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ecently, we’ve seen an abundance of specialist lenders enter the BTL space, among them United Trust Bank (UTB). However, this was no impulse to jump on the BTL bandwagon. As Buster explains, it was a calculated move that the lender had been planning for around 18 months. During this time, it conducted significant research and consulted its broker partners to accurately gauge the size of the market, where the opportunities lay, and what the bank needed to implement—in terms of products and technology—to ensure the offering would be a success. “We wanted to take our time. You only have one chance at making a good impression in an already crowded market, and we wanted our proposition to shine from day one,” says Buster. The company has appointed Barry Luhmann to head up the new division, who brings extensive experience from his roles at Trussle Lab, Lloyds Banking Group and BlackRock European Mortgage Strategies. He has also previously worked as an independent consultant focused on new technology, processes and offerings. With the groundwork completed, in April UTB began testing the product with a small number of broker partners that had given feedback during the research phase. By the beginning of May, the BTL offering officially went live. However, Buster emphasises that as a controlled launch, the product range is only currently available to a group of 25 intermediaries, including 3mc, Positive Lending, TFC, Impact Specialist Finance, Connect and Brightstar. The lender wants to make sure it can keep on top of service and avoid getting overwhelmed by too much business, which could affect quality—a strategy which has worked well with its previous launches. “This allows us to control sales activity and manage underwriting resource as we grow and gain momentum,” explains Buster, adding that the proposition will gradually be offered to more brokers and distributors throughout the second half of 2022. Its goal is to make it available to all its 2,000 broker partners by the end of this year. The bank is also keen to open it up to new intermediaries, who are advised to contact UTB to register their interest. “Eventually, we would like to accept business from all brokers in the UK, but Rome wasn’t built in a day!” The product suite offers loans of up to £1m at a maximum 80% LTV and includes two- and five-year fixed-rate options. Available to individual borrowers and SPVs, with no minimum income requirement—it is split into three price categories, depending on the deal’s complexity. The first is designed for standard BTL properties, with pricing from 3.2% for two-year options and 3.4% for five-year fixes. The second is available for more specialist BTL dwellings, such as HMOs or MUBs up to six units and holiday lets—also priced from 3.2% or 3.4%, but with more expensive rates at higher LTVs. The third category is for complex BTLs, including HMOs of up to 10 units, flats above less desirable commercial units, and others, for which rates start at 4.3% for two-year fixes and 4.4% for five-year terms. Being accessible for a wide range of properties is, in Buster’s opinion, key in setting its offering apart from others. “There isn’t really a construction or property type we wouldn’t lend on, providing it’s a permanent structure,” he expounds. “I think some of that flexibility comes from the fact that we fund the loans from our own retail deposits. Of course, we will follow all PRA guidance and regulations, but we don’t have to face covenants within a warehouse
loan facility or meet the requirements of a securitisation vehicle.” While there are other banks in the BTL sector, he claims that a significant section of the market is warehousefunded. “These lenders don’t have some of the flexibility we can offer on things like property types or customer profiles.” Nonetheless, the BTL proposition presents more than flexibility. Ahead of the launch, the bank used its existing tech to create a fully digital process that eliminates paper documents and streamlines the deal completion. To start, brokers can submit their case via a BTL portal on the bank’s website, similar to how mortgages and second-charge applications are handled. When the application is submitted, a Hometrack AVM, credit search and automated day-one underwrite are carried out to provide a DiP within five minutes, on average. Next, a mandated case owner is allocated (whom the broker can speak to) and a full valuation is instructed; then, the client will use an app to confirm loan details and complete their virtual biometric ID. When all the steps are done, the loan will be approved and the offer issued online to the borrower and broker, ready for the solicitors to do their tasks. “This kind of journey, wrapped around the service commitment and the expertise we’ve brought into the team, is hopefully what’s going to make it successful as we roll out,” Buster states. “All of these things are the building blocks of the overall BTL proposition. In isolation, none of them are going to blow the roof off, but when you piece them together with the experienced people and criteria, you end up with something much greater.” As well as opening up the product to brokers throughout the year, UTB plans to continually enhance its criteria and
UTB ENTERS THE BTL RING Words by
andreea dulgheru
In March, United Trust Bank announced its imminent entry into the BTL market. I sit down with director of mortgages Buster Tolfree to find out the reasons for venturing into the sector, what the product range will offer, and the benefits of being backed by retail deposits digital process (for example, by integrating with other fintech providers to further simplify the loan journey) and recruit more underwriters to handle the expected volume of business.The bank aims to lend a material amount of BTL which, in Buster’s view, is at least £200m per year once at scale. On top of that, it is looking to expand the offering to cover multiple property loan facilities, consumer BTL and even second-charge BTL mortgages— all of which will be in development over the next few years. “One of the words that a lot of people use to describe UTB is ‘diverse’. From a product point of view, we’ve shown a very strong track record over the past 10 years of bringing new offerings to the market, so it would be totally fair to say that BTL will mirror that,” Buster concludes.
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