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FCA will take greater interest as specialist markets become more professional – Octopus Property

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  • 06/02/2018
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FCA will take greater interest as specialist markets become more professional – Octopus Property
Bridging and development finance lending is undergoing a noticeable professionalisation akin to the changes within the mainstream mortgage market in the 2000s, according to Octopus Property.

The lender believes part of this will see the Financial Conduct Authority’s (FCA) interest in the sector grow, while Octopus also has big plans to take its lending beyond £100m per month.

Speaking to Specialist Lending Solutions, Octopus Property head of sales D’mitri Zaprzala said other changes and new lenders had already driven the sector to become higher calibre.

“There’s a wider point that the industry is professionalising,” he said.

“The difference compared to when I started is huge – most lenders and brokers now are definitely of a higher calibre. Customers know there’s lots more choice and so there’s a self-imposed and self-regulated improvement you have to do.”

 

Regulation journey

Zaprzala added that the industry was going on a similar journey to the mortgage market in the 2000s.

“The FCA is interested in what we do, of course they are, and they will become more and more so,” he continued.

“But a lot of us are regulated anyway. We have made the decision to become fully FCA regulated and most of our peer group are too.

“The entrance of the challenger banks have also professionalised this market so I think it’s definitely been a pick-up in the calibre of the whole sector,” he added.

 

£100m per month

Octopus has big plans for the next year, which includes a significant uplift in lending while its product diversification continues.

At present it funds anywhere between £60m-£80m per month.

“But there’s capacity there to comfortably be a £100m+ lender in the next 12 months, which is what the vision is,” Zaprzala explained.

“The big opportunity we see is portfolio landlords – that for us is a massive opportunity this year,” he added.

 

Big banks won’t return

Having already introduced buy to let and commercial term funding products this year, Octopus has just added a pre-approved auction finance loan in partnership with Acuitus Finance.

This allows developers to go to auction knowing they have a certain loan to value they can access to purchase the property.

And Zaprzala believes the bridging sector in general is looking solid, if not spectacular, in a secure market.

“Bridging business is trending up because houses are taking longer to sell, so people have the need for that more and more,” he said.

“The one thing that’s unfortunate in bridging is that no-one knows exactly how big the market is, but the positive sentiment continues to grow.

“We often get asked what happens when the big banks come back to bridging? I don’t think they will, but anyone who came in at low prices would get swamped and probably couldn’t deliver the funding quick enough.

“So, I do think we’re quite well insulated in that respect,” he added.

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