Confident lender assures market

Despite an uncertain economy, there’s reason to be optimistic, says the new managing director of Sancus Lending (UK) Limited, Richard Whitehouse. He tells Bridging Introducer’s Simon Meadows how brokers can thrive

As the newly appointed managing director of Sancus Lending (UK) Limited, Richard Whitehouse might be expected to be upbeat. But it isn’t simply his promotion that sees him on good form. He is optimistic about the future of the business he now leads, and the bridging sector it serves.

Not for Richard, it seems, the despondent navel-gazing that some others might feel in the current economy. As the UK economy navigates choppy waters, he believes there are opportunities for brokers to maximise.

“Disruption is good news for the broker market,” Richard told Bridging Introducer confidently. “People who need access to money will find that the routes that they normally travel will be interrupted for a whole host of reasons. So, instead, they’re actually going to use a broker who can scan the whole of the market, who understands lenders of which the borrower perhaps doesn’t have experience, finds the best fit, and can understand how to present proposals to those lenders and engage with them.”

He added, “This is a boom time, in my view, for brokers because of that ability to facilitate access to funding that borrowers, frankly, don’t have the time and, really, the skills to go and service on their own. It’s a bit like early 2020, when COVID hit. There tends to be a large mismatch of borrowers’ expectations versus what the market will deliver for them. And I think working closely with borrowers to help them understand the change in the landscape will help brokers present them in the right light to lenders.”

For over six years, Richard has been a key member of the team at Sancus Lending Group, first as a sales director and then more recently as managing director (MD). The group is a provider of alternative property finance, specialising in development and bridging finance for developers, investors, and professional landlords. The group also has offices in Ireland, Jersey, Guernsey, and Gibraltar, all manned by local teams. For all his positivity, Richard “We’re a people business. We don’t rely on algorithms or computers to make decisions. Our experienced team are at the core of how we do business – listening, collaborating, decision making and supporting our clients through every level of the journey, from initial enquiry through to drawdown”

acknowledges that he is stepping into the role of managing director at a time of change. The war in Ukraine and the knock-on effects post-COVID have had a significant impact on supply chains around the world, and inflation is now a huge factor.

“The phrase ‘a new normal’ has probably been overused over the last 10 years, but I think there is a period of readjustment coming up,” he anticipated. “Interest rates will stay higher, compared to the 0.1 to 0.5 per cent that people have had for a decade or more. But I genuinely think once people have adapted to a slightly higher cost-of-living, and interest rates at a higher level, their budgets will adjust accordingly. And lenders in the housing sector can still ‘benefit’ from the long-term structural imbalance between housing supply and demand. People will still get married, move for job opportunities [or] families, and their needs will change – people will want to downsize, and that will drive activity.”

Richard believes there is some truth in recent figures from Knight Frank and Credit Suisse saying that residential property values will drop 10 per cent and 15 per cent respectively, and thinks a decrease in value is likely. “I think you’ll start to see longer sales periods, and perhaps slightly stickier stock and maybe a little bit of discounting,” he predicted. “I think the fundamentals around employment, wages, and supply of housing are strongly in our favour. When I talk to colleagues, competitors who are in the regulated space, they are very buoyed by the opportunities that this presents. We’ve seen the withdrawal of a number of mortgage products, you’ve got long-term lenders having to reassess their price points and their credit appetite, and while they go through that adjustment period, the bridging space – particularly the regulated bridgers – will be the people who step up and fill that gap and allow activity to continue.”

The downturn could be likened to the sea, Richard reasoned, in a lyrical but apt metaphor. “I think as the tide recedes, inevitably, banks and people who deploy regulated capital will see their credit appetite naturally diminish,” he said. “As that tide pulls out, it leaves a lot of wet sand to go and play in. I think that’s the opportunity for a business like ours – to go and service those clients that banks, through no fault of their own, will become unable to service. I think that will be the story of the next two or three years and I think that will suit us very well in terms of our own desire to grow and, I

think, the wider bridging market, too. That’s the place where brokers and introducers will come into their own, too, because those borrowers who have been used to being serviced by their existing banking relationships will be the ones with the lowest knowledge of the alternatives available to them. It’s an opportunity for brokers and advisors to go to help those clients navigate a landscape that’s new to them.”

The bridging market is somewhat fragmented and diverse, according to Sancus Lending Group’s newest MD, but he anticipates that changing. “I view it as a hyper-competitive environment,” he said. “I think there’s probably an element of oversupply, certainly in pure bridging now, and you see that in terms of bridgers trying to find a way to extend their products to improve returns and to improve their origination levels. Irrespective of economic headwinds, it feels like a market that is ripe for consolidation. There’s a lot of lenders with £20m to £30m loan books and they really struggle to break from that to £150m. The steps to get to £500m and then a billion get exponentially harder. If you’re a £100m lender, you’re probably thinking the easiest way to grow is to go and pick up a few of those £30m loan books. I think that consolidation will start to become a story in the next 12 to 24 months.”

Richard has over 20 years’ experience in asset-backed lending, property development finance, bridging finance, supply chain finance, and trade finance, including roles in business development, credit operations, and relationship management. But when he pares it down, his attraction to the industry is very simple. “The sector is incredibly relatable,” he reflected. “We focus on residential real estate, the development of it and supporting people who invest in it. Ultimately, everybody has a home, and that relatability, I think, is huge as a starting point. There is something really quite rewarding about knowing that you’re building homes for people. Being able to walk around building sites, see them develop and ultimately turn into somebody’s home, knowing the benefit of the money you’re providing, it gives a real sense of satisfaction.”

He pointed to the strong culture of Sancus Lending Group and its staff of around 50. “We’re a collection of very, very experienced people,” he enthused, “extremely energetic. We deliver what we do, using a combination of that energy and expertise, with a genuine desire to deliver great outcomes for our clients and the people who work with them. And I think you could feel and see that in everybody in the business. We’re not a big business, but I think you can meet a Sancus person and recognise them as such, whether you’re in our Gibraltar office or here in London. That’s the DNA of the people, and it makes it a great place to work.”

For Richard it’s about sharing a set of common goals, with everyone being

focused on what they have to do every day, while enjoying the company of their colleagues around them. “I’d like to think our clients feel that, too,” he said. “That relaxed, confident delivery that we have, also knowing that when we say we’re going to do something for you, we deliver it. One of our introducers described us as being the most tenacious lender he’s ever worked with, and that makes me genuinely proud about the business. I always describe us as a storybook lender. We really listen to the clients’ story to understand what they need and the support we can give them and then make sure we deliver on it. We have a lot of freedom as an organisation to look at those solutions and then put them in place.”

With such a strong, personable culture, the challenge for Sancus Lending Group is finding staff who will be the right fit with its team. “We’re a people business,” Whitehouse declared. “We don’t rely on algorithms or computers to make decisions. Our experienced team are at the core of how we do business – listening, collaborating, decision making and supporting our clients through every level of the journey, from initial enquiry through to drawdown. So, trying to find good people who match our culture and can flourish in our business, that’s probably the biggest challenge. We’re growing, and our need for people is higher than it has been historically, so we’re constantly looking for new personnel. Good people with experience and the right attitude are very much in demand.”

He elaborated, “Front-and-centre for me is making sure the people we’ve got are happy and the people we’d like to bring in want to come. It helps a lot that we have got a good environment that people want to be a part of. We spend a lot of time talking to the specialist recruitment agents in the market, talking to people that we think we would like in the business and building dialogue and relationships with them. So, when the time comes, they’ve already got an association with us. In fact, if anyone is reading this, think they would be a good fit, and would like to know more about working with us, I am always available for a discreet chat!”

Going forward, the group is to invest in its origination team, with up to four new members arriving over the coming months, ensuring it has faceto-face contact with the people who provide it with continued opportunities to be successful. “We are more than committed to the broker market,” Richard confirmed. “I do genuinely think it’s incumbent on us to make sure that we’re working properly with brokers, that we’re present and available, with more points of contact for them to come and talk to us.”

Richard’s enthusiasm and optimism for the business are infectious, but with the responsibility befitting his new role, he’s conscious not to take unnecessary risks. “We’re very focused on contingency levels in projects now,” he assured. “So we’re making sure that a project has got enough room to withstand shocks and unexpected outcomes, and we are careful about the clients we work with. We want to work with borrowers who have good experience, who have got some wealth behind them, whether they’re buying property with bridging loans from us or they’re taking development funding from us.” He added, “From our point of view, we’re incredibly lucky to be backed by a strong, substantial shareholder with very deep pockets and I think that gives us a lot of stability. We also have access to a wide variety of funding lines that are well secured.”

The new managing director believes there’s an opportunity for brokers to step up and embrace a changing market. “If you’re an advisor, you get to a period where your own bandwidth and capacity are limited,” Whitehouse shared. “You say, quite reasonably, that you’ll work with lenders who perform for you, and end up with a bank of 10 or 15 lenders that you know you can rely on, and they become your go-to. Without criticism, I suspect interruption will mean that perhaps those go-to lenders can’t be as reliable as they used to be. So I think for brokers to maximise those opportunities, they will want to engage with the full market, the full lender landscape, and get a refresh on where people’s appetites sit because I think lenders’ appetites will change quite dynamically over the course of the next six months or so.”

How key, then, is the broker community to the future success of Sancus? “Hugely important,” replied Richard, without hesitation. “I think at our last check, 83 per cent of the loans that we wrote came from a broker source. As a reasonably small team, for us to have the reach and the ability to cover the whole of the UK, but also for the market to be aware of us, we are reliant on the broker channel to enable us to do that. Without them, we don’t have any success at all. I think it’s about how we present ourselves to brokers – how we make sure that they understand what it is that we’re capable of doing and our appetite to deliver that.” Wrapping up the conversation, he added, “In my experience of working with brokers, they’re keen to find a solution, and they want to help clients. So it’s a key partnership for us.”