Buzz Capital joins ASTL
The Brighton-based lender offers bridging finance up to a maximum of 75 per cent loan-to-value, across a range of lending targets. These include purchase, refinance and refurbishment of residential or semi-commercial property; commercial to residential conversions and development exits. In addition, for those with complex circumstances a bespoke offering is available.
David Peck, property director at Buzz Capital, said the firm was committed to delivering affordable property business loans, and focusing on providing “open, transparent and customer-focused solutions”.
He continued: “This focus on the best outcomes for the end customer aligns closely with the ethos and objectives of the ASTL and we are proud to become members of such a well-respected association.”
Vic Jannels, CEO of the ASTL, added: “As with all our members, Buzz Capital commits to the ASTL Code of Conduct, which is built on fairness, customer focus, and transparency. I would encourage all brokers seeking a short-term lending solution for their clients, to look for ASTL membership as a badge of quality.”
The addition of Buzz comes after bridging applications hit a new record high in the last quarter, according to ASTL figures.
HTB adds to asset finance division
Ian Corbett has been appointed as head of credit and risk, where he will lead the lender’s underwriting team. Corbett has spent more than 20 years within asset finance, and joins from BNP Paribas where he was head of ELS credit UK. He has previously senior manager of underwriting at ING Lease.
Ian Meyer is also joining HTB, taking up the post of manager of new business operations. Meyer has more than 15 years’ experience in asset finance, having also spent time at ING Lease as well as latterly working as operations manager at Hitachi Capital. HTB pointed to Meyer’s experience with the ALFA Lease Administration system, which HTB has recently implemented.
Paul Bartley (pictured), managing director of HTB Asset Finance, said the appointments complemented an already growing team, and demonstrated its appetite to “pursue and ambitious growth strategy”.
He continued: “We have restructured the business in such a way that we are now poised to take full advantage of the economic recovery and significantly extend HTB’s presence in the asset finance market.
“It goes without saying that finding and hiring the very best high calibre team is key to maintaining an exceptional and consistent level of service to both our brokers and customers and these two recent hires show our commitment to this.”
The recruits follow a recent rejig of HTB’s specialist mortgages division, which is now headed up by Louisa Sedgwick.
Being armed with proficiency in the specialist market helps cases go further – Pink Pig Loans
So, you end up lumping, for example, bridging, commercial and buy-to-let in with development finance when they can actually be quite different.
This problem can be exacerbated for those who feel experienced in one area, perhaps bridging, when they see that it’s often the same lenders presenting product solutions for development finance investors.
This might be the case, but it doesn’t necessarily mean those lenders are looking at such cases in the same way. In fact, while bridging can be relatively straightforward, that’s often not the situation with development finance.
The good news is that there are options right across the board – this is not a part of the market which is short on lender options or products.
From first-time developers to highly experienced players there is finance available for all, but if advisers are going to be presenting development finance deals, then they really need to be prepared.
Development finance is likely to be one of the more significant niche sectors in 2022 and developers are preparing right now for what they want to achieve next year. That being the case, if you want to be active in this space, here are a few tips for you and your clients.
How brokers can be ready
Firstly, make sure you firm up the numbers. We work with a lot of advisers who come to us in order to access the array of development finance products on offer, and to work those deals through.
However, when it comes to this product set, a conversation which begins with, “The figures are something like this…” isn’t going to cut the mustard in terms of getting a product solution.
Without a firm grasp of the numbers – both around the need in terms of top-end finance requirements and what is required after the work – we are not likely to get too far. Come to us with a firm outline and you’re already half-way there.
Secondly, and this is especially pertinent for newer developers, make sure they have a good team around them. It can make a huge difference to have quality individuals who know what they’re doing.
Not least because this will give confidence to lenders, but we may be able to introduce other elements to the work or offer a deal that maximises a development’s profitability.
Thirdly, while we fully understand this space, it is always helpful if the adviser comes to us having carried out some initial research into what might be available and where their client or deal might fit.
Even if it’s just a ballpark idea of where the case could work that is always going to be helpful as it again means we’re a little further down the road in terms of what could be possible. We’ll then review those ideas and see whether we can secure finance which works completely for the client.
Finally, and you would expect me to say this, but utilise those businesses which specialise in this sector, especially if securing development finance for a client is a rare opportunity and you are not a specialist. No one is suggesting you miss out on these opportunities, but this market does change quickly and client needs can be complex.
You could spend a lot of time trying to make it work yourself and not get anywhere close to a completion.
If you’re not doing this week-in, week-out, then why wouldn’t you work with a packager who is immersed in this market?
You’re more than likely to find a solution you couldn’t access on your own and this is much more likely to secure a happy client willing to return to you in the future.
Pandemic created ‘massive, renewed spirit of opportunity’ – Jupp
Speaking to Specialist Lending Solutions after Brightstar’s 10-year anniversary, chief executive Rob Jupp said: “When we started back in early 2011, there really wasn’t a specialist lending market in operation in the UK market, it was entirely shut, so we had to do our bit to reopen it.”
He said this was because the market was still recovering from the global economic crisis and credit crunch, which impacted the liquidity of the UK lending market.
According to Jupp, this meant a lot of borrowers were not able to buy a home as they did not fit traditional criteria and could not borrow.
He said: “Unless you were middle aged, middle class, low loan to value and a home mover you would really struggle to obtain a mortgage. I looked at them [other borrowers] and would wonder ‘why on earth is this client struggling to obtain a mortgage? They have a good job, there is no damage in the background like excess credit, it’s just a little bit unconventional’.”
He said the specialist market started to gain momentum with the likes of Precise and Together in 2012 and 2013, and then in 2014 and 2015 the “world and their wife decided they would fund a lender in that world, and the rest is history”.
After a decade in the specialist market, the company has worked with nearly 30,000 customers on 18,000 completions worth more than £5bn. It also has grown its reach to 75 per cent of the intermediary market and its team has expanded to 85 employees.
Speaking on more recent market conditions, Jupp said the specialist lending market “fared well” during the pandemic, especially those who used automatic valuation models at a time when valuers were unable to visit sites.
“Most of our lenders continued lending, only a small number didn’t. There was a lot of maturity, most lenders didn’t knee jerk. They worked with borrowers and supported borrowers with payment holidays.”
He continued: “The pandemic has created a massive, renewed spirit of opportunity, where the specialist market is now awash with potential borrowers that need to use that market in order to provide an entry to home ownership.”
He added that consumers were more aware of the specialist lending market and said there were increased options to achieve home ownership outside of traditional lenders.
“The specialist lending market is a very good pathway and entry point in to lending. There is no shame at all about using a specialist lender for a mortgage. You could be self-employed or have different income streams or had a tax issue in the past, or you want to buy a property with unusual construction or build a property in your garden. You can do a range of things.”
He added: “In the past if you needed a specialist mortgage you were sub-prime, and that could not be further for the truth now.”
Looking ahead, Jupp said the question around how to reach carbon neutrality would become increasingly important to lenders, particularly as one of the largest pollutant emitters is property .
Jupp added: “What we are finding is a revolution whereby it will be commonplace that people who take green mortgages will be very much rewarded and incentivised by their lenders on the basis that they will get a better price for their assets if they are more environmentally sound.
“That is growing by the day, not just because of COP26. Every lender I speak to the green agenda is at the forefront of everything they do.”
He cited upcoming legislation in three years’ time requiring landlords to get their existing properties to an EPC rating of C or above as an example of this, adding that many were uncertain as to how they would fund it as the bill for portfolio landlords especially would be “significant”.
“I think a lot of lenders in the mainstream market in the years to come will say if you’re buying a particular housing stock that isn’t energy rated A, B or C you might not be able to get a mortgage, we might not lend on that. Actually, energy ratings may be as significant as someone’s current credit rating,” he said.
He added that from a product innovation perspective, the specialist lending market had a key role to play and its actions would inform the mainstream market.
He said: “If we do it right, what we do is provide the environment and a template for mainstream lenders with cheaper cost of funds to replicate and produce mass market solutions. That’s where the specialist lending market is so imperative in the UK as it gives the intellectual capital of ideas to the mainstream market to improve on for the benefit of consumers.”
Changing role of the high street
Jupp said pandemic had “sped up the inevitable demise of the high street as a place to shop and to eat” and it would now be a “place to live”.
He said five years ago it would have been rare to get planning permission to convert flats above shops and there was no real need as retail tended to be on long-term contracts.
However, the high street has since changed with the growth of out of town and online shopping. That has left “swathes of vacant properties at ground level and above that are absolutely perfect housing”, Jupp added.
He said he expected the process of development to become “easier to realise” and this would occur on almost every high street. He added that this was already occurring in some areas.
“The CBD [central business district] is not going to be a place where people just go to shop and eat. It will be a place where they live, and probably eat and probably shop, but not very often. There might be a few nice shops and a few corporates, but it will be mainly independent retailers, nice restaurants, and places where you want to live,” he said.
This would provide opportunities for renovation, refurbishment, conversion, bridging and and so on, and will be something the specialist lending market should keep an eye on.
Jason Neale to head up new specialist lender Quantum Mortgages
Neale (pictured) was previously the head of buy-to-let lending at Axis Bank, while he also spent four years as sales director at Magellan Homeloans.
Quantum will be an intermediary-only lender, with the promise of manual underwriting with no automated credit scoring, as well as access to experienced buy-to-let underwriters.
The lender has secured an initial £1bn funding line, and is backed by funds managed by CarVal Investors.
Alongside Neale, Spencer Gale will take up the position of sales director. He was previously head of sales at ULS technology, and worked alongside Neale at Axis Bank and Magellan.
They are joined by Gautum Pandey as capital markets and funding director, who has previously held investment banking roles at JP Morgan Chase and Royal Bank of Scotland, and Manish Shah as non-executive director, who has more than 15 years of experience in investment and asset management.
Neale, managing director at Quantum Mortgages, noted that the circumstances of professional landlords are becoming ever more complex, leaving increasing numbers underserved by high street lenders as well as existing specialist lenders.
He continued: “We’re delighted to have secured a substantial initial funding line which gives us the flexibility to take a more common-sense approach to lending with more useful and modern lending criteria, coupled with the ability to listen to and understand individual circumstances.”
More awareness towards complex credit options is needed – Gee
Close to our industry ‘home’ we’ve seen the final throes of the stamp duty holiday – partial in nature for the last few months and ultimately only available in England. It delivered at most a £2,500 saving, which undoubtedly helped some, but would have been a minimal driving force for housing transactions, particularly in the last four to six weeks of it.
Many have welcomed the return to ‘normality’, and it’s true that we are now getting a much better idea of the medium to longer-term future for the UK housing market because the holiday has fully ended.
The second deadline to be hit and passed was that of the furlough scheme and this clearly has the potential to have a much more sizeable impact for many more people and businesses, albeit in the context that the numbers on furlough have been dropping consistently for some months.
At the end of June, there were fewer than two million people on the furlough scheme. Now there are none, but we await to see how many of those individuals will be returning to their old – or new – jobs.
There will be people who unfortunately do not have a job to go back to, and it’s also clear the pandemic has had an impact on the finances of many people. The good news however is that the worst predictions of what Covid might unleash on the economy appear not to have been met.
Financial impact on tenants
Foundation carried out a survey focused on the housing aspirations of both existing homeowners and renters. It was encouraging to learn the vast majority of people had not experienced any negative financial impacts as a result of the pandemic, although self-employed people were three times as likely as employed individuals to have taken out a government grant or business loan.
And the further good news is that very few people say they have been declined for a mortgage, in-store finance, an unsecured personal loan, or a credit or store card when they applied for them.
The importance of access to finance and credit can’t be underestimated.
Lenders want to lend, have the funds to do so, and are actively looking at borrowers who might traditionally have been under-served.
What we can inform and educate borrowers and potential borrowers more on, is their increased ability to access mortgage finance, even if they have credit issues or are concerned about their finances during or post-pandemic.
Almost one in four say they’re worried about being approved for a mortgage in the future, citing concerns such as a poor credit history or score and a low or unstable income as the top worries.
Options are available
However, the availability of mortgages for those who might not have a clean credit score or have recent credit blips has grown considerably. We should know, as we’ve been offering these mortgages for some time, and there is a flexibility in terms of accepting multiple incomes or other types of income that might not have been there the last time the borrower sought a mortgage.
Or they simply might not be aware of these product options, if they’ve never secured a mortgage before.
So, there is clearly a need to keep banging the drum about specialist lending options and what is achievable for all types of borrowers, especially after a period when some borrowers might be worried about the impact on their finances and how this might be perceived by a lender.
We certainly don’t want prospective customers to think that a mortgage can’t be secured, especially when their product choice has grown considerably.
HTB appoints Wright head of propositions
Wright joins from Vida Homeloans, where she spent five years, holding roles including head of field sales and corporate sales manager. She was previously national account manager at OneSavings Bank.
Wright will work alongside Louisa Sedgwick, (pictured) who also recently joined HTB from Vida Homeloans as deputy managing director, who is tasked with supporting the lender’s growth ambitions.
Sedgwick (pictured) said this was an exciting time to be part of the HTB story, adding: “I couldn’t be more pleased to be able to bring Sally on board at this exciting stage in our development. Her expertise and experience will play a huge role in shaping our mortgage growth aspirations – more of which will become apparent soon”.
Wright praised the HTB platform and its reputation within the industry.
She continued: “This is a great time to join a team that has such enthusiasm and determination to do more and better for the intermediary market. I have worked closely with Louisa for many years and I know that together we can achieve great things”.
LendInvest targets homeowner launch and unveils holiday let range
Announcing its results for the six months to the end of September, the lender revealed that it intends to launch a specialist homeowner product in 2022.
Esther Morley, formerly managing director of mortgages at Secure Trust Bank, has been appointed as managing director of homeowner mortgages at LendInvest to oversee the launch.
She previously spent 10 years at Kensington Group, where she was responsible for the origination and portfolio performance of its specialist mortgage business.
Over the reporting period, LendInvest saw its platform assets under management grow by almost a third to £1.8bn, which it said was mainly driven by record originations within its buy-to-let (BTL) division.
The lender also pointed to the successful closing of its third residential-mortgage backed securitisation, and the renegotiation and expansion of its financial partnerships with the likes of Citi and National Australia Bank, as highlights of the period.
Technology remains an area of focus for LendInvest, which increased the size of its technology team by 26 per cent in the period. It has recruited Peter Wallis as vice president of technology. Wallis was previously chief technology officer at Sporting Group.
The results are the first published by LendInvest since it started trading on the Alternative Investment Market in July.
Launching into holiday lets
Alongside the publishing of the results, LendInvest has introduced a holiday let range, with rates starting at 3.59 per cent for two-year fixed rates up to 65 per cent loan-to-value (LTV).
It has also reduced rates on both its standard BTL deals and small HMO range, and launched a seven-year fixed rate starting from 2.99 per cent at 65 per cent LTV.
Andy Virgo (pictured), sales director at LendInvest, said the lender had been “eager” to implement these changes to its product range.
He added: “Supporting landlords who are experienced in, or have diversified into the short-term let market is a natural progression for us, as we continue to broaden our funding sources we are keen to keep tailoring our offering, and delivering new products that fill the gaps we see in the market.”
Data-led FCA will be more selective, direct and difficult – Sinclair
Speaking at The British Specialist Lending Senate, Sinclair (pictured) said eight executive directors have joined the Financial Conduct Authority (FCA) over the past two years who have a “different philosophy, brief and way of thinking” about industry regulation.
Its data-led approach, meant the regulator would be asking for more “granular detail” from lenders and brokers, not just about what a firm has sold but their financial position.
There will be an increased focus on a firm’s capital, liabilities and business management which will be predominantly based on data rather than personal consultations.
Sinclair said that the FCA would use this data to “analyse, scrutinise and work out where the outliers are”. Outlier firms, explained Sinclair, are those that fall outside the normal area of the regulator’s bell curve during data analysis.
From a broking perspective, directly authorised firms would have to hold more capital and there would be a greater focus on financial resilience.
Lenders will need to provide more clarity on the type of business they wanted and were prepared to accept, and it would become more important for them to “stick to it”.
He added that the authorisation process would be tougher and it would be “exceptionally hard” for firms wanting to switch business.
“The [FCA] will use all this data to analyse, scrutinise and work out where the outliers are,” he said.
Sinclair added that while the regulator would be “more selective and more direct and more difficult”, this should not be feared.
“If you’re doing the right thing in the right way for the right reasons, there’s nothing to be scared of,” he said.
Castle Trust Bank joins Paradigm lender panel
Paradigm members will secure access to Castle Trust’s specialist range of holiday property and residential buy-to-let products.
As long as clients have a UK mortgage footprint, Castle Trust will consider applications up to 80 per cent gross, day one loan-to-value (LTV) from first-time landlords, limited companies, expatriates, and foreign nationals for buy-to-let purchase and refinance. The lender also considers applications from holiday lets, refurbishments and multiple units – including those held under a single freehold.
Richard Howes (pictured) director of mortgages at Paradigm Mortgage Services, said: “We are very pleased to be able to bring on board Castle Trust. Our adviser members respond to creativity and flexibility in this space, and Castle Trust fit this bill, with a focus particularly in holiday property, residential buy-to-let lending and, coupled with the ability to link up with bridging options, means landlords and investors are well-catered for.
Rob Oliver, sales director at Castle Trust, added: “Paradigm is an excellent mortgage club and we’re really looking forward to working with its members and increasing our distribution footprint through this relationship allowing their DA firms access to our innovative product range.”
Castle Trust offers ten-year term mortgages up to 75 per cent (loan to value) LTV through its term ten product with initial fixed rates for two or five years, and the ability to provide a guaranteed exit option on its bridging loans by linking them to its term ten product, through the bridge-to-let option, should it be needed.
Last week, Castle Trust simplified its houses in multiple occupation (HMO) and holiday let range as well as cut rates across select products. The lender removed loading, where an increased cost or additional rate is applied to certain products, from its HMO and holiday let range.
The provider also cut rates across its product offering, with rates from 3.82 per cent.