Shawbrook launches self-service product switch platform for BTL customers
The lender said flight times had been decreased to 48 hours with the My Shawbrook Portal, which has been built to improve the experience for broker partners.
Mortgage Solutions has contacted Shawbrook to ask how long the transfer times were before the introduction of the portal.
Its like for like product switch is offered with no arrangement or product fee, while the introducing broker partner will still receive a commission determined by the customer submission preference on every case that completes.
The portal allows the bank to assist its brokers’ retention activity as it gives control of the 10 minute application to the customer, but sets out to keep the broker involved in the process.
Emma Cox, sales director for the Shawbrook Property Division, said: “A huge amount of work has gone into the design and development of the portal based on extensive feedback from our network of brokers, and our own research.
“This was one of the main requirements of the scoping phase and we were conscious that, although as a regulated bank we are obligated to provide ongoing product solutions for customers, we also have an obligation to our core distribution around which we have built this business.”
Landlords support NLA and RLA merger
Members of the NLA and RLA voted for the two organisations to form the new National Residential Landlords Association (NRLA) following meetings today.
The trade bodies said the merger will provide a stronger voice for the private rented sector.
The new organisation will boast more than 80,000 landlord members making it the sector’s largest trade association by far.
It will speak for members owning and managing half a million properties or about 10 per cent of the private rented sector. It will officially launch on 1 January 2020.
More powerful voice
RLA chairman Alan Ward and NLA chairman Adrian Jeakings issued a joint statement.
They said: “We are delighted that landlords have backed plans for a new, stronger body to represent them and their interests.
“The new organisation will have a more powerful voice to support landlords, provide services to them and to lobby government.
“Both organisations will now move forward together to appoint a new chairman and directors for the NRLA,” they added.
The body will be seeking candidates internally and externally for the positions and said it would welcome expressions of interest from members for these posts.
Together signs ‘eleventh hour’ £1.5m bridging loan for client
The client needed the finance to buy land but had a deal with another lender fall through just days before the deal was due to complete.
The property company’s retained mortgage broker SPF Private Clients brought the case to Together and the specialist lender agreed a commercial bridging loan of £1.5m, secured against the land.
Ritchie Watson, lending director at Together, said: “This was a strategic purchase of a piece of agricultural land, which would be the final piece of the jigsaw in a wider project.
“SPF provided all the necessary documents and our commercial underwriting team pulled out all the stops to get this deal across the line ahead of the customer’s completion date.”
Amadeus Wilson, director of short-term finance at SPF private clients, added: “We knew that Together would be able to provide the necessary funding within a tight timeframe. In the end, the client was delighted that we managed to achieve an impressive three-day turnaround from the application being submitted to funding being received.”
Specialist Lending Solutions contacted Together for the identity and location of the client and land, but was told they would remain confidential.
Shawbrook and Prospero Finance help client raise £527k on complex BTL deal
The investors wanted to refinance the freehold on the block of six recently converted flats in Gillingham, Kent which generate £45,000 of rental income per annum.
The client’s aim for the capital raise was to help with the expansion of their portfolio through the development and refurbishment of additional properties.
Shawbrook’s underwriters worked closely with Prospero Finance – which specialises in residential investment – from application to completion.
The process was said to be “largely seamless”, except for one challenge where the client requested that the aggregate value was taken into consideration, rather than the block value.
Taking this into account, the underwriting team navigated it with buy-in from both broker and client to deliver the completion.
Shawbrook financed the £527,000 capital raise on a 10-year interest-only term at 75 per cent loan to value (LTV).
Martin Smedley, director at Prospero Finance, said: “Our client has significant plans for their portfolio and I’m really pleased we were able to help them along their property journey.
“Shawbrook dealt with the case smoothly, even when there were a couple of small issues to navigate along the way, but their flexibility was a factor in getting this deal across the line.”
Richard Winston, business development manager at Shawbrook, added: “With specialist brokers like Prospero working alongside our experienced underwriting team, we ensured that we could support the client on their property journey.”
Extraordinary and left-field circumstances which affect lending decisions – Aspen
Bridging finance is a problem solver.
Although in recent years the scope of the sector has widened and become more vanilla, bridging has always had grey areas and it’s here that specialist lenders need to excel.
Let’s look at five very different situations that will ultimately affect a lending decision and what they mean for an application.
We focus on deals that are doable. If they’re not, we tell the client why not within the first five minutes.
Most of the time this comes down to affordability, loan-to-value or troublesome financial backgrounds.
But some very interesting applications cross our path, and here’s where true expertise needs to rise to the top.
To be clear, I am not a lawyer and this does not constitute legal or financial advice, but here are some left-field scenarios with examples of when a lender can and cannot lend.
If a client is undergoing a divorce the underwriter should take care to understand that the divorce is settled, either in or out of court, or that both parties in the marriage have received independent legal advice and consent to the loan. This is regardless of in whose name the property may be.
If one party is trying to pull funds out of the property quickly before a claim is made of an interest in the property, the underwriter must avoid facilitating this or the lender may become exposed.
2. Sale at undervalue
Sales at undervalue are commonly banded about in the market, but there are some that are satisfactory and others that are insupportable.
When a client gets an option to purchase a site and then adds value through works or planning this, in our view, is fine – the real value of the site ought to be higher than the purchase price and this should be accounted for as long as the developer has adequate ‘skin in the game’.
When a family member gifts equity this is also acceptable to us – people have given property away to their children since time immemorial – and clearing the mortgage through a purchase is acceptable. A deed of gift and correct tax treatment is needed but this is, in Aspen’s view, acceptable.
“I bought it at auction”, “I am buying in bulk” and “the client is a good negotiator” are obviously terrible reasons.
The market is not as strong as it was in 2016 in some areas and people think things are worth more than they are – buying in bulk almost invariably leads to selling in bulk in a difficult situation and underwriters should anticipate this.
“The seller is desperate for a quick sale” is an interesting one. The lender must establish that the seller is of sound mind and is not a vulnerable person. They should also look at whether the numbers make sense – does moving country or fear of repossession merit the level of discount?
At Aspen we steer clear of these because nine times out of 10 something awful such as intimidation or fraud is happening in the background.
The worst one is “the receiver is flogging it cheap”. If correct, this is a criminal action and a major breach of the duty of care to the current owner’s equity position. An absolute ‘no’ and probably a note to self to avoid the receiver is needed here.
The second part of Jack Combs’ article will appear on Specialist Lending Solutions shortly.
Bath & West appoints Anderson as commercial director
Anderson was previously head of development lending at Amicus Finance and before that he worked for Fincorp.
Anderson said: “Bath & West values experience and judgement and understands that there are good deals to be done, particularly outside of London in the M4 corridor and down to the south coast.
“The bridging and development market has seen increasingly fierce competition and a surplus of private equity funding in the past year or so resulting in high-profile casualties.
“Getting the terms right, so that they work for both investors and developers is key, and knowing when to say ‘no’ is more important that saying ‘yes’ at any cost,” Anderson said.
Smith added: “Matt has long been involved with our business working closely with us during his time at Fincorp. His experience and hands-on approach to deals, before funding is approved and during development, is crucial to maintaining a robust loan book and something we value highly.
“His contacts across the short-term lending industry will be invaluable as we continue to grow,” he said.
Permitted development rules need to be reviewed, brokers say
Research by United Trust Bank found that 67 per cent of brokers believed a review was required, 33 per cent thought the rules were “fine as they are”, and none wanted them to be scrapped.
The bank’s survey asked 114 brokers whether they agreed with various statements about PDR regulations during June 2019.
On micro-homes of less than 37sqm in size, 57 per cent of brokers agreed that they “can still be good if they are well designed”, and 23 per cent said they “can play an important role in tackling the UK’s housing shortage”.
However, 43 per cent of brokers agreed that the minimum space was “too small”, and 24 per cent assented that “minimum floor areas on permitted development and new builds should be mandatory rather than just standards that can be side-stepped.”
Challenge of micro-homes
Paul Turton (pictured), head of sales – property development, at United Trust Bank: “A very small minority of PDR developers may exploit and overdevelop sites and these have the potential to cast the whole sector in a bad light.”
“PDR is an important channel for providing new homes, with government data on net additional dwellings showing that it enabled 45,000 new homes to be created from 2015 to 2018.
“Micro-homes that use good design and technology to maximise living space can be affordable and enjoyable places to live.
“The challenge for the planning system is to support good developers to create high quality homes, while making it harder for less scrupulous developers.
“We believe that the majority of PDR developers want to create new homes that they can be proud of,” he added.
Zephyr Homeloans scraps upfront application fees
The lender will remove the £199 charge with immediate effect until further notice.
The change will apply regardless of whether a broker deals directly with Zephyr or goes through one of the 15 packagers that it distributes mortgages through.
Paul Fryers (pictured), managing director at Zephyr Homeloans, said: “After 10 months of Zephyr trading, we’re now moving into the next phase of our growth plan and want to give something extra to brokers, packagers and their clients.
“We understand the pressures on landlords at the moment, so we want to make it easier for more people to benefit from Zephyr’s highly competitive range of buy-to-let mortgages by making access to our products even cheaper.”
Second charge volumes rocket in July ‒ FLA
The figure represented an increase of 23 per cent on July 2018.
The value of that business has risen 17 per cent to £115m for July this year compared to the same month in 2018.
Over the three months to the end of July, second charge agreements were up by 20 per cent on the same point last year, with the value of business increasing 18 per cent.
On an annual basis, the number of agreements rose by 19 per cent and the value of business increased by 15 per cent.
Fiona Hoyle (pictured), head of consumer and mortgage finance at the FLA, said that July saw the highest monthly new business volumes for second charge deals since October 2008.
She said: “The popularity of second charge finance is continuing to grow, with consumers increasingly using it to fund property extensions and other home improvements.”
The trade body’s data revealed that there was no change in the amount of retail and online credit taken out during July, at £679m. On an annual basis this was up by three per cent.
Credit cards and personal loans grew by three per cent in the month, but remained unchanged annually.
The value of car finance taken out increased six per cent in July and was up two per cent over the year.
Labour’s lack of understanding shows through in dystopian right to buy policy – Goodall
You would likely see some enterprising folk hiring and then purchasing a car in this way – something that would have quite an impact on the broader second-hand car market.
Values of second-hand cars would almost certainly fall as demand for non-rental second-hand cars plummeted. It’s hard to imagine car rental firms not struggling with profitability if they’re forced to sell their assets at a discount.
This would likely lead to the knock-on effect that Hertz, Avis and co. would pull out of the UK, or at least dramatically increase prices to stay buoyant.
Of course, they may find more creative avenues such as changing their fleets to cars that people might be happy to rent but not to own. These would be lower quality cars with a greater ongoing costs and maintenance requirement.
Broadly speaking, it would become much harder and more expensive to hire a decent car.
You’d be forgiven for not labelling this idea as a positive development, regardless that there would clearly be a few early winners, perhaps snaring a one-year old BMW at a bargain price. But it’s clear that this implausible, somewhat dystopian future would be damaging in the longer-term.
With that in mind, I ask you this: how, when the above scenario is applied to the housing market, can the idea ever be touted as positive and progressive?
Yet this is exactly what the Labour Party is proposing with its recent right to buy suggestion.
For the UK’s 2.6 million landlords, there would be zero incentive to invest in rental properties knowing that they could be forced to sell at a discount. And how would this be good for those that want to rent or cannot afford to buy?
The private rented sector is crucial to the UK economy and by undermining it, and neglecting its importance, the Labour Party shows a real lack of understanding of the housing market.
Foreign investment dry up
On a broader point, how does this serve to reassure businesses in other sectors or overseas investors that Britain is open for business?
If a government is prepared to force owners of houses to sell at a discount, what is to stop them doing it with any other form of asset? The reality is that we’d see foreign direct investment in the UK dry up almost overnight.
It is extremely likely that we will face an election in the coming months where we will no doubt hear various policies related to housing that are aimed to win votes rather than to improve the housing market.
What is clear is that we need more thinking to ensure that there is sufficient quality housing for both those who want to rent and those who want to own.