Five opportunities in commercial mortgages for brokers to take advantage of in H2 – Simpson
For us, it was trying to build a new commercial mortgages business in the midst of a pandemic, and ensure we were making the right decisions for our customers and our brokers, as well as commercially.
This was especially difficult when investor confidence was severely impacted. Extraordinary steps were required, like mortgage payment holidays, which we introduced with just 48 hours’ notice.
However, despite all this, there was a need to recognise that a positive response was essential to create a strong platform to build success for the future.
It is hard to believe that in 2021 things look so different. Q1 was not only a record lending quarter for us, but we did as much business in this quarter alone as in the whole of 2020. This suggests a great outlook for the commercial market going forwards.
So, what about the second half of the year and into next? What opportunities are out there that you could make the most of? Here are my top five thoughts on this:
1. Staycations – the development of the holiday lets sector
This might feel obvious, but one of the consequences of the pandemic has been a huge increase in people holidaying in the UK out of pure necessity.
Investors recognising this are capitalising on this profitable market, leading to an increase in demand for specialist holiday let mortgage products and lenders are responding. So, if you haven’t already, this could be a very profitable market to explore.
2. Buy-to-let sector growth and change
Recent increases in demand for housing and the resulting higher house prices have caused a shift in the buy-to-let market, leading to sector growth.
This has seen experienced investors expanding their portfolios, and a trend towards professionalisation in the sector.
Lenders have responded to this and amended their product offerings to cater for them, with products such as specialist HMO mortgages becoming more popular. This could mean getting up to speed with these specialist products and branching out, if buy-to-let is a new market for you.
3. Expanding regional markets
The value of residential properties across the country has outpaced London in the past 12 months. This suggests that a sensible course of action would be to focus on regional lending, such as investment in the physical expansion of your business.
This could mean opening new regional offices so that you have a physical presence in other locations, expanding your capability to reach more borrowers who might need your help.
4. Making the most of your people
Relationships have been brought into sharp focus as the pandemic has changed the way we interact. In our sector, lenders and brokers have had to adapt their way of working to provide the best possible support for their clients in uncertain times.
Strong relationships drive positive outcomes and will continue to do so as we move into the future, therefore it is essential to nurture and support your people and give them what they need to provide your clients with exceptional service.
5. Embracing technology
Technology was also moved on by the pandemic as face-to-face interaction became impossible.
Whilst this was initially very difficult to come to terms with, there are advantages such as improved work-life balance and increased efficiencies as employees do not have to commute.
In the future this could mean companies embrace a more hybrid approach to work. But it also means a focus on new technologies, like Application Programming Interface (API) technology.
This can save you both time and money, allowing you to focus on other things, like customer service or relationship-building, to take your business forward.
Signature Property Finance and VAS Audit together reach £200m of audited valuations
The audit company was retained by Signature Property Finance to provide independent analysis of valuation reports to decrease lending risks prior to funding.
VAS Audit and Signature Property Finance have been partners since 2017, and in that time VAS Audit has undertaken 500 reviews of valuations, equivalent to 15 audits a month across 60 different surveyors with an average value of £400,000 per property.
Signature Property Finance’s chief executive officer Tony Gilbertson (pictured) said: “In a market where some lenders will throw out low rates and high loan to value, to attract borrowers who rarely get the promised deal, we have focused on ensuring certainty of funding for our clients.
He added: “If we agree a deal at the outset, we deliver on those terms; no nasty surprises or last-minute rate increases. This approach requires total confidence in accurate valuations of the properties we are dealing with, which is where VAS Audit steps in. They consistently deliver what we need, when we need it.
VAS Audit’s managing director Daniel Owen-Parr said: “Signature understands that while a standard valuation is a solid base on which to make a lending decision, an audited valuation which has gone through a second layer of independent verification helps to further reduce property-specific lending risks.”
Assetz Capital appoints former Together executive as lending operations director
Thomas (pictured) worked at Together for nearly 14 years and before that she was an operations manager at Morgan Stanley. She has also held senior roles at Freedom Finance and Halifax.
Assetz Capital chief executive, Stuart Law, said: “We’re delighted to welcome Irene to the team. We are taking our operational management to the next level, and I’ve no doubt Irene will be a catalyst for our significant growth in 2021 and beyond.
“At a time when the economy is set to kickstart, Irene’s appointment will help us to continue delivering for SMEs and investors as we continue our journey to be the preferred lender for SMEs and SME house builders across the UK.”
Launched in 2013, Assetz Capital provides alternative funding sources to SMEs and property developers. It surpassed the £1bn lending milestone at the start of last year.
The business has also been accredited as a lender under the Coronavirus Business Interruption Loan Scheme which aims to support the economy through the pandemic and is now targeting £1.5bn lent by this summer.
The company also launched a new bridging product with a 0.65 per cent interest rate.
YBS Commercial completes £4.3m portfolio landlord deal in South West
The deal was agreed by the lender’s South West Hub in Bristol, covering a residential portfolio of 33 houses and 55 flats.
The interest-only loan was fixed for 10 years at 3.55 per cent, with the deal tailored specifically to suit the client’s portfolio.
The commercial lender has added a number of products suited to BTL borrowers in recent months, including one for homes in multiple occupancy.
George Elefheriou, managing director of Real Finance, which brokered the deal, said: “It’s great when lenders have strong appetite to lend on some of the more complex portfolios.
“There’s a place in the market for lenders to demonstrate support for portfolio landlords and I’m delighted with the outcome of this deal.”
Allan Griffiths, regional lead of the South West Hub, at YBS Commercial Mortgages, said: “We’re delighted to have been able to complete this high-value deal and to carefully tailor the loan to suit the client’s specialist requirements.
“Now that we have expanded our product offering, we look forward to helping even more portfolio landlords in the future.”
Know Your BDM: Ian May, Landbay
What locations and how many advisers and broker firms do you cover in your role?
I cover half of London (essentially North, Central East and South East) and Kent which is 1,800+ brokers and nearly 500 firms.
How have you changed the way you establish and maintain a good relationship with brokers in the pandemic?
Of course, everyone is missing the face-to-face side of things, however, on the up-side it means we can reply to enquiries much faster as we are not travelling. Also helping man the broker helpline has introduced us to new advisers and has started relationships that way. I think clients have liked the fact they can get a really quick response.
What personal talent/skill is most valuable in doing your job?
Honesty is so important I think. If you can’t help with the deal don’t try to string it out, be honest with the chances and if you can, use internal relationships to get an indicative decision.
What personal talent/skill would you most like to improve on?
Apart from golf? I find that with meeting so many people in this role it can be hard to put names to faces initially. So that could be improved upon although with age I expect that its likely to get worse!
Where would you rather be stuck, in bumper-to-bumper traffic or back-to-back Zoom calls?
You can’t be productive sat in the car. So despite Zoom overload, opportunities to speak to people are key.
What’s the best bit of career-related advice you’ve ever been given?
My first manager 28 years ago told me, ‘make decisions as if it is your business and never ask people to do something that you aren’t prepared to do yourself’ – that’s always stayed with me.
What is the most quirky/unique property deal you’ve been involved in?
There have been a few challenging ones but I remember a former castle that had been split into flats – it split valuers’ opinion but was very impressive.
What has been your lockdown coping strategy?
It has varied – wine, beer, walking and just lately a puppy. And I have watched a lot of golf on TV. We have also had a few Zoom cook-a-long sessions with Landbay’s own Keith Floyd – our managing director Paul Brett.
If you were head of the FCA for the day, what would you change about regulation in the mortgage industry?
I would look at the PRA rules for portfolio landlords. It seems crazy to me that a large portfolio landlord who could easily cover rental voids is restricted compared to a landlord that only has a couple of properties. The latter is far more vulnerable to voids causing an issue.
What was your motivation for choosing business development as a career?
I have worked in financial services all of my career in different roles. I love the variety of people I get to meet and working for a great company that you believe in really helps.
If you could do any other job in the property sector, what would it be and why?
That would have to be working on a programme like ‘A Place in the Sun’ – on location of course. I really like the differing properties you find abroad – and the sunshine.
What did you want to be growing up?
I hoped I was going to be a footballer (don’t so many kids?) and was close but just missed out when I was 16. Nowadays there are opportunities for youngsters in the situation that I was in to go to the USA on scholarships but sadly this came too late for me.
What’s your favourite face mask design/pattern to wear?
I have a camouflage one in the car and a plain Tommy Hilfiger one – I’m a bit boring on that front.
And finally, what’s the strangest question you’ve ever been asked?
Probably the one above about the facemasks.
Keystone hires BDM for South West as team resumes face-to-face meetings
Williams (pictured) has more than five years’ experience as a BDM in the South West and joins from distributor Black Book Finance, where he focused mainly on buy-to-let and commercial business.
Prior to that, he was a BDM for fellow distributor Enterprise Finance.
Williams will take over Rockett’s roles and responsibilities, including going to meet brokers in the region over the coming weeks.
The lender’s BDMs are preparing for a return of face-to-face meetings after 14 months of remote appointments.
Brokers who do not wish to meet face-to-face will continue to be able to contact their Keystone BDM using video call, online chat, email or phone.
Elise Coole, managing director of Keystone Property Finance, said: “We have shown over the past 14 months that we can work remotely while maintaining good service levels, and even when things return to normal, we will continue to offer brokers the choice of how they communicate with us.
“But after so long at home, our BDM teams are itching to get back on the road to speak to brokers about their complex buy-to-let cases and to tell them all of the exciting things we have in the pipeline.
“That said, we realise there will be many brokers out there who do not want to meet face-to-face, for whatever reason, and we completely understand that.
“As a modern, innovative lender, we aim to be as flexible as possible, and we will gladly continue to help solve brokers’ complex buy-to-let cases through their chosen medium,” she added.
Regarding Rockett’s retirement and Williams’ appointment, Coole added: “Paul is an exceptionally well-liked, valued and talented team member and we are going to miss his unparalleled experience here at Keystone. He’s been a wonderful colleague over the past few years, and I’d like to thank him for his hard work and effort. But at the same time, after more than 38 years in the mortgage market, if anyone deserves a long and happy retirement, then it’s Paul.
“In Ross, we have the perfect successor, someone with fantastic experience and who has a deep understanding of both buy-to-let and commercial lending. We are thrilled to welcome Ross on board and we are confident he will be a major asset.”
Shawbrook backs commercial-to-residential project with £2.3m loan
The lender was approached by strategic partner Vincent Burch Mortgage Services on behalf of a client wanting to convert an office block in a highly-industrialised area of London into 14 residential flats.
The price tag was £3m and the requested loan-to-value 75 per cent.
The client owned an extensive property portfolio, but had not yet completed an investment of this size and therefore required a specialist lender.
Shawbrook considered that the case represented a good investment opportunity, being close to a London Underground station and easily commutable into the City of London. Nearby, another block had recently been converted from commercial to residential, indicating that planning permission should not be a challenge.
The client swiftly provided all the required information to meet Shawbrook criteria, and the lender responded with a pre-valuation offer in 24 hours.
Gary Boorman, head of large loans at Vincent Burch Mortgage Services, said: “Shawbrook was an absolute pleasure to work with and displayed a can-do attitude throughout. I am certainly hoping to repeat this experience on other deals.”
Emma Cox, sales director at Shawbrook Bank (pictured), said: “We pride ourselves on having the specialist expertise to handle the most complex cases — and this one in particular is an excellent example.”
“Our team has significant experience lending on commercial-to-residential developments, and we therefore had the knowledge necessary to take on this case, working with an experienced strategic partner who knew exactly what to do to support their client,” Cox added.
Avamore Capital adds flexible planning feature to refurb range
This will be available for enhanced or modified planning and is expected to give developers the certainty that funding will be approved if they make planning changes in the future.
The feature can be applied in cases where the developer may have finalised plans to add an additional storey to a property and has already submitted an application.
In this scenario, Avamore can add an extra discretionary facility to the loan agreement which means further funds can be drawn subject to planning being granted.
The feature can also be used where a developer is converting a building with intention to submit planning to add another storey which they have estimated costs for, but not finalised plans.
Here, Avamore will include an estimated discretionary facility in the offer for the expected works. To draw the additional facility, finalised plans must be approved by the lender and final planning must be granted.
The final scenario in which the feature can be used is where the developer may have been granted planning by the local authority subject to a s106 agreement being signed and provided by the borrower. In this case, the formal planning consent may not have been issued and take time to come through.
In this instance, Avamore can accept that planning has been granted in principle. It will provide the loan for the full works with the build facility being released at the point which planning is gained in full.
There are no additional fees charged if the developer does not use the facility and rates will be in line with Avamore’s standard offering.
Only refurbishment projects will be eligible for the feature.
Adam Butler, relationship manager at Avamore Capital, said: “We have lent on a number of projects that fall into the planning flexibility bracket and it’s great that we are now able to formalise the feature.
“This is another element for brokers to add to their toolbox which speaks exactly to what developers need right now.”
He added: “The market is keen to build and Avamore’s feature mitigates the ‘stop start’ nature of the process. If the enhanced planning is packaged in the initial deal, once planning is approved, we really facilitate the developer’s ability to move at pace.”
Bill to ‘modernise’ planning outlined in Queen’s speech
Speaking today, the Queen said the government would help more people to own their own home with “laws to modernise the planning system, so that more homes can be built”.
The Planning Bill is set to be introduced in the autumn, after being trialled in the planning white paper last summer.
At the time, housing secretary Robert Jenrick said the government would make planning decisions “simple and transparent” with a focus on quality, design and the environment.
There will be an increase in homes built through modern methods of construction and developers will be given more certainty over what projects are established where.
This will be done by local councils identifying areas which are marked for either growth, renewal or protection.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “Without wishing to appear unduly curmudgeonly, I think most commentators could be forgiven for reacting to the latest government announcement by saying ‘we’ve heard it all before’.
“The announcement of a new planning bill aimed at helping to better designate land for development should be a positive step in the right direction towards building more homes in the UK – but we’ve had so many steps and promises in the past – all of which have led to – relatively little.”
“Successive governments have struggled to hit their building targets and recent research from Shelter suggests we may not do so until 2032. That is before we factor in the delays caused by Covid-19,” she added.
Davies said: “Having said that, the coronavirus crisis has reset so much about our everyday lives, and the government has made clear its desire to ‘build back better’.
“Implementing an effective housing strategy could play a big part in doing just that. There is a great opportunity for Boris Johnson’s government to be the first in nearly 20 years to make a real difference and deliver on its promises to address the current issues facing the housing market.
“The big challenge will lie in whether it can take a sufficiently long-term strategic view of what needs to be done and set in motion projects that will not be fully delivered until after the life of this Parliament and these politicians.”
Specialist platform OMS delivers facial recognition ID verification
The system helps to navigate the previous requirement for certified ID, usually provided by a solicitor. ID is verified by using machine learning and facial recognition to check the applicant is the genuine owner of an authentic passport, driving license or national ID card.
OMS covers product areas such as residential, buy-to-let, second charge, equity release, bridging, commercial plus general insurance and protection.
It has already integrated with four platforms – Iress, Twenty7Tec, iPipeline and Knowledge Bank – to provide users with product, protection and criteria searches.
Neal Jannels (pictured), managing director of One Mortgage System (OMS), said: “Despite information security, data privacy and compliance cited as top priorities, a lot of intermediary firms tend to struggle with digital transformation projects. Nivo is quick to deploy, simple to integrate and the benefits are quickly evident.
“It’s an exciting product which will speed up and simplify an antiquated ID verification process across a mortgage market which is swiftly catching up to other areas of financial services from a tech perspective.”
Matthew Elliott, chief development officer at Nivo, added: “Lenders and brokers love Nivo because it makes it easy for them to offer the kind of modern mobile experience that customers expect.
“We’re proud of having over 2,000 five-star app reviews, alongside the speed and efficiency results, which prove that customers want to engage in this way.”