Interview
he founders of Octane Capital—Jonathan Samuels, Matt Smith and Mark—have a respected lineage in the specialist finance industry. Among other notable credits, all three were responsible for the exponential growth of Dragonfly Property Finance (later acquired by Octopus Investments to be rebranded as Octopus Real Estate), which is widely considered to have put bridging firmly on the map as a viable option not of last resort. The trio set up Octane in early 2017 and went about assembling an enviable team of professionals, amassing an enormous amount of expertise in order to execute their ambition. Third-generation bridging (#3rdgen) was coined and summed up an evolved way of lending that had a product-less proposition at its core— employing creativity, flexibility and leveraging the capability of the team to face complex scenarios with confidence. This latest development marks the lender’s first significant addition to its primary proposition since launch. It was planned before Covid-19 and, after a slight, understandable delay (and minor adjustment to the original LTVs), Octane piloted its BTL product suite through a limited number of brokers in late April.
16 Bridging & Commercial
At the end of June, I spoke to Jonathan, Mark and Donna-Louise House (head of credit for BTL) about the ins and outs of the offering, what landlords really need right now, and why Octane decided to dive head first into this part of the industry. “Landlords have been under pressure for ages—but increasing pressure,” says Jonathan, leading into the logic behind the lender’s motivation for devising the range. The biggest thing affecting landlords when they are taking out finance is the interest cover ratio (ICR), so Octane did a very Octane thing: it removed the need for an ICR altogether. That’s right, no stress testing. According to Jonathan, using this one measure of affordability is flawed as it fails to assess the borrower as a whole. “It takes no account of their position, experience, the amount of money they have, their ability and track record in servicing their debt through other means when there are voids—it just seems to be myopic.” The ICR, a mandatory requirement levied by the PRA, is in place to give comfort and surety to the lender and the borrower that, if there are interruptions