OSB Group’s H1 gross new organic lending falls seven per cent YOY to £2.3bn

OSB Group’s H1 gross new organic lending falls seven per cent YOY to £2.3bn

The group said that the prior period had benefitted from higher purchase activity as a result of the stamp duty holiday.

In its latest results, OSB Group said that underlying net loan book growth for the first half of the year was three per cent, coming to £21.6bn.

The group said its loan book growth was driven by new buy-to-let and residential first charge mortgage lending.

Applications grew strongly in the first half of the year, it said, singling out buy-to-let, residential, commercial and semi-commercial segments.

It added that it had a “record pipeline of new business” but did not disclose figures.

Applications for buy-to-let mortgages grew throughout the period, it said, as landlords reported growing tenant demand, which in turn supported rising rents. It added that total loans and advances fell across its second charge and funding lines segments, which it said was expected.

The group delivered a pre-tax profit of £294.1m in the first six months of the year, up 16 per cent on the same period last year.

OSB added that it had a multi-channel funding model, opening around 72,000 new savings accounts and growing its retail deposit book to £17.9bn.

The other aspect of its funding was wholesale funding, confirming that in August it had fully retained a £1.3bn securitisation of buy-to-let mortgages under its Canterbury programme.

Buy-to-let lending

The group said that its buy-to-let and SME net loan book increased by two per cent to £10bn in the first six months of 2022, driven by organic originations of £832.3m.

In the first half of 2022, Charter Court Financial Services (CCFS) organic originations for buy-to-let through Precise Mortgages grew seven per cent year-on-year to £867.5m, driving a seven per cent increase in its underlying buy-to-let loan book to £6.7bn.

In both its Kent Reliance and Precise Mortgages brands, remortgage, longer-term products, portfolio and limited company landlords accounted for significant segments.

Residential business

The residential net loan book grew by two per cent to £2.2bn, with organic originations coming to £244.9m.

Kent Reliance provides first charge mortgages, aimed at high net worth individuals with multiple income sources and self-employed borrowers.

The gross loan book for this area grew by four per cent to £1.9bn due to relaunching its residential proposition and bringing out a new range for complex prime borrowers.

The underlying gross loan book in CCFS’ residential sub-segment remained broadly flat at £2.4bn at the end of June 2022 and organic originations came to £257.1m.

Commercial business

Through its InterBay brand, commercial organic originations grew to £72m, up from £20.3m in the same period last year.

Its commercial gross loan book came to £789.5m, up from £794.4m in the same period last year.

On the residential development finance side, its gross loan book came to £132.9m, with a further £172.9m committed.

Bridging and second charge

Short-term bridging originations increased 14 per cent to £77m in the first half of 2022 compared with £67.7m in the first half of 2021. The gross loan book grew to £83.8m, up from £56.3m at the end of last year.

Underlying net interest income fell to £2.1m from £3.m in the first half of 2021, due to redemptions at the beginning of the year.

The report said that the bridging sub-segment contributed £2m in profit in the first half of 2022 on an underlying basis compared with £4.2m in the same period of last year.

It also recorded an impairment charge of £100,000, compared to £1.2m credit in the same period last year.

The second charge gross loan book reduced to £133.4m compared with £153.7m as of 31 December 2021 as the second charge products under the Precise Mortgage brand have recently been withdrawn.

Funding lines

From a funding lines perspective, which is where OSB Group provides secured funding lines to non-bank lenders, total approved limits were £380m and total loans outstanding at £129.4m. This is down from £450m and £280m respectively.

The group said it had maintained a “cautious risk approach” and had closed four property-related funding lines and  not extended any new facilities.

Outlook

Andy Golding (pictured), chief executive of OSB Group, said that its secured lending book continued to perform well and it had not seen any “systemic signs of distress or early indicators of future concerns amongst our borrowers”.

“However, we are cognisant that the macroeconomic outlook for the UK economy remains uncertain. The pandemic related issues and the benefit of house price appreciation have been replaced by growing cost of living concerns, rising interest rates and geopolitical uncertainty.

“The strong foundations of our business with its secured balance sheet, strong capital position and proven operational resilience position us well to respond to opportunities and challenges as they arise,” he added.

Golding continued that the company had a “record pipeline of new business” and there was “robust demand” for its mortgages.

He also noted that tenant demand in the private rented sector was still “positive”, especially in its portfolio landlord segment.

“We have improved our full year underlying net interest margin guidance and now expect it to be broadly flat to the first half. We remain confident in delivering underlying net loan book growth of circa 10 per cent for 2022 based on current pipeline and applications. We continue to expect the underlying cost to income ratio for full year 2022 to increase marginally from 2021,” he concluded.

Nearly half of HMO landlords report rising tenant demand for ‘high-end’ properties

Nearly half of HMO landlords report rising tenant demand for ‘high-end’ properties

According to a report from Paragon, which surveyed 138 HMO landlords, this trend was more pronounced amongst young professionals, with 45 per cent of owners citing strong demand from young professionals for high-end  properties.

An HMO is a property with at least three people not from one household using shared facilities like a living room or kitchen.

The landlords said that tenants were expecting more in terms of property value, such as en-suite bathroom, larger rooms, high speed broadband and quality furnishings.

Around 56 per cent of landlords surveyed said demand for high-speed broadband had grown, and 39 per cent said tenants were seeking larger rooms.

Over half, 53 per cent, said tenants were looking for properties with en-suite bathrooms and 39 per cent reported tenants demanding higher quality furnishings.

More than a third of landlords, 35 per cent, said that tenants were asking for office facilities for home working.

Paragon Bank’s managing director of mortgages Richard Rowntree (pictured) said: “HMOs used to be dogged by a reputation for poor-quality housing, but that perception is shifting as landlords upgrade stock and meet the changing demand from tenants. Tenants will no longer accept poor quality; they want broadband, bathrooms and better-quality furnishings.

“We saw strong growth in demand from landlords to acquire HMOs during the pandemic. This may reflect the wider shortage in rental property with tenants opting for a room in a shared home because one or two-bedroom properties are in short supply. Tenants also like the flexibility and social nature of HMOs, particularly if they are renting with friends.”

HMO landlords likely to buy more property

The report found that 47 per cent of landlords with HMOs said the housing offered better rental yields, and 40 per cent said it offered more protection against rental voids.

Around 42 per cent of HMO landlords reported net yields of 10 per cent or more, whilst 64 per cent had yields of eight per cent or more.

However, two thirds of landlords spent more than 10 per cent of rental income on annual property maintenance.

Landlords with HMOs were also more likely to buy more than one property, with 43 per cent saying they planned to buy another HMO property in the next six months.

Only four per cent said they would sell their HMOs and leave the sector and eight per cent had plans to reduce their HMO holdings in the next 12 months.

The majority, 64 per cent, said higher energy bills were a concern. This is possibly because utility bills are typically included in the rent for HMO properties.

One in five landlords said they did not plan to pass on the cost of higher energy bills to tenants, but more than half did plan to increase rents to cover the increased cost of living. Around 19 per cent said they had already increased rents.

 

Aldermore provides multi-million-pound facility to Mint Property Finance

Aldermore provides multi-million-pound facility to Mint Property Finance

The block bridging facility allows independent funders to raise capital against future income from bridging finance deals in place between Mint and its customers. The exact amount was not disclosed.

Mint said that this was a “significant development” as it had previously been funded exclusively by private investors.

The lender said that it wanted to “accelerate its ambitious growth plans”, one of which included achieving a £250m loan book and launch new products.

Matthew McNeile, business development manager for asset finance at Aldermore, said that it was excited to provide funding to Mint Property Finance, adding that it was a “well-established and experienced lender in this space”.

He added that the company was looking forward to supporting Mint’s “ongoing growth”.

Andrew Lazare (pictured), founder and managing director of Mint Property Finance, said it was a “key milestone” in the company’s history, especially as it rapidly approached its £250m loan book target.

He added that Mint had been looking for an institutional investor, and had looked at many facilities with lenders, but that  Aldermore was the “right partner for us”.

“The facility gives us more firepower to write even more business and further broaden our product offering. Now we have an institutional lending partner onboard to maintain our competitive advantage across our bridging products, we intend to turn our focus towards providing more longer-term loans such as three to five-year term products and buy-to-let mortgages,” Lazare noted.

Kuflink simplifies valuation process for brokers and their clients

Kuflink simplifies valuation process for brokers and their clients

Kuflink, which works specifically with intermediaries, said that brokers registered with Hometrack can now use an AVM for any residential bridging deal with a maximum loan size of £300,000 with a loan to value (LTV) of 80 per cent or less. 

Ex-council flats and maisonettes are excluded, it said, adding that the AVM cost £25.20, including VAT. If the broker’s lending criteria are not met by the AVM, the broker can decide to conduct a drive-by or a full valuation instead.

Brokers can only register to instruct AVMs through Hometrack by applying to the Kuflink sales team, the lender said.

Ranjit Narwal, head of origination at Kuflink, said the simplification emphasised the importance of ties between the company and brokers.

He commented: “In simplifying our process, we are placing greater responsibility into the hands of our introducers to manage their own cases. Since we announced the facility to self-instruct valuations in June, the response has been extremely positive. This further move demonstrates our commitment to improving the speed with which we can provide the finance that customers need by offering brokers the opportunity to ensure the valuation process is instructed and completed at the right time whether via AVM, drive-by or full valuation for them and their clients.”

 

Ultimate Finance hires Alice Williams as regional director

Ultimate Finance hires Alice Williams as regional director

Williams (pictured right) previously worked for Pilot Fish Finance and Handelsbanken. A former broker, she said she was “extremely excited about the opportunity to be working on the other side of the transaction”.

She added that she was  looking forward to using her understanding of how brokers work to help the lender achieve its “mission to be the funding partner of choice”.

Liam Cavanagh (pictured left), head of bridging finance for Ultimate, said that Williams’ knowledge and expertise in the bridging and development finance market would be “invaluable”.

He continued that the lender’s first half saw an increase in new business, and its latest announcement to freeze interest rates for bridging the next two months showed its commitment to brokers and their clients. 

Ultimate Finance offers bridging finance loans between £100,000 and £3m with rates from 0.74 per cent per month up to 75 per cent loan to value (LTV).

The lender has made a number of hires in recent month, including Eric De Armitt and Kieran Ryan as regional directors in the Midlands, Ronnie Stokes as regional director for Scotland, Dan Sellwood as regional asset finance director and Phillip Speed as regional director for South East.

Property investors are bulk-buying in some UK regions to widen portfolios

Property investors are bulk-buying in some UK regions to widen portfolios

Research compiled by Octane Capital, a specialist property lender, showed that when purchasing ready-made portfolios, investors were spending £1.2m on average. Such property packages had an average of 6.4 bedrooms, equivalent to £196,000 per bedroom and an average yield of 2.9 per cent.

The lender said the North East was providing the best value for money for investors whilst London was the most active in terms of the purchase of ready-made property portfolios.

London accounted for 18 per cent of the national total, Octane Capital said, although the region has higher property prices with each bedroom costing about £556,000. This means a ready-made investment portfolio produces an average yield of 1.4 per cent. 

In contrast, investors in England’s North East were spending just over £1m for portfolios that held an average of 9.7 bedrooms, or £104,000 per room, leading to a yield of 4.5 per cent. 

In Yorkshire and the Humber, the lender found that the average portfolio cost £1.1m for an average of 10.1 bedrooms, or £106,000 per room. That led to the second-highest average yield at 4.4 per cent.

Octane Capital said that there were benefits to both the buyer and the seller of buying in bulk. Full portfolios typically consist of properties gathered over time by another investor before being sold as a group, meaning that a buyer can quickly scale up their portfolio and the seller can offload properties easily and swiftly. 

Jonathan Samuels (pictured), co-founder and chief executive of Octane Capital, said: “Portfolio investment offers advanced investors a far quicker path to scaling their portfolio and, as is often the case when buying in bulk, doing so can result in securing a greater level of value per unit.  But it’s also the convenience of this approach that appeals to many, allowing them to acquire multiple properties in a single transaction.”

Samuels said bulk-buying allows investors to renovate en masse, “to bring these homes to market within a similar time frame, so that they can start to earn a consistent return across the board”.

He added: “Of course, not all investment portfolios are created equally and investors should ensure they carry out the proper due diligence on each and every property to avoid purchasing a bad batch.  Even a singular bad apple amongst an otherwise strong portfolio can tip the scales of profitability in the wrong direction.”

 

Precise Mortgages withdraws products and pauses second charge lending

Precise Mortgages withdraws products and pauses second charge lending

The lender said as of yesterday it had withdrawn select buy-to-let and residential products.

On the buy-to-let side, this includes products at 70 per cent loan to value (LTV), five-year fixed rate limited company and limited company houses in multiple occupation (HMO) products.

On the residential side, the lender is temporarily withdrawing five-year fixed rate products in its Tier One and Tier Two ranges.

Tier One and Tier Two do not accept defaults or county court judgments, and one missed mortgage or secured loan arrears in 36 months. It also allows debt management plans if satisfied over 36 months ago.

Precise Mortgages is also taking down its Tier Five products, and its debt management plan products.

Precise Mortgages said that to secure a rate, then applications needed to be fully submitted by the end of the day yesterday.

Last week, the lender said it was temporarily withdrawing its second charge lending products in order to “effectively manage increased business volumes and continue to reduce turnaround times”.

At the time Precise Mortgages said that it had no “immediate plans” to launch replacement products.

The lender said to secure a rate from the range, applications needed to be submitted before the end of the day on 5 August and fully packaged cases should be submitted no later than 30 September.

Adrian Moloney, group intermediary director at OSB Group, the lender made the decision to temporarily withdraw second charge lending to “enable us to continue to effectively manage capacity and support current pipeline cases”.

He added: “This allows our teams greater flexibility to assist operational areas where additional support to meet increased business volume is required.”

Moloney continued that having assessed its service levels it was “appropriate” to withdraw some of its buy-to-let and residential products so it could give “further resource to areas facing increased demand”.

He added that the lender also wanted to “create space for replacement products in the near future”.

“It’s important to note that we continue to offer a range of products across buy to let, residential and commercial within Precise Mortgages, Kent Reliance for Intermediaries and InterBay, including support for affordable housing through shared ownership and Help to Buy as well as higher loan to value (LTV) buy-to-let products where we recognise there are less choices for landlords and brokers in the market,” he said.

“We’re carefully monitoring the situation and will continue to adapt according to service levels as we’re acutely aware of the current pressures within the market including those faced by our intermediary partners.”

Holiday let market size rises to over 100,000 properties – Octane Capital

Holiday let market size rises to over 100,000 properties – Octane Capital

Analysing data from 10 holiday destinations in the UK, specialist lender Octane Capital found activity in this investment increased the number of short-term rental properties by a third in the Lake District. 

This represented a rise from 5,693 rentals to 7,591. 

The Lake District saw the largest uptick in short-term rental availability, followed by the Peak District where holiday let availability increased by just over a quarter in one year. 

The Cotswolds also saw an increase of a quarter while short-term rentals in Cornwall rose by 24.1 per cent. This was followed by Devon at 21.1 per cent, Brighton at 13.1 per cent and Liverpool at 10.8 per cent. 

Three popular destinations reported a decline in holiday let rental availability, Octane’s data showed. 

This dropped by 1.7 per cent to 3,891 in Manchester, while Newcastle saw an 11.6 per cent fall and London saw a 17.1 per cent decrease. 

Overall, Octane Capital said the rise in holiday let properties aligned with an increase in appropriate mortgage availability. 

According to Moneyfacts, the holiday let mortgage market boomed in January this year with 27 lenders offering 231 products, up from 186 deals from 25 providers in September 2021r. 

Jonathan Samuels, CEO of Octane Capital, said: “Holiday lets offer a much more private and self-sufficient holiday experience than hotels provide. They provide more space and more freedom. So, it’s little wonder that the market is booming so much in most parts of the country.  

“Because holiday lets are now the first choice for a huge swathe of the population, more and more people are thinking about ways to make money off the sector. Some people are simply opening up a spare room in their home, but others are buying new properties with the sole purpose of putting them on the holiday let market.”  

He added: “While it’s an attractive idea, it’s one that requires careful consideration. The old idiom of location, location, location has never been more appropriate. If you can’t buy a property in a high demand short-term rental location, you’re going to really struggle to make any sort of profitable income in this sector.  

“It’s about finding locations that offer the perfect balance between affordable purchase price and strong, reliable rental income. This is often easier said than done.” 

Ultimate Finance to fix bridging rates for next two months

Ultimate Finance to fix bridging rates for next two months

The lender offers bridging finance loans between £100,000 and £3m with rates from 0.74 per cent per month up to 75 per cent loan to value (LTV).

It is available for development exit, purchase bridge, development finish and exit, and refurbishment, with all available on fixed rates.

Ultimate Finance said that the Bank of England’s decision to increase the base rate to 1.75 per cent last week was “adding existing pressures” on development projects, pointing to increased material and labour costs.

The lender added that gross development values remained static and there were also ongoing planning delays.

Ultimate Finance said that it was “committed to maintain their support of residential property developers with their range of products remaining at current rates”.

Josh Levy (pictured), CEO of Ultimate Finance, said: “On the back of a strong performance in our bridging finance business this year, we are committed to continuing to support residential developers and investors, and have taken the decision to freeze our bridging loan rates for the next two months against the backdrop of increasing lending rates in all areas of finance.

“Our unique position as an independently backed lender allows us to take this decision.”

Liam Cavanagh, head of bridging finance of Ultimate Finance, said that current market conditions were “extremely difficult” for residential developers to complete on time and budget, and its products were uniquely positioned to support them in key phases where refinance was the best option.

He pointed to the development exit product, which gives developers “valuable time” to complete their project, secure their desired exit and provide capital through equity release for future projects.

Cavanagh added: “Our team know that where property is concerned, speed and flexibility is everything, and freezing our rates will give developers some certainty over the coming months.

“What’s more once the project is completed and signed off, we can look at a potential equity release to support our borrowers cash flow requirements, whether it be used towards a new project or another business need.”

Gatehouse Bank’s home finance portfolio surges 40 per cent to £762m

Gatehouse Bank’s home finance portfolio surges 40 per cent to £762m

The lender said this was down to the launch of higher finance to value products in Q3 which generated more home buyer activity at the bank.

It also reported a record number of home finance originations during the year. During the year, the bank generated £267m in home finance loans, made up of £181m in buy-to-let lending and £86m in home purchase plans.

Looking ahead, Gatehouse intends to broaden its home finance offering with the development of new products in 2022. 

Gatehouse also strengthened and formed relationships with intermediaries during the year, “with more active brokers registered to introduce clients to the bank”. It also continued its work with the Commercial Bank of Kuwait and Warba Bank as introducers for clients wanting to buy and finance property in the UK. 

The bank’s pre-tax profit rose to £3.6m, up from £2.1m in 2020 and its income increased by 30 per cent to £28.5m. 

Charles Haresnape (pictured), CEO of Gatehouse Bank, said: “In a year characterised by the ongoing challenge of the global pandemic, Gatehouse made strong progress, with the expansion of service lines translating to growth of our customer base and the achievement of a profitable return for the second year in a row. 

“Product innovation was a key driver of growth in 2021 – with the introduction of our award winning Woodland Saver on the savings side of the business, as well as a series of higher finance to value products, resulting in us welcoming a record number of new Home Finance customers to the bank.” 

He added: “More widely, our mission remains to work continuously to ensure that our success as a business is increasingly synonymous with what is best for society, helping to create a better future for all.”