Tiuta said it will target the professional bridging loan market, only lending to property professionals, such as property developers and portfolio landlords.
The review follows a series of high profile and sudden exits of senior members of Tiuta’s team, including former chief executive George Patellis, former head of business development Guy Garrard and former head of marketing Stephen Brumhill.
The decision marks a reversal of its strategy from last year, when Tiuta secured open-ended funding from Connaught Asset Managers to expand into the specialist lending sector and longer-term finance. It claimed that regulated business was making up around a third of its new business.
However, today, Martin Kearns, head of strategic policy at Tiuta, said that regulated loans made up just 2% of its entire loan book value and it felt “the additional time and resource this takes can no longer be justified”.
In addition, Connaught Asset Management chairman Mike Davies said it fully supported the move to bridging loans for professionals, given that the residential mortgage market has never been its focus.
He said: “”We have always discouraged regulated loan activity for this reason which is why it has always been such a small part of Tiuta’s business.”
Tiuta has now voluntarily removed its permissions to offer regulated loans, but will remain authorised by the FSA to manage and administer its regulated loan book.
Kearns highlighted that Tiuta is on course for its best trading month on record this month, with an even more positive outlook for June.
Kearns said: “Following a complete review of the business strategy Tiuta has decided that it will stick to what it excels at, namely secured bridging lending to professional and experienced customers.
“There is an enormous demand for such loans in the UK and we have the funding lines and expertise to remain the number one provider in this market. Our current bridging loan lending figures are increasing month by month which shows this part of the market continues to thrive.”
He said that it would not accept regulated loans “for the foreseeable future” given that it can take up to a year for the loan capital to be repaid in the event of a default – something “not acceptable to our stakeholders”.
Kearns continued: “The review has clearly highlighted that we should now focus all our efforts on the core business which is dealing with professionals who use bridging loans to often renovate or add value to a property, and then replace our loan with a standard mortgage after maximising the value of the property.”
Connaught’s Davies said: “As one of the main funders of Tiuta’s loan book, we fully support this decision as clearly it is in our investors’ best interests to ensure that if a loan ever does default in the loan book, the capital can be reclaimed and reinvested as quickly as possible.”