that commuting between the north and south might be a realistic option for even the most lethargic among us, it’s still far too difficult to navigate within the region itself. Take, for instance, the journey between Sheffield and Manchester - two seats of the North’s industrial power. Quick access is not even poor, it’s practically non-existent.

This means that there will be no quick fixes and the speculative property investors and developers in the North must take a long-term view.

With various large-scale transport and regeneration schemes currently underway or planned, not just in the North but around the whole of the UK for the next couple of years, now is the time for both brokers and developers to do their research.

Choosing the right location to build new housing is one of the single most important decisions to be made in the development process, and the North is currently looking like a golden opportunity.

Matthew Tooth Chief commercial officer LendInvest

Warm

Zurich N. Ireland

Lukewarm

Scotland

Lukewarm

Moscow

Cold

Region

Market

Europe

Dublin Moscow London

Source: The International Construction Market Survey 2017, Turner & Townsend

Cost inflation in 2016

Forcast cost inflation in 2017

7.0% 6.0% 5.0%

Warsaw

4.0%

UK Central

3.8%

UK South

3.5%

Amsterdam

3.0%

8.0% 5.0% 4.1% 2.0% 3.5% 2.0% 3.0%

UK North

2.9%

Scotland

2.3%

2.3%

Munich

1.9%

2.0%

Northern Ireland

A FS GROU P

1.8%

brokerinabox.finance

3.6%

2.0%

Zurich

0.5%

1.0%

Madrid

0.3%

0.5%

Paris

0.0%

0.5%

WE’VE GOT YOU COVERED

STRONGER TOGETHER

visit brokerinabox.finance for more information 46 | NACFB Magazine

Asset Finance Solutions (UK) Ltd and Synergy Commercial Finance Limited are an Appointed Representative of AFS Compliance Ltd, which is Authorised and Regulated by the Financial Conduct Authority under number 625035.

GUIDES

GUIDES

I

s what the client wants always what their business needs? Or could taking a little bit more time to better understand the client’s business make a significant difference to them?

Is it time to look at asset finance from a new perspective?

Over the past few years, there seems to have been a shift in the asset finance market. The industry appears to have become more rigid and more focused on the transaction itself, rather than the business we are supposed to be helping.

That isn’t to say there’s no place for the transactional approach – of course there is. In many cases, this will be the most efficient use of a broker’s time. But are we missing a trick if we put too much emphasis on doing things this way, or could a different approach be more of a benefit to SMEs?

For example, let’s say a haulage company client wants finance for a new truck, but they also want that finance to be at the cheapest rate, with the smallest deposit, financed over the longest period with a VAT deferral.

The transactional approach would most likely get the finance arranged as requested, then move on to the next one. The company has got what they want, but was it what their business actually needed?

The flags of the small deposit, the VAT deferral and the long term could suggest something else. The business might have short-term cash flow problems and the truck may be needed to fulfil a new contract, so the running costs of this (before they start being paid on the new contract) need to be considered. It would be possible to uncover these needs if the time was taken to gain a greater

options available to them? Surely it’s our job to help them utilise these in the best way possible, to help their businesses develop and grow.

Greater understanding of a client’s business allows for: Funding to be tailored

This also creates new opportunities for the broker, both through repeat business and new clients impressed by the experiences of their peers.

S

pending time to understand a client’s needs is paramount.

The effort and attention to detail can make an enormous difference, both to the client and the reputation of their broker.

This approach is exactly what we offer at Praetura Asset Finance. We are seeing our business go from strength to strength and we believe this is down, in no small part, to the way we operate – client-focused and flexible.

We, as lenders, are not bound by restrictive procedures or set ways of doing things, which allows us to structure deals according to the specific needs of an individual client.

Every case is judged on its individual merits and each deal is underwritten

Terms to be adapted Alternative options to be highlighted Future needs, as well as immediate requirements to be identified develops, the understanding of clients’ businesses will too, so brokers can also be on hand to offer solutions to needs as of yet unidentified.

Yes, the personal approach to asset finance can be more time consuming, which is when working in partnership with a consultant lender like Praetura really comes into its own.

Brokers have our time, specialism and expertise as an additional set of resources at their disposal. The affiliation with a consultant lender also adds an extra dimension to the

As the relationship develops, the understanding of clients’ businesses will too, so brokers can also be on hand to offer solutions to needs as of yet unidentified understanding of the business.

By looking at the whole picture, we could perhaps find the business has another five trucks all running with different finance arrangements, taking up a significant chunk of its monthly expenditure. Refinancing existing assets could create additional cash for the new truck deposit and VAT, as well as an additional injection of working capital into the business and payments overall would either be similar or even reduced.

The client wanted finance for a new truck, but a refinance arrangement on multiple assets would be a greater benefit to the business.

Without our help, advice and expertise, are our clients aware of the range of

48 | NACFB Magazine

on a balanced risk and reward basis.

This adaptability is often necessary to find the best outcome for clients, which is something the transactional approach to asset finance cannot do.

Consequently, this allows our broker partners to build and develop the relationships they have with their clients, which also helps their business grow.

These relationships are then in place for the whole business cycle: at the beginning, when the extra time and understanding is needed; at the peak, when the transactional approach is the best way forward; and if there are unusual circumstances or difficult situations, which can make increased understanding necessary once again. As the relationship

levels of service they can offer.

We have a responsibility not just to show SMEs the difference that asset finance can make to their business, but the difference that our approach can make. If we rely too heavily on the transaction itself, we can’t make that difference and the businesses we are here to help are going to miss out on the best solution for their funding needs.

Mike Hartley Managing director Praetura Asset Finance

NACFB Magazine | 49

GUIDES

GUIDES

I

s what the client wants always what their business needs? Or could taking a little bit more time to better understand the client’s business make a significant difference to them?

Is it time to look at asset finance from a new perspective?

Over the past few years, there seems to have been a shift in the asset finance market. The industry appears to have become more rigid and more focused on the transaction itself, rather than the business we are supposed to be helping.

That isn’t to say there’s no place for the transactional approach – of course there is. In many cases, this will be the most efficient use of a broker’s time. But are we missing a trick if we put too much emphasis on doing things this way, or could a different approach be more of a benefit to SMEs?

For example, let’s say a haulage company client wants finance for a new truck, but they also want that finance to be at the cheapest rate, with the smallest deposit, financed over the longest period with a VAT deferral.

The transactional approach would most likely get the finance arranged as requested, then move on to the next one. The company has got what they want, but was it what their business actually needed?

The flags of the small deposit, the VAT deferral and the long term could suggest something else. The business might have short-term cash flow problems and the truck may be needed to fulfil a new contract, so the running costs of this (before they start being paid on the new contract) need to be considered. It would be possible to uncover these needs if the time was taken to gain a greater

options available to them? Surely it’s our job to help them utilise these in the best way possible, to help their businesses develop and grow.

Greater understanding of a client’s business allows for: Funding to be tailored

This also creates new opportunities for the broker, both through repeat business and new clients impressed by the experiences of their peers.

S

pending time to understand a client’s needs is paramount.

The effort and attention to detail can make an enormous difference, both to the client and the reputation of their broker.

This approach is exactly what we offer at Praetura Asset Finance. We are seeing our business go from strength to strength and we believe this is down, in no small part, to the way we operate – client-focused and flexible.

We, as lenders, are not bound by restrictive procedures or set ways of doing things, which allows us to structure deals according to the specific needs of an individual client.

Every case is judged on its individual merits and each deal is underwritten

Terms to be adapted Alternative options to be highlighted Future needs, as well as immediate requirements to be identified develops, the understanding of clients’ businesses will too, so brokers can also be on hand to offer solutions to needs as of yet unidentified.

Yes, the personal approach to asset finance can be more time consuming, which is when working in partnership with a consultant lender like Praetura really comes into its own.

Brokers have our time, specialism and expertise as an additional set of resources at their disposal. The affiliation with a consultant lender also adds an extra dimension to the

As the relationship develops, the understanding of clients’ businesses will too, so brokers can also be on hand to offer solutions to needs as of yet unidentified understanding of the business.

By looking at the whole picture, we could perhaps find the business has another five trucks all running with different finance arrangements, taking up a significant chunk of its monthly expenditure. Refinancing existing assets could create additional cash for the new truck deposit and VAT, as well as an additional injection of working capital into the business and payments overall would either be similar or even reduced.

The client wanted finance for a new truck, but a refinance arrangement on multiple assets would be a greater benefit to the business.

Without our help, advice and expertise, are our clients aware of the range of

48 | NACFB Magazine

on a balanced risk and reward basis.

This adaptability is often necessary to find the best outcome for clients, which is something the transactional approach to asset finance cannot do.

Consequently, this allows our broker partners to build and develop the relationships they have with their clients, which also helps their business grow.

These relationships are then in place for the whole business cycle: at the beginning, when the extra time and understanding is needed; at the peak, when the transactional approach is the best way forward; and if there are unusual circumstances or difficult situations, which can make increased understanding necessary once again. As the relationship

levels of service they can offer.

We have a responsibility not just to show SMEs the difference that asset finance can make to their business, but the difference that our approach can make. If we rely too heavily on the transaction itself, we can’t make that difference and the businesses we are here to help are going to miss out on the best solution for their funding needs.

Mike Hartley Managing director Praetura Asset Finance

NACFB Magazine | 49

Opinion | & commentary Thought leadership from our Patrons and Members

One potential benefit of regulation, should it arise, would be a universal method of calculating interest rates

Interest-only regulation could work Daniel Sproull Director Devon & Cornwall Securities

A

s the FCA announces another review into interest-only mortgages (the third since 2013), it is worth thinking about the implications this could have on commercial interest-only mortgages in the longer term.

In the wake of the financial crisis of 2007/8, interest-only mortgages came in for a lot of criticism. Residential interest-only mortgages now stand at about 1% of the whole residential mortgage market, down from some 83% in 1988. According to the FCA’s business plan for the coming year, about 1.8 million UK home owners currently have outstanding interest-only mortgages (excluding buy-to-let). It goes on to suggest that many do not have an appropriate strategy to repay them.

While statistics show just 27 lenders now offering interest-only residential loans, compared with more than 80 before the financial crisis, the vast majority of commercial mortgage providers, and particularly specialist or bridging lenders

do, of course, continue to provide interestonly mortgages. There is good reason why, thus far, the FCA has not sought to regulate commercial mortgages. The commercial mortgage borrower is in a very different position from that of the residential. Most residential mortgages are taken out over a long term, typically 25 years and, obviously, are secured on the person’s home. Most commercial mortgages, on the other hand, tend to be on a shorter term and taken out for a variety of different purposes.

It has long been thought that the commercial borrower needs the flexibility to be able to decide what deal suits him, her or it and does not need the benefit of such rigid regulations. One of the reasons mortgage regulation was originally introduced was because borrowers were being sold inappropriate mortgages by some brokers.

In the view of this lender, commercial mortgage brokers can play an absolutely vital role in making certain that borrowers get the right deal for them. There are obviously a very wide range of products on the market. In the area occupied by Devon and Cornwall Securities Limited (openended, non-status commercial lending) there are very few, if any, competitors. Our deals are often compared with that of a bridging lender. This is usually inappropriate

but, bearing in mind the myriad of different ways a mortgage offer can be made, it is often difficult directly to compare one with the other.

One potential benefit of regulation, should it arise, would be a universal method of calculating interest rates, as with the prescribed method of calculation of APR in residential mortgage cases. This would enable us, for example, more easily to demonstrate that an offer we make is actually better than an offer at a lower interest rate but with enormous fees.

The FCA may, at some stage, turn its attention to commercial interest-only mortgages. As and when it does, we must all be in a position to explain why these sorts of deals differ from the type of residential mortgage contracts where borrowers may find themselves having to sell their home in a hurry if they haven’t got a repayment vehicle in place. NACFB brokers can play a vital role in making sure that commercial interest-only mortgages are provided to those for whom they are appropriate.

LEADING THE PACK IN ALTERNATIVE FINANCE Asset Advantage is an award winning, privately owned, finance business specialising in providing asset finance and loans to SME businesses throughout the UK via a premium panel of introducers.

Our finance products utilise a combination of experience, expertise and uncompromising business processes to deliver the perfect solution to our clients.

To find out more about joining our select panel of introducers and our award winning SME finance solutions please call Tracy Millsom on:

01256 316 200 or visit our website on:

www.assetadvantage.co.uk Efficient Finance is our Advantage Third Floor, Matrix House, Basing View, Basingstoke, Hampshire, RG21 4DZ

Follow the Asset Advantage Carrera Cup team @AARaceTeam

50 | NACFB Magazine

Opinion | & commentary Thought leadership from our Patrons and Members

One potential benefit of regulation, should it arise, would be a universal method of calculating interest rates

Interest-only regulation could work Daniel Sproull Director Devon & Cornwall Securities

A

s the FCA announces another review into interest-only mortgages (the third since 2013), it is worth thinking about the implications this could have on commercial interest-only mortgages in the longer term.

In the wake of the financial crisis of 2007/8, interest-only mortgages came in for a lot of criticism. Residential interest-only mortgages now stand at about 1% of the whole residential mortgage market, down from some 83% in 1988. According to the FCA’s business plan for the coming year, about 1.8 million UK home owners currently have outstanding interest-only mortgages (excluding buy-to-let). It goes on to suggest that many do not have an appropriate strategy to repay them.

While statistics show just 27 lenders now offering interest-only residential loans, compared with more than 80 before the financial crisis, the vast majority of commercial mortgage providers, and particularly specialist or bridging lenders

do, of course, continue to provide interestonly mortgages. There is good reason why, thus far, the FCA has not sought to regulate commercial mortgages. The commercial mortgage borrower is in a very different position from that of the residential. Most residential mortgages are taken out over a long term, typically 25 years and, obviously, are secured on the person’s home. Most commercial mortgages, on the other hand, tend to be on a shorter term and taken out for a variety of different purposes.

It has long been thought that the commercial borrower needs the flexibility to be able to decide what deal suits him, her or it and does not need the benefit of such rigid regulations. One of the reasons mortgage regulation was originally introduced was because borrowers were being sold inappropriate mortgages by some brokers.

In the view of this lender, commercial mortgage brokers can play an absolutely vital role in making certain that borrowers get the right deal for them. There are obviously a very wide range of products on the market. In the area occupied by Devon and Cornwall Securities Limited (openended, non-status commercial lending) there are very few, if any, competitors. Our deals are often compared with that of a bridging lender. This is usually inappropriate

but, bearing in mind the myriad of different ways a mortgage offer can be made, it is often difficult directly to compare one with the other.

One potential benefit of regulation, should it arise, would be a universal method of calculating interest rates, as with the prescribed method of calculation of APR in residential mortgage cases. This would enable us, for example, more easily to demonstrate that an offer we make is actually better than an offer at a lower interest rate but with enormous fees.

The FCA may, at some stage, turn its attention to commercial interest-only mortgages. As and when it does, we must all be in a position to explain why these sorts of deals differ from the type of residential mortgage contracts where borrowers may find themselves having to sell their home in a hurry if they haven’t got a repayment vehicle in place. NACFB brokers can play a vital role in making sure that commercial interest-only mortgages are provided to those for whom they are appropriate.

LEADING THE PACK IN ALTERNATIVE FINANCE Asset Advantage is an award winning, privately owned, finance business specialising in providing asset finance and loans to SME businesses throughout the UK via a premium panel of introducers.

Our finance products utilise a combination of experience, expertise and uncompromising business processes to deliver the perfect solution to our clients.

To find out more about joining our select panel of introducers and our award winning SME finance solutions please call Tracy Millsom on:

01256 316 200 or visit our website on:

www.assetadvantage.co.uk Efficient Finance is our Advantage Third Floor, Matrix House, Basing View, Basingstoke, Hampshire, RG21 4DZ

Follow the Asset Advantage Carrera Cup team @AARaceTeam

50 | NACFB Magazine

OPINION & COMMENTARY

Technology or tradition?

Let’s aim for both Stuart Lunn CEO LendingCrowd

Unlike our developers, we don’t build walls

W

ith parameter-driven models and algorithms increasingly driving lending decisions, brokers are becoming frustrated by the inability of lenders to shape deals. While technology is key to building speed and efficiencies into lenders’ service strategies, is there still a role for the human underwriter?

Borrowers and brokers are gaining confidence in new routes to finance; from the borrower’s perspective, the ease of the application process, speed of decision making, transparency of interest rates and fees and the overall short time taken from application to availability of funds are major attractions. While the cost of funds to borrowers may be sometimes higher than through traditional routes, this is more than compensated for by the perceived ease of the process and, more importantly, the ability to raise the funding required to grow their business and take it to the next level.

These advantages are often driven by technology and automated processes, including an increasing use of data and algorithms to make credit decisions and price risk. The level of automated decision making will continue to increase, partly driven by new technologies but, importantly, it facilitates legislation and regulation. For example, the Open Banking initiative, due to launch in 2018, will provide data to nonbank lenders that is currently unavailable or difficult to access.

Lending without the box ticking Our development finance specialists deal with each case personally, and can usually help customers who don’t fit neatly into the more traditional banks’ rules. product fit and security requirements all play a part in deciding the appropriate method of credit decision. A fully automated decision process is not necessarily appropriate for larger, more complex deals in contrast to smaller, volume-based loan books, where strict parameters built into algorithms mean that exceptions are not handled well. The belief on the part of the volume lender is that the velocity in building a loan book and market share outweighs the risk of missing out on deals that require a more traditional hands-on approach to underwriting.

However, it is imperative that new players demonstrate the robustness of the underwriting processes both for the benefit of the borrower, to ensure that their request is receiving a fair and thorough assessment, but also so that the capital suppliers have confidence that the deal they are backing has been the subject of a rigorous and effective underwriting process.

Non-bank funders therefore need to embrace the basic tenants of good lending practice to establish their creditability and maintain it thereafter. Not tainted by previous experience, they also have the opportunity to assess each proposition on its own merits rather than, as is more often the case now at the smaller end of the market, with a generic approach. For sub-£500,000 lending, we believe that the ability to use technology but not be dictated by narrow parameters is key, and that having an experienced underwriting team is crucial to providing solutions appropriate to each case.

We believe that, while use of data and technology is crucial, the market segment,

At the end of the day, for non-bank funders to become the new norm it is

Regardless of the level of automation, the key elements of a robust underwriting process remain: Affordability/ability to repay

For more information about our development finance products please contact us on 020 7036 2000 or email development@masthaven.co.uk

Previous financial performance Sustainability/potential of the sector the business operates in Quality of the management team and their relative experience in the sector they operate in Availability of a second repayment source (security) Pricing of risk imperative they get their credit process absolutely right. They need to demonstrate that the algorithms are used in a fashion appropriate to the size and complexity of the requirement, and mustn’t ignore the tried and tested methods used by the banks for hundreds of years.

masthaven.co.uk Your property, provided as security for the loan, may be repossessed if you do not keep up with payments.

Masthaven Bank Limited is a company registered in England & Wales with registration number 09660012 and whose registered office is at: 11 Soho Street, London W1D 3AD. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Firm reference number 719354).

The “Masthaven” name and logos and all other brands, names, logos, marks and slogans on this document are the trademarks or service marks of us or our licensors.

52 | NACFB Magazine

OPINION & COMMENTARY

Technology or tradition?

Let’s aim for both Stuart Lunn CEO LendingCrowd

Unlike our developers, we don’t build walls

W

ith parameter-driven models and algorithms increasingly driving lending decisions, brokers are becoming frustrated by the inability of lenders to shape deals. While technology is key to building speed and efficiencies into lenders’ service strategies, is there still a role for the human underwriter?

Borrowers and brokers are gaining confidence in new routes to finance; from the borrower’s perspective, the ease of the application process, speed of decision making, transparency of interest rates and fees and the overall short time taken from application to availability of funds are major attractions. While the cost of funds to borrowers may be sometimes higher than through traditional routes, this is more than compensated for by the perceived ease of the process and, more importantly, the ability to raise the funding required to grow their business and take it to the next level.

These advantages are often driven by technology and automated processes, including an increasing use of data and algorithms to make credit decisions and price risk. The level of automated decision making will continue to increase, partly driven by new technologies but, importantly, it facilitates legislation and regulation. For example, the Open Banking initiative, due to launch in 2018, will provide data to nonbank lenders that is currently unavailable or difficult to access.

Lending without the box ticking Our development finance specialists deal with each case personally, and can usually help customers who don’t fit neatly into the more traditional banks’ rules. product fit and security requirements all play a part in deciding the appropriate method of credit decision. A fully automated decision process is not necessarily appropriate for larger, more complex deals in contrast to smaller, volume-based loan books, where strict parameters built into algorithms mean that exceptions are not handled well. The belief on the part of the volume lender is that the velocity in building a loan book and market share outweighs the risk of missing out on deals that require a more traditional hands-on approach to underwriting.

However, it is imperative that new players demonstrate the robustness of the underwriting processes both for the benefit of the borrower, to ensure that their request is receiving a fair and thorough assessment, but also so that the capital suppliers have confidence that the deal they are backing has been the subject of a rigorous and effective underwriting process.

Non-bank funders therefore need to embrace the basic tenants of good lending practice to establish their creditability and maintain it thereafter. Not tainted by previous experience, they also have the opportunity to assess each proposition on its own merits rather than, as is more often the case now at the smaller end of the market, with a generic approach. For sub-£500,000 lending, we believe that the ability to use technology but not be dictated by narrow parameters is key, and that having an experienced underwriting team is crucial to providing solutions appropriate to each case.

We believe that, while use of data and technology is crucial, the market segment,

At the end of the day, for non-bank funders to become the new norm it is

Regardless of the level of automation, the key elements of a robust underwriting process remain: Affordability/ability to repay

For more information about our development finance products please contact us on 020 7036 2000 or email development@masthaven.co.uk

Previous financial performance Sustainability/potential of the sector the business operates in Quality of the management team and their relative experience in the sector they operate in Availability of a second repayment source (security) Pricing of risk imperative they get their credit process absolutely right. They need to demonstrate that the algorithms are used in a fashion appropriate to the size and complexity of the requirement, and mustn’t ignore the tried and tested methods used by the banks for hundreds of years.

masthaven.co.uk Your property, provided as security for the loan, may be repossessed if you do not keep up with payments.

Masthaven Bank Limited is a company registered in England & Wales with registration number 09660012 and whose registered office is at: 11 Soho Street, London W1D 3AD. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Firm reference number 719354).

The “Masthaven” name and logos and all other brands, names, logos, marks and slogans on this document are the trademarks or service marks of us or our licensors.

52 | NACFB Magazine

BRIDGING FINANCE OPINION & COMMENTARY

Regulation: who is responsible?

Two years on from the FCA taking over from the OFT, I am still hearing the same phrases from some brokers: “I don’t need to be regulated. I am a commercial finance broker and everything that I do is unregulated; all the products are unregulated.”

Norman Chambers MD NACFB

W

hile it’s true that most of the products are unregulated, it’s the activity that is regulated. In the Perimeter Guidance manual (2.7.7E) and its definitions, the FCA provides a broad outline for credit broking. This outline makes it clear that anyone effecting an introduction to an individual for finance, which includes sole traders or partnerships of three or less, needs to be regulated by the FCA. They must hold, as a minimum, some level of credit broking permissions.

The most common response I receive is that the lender will only lend to limited companies, which means that lending is out of scope. Then we address the hypothetical issue: if an unregulated broker is introducing limited companies to one lender but then introducing regulated deals to another funder, or to a broker who is regulated, is this not illegal?

You might not know that here at the NACFB we still receive enquiries from individuals wishing to join as unregulated Members because all they do is introduce business for limited companies. Yet, when questioned

54 | NACFB Magazine

Our online Automated Valuations (AVMs) for bridging finance can be generated in an instant to help your customers seal the deal faster.

At only £99 at the point of application, they could save money too.

Automated valuations available subject to criteria Quick decisions to meet tight transaction deadlines Dedicated underwriter from DIP to completion about their activities, it becomes clear they are looking to avoid adhering to the rules of the regulator. Unregulated brokers having a website that says they can provide lending solutions to SMEs can be misleading.

of regulation and they must hold credit broking permissions. What’s worse, some funders continue to accept the business.

The same can be argued for surveyors and valuers who are not part of DPBs.

Take a look also at invoice discounting and factoring brokers. Yes, I know this part of the market is not regulated, but when a sole trader deal is introduced to a funder, you cannot then subsequently introduce the client’s banking requirements which include outstanding loans. Equally, the funder should not be accepting this if the broker is not regulated.

Humans are fascinated with trying to bend the rules. How often do footballers try to steal a few extra yards for a throw-in when the ball is kicked off? We are now in Wimbledon season, where the standards are that players must play in whites, but there will still be players pushing the boundaries by wearing different colours in the hope they can get away with it. These acts of rule-flexing are relatively visible; brokers and funders should have less margin for pushing the boundaries of what’s acceptable.

Then there are accountants that are not part of designated professional bodies (DPB).

They still believe they can introduce clients who are sole traders and partnerships direct to lenders, because that is what they have always done. Well, the simple fact is that they can’t do that, because it’s a breach

NACFB Compliance Services, at www.nacfbcompliance.co.uk, is the place to go for expert advice and clarity.

If you wish to discuss a case please contact our Intermediary Support Team for more information.

Call us

0800 116 4385

Visit us

precisemortgages.co.uk

Follow us

FOR INTERMEDIARY USE ONLY.

Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and NACFB Magazine | 55 regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549).

Registered in England and Wales (company number 06749498). Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.

01738 (1)

So what about the lenders and funders? How well have they adapted to regulation? Some have opted not to be regulated and when I ask them about that decision, they explain to me that everything they do is unregulated and that all their products are unregulated.

That’s when I ask who introduces business to them and what due diligence they undertake. Surely they need to be certain brokers are not trading illegally?

Online bridging valuations in an instant

BRIDGING FINANCE OPINION & COMMENTARY

Regulation: who is responsible?

Two years on from the FCA taking over from the OFT, I am still hearing the same phrases from some brokers: “I don’t need to be regulated. I am a commercial finance broker and everything that I do is unregulated; all the products are unregulated.”

Norman Chambers MD NACFB

W

hile it’s true that most of the products are unregulated, it’s the activity that is regulated. In the Perimeter Guidance manual (2.7.7E) and its definitions, the FCA provides a broad outline for credit broking. This outline makes it clear that anyone effecting an introduction to an individual for finance, which includes sole traders or partnerships of three or less, needs to be regulated by the FCA. They must hold, as a minimum, some level of credit broking permissions.

The most common response I receive is that the lender will only lend to limited companies, which means that lending is out of scope. Then we address the hypothetical issue: if an unregulated broker is introducing limited companies to one lender but then introducing regulated deals to another funder, or to a broker who is regulated, is this not illegal?

You might not know that here at the NACFB we still receive enquiries from individuals wishing to join as unregulated Members because all they do is introduce business for limited companies. Yet, when questioned

54 | NACFB Magazine

Our online Automated Valuations (AVMs) for bridging finance can be generated in an instant to help your customers seal the deal faster.

At only £99 at the point of application, they could save money too.

Automated valuations available subject to criteria Quick decisions to meet tight transaction deadlines Dedicated underwriter from DIP to completion about their activities, it becomes clear they are looking to avoid adhering to the rules of the regulator. Unregulated brokers having a website that says they can provide lending solutions to SMEs can be misleading.

of regulation and they must hold credit broking permissions. What’s worse, some funders continue to accept the business.

The same can be argued for surveyors and valuers who are not part of DPBs.

Take a look also at invoice discounting and factoring brokers. Yes, I know this part of the market is not regulated, but when a sole trader deal is introduced to a funder, you cannot then subsequently introduce the client’s banking requirements which include outstanding loans. Equally, the funder should not be accepting this if the broker is not regulated.

Humans are fascinated with trying to bend the rules. How often do footballers try to steal a few extra yards for a throw-in when the ball is kicked off? We are now in Wimbledon season, where the standards are that players must play in whites, but there will still be players pushing the boundaries by wearing different colours in the hope they can get away with it. These acts of rule-flexing are relatively visible; brokers and funders should have less margin for pushing the boundaries of what’s acceptable.

Then there are accountants that are not part of designated professional bodies (DPB).

They still believe they can introduce clients who are sole traders and partnerships direct to lenders, because that is what they have always done. Well, the simple fact is that they can’t do that, because it’s a breach

NACFB Compliance Services, at www.nacfbcompliance.co.uk, is the place to go for expert advice and clarity.

If you wish to discuss a case please contact our Intermediary Support Team for more information.

Call us

0800 116 4385

Visit us

precisemortgages.co.uk

Follow us

FOR INTERMEDIARY USE ONLY.

Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and NACFB Magazine | 55 regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549).

Registered in England and Wales (company number 06749498). Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.

01738 (1)

So what about the lenders and funders? How well have they adapted to regulation? Some have opted not to be regulated and when I ask them about that decision, they explain to me that everything they do is unregulated and that all their products are unregulated.

That’s when I ask who introduces business to them and what due diligence they undertake. Surely they need to be certain brokers are not trading illegally?

Online bridging valuations in an instant

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