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.
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.
Together increases mortgage lending to £2bn
The results show continued growth for Together – in February it reported a 28 per cent rise to £1.8bn for the calendar year of 2018.
The lender attributed the latest figures to “robust” lending volumes at low loan to values (LTVs), with its overall loan book reaching a high of £3.7bn.
Mortgage loans accounted for 32 per cent of this or £1.2bn.
The net interest margin for the year was at 6.8 per cent and profit before tax rose 7.1 per cent to £130.3m. The group generated cash receipts of £1.6bn during the year.
Together also completed a second public residential mortgage backed securitisation (RMBS) raising £272.6m against a loan portfolio of £286.9m during the 12 month period.
Commercial and unregulated bridging up
Group chairman Mike McTighe (pictured) said: “Together delivered another solid performance during the year, with strong lending volumes at low LTVs driving continued growth in the loan book and increased profitability and cash generation.
“During the year, we also raised or refinanced over £2bn of facilities, increasing the scale and diversity of our funding base and extending the maturities to support the group’s future growth.”
Marc Goldberg, commercial finance CEO, added: “We achieved this growth across all of our products in commercial finance, with particularly strong increases in commercial term and unregulated bridging.”
Clever Lending appoints senior leadership team
Kevin Blount was appointed to oversee all operational aspects as director of technical operations and Michelle Neville was hired as director of new business to deliver the sales strategy.
The pair have been promoted following the departure of Sam Kirtikar, who left his position as CEO in July.
Neville (pictured left) has been involved with Clever Lending since it launched and said it was a great pleasure to take on the new role.
She said: “Our efforts will now focus on nurturing existing relationships and engaging with brokers who may not know how a specialist distributer such as Clever Lending can benefit their businesses.
“With aspirations of growth and increased product offering, the team and I are looking forward to building our presence across the specialist lending market,” she added.
Blount (pictured right) has been at the distributor for more than six years, having previously been an adviser at Payplan Financial Services.
He said: “The growing specialist lending market presents huge opportunities for the business and with a recent surge in people looking to take out alternative finance solutions now’s an exciting time to develop Clever Lending even further.
“Mortgage brokers are experts in what they do and have great product knowledge, but the fact is, the market is a moving beast and new product solutions are constantly being introduced in the specialist space,” he added.
“Plus, if the situation is a bit more complex, there’s nothing wrong with getting a second opinion,” Blount said.
Clever Lending offers first charge packaging, second charge, commercial and bridging loans.
New lender Offa launches Shariah-compliant specialist solutions
The lender has secured £20m in funding from a Sharia-compliant UK financial services organisation.
It will offer Shariah-compliant residential loans ranging from £100,000 to £10m for up to 12 months at a maximum finance-to-value (FTV) of 75 per cent. Commercial bridging facilities are offered for the same sums and term length up to 65 per cent FTV.
Offa was established by head of operations Bilal Ahmed, the former chief executive of Signature Finance, head of business development Tarek Kallel and head of investments Haris Akhtar.
The lender added it was “in advanced talks” with an Islamic finance institution over £100m of additional funding.
The company plans in future to offer solutions for refurbishment, stretched development, planning and shared risk/joint venture schemes.
The lender said it expects to lend to UK residents, UK ex-pats and international clients based overseas, including individuals, sole traders, partnerships, limited companies and on and offshore special purpose vehicles.
Offa said that brokers could earn procuration fees of up to 2 per cent.
“Shariah-compliant finance is established in the UK and used by Muslims and non-Muslims. We are extending it into bridging and other specialist lending,” said Ahmed.
“The UK’s muslim population is expected to grow to 13m by 2050 from 3.4m today. We see this as a high-growth market with a long-term future,” Ahmed added.
“The broker channel will be integral to our proposition and we want to speak to intermediaries interested in adding Shariah-compliant bridging to their proposition. We expect that lots of investors in the UK market will relish the chance to take out Shariah-compliant short-term finance,” said Kallel.
Funding 365 launches flexible three-year property loan products
The lender said that the new three year and bridge-to-three-year products offer a “unique level of customisability” as the level of pay rates vs retained rates can be tailored to suit the yield of the borrower’s property.
Pay rates start at 3M LIBOR + 3.45 per cent per annum, with retained interest between one to three per cent per annum. This is dependent on security type, loan to value (LTV), loan size, borrower credit profile and desired pay rate.
Loans can be up to £3m in size and have a maximum LTV of 75 per cent.
An eight month bridge from 7.49 per cent per annum is included in the bridge to three-year product, and allows borrowers to exit within that time frame with no early repayment charges (ERCs).
Accepted securities include residential (including HMO), semi-commercial and commercial buildings across England and Wales. Borrowers with adverse credit will also be considered.
These new products are also available to brokers.
Funding 365 managing director Mike Strange (pictured) said: “Our research found that brokers and borrowers did not have enough choice in the mid-term property finance market, especially in scenarios where the loans would be secured against commercial and specialist properties.
“Our new three-year property loans will provide unrivalled solutions to borrowers who are seeking longer term and more tailored solutions than currently exist in the bridging market.”
Laura Sneddon joins Masthaven as national account manager
Sneddon (pictured) joins from The Mortgage Lender where she was national account manager responsible for supporting intermediary partners across the business, having progressed from key account manager.
She will be responsible for building and maintaining strong relationships with a portfolio of accounts, while also supervising and supporting regional managers to maximise sales leads within these accounts.
“Laura has a wealth of financial services experience and has been appointed to the newly created role as part of Masthaven’s ongoing expansion,” the lender said.
Her career includes a stop at Together as business development manager.
Sneddon said she was delighted to be joining the Masthaven team.
“It’s exciting to be part of an engaging and motivated team with a company culture that welcomes change,” she said.
“I’m looking forward to working with my accounts to continue the great work the team has started.”
Masthaven sales director Rob Barnard added: “Masthaven continues to invest in hiring the best senior talent as well as developing and training our current team.
“Laura has extensive experience in the financial sector, and we are confident she will add a significant strength to our growing leadership team.”
Hersch: Regulation is coming – we need higher standards and a code of conduct
There have been signs of this happening for some time and those signs took a step closer to being confirmed at the end of July.
The House of Commons Treasury Committee urged HM Treasury to extend the remit and powers of the Financial Conduct Authority (FCA) in efforts to avoid potential harm in the future caused by unregulated SME lending, among other areas.
My big concern about regulation is that, when it comes, the FCA will create regulation for the bad apples, not those lenders that follow best practice.
Consequently, it won’t be light touch and it will impact the whole market, which will increase costs and dampen innovation.
This will be to the detriment of some customers as much as it protects others.
Code of conduct needed
We may be too late to convince the regulator that short-term commercial lending can operate more effectively in the best interest of customers without regulation, but we still have the time and ability to influence the shape of that regulation.
This is why, as an industry, it is so important that we agree across the board to a code of conduct that protects our investors, our borrowers and our sector.
We must place greater emphasis on high standards of underwriting, training and education, and we must do this sooner rather than later because it could save the industry from over-zealous regulatory intervention.
We have a window of opportunity for lenders to support an organisation like the Association of Short Term Lenders (ASTL) so that it may take the lead on having the industry follow a code of conduct that ensures customers get the best deal and are not misled.
This might encourage the FCA to take a pragmatic approach to regulation.
Can lead to lower standards
Currently, it is possible for a lender to set up without having adequately trained staff and there is no requirement to equip staff so that their skills are fit for purpose.
Similarly, it’s not uncommon for lenders to poach junior staff from competitors and give them senior positions.
This approach can easily lead to lower standards among lenders and we should all put greater emphasis on sharing knowledge and best practice.
This is another area where the ASTL is taking the lead and delivering best practice training and seminars to maintain high standards.
Regulation is coming. But with an aligned approach and commitment to high standards and customer focus, we can help to influence what form it takes.
Now is the time to come together and shape the future of our industry.
Know Your BDM: Justin Cooper, Octane Capital
What locations and how many advisers and broker firms do you cover in your role?
I look after 40 or so brokers in my area, which is London and the South of England.
How do you establish and maintain a good relationship with brokers?
Trying to inject a bit of fun into proceedings and generally being yourself is a good place to start. Relationships with brokers work best when they’re natural rather than corporate and formal. And it goes without saying that the better the service you provide to brokers, the more likely they will be to send business your way in future. Above all, just be yourself.
What personal skill is most valuable in doing your job?
I’d like to think I can communicate with people fairly well, although clearly that’s for them to decide, this definitely helps transactions complete as smoothly as they can and keeps everyone happy. You need to be a multi-tasker as you can be juggling countless cases at the same time and you also need to be flexible about your hours to meet tight deadlines.
What personal talent would you most like to improve on?
I’d like to say I have the patience of a saint, but that’s not true. I like to get things done quickly and have a dread of missing deadlines so sometimes I can become a tad overenthusiastic, shall we say.
What’s the best bit of career-related advice you’ve ever been given?
To always enjoy your job. A colleague once told me: “Find a job you enjoy doing, and you will never have to work a day in your life.” It’s a cliché, I know, but it’s true. I always have this advice in the front of my mind. And thankfully, I really enjoy what I do and the people I work alongside.
What is the most memorable property deal you’ve been involved in?
A few years ago I was approached by a broker to help provide a loan to support the acquisition of a £20m office building in London on behalf of a Dragon from Dragons’ Den, with, errrr, five days’ notice.
If you were head of the FCA for the day, what would you change about regulation in the mortgage industry?
This is a great question. I would probably look at introducing a minimum entry level qualification for those looking to enter the specialist finance industry. It’s a specialist sector and it needs specialist knowledge. There should be a minimum barrier to entry.
What was your motivation for choosing business development as a career?
I have always been extremely competitive and I’m also highly motivated when it comes to reaching sales targets. Also, working as a BDM allows me to have an element of control over my earnings.
If you could do any other job in the property sector, what would it be and why?
Definitely a property developer. The challenges of building new homes from the ground up right through to sale is something that I respect and would take great pride in achieving.
What did you want to be growing up?
When I was a young lad my friends and I were completely obsessed with cars, so I always wanted to be a mechanic.
If you could have one superpower, what would it be?
To be able to fly. Those that know me are aware that I have had a prosthetic leg for the best part of 35 years so walking can be pretty tiring. Being able to fly would definitely be a dream come true.
And finally, what’s the strangest question you’ve ever been asked?
I was once asked if I would be prepared, for charity, to jump out of a plane at 10,000 feet without a parachute. As charitable as I like to think I am, I couldn’t possibly agree. Hitting the ground at 200mph is not my idea of a good day. The person in question then explained that I would be strapped to an expert who would be wearing a parachute big enough for the two of us.