Majority of commercial finance brokers back to full capacity – UTB
A further 18 per cent are operating with two thirds of their staff back at work. Only two per cent of brokers said their businesses were closed.
The survey, of more than 120 brokers in the last week of June, revealed a largely positive view about brokers’ ability to recover from the effects of the Covid-19 lockdown.
Some 40 per cent of advisers said currently less than a quarter of their staff were based in the office, but 72 per cent of respondents expected to have all their staff back in the office on a regular basis by the end of October.
However, almost 20 per cent of brokers surveyed said it was unlikely their companies would return to the working arrangements that were in place before the lockdown.
The majority of brokers said they wanted to maintain a flexible, home working style when the pandemic was over.
Three quarters of brokers said social distancing was not detrimental to their business.
The majority of brokers said they thought it would be next year before their business levels recovered to pre-pandemic levels, while 40 per cent said normality would return in quarter four this year. Just five per cent thought it would take until 2022.
Harley Kagan, group managing director of United Trust Bank, said: “The relaxation of social distancing measures and travel restrictions has enabled many staff to return to work, though clearly it will be some time before brokers and lenders can be fully staffed, and that’s if they choose to return to the same working practices they had in place before the pandemic hit.
“Technology has certainly made flexible and home working a viable and sustainable option for many businesses and UTB’s considerable investment in fintech over the last two years has been money well spent.
“How long it takes for property and asset finance markets to recover remains to be seen and broker opinions are divided. The threat of a second wave of Covid-19 is ever present and avoiding another widespread lockdown is vital to the recovery of our industry and the UK economy as a whole.
“Recent events in Leicester show how easily the pandemic can resurface and extend disruption and we hope brokers, colleagues and customers stay safe and well,” he added.
Paradigm shift in planning rules will help SME developers – Tooth
Despite this, everyday we see new signs of improvement across the market.
As restrictions lift further and businesses receive a clearer plan for receiving much needed support from the government in the coming months, there are reasons to be optimistic.
We have seen an influx of lenders returning to the specialist lending market over the last couple of weeks.
With valuers returning, building sites reopening as more projects recommence work and access to properties being reinstated.
It is certainly encouraging to see the housing market as a whole kicking back into gear.
With these green shoots came an increasing approach to relaxing loan to values (LTVs) and readjusting risk appetite where appropriate for more lending products and use cases.
Planning changes support SMEs
Last week Boris Johnson announced what he hailed as ‘the most radical reforms to our planning system since the Second World War’ in a statement setting out the government’s plan for nationwide economic recovery.
The industry has long awaited commitment from the government to effect a paradigm shift in the planning system, and this support from the prime minister comes at a pivotal time for the housing market that has endured an undoubtedly turbulent couple of months.
This dialogue will be particularly well received by SME developers who have found the planning process cumbersome and relatively more expensive in time and effort for smaller projects.
So the intent to streamline the process and extend permitted development rights for commercial to residential conversions is very welcome.
Important steps towards stamp duty reform
What’s more, the government is not stopping at planning.
Stamp duty reform is something that the majority of the industry has been united in wanting, even if the exact strategy surrounding that reform varies sharply depending on who you are talking to.
As it stands, stamp duty not only provides a barrier for increasing transaction volumes in the market, but remains a disincentive for older homeowners considering downsizing, which simply reduces the amount of suitable available stock for those second- and third-time purchasers and clogs up the entire market.
In 2018 we saw steps in the right direction with the removal of stamp duty for first-time buyers on purchases of up to £300,000 and now the chancellor’s temporary but immediate abolishment of stamp duty on homes up to £500,000 until March 2021.
This stamp duty holiday will provide a welcome relief for buyers in the current climate, and it’s a smart legislative decision to inject mobility into the housing market and provide a much needed remedy to the ‘wait and see’ approach that many buyers may have opted due to recent market uncertainty.
Each of these initiatives is an encouraging step towards a more optimistic future for the industry; and importantly a clear message that this government is well aware of the issues faced by the housing market in light of the Covid-19 crisis, and is prioritising taking material action to tackle them.
Paragon extends funding to £16.7m for Devon development
Paragon originally funded £15m towards the acquisition and development of 54 houses at the EXIII Topsham site. Since then, the remaining units have been refinanced on a £1.7m six-month marketing facility.
This allowed Burrington to secure the purchase of the land and use the increased planning value to minimise the amount of equity needed to fund the project.
Nick Marsham, corporate finance director at Burrington Estates, said: “We have a long-standing relationship with Paragon and the company provides a first class service.
“The flexible nature of the facility for this project and the speed of their lending and decision making enabled us to complete the site six months ahead of budget.
“Oliver Thompson and Daniel Cresswell from Paragon are always quick to respond, commercial and flexible in their approach and they are a pleasure to deal with. This project at Topsham is one of many successful projects that Paragon have helped us to deliver.”
Oliver Thompson, relationship director at Paragon, added: “It’s great to support Burrington on another scheme, providing more much needed housing to the market.
“In addition to the initial funding, a revolving facility was provided for the development – committed for the entire duration of the project to enable the site to be developed efficiently.”
Investec gives green light to £17.5m London student digs deal
The loan has been advanced to Scape, a global student accommodation provider, and will allow the firm to refurbish the Thanet Street property to deliver 60 self-contained studio units.
Investec has provided Scape and it partners with over £150m of senior debt funding, to date, across five schemes.
Since the start of 2015, Investec has originated £677m of funding in the purpose built student accommodation (PBSA) sector to a range of UK and global institutions, financing more than 16,000 beds across 23 university cities.
Shane Ryan, at Investec Structured Property Finance, said: “This is a high quality development in a prime London location, which is well placed to further meet the demands of London’s student population. Despite short-term uncertainty affecting the sector, the city’s enduring international appeal and challenging planning restrictions continue to underpin favourable supply-demand dynamics.
“We remain steadfast in our conviction that the PBSA sector will continue to be a sought after asset class by both UK and global investors, attracted by its long income characteristics and attractive pricing. Having forged an extremely close relationship with Scape, we look forward to working with them on future schemes.”
The development is centrally located in Bloomsbury and will be within walking distance of several leading universities, including the University of London, Birbeck University and SOAS.
Scape is one of the largest developers and operators of PBSA globally with over 30,000 beds in operation and development across the UK, Australia and the USA.
Maslow Capital restarts development and conversion lending
In May the firm launched its liquidity fund which seeks to help development finance providers and borrowers to acquire existing loan portfolios and provide costs to help with the completion of facilities, along with refinancing.
Maslow said it had used the lockdown “as a necessary period to assess the market and ensure its origination efforts are focused on the right opportunities”.
It will consider developments in the residential, private rented sector, build to rent, and purpose-built student accommodation (PBSA) sectors.
“Notwithstanding the difficulties of the post Covid-19 landscape, Maslow is committed to the future of delivering housing across the UK and has assigned substantial capital to both primary and secondary lending activities going forward,” it added.
Since being formed 11 years ago the lender said it has financed more than 220 projects delivering in excess of £3bn of gross development value.
Loans start at £5m with its average deal being £15m.
Head of deal origination Matt Pigram said the lender was well placed to support developers adapting to the current environment.
“We fund small, large, straightforward, and complex loans,” he said.
“Unlike the banks we are able to avoid some of the regulatory and credit rating pressures allowing us to be very flexible when it comes to loan size, scheme and borrower concentration exposures.
“We are witnessing our experienced developers adapting exceptionally well to the pandemic with new high-quality schemes that deliver core housing at accessible price points.”
CEO and co-founder Ellis Sher (pictured) added: “We remain focused on core asset classes, staying true to our longstanding experience of funding residential and PBSA developments, while diligently sticking to the key lending fundamentals that have helped steer our credit decisions over the past decade.
“As the country begins to reopen, we look forward to playing our role in delivering much needed funding to the UK’s small and medium enterprise housebuilders.”
Gatehouse invests £10.2m in 66 home build-to-rent scheme
The scheme will be made up of 23 two-bed, 39 three-bed and 4 four-bed houses and is being built by Vistry Partnerships. The deal was advised by Gatehouse Bank which is also a co-investor.
Colliers International acted as property advisers and Dentons as legal advisors on the transaction.
The scheme, on Raleigh Street, will form part of the second build to rent fund advised by Gatehouse Bank which, since its establishment in December 2015, has spent around £90m on the construction of 684 single family houses across the UK.
Following the completion of Raleigh Street, the fund will comprise of a 750 unit single family housing private rented sector portfolio. The portfolio is being professionally managed through a build to rent platform, Ascend Properties.
Work on the Raleigh Street site in the Birchills area of Walsall began in September last year and is expected to be finished by the summer of 2022.
Paul Stockwell, chief commercial officer at Gatehouse Bank, said: “Gatehouse has a proven track record of delivering much-needed homes around the UK by successfully investing in and managing build to rent schemes.
“This is another example of our intention to fund developments in the single-family housing sector, providing attractive, affordable and professionally managed homes.
“The Raleigh Street site has remained dormant for eight years so this is a fantastic regeneration opportunity that will provide a significant number of family homes.”
Housing market fundamentally sound but stamp duty boost needed – Lewis
Confidence is slowly returning as buyers and sellers get on with deals that have been put on hold firstly because of Brexit, then while they waited for the general election outcome, and finally because of the pandemic.
Now, however, there is a new threat – historic statistics.
House price volatility
As the Office for National Statistics predicted when it temporarily suspended its UK House Price Index from April until further notice, Covid-19 would greatly reduce the volume of housing transactions taking place.
This makes it difficult to produce a measure of house prices that, as the ONS said, “would be representative of any true transaction activity within the housing market”.
Indeed, Nationwide Building Society’s May report made for particularly grim reading, with a 1.7 per cent fall from the previous month, the largest monthly fall in house prices in 11 years.
Back in 2009, we had a financial crisis on our hands; now we do not. Banks have plenty of liquidity and are eager to lend.
Interest rates are at all-time low and agents are reporting a positive uptick in applicants registering, which are all positive signs.
With the full impact of lockdown measures being felt during the period covered by Nationwide’s report, it’s not surprising to see artificial numbers. It is not a fair reflection of the market or sentiment but purely a result of necessary measures taken by the government to deal with the pandemic.
Halifax’s take on May’s data was more positive, with the average house price falling for the third month in a row, a 0.2 per cent month-on-month decline in values.
Indeed the fall was more modest than in April, which saw a 0.6 per cent drop, pointing to a robust property market notwithstanding unprecedented conditions which forced it to grind to a virtual halt in May.
Fundamentals are there
Of course, if you put these reports into context, we get a truer picture.
Bank of England data reveals a great first quarter with confidence in the lending market, more mortgages and higher LTVs being offered by banks, along with cheaper rates.
This was all set to be the trend for the year ahead, before the pandemic struck.
Ultimately, it shows that the fundamentals are there. They haven’t gone away – lenders are still keen to lend.
The easing of lockdown conditions is seeing an uptick in activity and transactions, and indeed average values as we move into the summer months, although it’s too early to see these reflected in the official data.
Nationwide reports that one in eight people put off moving because of lockdown but the majority saw the current situation as a temporary pause with would-be buyers planning to wait six months on average before looking to enter the market.
Indeed, MT Finance’s latest Broker Sentiment Survey points to a relatively optimistic outlook with 40 per cent of brokers predicting that it will take six to nine months for the market to fully recover from lockdown.
Once lockdown is fully over, would-be buyers should regain their confidence to move.
The government has done well supporting borrowers with its mortgage payment holiday programme, which has subsequently been extended.
It has provided support for households and jobs on a scale never before seen.
In order to ensure all this good work is not undone, the next step is further stimulus in the form of a reduction in stamp duty or even its removal for several months.
Shawbrook makes senior hire and Glenhawk expands team – round-up
He will be responsible for developing the lender’s product proposition to support brokers and customers.
McMillan has 17 years’ experience in the specialist lending industry, with his most recent role being group mortgage product manager at OneSavings Bank. Other previous roles include loan manager at Interbay and financial planning manager at NatWest.
Emma Cox, sales director at Shawbrook, said: “Even in these uncertain times, we are committed to continually improving and investing in our proposition to support brokers and customers.
“This includes expanding our expert teams with the right talent, so we are pleased to welcome Bradley to the Shawbrook family and look forward to his contribution.”
McMillan added: “It’s great to join a team where everyone shares the same passion and commitment to bettering the experience for their customers.
“I’m excited to be a part of that and looking forward to getting stuck in and helping shape Shawbrook’s offering.”
Glenhawk expands team by two
Glenhawk has appointed Joan Drummond in the newly created role as head of collections and Andreea Negroiu as treasury associate.
Drummond (pictured) will head the loan servicing and collections team.
She has over 20 years of experience in loan servicing, having previously managed operational teams at Mars Capital and CHL Mortgages, where she dealt with loan books across the residential, buy-to-let and commercial sectors.
Negroiu will report to group treasurer Daron Kularatnam as part of the team responsible for securing and managing third-party funding lines.
She previously held roles within the RBS capital markets team and with NewDay’s treasury department.
Guy Harrington, founder and chief executive of Glenhawk, said: “Joan and Andreea will be excellent additions to our existing strong team.
“As we continue to grow the business, we require people with new skills and expertise, and Joan in particular brings a wealth of experience which will be invaluable.”
Glenhawk has also reported it generated £191m in new loan enquiries since the government-imposed lockdown was announced on the 23 March.
During the same period, the challenger bank said it has experienced no defaults and redeemed £12m of loans.
In March, Glenhawk announced it agreed a senior funding line with JP Morgan, the first time JP Morgan has invested in a private securitisation backed by UK bridging loans.
This helped increase Glenhawk’s maximum loan size offering from £3m to £5m and will support its entry into the homeowner mortgage market.
Large portfolio and commercial landlords should get payment holidays – Sharma
Speaking in the House of Commons yesterday, Sharma (pictured) said: “I would expect lenders to apply similar forbearance [as residential tenants and landlords] where needed in the case of existing commercial loans.”
Sharma’s statement was in response to Kevin Hollinrake MP, who said allowing commercial tenants to take breaks on their payments shifted the financial burden to commercial landlords, who in many cases were only given a capital repayment holiday.
Hollinrake, co-chair of the All Party Parliamentary Group for fairer business, has previously called on the Financial Conduct Authority and UK lenders to introduce six-month payment holidays on commercial loans for business customers affected by the Covid-19 crisis.
This announcement means small and medium enterprises and landlords with larger portfolios affected by Covid-19 should be able to benefit from some of the financial relief the government has made available for those impacted by the pandemic.
Three-month payment breaks on mortgages and loans were initially introduced in March for residential borrowers, before being extended to Help to Buy and buy-to-let customers later that month.
In May, it was announced that the payment holiday scheme would be continued for a further three months to help those affected by the coronavirus pandemic.
UTB funds £7.2m redevelopment project
It is the first time UTB has funded a Hawkfield Homes development.
Hawkfield Homes has been developing and building new homes in and around Bristol and the South West for 12 years. The firm focuses on properties which support flexible lifestyles and working from home and the homes are typically designed to include an office or study.
The redevelopment will see Hawkfield Homes demolish the existing buildings at Dryleaze Court and construct ten four bedroom semi-detached and 12 two bedroom semi-detached and terraced homes.
The homes should be eligible for the Help to Buy scheme with the first units available to purchase from summer 2021.
Jonathan Nail, director – property development at United Trust Bank, said: “United Trust Bank is keen to support growing regional house builders and I’m delighted to be working with James and Hawkfield Homes as they bring much needed quality new homes to the Bristol area.”
James Kilmartin, director of Hawkfield Homes, added: “Although the Covid-19 pandemic took us all by surprise, Jonathan and the UTB team have been accessible and supportive throughout.
“It’s been an unusual start to a new relationship but between us we’ve been able to overcome the challenges.”