Bridging Introducer April 2019

BRIDGING

April 2019

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INTRODUCER

www.specialistfinanceintroducer.com

Champion of the Bridging Professional

All Together now Together’s Richard Tugwell talks all things bridging BRIDGING IN-DEPTH

INDUSTRY COMMENT

MIPIM REVIEW

ROUND-TABLE

57,169 bridging loans funded since 1985.

It would be our specialist subject.

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Lending for the new normal.

For professional intermediary use only. Includes commercial and regulated bridging loan applications over 33 years.

Comment

Publishing Editor Robyn Hall Robyn@mortgageintroducer.com @RobynHall Managing Editor Ryan Fowler Ryan@mortgageintroducer.com @RyanFowlerMI News Editor Ryan Bembridge RyanB@mortgageintroducer.com Reporter Michael Lloyd Michael@mortgageintroducer.com Editorial Director Nia Williams Nia@mortgageintroducer.com @mortgagechat Commercial Director Matt Bond Matt@mortgageintroducer.com Advertising Manager Francesca Ramsey Francesca@mortgageintroducer.com Campaign Manager Joanna Cooney joanna@mortgageintroducer.com Production Editor Felix Blakeston Felix@mortgageintroducer.com Head of Marketing Robyn Ashman RobynA@mortgageintroducer.com Photography Alex Moore Subscriptions Nia Williams Nia@mortgageintroducer.com Printed & distributed in England by The Magazine Printing Company, using only paper from FSC/PEFC suppliers www.magprint.co.uk

BRIDGING

INTRODUCER Information carried in Mortgage Introducer is checked for accuracy but the views or opinions do not necessarily represent those of Mortgage Introducer Ltd.

April 2019 www.specialistfinanceintroducer.com

BRIDGING

INTRODUCER We could start this editorial by talking about the potential outcome of Brexit. But to be frank what’s the point? It’s hard to keep track of all the infighting in Westminster and even harder to work out what will actually happen.

Closer to home the bridging market appears to be in the same holding pattern it has held for the past few months.

Some borrowers are keen to capitalise on the uncertainty in the UK which provides a boon to the sector.

Equally some borrowers remain cautious and like the rest of the UK they are “One of the other waiting to see what happens first before things slowing making the jump into a the market is the project or purchase.

As such the market continued London probably hasn’t grown too slowdown” much over the past few months. It certainly hasn’t grown as much as people would have anticipated if we were not currently still entagled in the Brexit omnishambles.

One of the other things slowing the market is the continued London slowdown. Halifax reported at the begining of the month that house prices fell in March and, as has been the case for some time now, the biggest drag came in London. A report at the end of March from Nationwide also showed home values in the capital dropped the most in Q1 since the financial crisis.

Not the best of reading for lenders focussed on the capital and the wider South East.

We’ve seen lenders switch focus to the regions which is a good thing and should mitigate the slowdown to an extent.

We’ve also seen positive news from lenders in the sector - notably from MTF and Lendinvest - which shows that despite the uncertainty that previals at the moment its not all doom and gloom.

Let’s hope the government can get its act together so the entire UK can continue to flourish and not be dragged down into the quagmire.

72 bridging loans funded on average each week in 2018.

5 Andrew Hosford

The time has come to just get on with things

7 Kevin Thomson

Lending for commercial property

9 Bret Jackson

Uncertainty means businesses must adapt

11 Brian West

Paying the asking price

12 Harriet Smith

EPC – every penny counts…

16-22 MIPIM Review

Our commentators look back on MIPIM

25 Benson Hersch

The latest from the ASTL

28 Round-table

This month’s industry debate

36 Cover Story: Bridging - All Together now

Richard Tugwell of Together talks all things bridging finance

42 Alan Dring

How strong is your reputation that of the lenders you use?

togethermoney.com/ bridging

They’re a walk in the park for us.

www.specialistfinanceintroducer.com

APRIL 2019

BRIDGING INTRODUCER

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Comment News

Keep it together The time has come to just get on with things

Right, so still no Brexit. Whether you are in the remain camp or leave camp, I think we can all agree that the indecision, party fractures, bickering and general nothingness is becoming at best infuriating and at worse it is starting to choke the life out of us. I’m not specifically talking about “us” in the property world, but in UK business generally.

The effect of the uncertainty is really taking hold and although the main news headlines are focussed on larger, worldwide companies, the smaller businesses are preparing for Armageddon and already beginning to suffer. Again, Brexit hasn’t even happened yet! A number of globally recognisable business including HSBC, UBS, Bank of America, Goldman to name but a few, have been the subjects of countless news articles since we voted to leave that state that they are looking to move staff, assets or both away from the UK. Away from the banking world, Honda predict they will close their UK plant by 2021 and Nissan are massively scaling back too.

I had been assuming and I suppose I am still a little (maybe more hopeful than assuming now) that at some point some form of tax break would be introduced as an incentive aimed at keeping businesses here. Maybe scaling back corporation tax by 3% or 4% to get closer to the Irish rate would be sensible?

One other factor that I have been hearing more and more about in the last six months that’s working in our favour is that people, the actual humans that keep these businesses in business, do not seem overly keen to move to Paris, Frankfurt or even Dublin. Maybe that’s um, what’s the popularised American term, “Fake News”? But could London, the actual city itself, with all its history and phenomenal cultural variety and www.specialistfinanceintroducer.com

interaction play a significant part in mitigating the exodus we have all been threated with? I know that if I was told I was moving to Paris, Frankfurt, Dublin or anywhere else in Europe I would quit and find a job here. Talk is cheap of course, but I’m not leaving.

As an aside, that statement wasn’t solely focussed on London rather than the whole if the UK because I am based there. I only named London due to the sheer volume of business headquarters and the employees that may have to leave the city.

The general message I have picked up from speaking to industry peers, clients and then mates in other industries and from the general random small talk you have in your pub or supermarket is that the delay and uncertainty is what’s hurting. It seems like most people are in agreement, regardless of how they voted, that we just need to get on with it now. We all know it’s going to be a rough ride. We all know it will take time to fight back and recover and of course we all know there will be casualties. But what we cannot do is start that fightback and do our typical British thing, which is to get on with it, all the while the

Andrew Hosford director – head of bridging, Voltaire

delay and the general nothingness is continuing.

Lately the message and one word in particular that I am hearing from speaking to a wide variety of people in all kinds of industries is that they believe the key to their survival will be their relationships. The relationships they have built and formed and developed over their time in business. These are their relationships with clients/customers, their suppliers and even their direct competitors. But whoever the relevant relationship is with, I love that something which I think is key to a successful business seems to be viewed as one of the main factors to their survival and future success.

I think it’s fair to say that whatever actually does happen, we are all in this together. Our backs against the wall, ready to fight our way out as we have done so many times before.

How typically British that is. I suppose that’s another reason that I and many others wouldn’t want to, or simply wouldn’t, leave this place to work in a smaller European city. n.b. If Jeremy Corbyn becomes Prime Minister you will find me in Costa Rica running a beach bar and renting pedalos to holiday makers

APRIL 2019 BRIDGING INTRODUCER

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A full house.

From bridging to buy-to-let, play your best hand with our broad range of property finance.

Call us on 020 7118 1133 or visit intermediaries.lendinvest.com. LendInvest Limited is registered at 8 Mortimer Street, London, W1T 3JJ (Company 08146929). ICO number ZA179467. Your client’s property may be repossessed if they do not keep up repayments on their mortgage. For intermediaries only.

Comment News

SIPP and SASS Lending for commercial property

Many property investors choose to invest in or develop commercial property for the potential of capital growth and regular income, however they may also consider using pension funds to do this, thereby increasing their pension’s net value.

Purchasing or investing in commercial property through a Self Invested Personal Pension (SIPP) or Small Self-Administered Scheme (SSAS) offers many advantages that may include: zz Exemption from capital gains tax when the property is sold zz Exemption from income tax on any rents received zz Potential mitigation against inheritance tax on death – although this does depend upon the SIPP structure There are things to be aware of however, for example, when an investor uses the funds from their SIPP to buy a commercial property which will be used as their own business premises, the business will have to pay rent back to the SIPP and pay it at commercial rates.

However, the rent should be an allowable business expense, so it will reduce the tax your client pays on any business profits. Also, the rent that is paid into the SIPP, less any loan repayments, generally grows free of income tax and capital gains tax. If the commercial property has an existing lease the SIPP can still

www.specialistfinanceintroducer.com

buy the property, subject to the lease being acceptable, i.e. no unsuitable clauses. Rent from any other tenants that may occupy the property will also be paid to the SIPP. There are also other advantages for the business apart from the potential tax benefits. These include increased cash flow if the property is purchased from the company by the pension scheme; if the business goes into liquidation, the property is an asset of the SIPP/SSAS and therefore will be excluded from creditors and finally, the business owners still retain an element of control over the property when owned by his/her SIPP or SSAS. Irrespective of whether a business is purchasing a commercial property on an owner-occupied basis or as a commercial investment, the maximum loan the client can borrow is 50% of the SIPP value. As always, the deal has to stack up for the lender, for example, if it is an owner-occupied building then the lender will assess the accounts for the business and if it is a commercial investment lenders will assess the commercial lease.

The common issue around SIPP and SSAS purchases is that the fund is not big enough to allow the client to borrow what he or she needs; however, this may be overcome with a split purchase, so the SIPP partbuys a commercial property where the other purchasers are not SIPP

Kevin Thomson corporate sales director, Connect

investors. This option is not yet available in Scotland however.

Any VAT loans have to be within the borrowing limits so the HMRC rule also applies here where the loan can only be up to 50% of the entire SIPP value.

Other issues regarding buying commercial property through a SIPP or SSAS generally fall around the criteria rather than the SIPP, usually around the lease length, break clauses, tenant quality or property valuation as they would with any other commercial property purchase.

It is also possible to develop a commercial property through a SIPP provided a number of conditions apply. These are: zz The work increases the value of the building zz All costs associated with the development are paid for from the SIPP zz The SIPP is able to borrow to develop the property, subject to the appropriate 50% limits referred to earlier zz The cost of the works and that the construction is carried out by a contractor that is acceptable to the SIPP provider Due to the complexity of purchasing or developing a commercial property via a SIPP it’s essential that any prospective client seeks investment advice and taxation advice before seeking finance via a SIPP or a SSAS. Of course, any broker unfamiliar with helping their clients to buy commercial property through a SIPP or an SSAS can either refer their clients to someone like Connect who does this regularly and will still pay a proc fee or use a packaging service that can assist you.

APRIL 2019 BRIDGING INTRODUCER

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Comment News

Adapting to a new environment Uncertainty means businesses must adapt

Could we see the end of May, before the end of April? It is not very often that I am speechless, but for all that is going on, I literally have no words.

On this basis, I shall leave it at that.

Our specialist finance and lending division was launched in 2018, following a lengthy undertaking of the market and finding the consultants with industry experience. With this in place, the division is starting to make an impact and is contributing to this year’s record first quarter.

The other week, we received a testimonial from a candidate. This was quite special, as the candidate was referred to BWD having gone through a torrid time, at the end of his previous role. As a senior manager in the industry, it was an honour to support him and find him a new role, but his comments really resonated with me.

He wrote: “With LinkedIn and algorithms taking over the world of recruitment, it was an absolute delight to work with the skilled experts at BWD to find my current position.

Having a deep understanding of the Specialist Finance sector, they took time to properly understand my experience and goals, thereby ensuring potential vacancies were closely matched. By working closely with the candidate and keeping regular communication, everyone benefits.

The long and short of it was, I was offered my new role in a matter of weeks. I can highly recommend you give them a call.”

I have commented before; this sector of the industry is all about the people and how closely connected it is and this is another fine example. The support we have had from certain lenders and banks has been excellent and long may this continue.

Enough about us. Peer-to-peer lending has been in the press rewww.specialistfinanceintroducer.com

cently, not necessarily for the good.

An excellent article featured in Citywire recently, specifically around fixed high returns of 12% on ISA investments. For consumers, these have been marketed as low risk and are very appealing. They are, but are they low risk? No. Are there alternatives available, that are lower risk? Should IFAs be recommending them to clients? The answer to these questions is yes but poses some others. Advisers have to conduct thorough due diligence on products, before recommending them to clients. Whilst awareness has increased, further work and understanding is required, but is an excellent source for increasing inflows into the market. Figures have shown a substantial increase, but can more be done?

Many articles written, including ones by myself and the Bridging Roundtable discussions have focused around education. Primarily, this has been on the Bridging sector, how the products work, why IFA’s and Mortgage Brokers should be looking at the sector and the possibility of introducing exams. There clearly is grounds for this to be stretched even further.

Bret Jackson head of marketing and communications, BWD

The demise of London Capital & Finance, along with the issues identified at Lendy could have an impact on the peer-to-peer market, but with clear and concise information, it should not be a problem.

Assetz Capital website is an excellent example. The detail, disclosure and potential returns available are excellent and if all adopted this approach, both consumers and financial professionals alike, would be well informed.

Continuing with Assetz Capital, a very interesting article/press release from them recently caught my attention. They have decided to diversify their funding lines, with the aim of 50% to come from institutions by the end of 2019. Historically, 95% of funding has been from retail investors, via its platform. Assetz announced Varengold Bank is to provide funding, with the target of 15-20 institutional relationships in place by the year end to meet targets.

Personally, I think this is a great step forward for the lender.

De-risking and diversifying their funding lines will make them more attractive, able to launch new products and attract business from other brokers and intermediaries.

The question is, will others now follow suit?

Some lenders already adopt a hybrid funding structure, obtaining lines from several sources, but should this be the standard?

Zorin, another lender who recently announced they now have two institutional investors, rather than being just shareholder funded, helping them complete eight large deals on the original planned day of Brexit.

Many questions asked, some of which I don’t know the answers to, but one thing is for certain, it is never dull in this industry.

APRIL 2019 BRIDGING INTRODUCER

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Comment News

May day deal We’ve ended up in an embarrassing position

“Theresa May - first person ever to pay full price for a sofa at DFS.” This was the headline above a clever Whatsapp picture one of my mates sent me recently. It showed our much-maligned PM leaving a DFS Furniture Store sporting a very sickly grin. Now in terms of a comment on her negotiating prowess it certainly had merit but, despite myself, I couldn’t resist mounting what, in some small measure, amounted to a defence of poor old Theresa.

Whilst acknowledging Mrs May’s general ineptitude I nonetheless pointed out that it’s tough to negotiate a good discount on a new sofa if the rest of the folks back home have let DFS know in advance that she will definitely be buying one! My friend’s mildly amusing picture was in fact a sad indictment not only of our Prime Minister but of the vast majority of our MPs. As if wasn’t bad enough watching the government failing to properly prepare for a ‘no deal’ and making a complete hash of the negotiations we’ve then had to watch as parliament finally handed the initiative lock, stock and barrel to Brussels by failing to agree on pretty much anything other than ruling out a ‘no deal’ under any circumstances!

Monsieur’s Barnier, Junckers and Tusk could barely contain their glee!

The sad truth is that since the 2017 election we were inevitably headed toward the embarrassing position we now find ourselves in.

Perhaps we should have listened more carefully to the former Greek Finance Minister, Yanis Varoufakis when in early 2017 he suggested that the UK should “avoid negotiating with Brussels at all costs.”

This, afterall, was the man that had headed negotiations with the EU and the IMF over the extension of Greece’s debts, negotiations www.specialistfinanceintroducer.com

where the terms offered by the EU were so harsh, they led to a Greek Referendum in 2015 on whether to accept the bail-out deal. Varoufakis successfully campaigned for a “No vote” but it made no difference, the Greek Prime Minister simply ignored the result of the referendum!

Despite our relative size and strength in relation to Greece we were naïve to think that this would bolster our negotiating position with Brussels. We needed to remember that Brussels is a democracy free zone. It is an immensely powerful bureaucracy and protector of vested interests imbued with unprecedented law-making capacity. Time and again it has shown that it will seek to negate the will of electorates, and whenever a vote has gone against it the vote has simply been ignored or re-run.

From the outset negotiations were structured to ensure the EU got what it wanted first. Phase 1, the withdrawal agreement, where the UK accedes to the EU’s demands and agrees a large divorce bill only then to be followed by Phase 2, where we can start to talk about trade and what we want from the new relationship. The EU were in control and thanks to the chronic weakness of our own politicians and their unwillingness to set aside self-interest in favour of the national interest our weak minority government has inevitably succumbed to EU bullying.

The ticking clock has always suited the EU a great deal more than it has the UK and now, having collected our £2.900,000,0000 monthly contribution for March they are well positioned to continue making an example of us for ever having the temerity to try and leave!

If only our politicians would remember that we are the fifth largest

Brian Strange Mike West managing director, Central director, Bridging Funding 365

economy in the world, that we are a global trading powerhouse with an infrastructure, regulation and legal system that are the envy of the world. They seem to have forgotten that we continue to attract vast sums of foreign investment and that as a nation we are geographically well placed, resilient, business friendly and far more dynamic than they ever acknowledge. They have overlooked the fact that our economy is outperforming France, Germany and Europe as a whole, and that we are massive net importers from the EU. Finally, they seem oblivious to the systemic weaknesses within the EU or the fact that 85% of the world’s markets sit outside of Europe.

Like so many I now marvel at the sheer incompetence of our politicians but at the same time I have rarely been so proud of this nation’s ability to make a success of things despite, rather than because of Westminster. Right now, I’m going to place my faith in the inherent dynamism and strength of character of the British people and of British business and of course in our famous sense of humour.

My mate texted me the other day “Good news Westy – we’ll be leaving the EU…when the DFS sale ends!”

APRIL 2019 BRIDGING INTRODUCER

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Comment

EPC – every penny counts…

2.5 million EPCs are incorrectly rated

The Minimum Energy Efficiency Standards (MEES) for private landlords came and went with very little fanfare in April 2018.

A significant number of landlords utilised bridging loans so all newly rented properties in the UK met the legal minimum Energy Performance Certificate (EPCs) rating of ‘E’.

So far so good……

But shocking new research suggests a total of 15% – or 2.5 million – EPCs for properties in the UK are “incorrectly rated”, with landlords “illegally letting” tens of thousands of homes*.

At the outset it seems prudent to remind ourselves of the MEES legislation: from April 1, 2018 all landlords are prohibited from granting new tenancies for properties with an EPCs rating below E, which includes extensions and renewals of existing tenancies or a tenancy becoming a statutory periodic tenancy following the end of a fixed term shorthold.

And the consequences are not insignificant, failure to meet the EPC standard can result in a fine of up to £4,000 per property

from the local council.

Come April 1, 2020 all let domestic properties that are being let must have an E rating or higher, whatever the tenancy status.

So new research that suggests an estimated 2.5 million EPCs have been inaccurately rated, which could leave many landlords who feel they have addressed the issue open to penalty, is not welcome news.

The flawed findings

for producing an accurate rating, because as little as a 1% change in floor space can result in a one point change in EPC score which will ultimately affect the final rating.

Another financial difficulty Harriet Smith head of bridging finance, Crystal Specialist Finance

Property technology solution provider, Spec claims landlords are letting properties illegally as an estimated 35,000 E rated properties – worth nearly £8bn – are below the legal standard for the residential lettings market.

In short it states the many EPC scores would likely be downgraded if the floor space was accurately measured, with one in four EPCs recording the size of a property so inaccurately that it varies by more than 10% from the actual measurement.

It continues to state that accurate floor space measurements are one of the main essential parameters

“Research that suggests an estimated 2.5 million EPCs have been inaccurately rated could leave many landlords open to penalty” 12

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APRIL 2019

Last year many landlords turned to bridging to address the issue.

The PRA (Prudential Regulation Authority) changes meant many landlords were unable to fully service their loans using income generated by their investment due to tougher portfolio stress tests and new tax implications.

Added to that some mortgage lenders are reticent to provide finance for buy-to-let properties without the required EPC rating.

This left landlords struggling to remortgage existing properties – even those that have the required EPCs – while they invested in energy efficiency measures on older properties with a ‘F’ or ‘G’ rating.

A bridge for brokers

While this article has so far been a negative overview of another problem facing private landlords in an ever more regulated market, positive brokers now have the opportunity to grasp the nettle and contact their clients to tell them the news.

As we know, ignorance is not an acceptable excuse should the council come knocking to clarify a property’s EPC rating, as surely as night follows day a fine awaits.

The good news is that bridging finance is built for landlords who find themselves in a position of requiring further remedial work to ensure their properties carry a conclusive EPC rating that will stand up to scrutiny.

EPC is back on the landlord agenda, and bridging could well be the answer. www.specialistfinanceintroducer.com

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More than a partnership

With over £740m already lent to SME’s to date, Assetz Capital have the perfect alternative finance solution to suit your client, whatever their needs may be. We are flexible in our approach and we know there’s no one size fits all.

Get a decision-in-principle within 24 hours: 0800 470 0430

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www.ssawards.co.uk FRIDAY 28 JUNE 2019 MADISON | ST PAUL’S LONDON

IN ASSOCIATION WITH

Place your nominations and contact the team to confirm your support today. www.sfiawards.co.uk Matt Bond matt@mortgageintroducer.com 07525 456 869 Francesca Ramsey francesca@mortgageintroducer.com 0203 883 9017

With thanks to

Comment News

Three bridging trends for 2019 Opportunity knocks for the sector

The bridging market has experienced huge growth in recent years.

Lending grew by 15% last year compared to 2017, according to the Association of Short Term Lenders, and we have seen continued demand in the first quarter of 2019.

Here are three of the most common types of bridging enquiries we are receiving from brokers at the moment:

Property refurbishment

A growing number of property investors are realising that they can generate better returns by buying a rundown property and renovating it to achieve a higher resale price or retaining the property and benefitting from increased rental income Property refurbishment falls into two main categories – light refurbishment and heavy refurbishment.

Light refurbishment is where no planning permission or building regulations are required and there is no change of use to the property.

Since the introduction of new minimum EPC requirements on rental property it has become popular for light refurbishment to be used by investors to buy a property that doesn’t make the grade and make the required changes that would enable the property to be let out.

Heavy refurbishments are more involved, involving structural changes to the property that require planning permission or building regulations.

The returns on a successful heavy refurbishment project, however, can justify the effort and typical types of heavy refurbishment that we are currently seeing these include converting a property to residential use, including things like commercial to residential and barn conversions, creating multiple units from a single building or converting multiple www.specialistfinanceintroducer.com

units to a single building.

Development exit loans

Development exit loans can help developers to manage their cash flow while they market a completed scheme, and they are proving particularly popular in the current market of slow property transactions.

Many developers are in a position where they are asset rich and cash poor, particularly when they near the end of completing a development. Their options at this stage depend on their intentions for the scheme.

If they are retaining the development to let out developers will usually refinance onto a longer-term solution. For those who are selling the properties they have developed, there is the option to buy extra time and release equity with a development exit loan.

A development exit loan is a short-term loan that allows a developer to refinance their completed scheme, often at a lower rate than their development finance facility.

This can provide a saving on interest payment and give them more time to achieve the best sales price and most investors also release equity from the scheme to use towards future projects.

It provides developers with the flexibility to take money out of scheme before they have sold the properties and can often be completed in a matter of days.

Auction finance

A major consideration when it comes to the purchase of a property at auction is the tight timescales within which a client would be required to complete.

Under typical auction conditions (though this can of course vary

Kit Thompson director of short term and development finance, Brightstar Financial

dependant on the auction house), if a client’s bid on a property is successful, they would be required to pay a non-refundable 10% deposit on the day and would usually have a further 28 days to complete the purchase.

The funding for the purchase of a property at auction can be structured in numerous ways, each one dependant on a buyer’s circumstances, situation and financial requirements.

This could include utilising a client’s other property assets as additional loan security, often meaning that a borrower’s personal or business cash contribution to the purchase price is reduced to just the 10% deposit paid on the day of auction and the subsequent valuation and legal fees associated with the purchase.

As with all types of bridging finance, the client should be clear about their exit strategy for the short-term loan they are looking to apply for.

This would usually be via a refinance onto a longer-term product, or the sale of the property, or a possible combination of both if additional securities have been offered as part of the loan structure.

These products all demonstrate how bridging can provide a flexible and cost-effective tool and the growth of all three indicates the increasing demand from investors to generate extra value from their assets.

Bridging is a growing sector, but it remains a specialist sector and expert knowledge and understanding of the available options is needed to ensure the best outcome is achieved.

So, if you think your clients could benefit from bridging finance but are unsure of which route to take, speak to an expert.

APRIL 2019 BRIDGING INTRODUCER

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Review: MIPIM

The value of MIPIM A week in Cannes may seem extravagent. Is it worth it?

Let’s be frank. A trip to the South of France for a week to visit a property conference seems a bit extravagant.

A week out of the office can have serious ramifications to small and large businesses alike.

However now that MIPIM is over, I can sit back and reflect on what my main takeaways were from a sunny week in Cannes.

One of the main things to strike me about the event was the level of representation from the specialist finance market.

By that I mean lenders, packagers, brokers, valuation businesses and legal firms – every part of our sector had a big player out at the event.

As a journalist I spend a significant amount of time rubbing shoulders with industry luminaries, but the atmosphere was different.

Overall the mood was upbeat and positive – a bit of sun and lunch by the beach has that effect – but the same topics continued to dominate

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in Cannes that have dominated the conversations at home.

Brexit chat dominated the agenda and people discussed issues with getting deals done as people bide their time waiting for some clarity from the government.

Uncertainty abounds at the moment, so it was unsurprising that it permeated the conference.

However, despite this there was also a great deal of optimism.

Phil Mabb, a broker I’m sure many of you will know, had taken me to MIPIM as his guest.

He’s a MIPIM veteran and helped me find my feet at what could be a very intimidating event if it was your first time and you were alone.

He was also kind enough to let me attend some of his meetings with him. It was interesting to hear his perspective and interactions with lenders during the event.

For those of you who don’t know Phil he’s an independent broker - a

APRIL 2019

Mike RyanStrange Fowler managing managing director, editor, Mortgage Funding Introducer 365

“One of the main things to strike me about the event was the level of representation from the specialist finance market” one-man band if you will - and has a good reputation for getting things done.

Without spilling his private dealings out in a trade magazine, I think it would be fair to say his meetings were positive. Lenders want to get deals done.

In terms of lenders I met a number of them during my time in MIPIM. Octane, United Trust Bank, Signature Private Finance and Secure Trust Bank were just some of the lenders I met during my time out there and all were confident and upbeat about the market.

It was a good experience and from the broker perspective I can see how MIPIM could add real value.

The pure number of property developers and speculators I met can only prove that there are plenty of contacts to be made with people who need access to the finance this sector offers.

Despite being warned that I may need a liver transplant by the end of the week I was in rude health.

Can you go out to MIPIM and wine and dine a week away – certainly you can.

However I think you get out of it what you put in. It’s a busy week but a rewarding one.

Is taking the week out of the office worth it? Certainly. Will I be going to MIPIM again? Definitely. www.specialistfinanceintroducer.com

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06/03/2019 16:46

Review: MIPIM

MIPIM résumer with LDNfinance LDNfinance wrap up their week in Cannes

MIPIM has a reputation as an elite networking event and this year was no different. This year’s event saw us arrange meetings with a variety of industry movers and shakers, acting as the catalyst for invaluable business relationships. It was also the perfect place to gauge the wider market sentiment and uncover key property trends.

Representing LDNfinance at the event this year were; our two founding directors Anthony Rose and Chris Oatway, Colin Anderson; executive director, Naomi Greatorex; protection director and Nick McLean; associate director.

Chris Oatway commented, “For us, MIPIM is about maintaining existing relationships, re-engaging with long-standing contacts and creating new business connections.

“If you are passionate about property and want to meet and speak with like-minded individuals, there is no better place to be.”

Naomi Greatorex added, “I found the trip to Cannes very successful and extremely useful from an insurance perspective. Over the four days I met a huge range of people that I feel will be successful future business contacts.”

Throughout the week in Cannes, the official exhibitions and conferences are complimented by a multitude of networking events in the surrounding area. Due to the plethora of networking opportunities each day presented, it was important we organised the week in advance to best schedule our time.

“Pre-planning and booking in appointments were key in preparing for the week. This took months of organisation, especially from Chris Oatway, to put together a seamless agenda,” said Anthony Rose. He continued by saying “we shared a team calendar to help coordinate

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our meeting locations to best utilise transportation and synchronise attendance at certain meetings to get the most out of each event.”

This was the second year that LDNfinance attended the event and there are three key pointers we would recommend to maximise the benefits of the week: 1. Location When researching the areas to stay in Cannes, keep an eye on where the MIPIM program areas are located, as the events are scattered throughout the city. Try find a location to stay which can act as your ‘base’ and is an easy walk to any area you need to be.

2. Diary Pre-book your appointments for the week so you have a general guide of where you need to be and when.

The easiest way to do this is to connect with contacts on LinkedIn that posted that they will be attending MIPIM and reach out to them directly.

3. Next level networking Even if you have attended numerous numbers of networking events, MIPIM is always on another level.

Put your networking hat on and be prepared with suitable attire which allows you to be out all day.

Nick McLean stated, “MIPIM is full of opportunities to meet people in a relaxed environment and be introduced to a range of people you may not have otherwise met. The atmosphere is conducive for friendly and open conversation.”

As MIPIM 2019 has come to a close, it is important to not lose momentum now as we return to London. Colin Anderson said “your post-MIPIM follow-up is extremely important! It is pointless to meet new contacts and then not engage with those contacts afterwards. As such, I have arranged a number of

APRIL 2019

Chris Oatway director and Anthony Rose director, LDNfinance

follow-up appointments now we have returned home.”

Some people say that the size of the crowd outside Caffe Roma represents the strength of the property market and if this year showed anything, it is that we can stay pleasantly optimistic.

Clearly a level of market uncertainty exists, however there are reasons to be positive as the underlying fundamentals of the UK housing market remain the same, with an undersupply of properties and continued high demand being supported by ultra-low interest rates and government initiatives such as Help to Buy. In addition, the overall UK economic position is strong with government borrowing at its lowest since 2002, and 32.6 million people in work.

Overall, the spirit of collaboration and a welcoming of new ideas amongst the attendees at MIPIM 2019 was great to see and it is clear that there are some large and positive shifts happening in the global property market. As soon as a Brexit decision is made in the UK, the clarity this will provide will hopefully result in more opportunities for developers and development finance lenders as the level of competition and demand increases.

We look forward to playing our part in supporting a resurgent UK housing market!

“Some people say that the size of the crowd outside Caffe Roma represents the strength of the property market and if this year showed anything, it is that we can stay pleasantly optimistic” www.specialistfinanceintroducer.com

Review: MIPIM News

A brokers view and guide A closer look at the MIPIM experience

A holiday, a huge stag do, a four day pub crawl and ‘Cannesfest’. These are just some of the more diplomatic offerings from my learned industry colleagues, most of whom (but not all) have not actually been, about my recent excursion to coastal town of Cannes in the South of France or perhaps it is what MIPIM means to them from sordid recollections of others?

Well, it has been in existence since 1990 so will be 30 years old next year. Afterall, this is what is described as the biggest and best real estate trade fair on the planet – so it must be doing something right - right? The great, the good, the glamour, the yachts, the cars, the catering and parties and let’s not forget the red carpet are all laid on.

If rumours are correct more money spent and deals close than the more illustrious Cannes (Film) Festival which takes place in May of each year and originates back to 1932.

I first visited in 2006 as a lender for a three year stint blunted by the financial crisis and only resurrected my visits in 2016 (now as a broker), but think I should have frequented more. To my mind you should do whatever it takes to go at least once to make your own mind up, and hopefully the reasoning below will help explain how and why.

As I write this it is the week of the Aintree Grand National so you will forgive me for using the expression runners and riders to represent the community we work in (think lenders, lawyers, valuers, brokers insurance providers professional service providers etc… get my drift).

Put them in the huge fishing bowl of MIPIM, add a bit of spice (think yachts, super cars, villas, bars, restaurants, sunshine, sangria (your imagination can do the rest) and you have the perfect networking www.specialistfinanceintroducer.com

arena for chit chat, small talk and power play away. We as humans are made to communicate, and believe me you will not fail to have meaningful communication (even the most tight-lipped succumb to the ambience) with more people in the three key days (Tuesday-Thursday) than you could ever organise in a couple of months back home.

I once paid top dollar to enter the bunker (Palais de Festival), and whilst it was an eye opener to what is going on in the rest of the world, if like me, you want value for money (call me cheap if you like) you are just as well arranging a few strategic breakfasts, lunches and dinners, then hang around the triangle created by Café Roma, the Upside Bar and New York, New York directly opposite the bunker. You cannot fail to meet old acquaintances and make many new contacts for the future – my first was in the loos at Ma Nolans!

Prior preparation is key, book flights and accommodation early (previous June), perhaps looking outside Cannes since I hear a number of central Cannes hotels allow gazumping of bookings late in the day and take a look at www.mipimtoughguide.com in the lead up, since it offers a number of opportunities to gatecrash hosted events.

I have always taken the fly-drive option flying to either Toulon or Marseilles, renting a car and driving to Airbnb accommodation in Juan les Pins, a beautiful village two stops (10 minutes) down the superbly efficient train line, which also encourages me to escape the hurly burly of the numerous parties at reasonable hour (Uber exists for those with more youthful energy).

The amount of bleary eyed MIPIM virgins who party until the wee hours is astonishing – and that is

Phil Mabb director, Bridging Development

just on the first day of the even (Tuesday morning)!!

This year I went in tandem with Ryan Fowler, managing editor of Mortgage Introducer – having a buddy helps in the quiet moments – no doubt you will read some material somewhere else in this issue hear his view. I suspect his boss will be sending an entourage next year, such are the positive fringe benefits to be had.

The bottom line is the event is what you make of it, and for the more sceptical readers and MIPIM Virgins out there, there is more to be gained than lost (expenses). I know a number of people who were not sponsored by their employer, so took the trip as holiday to ensure they were present – it can’t be all bad can it?

So, to summarise, book early, avoid being central, and for heavens sake pace yourself, the next beer, glass of wine of bubbly is never far away!!

Here’s to the next MIPIM (9 to 12 March 2020) – Be there or be square!

APRIL 2019 BRIDGING INTRODUCER

19

Review: MIPIM

Broker numbers on the up There was a notable rise in specialist lending brokers in attendance

Close to 6,000 UK property professionals made the annual pilgrimage to MIPIM last month. This year’s event was particularly special as it was the 30th MIPIM property festival.

The mood around the event was upbeat and positive, fuelled by sunshine and the usual, ahem, moderate consumption of alcohol.

But what stuck out like a sore thumb was the lack of concern about Brexit uncertainty, which was certainly dominating the news back home in the UK. By contrast, the main talking point and theme of the event was the significant amount of opportunities that Brexit, in whatever form it ultimately comes to pass, will provide the specialist lending market.

Even if the UK leaves the EU with no deal, the feeling was that this could create a major window of opportunity and will attract an influx of foreign investors back to the UK’s property market. Volatility, remember, can prove a powerful magnet for many serious investors.

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One other thing I noticed quite early on was the significant increase in specialist finance brokers in attendance. We’ve always been used to seeing a number of them in previous years, but this time round specialist finance brokers made up the lion’s share of the people we met up with during the four-day event.

In previous years, the majority of brokers we’ve bumped into have typically come from the structured finance world, so it was fantastic to see that MIPIM has started to attract copious amounts of specialist finance brokers to Cannes — the brokers that lenders like us deal with day in, day out.

On the Tuesday evening, myself, Alex Tyrwhitt and Liam Lawlor attended a dinner at our favourite restaurant, hosted by Seddons, just a stone’s throw away from the Mediterranean. We were part of 30 attendees, who we all knew from back in the UK, including some of our existing partners.

Once again, the B word was notably absent throughout the evening’s conversations and we

APRIL 2019

Mark Posniak managing director, Octane Capital

focused more on what our partners wanted to see from us in the upcoming months — how we could further refine the #3rdgen of lending. It was fantastic and invaluable feedback. On Wednesday, we set out for a jam-packed day of meetings with new and existing intermediary partners. Admittedly, the thousands of people in attendance looked slightly worse for wear after an evening of party-hopping across yachts, hotels and pubs to take in the vast amount of entertainment on offer.

During the evening, we co-hosted an event to watch the Liverpool vs Bayern Munich fixture in the Champions League, and once again, the main topic of conversation was the opportunity of Brexit, rather than the challenge, and this created a positive energy in the room.

Overall, MIPIM 2019 provided a perfect platform to discuss the current state of the property market and enabled us to catch up with new and existing broker partners and discuss what they expect to happen in the market over the coming months — and what we could do to help them.

I seriously urge any intermediary who hasn’t attended MIPIM before to get out there next year to make the most of having thousands of property professionals in one place, both from a networking point of view and generally gauging the state of play in the property market.

Without bigging it up too much, MIPIM 2019 was certainly one for the record books in regard to both attendance and event itinerary over the whole four days. It can be a bit tough on the liver and it’s easy to pile on half a stone, but for the intel and insights you leave with it’s always worth it. We’ll hopefully see you there next year. www.specialistfinanceintroducer.com

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Review: MIPIM

A great way to do business It’s rare to get so many professionals in one place

It is billed by the organisers as ‘the world’s leading property market’ and if you’ve ever visited Cannes with an extra 20,000 people packing every hotel, restaurant, bar and café from beachside to back street you wouldn’t disagree.

MIPIM is like no other event on the property professional’s calendar.

For four days in March it brings together people working in every sector and sub-sector of the property industry including developers, brokers, architects, lawyers, planning and land agents, suppliers and of course, financiers.

Thousands of businesses connected in some way to building, refurbishing, converting and investing in residential and commercial property in the UK and Europe are represented.

Of course, the larger developers and national house builders were there as were institutional investors, the clearing banks and major suppliers. However, there’s also a growing presence in the SME sector. MIPIM now attracts smaller scale property developers, investors and finance brokers looking to grow their network as well as their businesses.

The conference venue itself is packed with trade stands and there are presentations and panel discussions to suit every interest.

However, for many delegates it’s what goes on outside of what’s affectionately known as ‘the bunker’ that’s the real reason they go.

It is a networking paradise.

Everyone you meet can introduce you to half a dozen other people you should add to your contacts and each of those will know half a dozen more.

As you move through the week and go to yet another informal meeting at a harbourside bar or café you find you’ve connected with

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hundreds of people. If you nurture those relationships there’s a good chance you will gain business from them one day, either directly or by referral. At UTB we have already seen bridging cases resulting from having made new contacts at MIPIM or by having constructive catch up conversations with developers and brokers we already knew but have perhaps not dealt with for a while.

The fact that so many people pitch up for one or more days means it’s an extremely efficient way to meet with lots of brokers, clients and professionals you may struggle to link diaries with when you’re back at the office.

People make time to go to MIPIM. They go to catch up with people they may not see for the rest of the year and because they’re away from the day to day stresses of ‘work’ they have time to talk and listen and maybe reconnect.

This year UTB headed to Cannes in numbers. Nine senior representatives from the bank made the trip including our group MD. We hosted two events.

The first an informal and exclusive lunch in a well-known beachside restaurant for 15 influential brokers from the bridging sector.

For some it was a thank you for their consistent support, for others it was an introduction to UTB and the start of what will hopefully become a mutually beneficial relationship.

Our invitation may have played a part in persuading some of them to jump on a plane or train to the Cote d’Azur.

I know some of them were at MIPIM for the first time but having experienced it would almost certainly be returning next year.

The second event was on an alto-

APRIL 2019

Gavin Diamond commercial director – bridging, United Trust Bank

gether different scale. United Trust Bank and James Andrew International (JAI) jointly hosted a cocktail party for 500 of the construction industry’s key players. I say 500.

That was the number of guests we hoped would attend.

The number who turned up on the night was closer to 700.

The high calibre of people we have working for the bank means our collective contacts include just about anyone influential in UK property and one of our aims is to develop UTB as a organisation which connects talented people, encourages them to share their knowledge and insight and provide the means to communicate that to interested and engaged audiences.

UTB’s ‘wise owls’ are a great example of the highly knowledgeable and experienced individuals who generously share their expertise with us so that we may pass it on through articles and at face-to-face events. We were delighted to have several wise owls join us in Cannes.

With MIPIM taking place in midMarch, Brexit was a regular topic of conversation and what came across was that most people were keeping a watchful eye on it but not letting Brexit uncertainty hold them back.

The mood of MIPIM was similar to our own – confidently upbeat.

UTB’s plan is to keep growing and the way to do that is to keep lending.

We are prepared to ride out the ups and downs of the economic cycle and we’re keen to support developers, brokers, investors and housebuilders who wish to do the same.

We’ve already booked our flights to MIPIM 2020. The only question is whether we’re going to need a bigger venue for next year’s party! www.specialistfinanceintroducer.com

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09/01/2019 15:11

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Comment News

Knowledge is power This is particularly true in times of uncertainty

Prolonged Brexit uncertainty is damaging the UK housing market, according to the latest RICS Residential Market Survey. With key activity indicators remaining in negative territory during February, 77% of surveyors said Brexit is the biggest challenge in the market – and this situation is taking its toll on the lending community.

Secure Trust Bank and Magellan Homeloans have both cited market pressures as reason for stepping back from the market, while other lenders like Fleet and AA Mortgages have pressed the pause button on lending, all within the first three months of the year.

These lenders may not be directly involved in the bridging market, but the trend is certainly something that should make bridging loan providers sit up and take notice. The mortgage market may remain competitive, but this retraction of lending appetite is something we haven’t seen for a number of years and while we might not see other lenders with-

drawing their products, there’s a good chance that there will be a tightening of criteria.

On the other hand, the number of BTL mortgage products available has reached its highest level since the financial crisis, with landlords now having the choice of more than 2,000 products which is the largest number since October 2007. It’s easy to be sanguine about exit routes, but what happened in 2007/2008 should be a warning of how quickly the market can change. This could impact the exit routes for bridging loans in the future and so should be a central consideration as part of the underwriting process now. Aside from Brexit and the suffering retail sector, the news isn’t all negative. Recent figures from the ONS show that the number of people employed in the UK rose to a new record high of 32.7 million between November and January this year.

The 76.1% employment rate is the highest since records began in 1971 and the unemployment rate has fallen below 4% for the

Benson Hersch chief executive, Association of Short Term Lenders

first time since 1975. This is well below the EU average of 6.5%.

Wage growth has also started to pick up, with average earnings increasing by 3.4% in the three months up to January, outpacing inflation even though it rose to 1.9% in February. In this environment of conflicting information, it can be difficult for business leaders, of lenders and broker firms, to know exactly what course they should be plotting, and the danger is that they carry on regardless without due consideration of what is going on around them.

But, while the information may not be creating a clear picture currently, knowledge is power, particularly in times of uncertainty. Reliable market intelligence and trusted insights become more crucial when the risks of making incorrect decisions become more pronounced.

And so, while it may be tempting to bury your head in the sand until the world becomes a more certain place; understanding the dynamics of the shifting market around you, will help you to make better informed, and less risky decisions.

It’s for this reason that we put so much effort into the speakers and content for our annual conference at the ASTL. The event does not take place until November, but even now we are working towards delivering delegates a truly informative experience with a seminar programme designed to tackle the key issues in today’s market.

Knowledge is power, so in this environment it’s vital that you take every opportunity to build your own personal, professional and institutional knowledge.

APRIL 2019 BRIDGING INTRODUCER

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07/02/2019 09:33

Comment News

SME disputes The FOS compensation limit increase is no cause for alarm

April sees the launch date of the Financial Ombudsman Service’s (FOS) extended reach embracing a cohort of SMEs so it is timely to consider some of the opinions and reactions to this regulatory tightening.

Whilst FOS will be restricting their remit to SMEs with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m, the UK Finance plan is to not only support this extension but provide support for a broader agenda. This includes providing access to an appropriate ombudsman scheme for SMEs with turnover of between £6.5m and £10m and a balance sheet up to £7.5m, demonstrating an industry commitment to supporting the establishment of a suitable ombudsman scheme for larger SMEs that meet the eligibility criteria.

The industry believes that the natural home for the ADR mechanism for this cohort of businesses is within the framework of the FOS. However, the industry has agreed to support and fund an interim voluntary ombudsman with an aim to deliver the arrangement

by September 2019 and will work with all stakeholders with input from government and regulators to develop the necessary proposals as quickly as possible.

This new scheme will recommend appropriate awards for redress, which will be binding on banks up to a new higher level of £600,000, meaning the bank cannot appeal any award up to this threshold.

As with the current FOS binding award, both parties can appeal over this threshold and the SME can still go to court if it wants to pursue an award above the threshold.

Not everyone, however, appears to be on the bus. There are concerns www.specialistfinanceintroducer.com

09:33

being expressed by organisations in the commercial compliance arena, that there will be a knock-on impact on professional indemnity insurance with the possibility that premiums could increase, and insurers may leave the market with entrants deterred as a consequence.

Professional indemnity insurance is an important component of our Member’s business and we work hard with our business partners, Towergate, to ensure that the policies deliver the most appropriate cover and that the premiums are competitive.

Feedback from Towergate on this matter has confirmed that their insurers are aware of the FOS changes, but this will not have an impact in their rating unless of course they begin to see an adverse increase in the number and size of claims paid. They are keeping a

James Hinch compliance consultant, NACFB Compliance

watching brief for now. This is a far more pragmatic and commercial approach than the somewhat alarmist declaration heard from others in the industry.

As with any new initiative there are bound to be learning points as the processes and systems are tested. I am sure that the independent assessor of FOS will be widening her remit as the extended reach becomes business as usual so there will be transparency on how well the FOS are performing.

This initiative alone will not guarantee the highest levels of professionalism in every corner of the sector, but it will help. It will make a contribution and ensure that all of us remember the importance of professionalism and integrity in everything that we do as we partner with SMEs on their customer journey.

APRIL 2019 BRIDGING INTRODUCER

27

Round-table

Our experts cast their collective eye over the issues affecting the bridging market

An eye on the future Ryan Fowler: A lender recently launched an overdraft facility. Could we see bridging lenders launch different lending opportunities and where will the expertise of bridging professionals lend themselves most easily?

Terry Pritchard: It’s a repackaged loan that’s been around for a long time. It’s just different marketing.

There are lenders that are looking at different types of products and thinking outside the box. I’ve looked at what we can do to compensate for some of the Brexit issues. It’s a revamped product and everyone has probably written something similar and just not called it that before. It’s a good way of doing it.

Richard Tugwell: It’s whether those types of products are right for their clients because they’re undoubtedly right for some clients and not others. I think the danger is for clients who can get cheaper funding from other products being drawn into that because of its marketing. It’s not alien to most lenders around this table but they’ve marketed it very well.

Alan Dring: I think it reflects on the growing maturity in the market. I’ve just taken on a new client, Apex Bridging and we’re looking at a new marketing director and my previous client has just appointed a new head of marketing so the sophistication of marketing is now being appreciated.

Rachel Anderson: I think marketing is really important. We keep seeing the market get more and more saturated with more lenders. And good marketing is important to set yourselves apart as it becomes harder to differentiate between what everyone does. Good marketing gets that across.

AD: It’s also how your marketing department

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BRIDGING INTRODUCER

APRIL 2019

cascades down its objectives to the people that sell the proposition, the BDMs. My experience is that’s not of quality in many businesses.

RA: It has to be an innovative approach where everyone works together, working with the sales team, underwriting, to ensure everyone’s on the same page, working together and taking a data led approach, looking at the insight and understanding who it is you’re communicating with.

RT: The best marketing simplifies what you have and this is a complex area so simplifying the complex can make it seem too simple. And I think making sure what people see when they see a product is what’s behind it and how they advise on it.

RA: One of the biggest challenges is making sure you’re pitching it at the right audience.

Richard Deacon: There are plenty of other areas bridging lenders can explore. If you’re working for a lender and you’re not exploring other avenues you’re foolish. The marketplace is so alive with intelligent people and lenders, sales and marketing. You need to

www.specialistfinanceintroducer.com

Round-table

Brian West, Central Bridging; Phil Mabb, BridgeDevelopment; Damien Druce, Assetz Captial; Arthur Cole-Fontayn, Aspen Bridging; Simon Chapman, Lendco; Richard Deacon, Masthaven; Rachel Anderson, Together; Jonathan Newman, Brightstone Law; Gary Feast, Robert Sterling Surveyors; Terry Pritchard, Charter House Corporate Partners; Alan Dring, The Mad Approach/ Apex Bridging; Richard Tugwell, Together

being pulled. I remember the Mortgage Express one was very successful because it was almost a chequebook loan.

AD: Platform had it and Mortgages PLC dabbled with it too.

BC: The funding is clearly an issue with it. It’s been trialled and run and disappeared.

TP: I suspect the pricing is expensive to insure the capital on there. be thinking ahead. A lot of lenders are in the same boat with regards that things are on hold at the moment while they see what happens but if you don’t have that ace card in your pocket to pull out when everything settles down, you’re going to be behind the competition when everything does settle down.

Brian West: We’re looking at different forms of security and working on deals we hope to announce soon. Diversification is key. I’ve heard of this flexible overdraft type product but didn’t it go down with a lender that disappeared from the market, pre-credit crunch?

TP: In that period just before, a few launched this overdraft.

Damien Druce: More recently Castle Trust have done it but not marketed it as well. It comes down to marketing. It’s a crowded market and it’s finding a way to make yourselves heard.

BC: It was a product and died a death?

TP: I think it was generally the lenders’ funding lines

www.specialistfinanceintroducer.com

BC: As a bridging lender you can turn the deal around fairly quickly so what’s the need for a facility to be there?

Phil Mabb: Legal fees and valuation. You have security in there and you can phone and buy a cheque, job done.

DD: And if you have that cash there you can mobilise it.

PM: And non-utilisation fees where the lender could take something.

BC: I’m struggling to see a scenario where you set up multiple of these accounts and people aren’t drawing down on them.

AD: Over the last couple of years I’ve been developing a trust curve. You have a risk curve which everyone works to but a successful one has to be concurrent with the trust curve. How well do you know the target market before you launch a product?

You have to do research first. With data capture and modelling you get the opportunity to have a trust curve.  APRIL 2019

BRIDGING INTRODUCER

29

Round-table

RF: With heavy competition in the bridging market and some significant economic challenges looming are some lenders taking on excessive risk at the moment?

Jonathan Newman: They certainly are. There are certain lenders under the radar that no one knows much about or see rarely. They are certainly taking excessive risk. My client base is more institutional lenders and they’re very averse to risk which has its own ramifications when growing their business because once you start being risk averse it’s harder for guys going out selling and harder to raise market share. I’m getting a growing streak of referrals from people exploited by bridging finance companies, some I’ve never come across before and some who are not proper bridging finance lenders but people in real estate with money and are very dangerous. There are people taking excessive risks but more importantly, people that think that they can dip in and out in the unregulated environment quite easily and there’s a lot of consumer detriment out there.

RT: This isn’t just a bridging problem. Margins have been squeezed completely by the high street lenders on first charges. Lenders have two options, stopping lending or start going up the risk curve. We’ve seen that on the high street. With bridging I expect most lenders have their risk compliance and oversight procedures, looking at the purpose, exit and affordability. If you’re dipping in and out of the market, it’s harder to do. If you have some money burning in

you need to get rid of it at higher margins and the temptation to do that is increasing.

Arthur Cole-Fontayn: Aspen does 80% in the market and to some it’s perceived as being overly risky but fundamentally the deals we’re seeing are paying on that product and performing no worse than ones we’re writing at 70%, 75%.

TP: Do you think it’s the strength of the underwriting and knowing the client’s vulnerability?

ACF: Yeah, we take steps in our process.

RT: We very rarely go over 70%. There’s some existing client stuff that may go over. The core LTV is king, the valuation is important, that we understand the valuers and making sure it’s affordable.

TP: I’ve noticed a few funders in the marketplace looking at a crash position. No matter what economic situation we’re in, in or out of the EU, there will be some vulnerability to valuations. There’s a number of funders especially pension funds who’ve come to us wanting to launch a crash fund. I’ve seen quite a few come into that and say they’re looking at a 5-year term of the money out and are looking at the crash position and then lending slightly over the crash position, waiting for it to go up. They’re charging margin for it. It’s ridiculous. We’ve just done our first loan on one of them particular development issues and they’ve come to us asking to do it so it’s not me saying I’ll lend up higher on the risk curve. It’ll be interesting to see once they’ve dipped their toes in how far they actually go with it.

RT: I wonder how many of those are looking at valuers they trust.

TP: Yeah, we’ve made sure we use valuers we know.

“I think BDMs should show if they’re going on the road, they know what they’re talking about” Richard Tugwell

Over £5.4 billion* in bridging loans funded, but we don’t make a song and dance about it.

Gary Feast: We deal with a wide panel. A lot of lenders are funded in different ways. Those reliant on securitised debt to fund themselves are probably a bit more exposed and have to get the money out the deal. We probably don’t see that from a valuation perspective because that’s not really our remit, however, it’s all about trusting the valuer. The marketplace is very different. It’s not seeming to be anything stabilising, if anything it’s going backwards.

The most important thing from a valuation perspective

togethermoney.com/ bridging

*Includes commercial and regulated bridging loan applications over 33 years.

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is dialogue with your lender and keeping an open communication process to talk about the marketplace, where it’s going and individual schemes attract different types of risk and if you have that trust with the valuer you use you can identify problems at an earlier stage and hopefully avoid them. We tend to work very closely with our panel and have that open dialogue.

JN: This business at its bare essentials is about security, which hasn’t changed, and the borrowers, which has changed. Now there’s a wider range of borrower and different types of borrower. Assessing risk then should be more on the borrower than on the security because that hasn’t changed much. We have market factors and property market crashes but there has been a downturn since the Brexit vote and a lot of that has already been factored in. Properties are still selling with all the uncertainty at the moment so how far it’ll go no one knows. The number and size of the market has changed so we have different types of borrowers.

DD: We meet every borrower irrespective of loan size.

We have valuation partners that do the bulk of the work assessing the security and property, but it is understanding the borrower as much as we can.

AD: That goes back to trust. I’ve looked at all your websites and very few use the word trust on the sites.

And that’s right, you can’t say trust me if you’ve got stakeholders involved in taking you to the market who you can’t trust. Over time you’re getting more trust with your panels helping with the decisions. People adverse to risk are adverse to it because they’ve been stitched up in the past. The only thing the client looks at is that they want to be able to trust you.

Simon Chapman: I agree. Trust is a great word but your trust is instilled in the professionals you appoint which covers your security and valuation. For us the key emphasis is knowing your client. If you don’t know your client that could make the whole deal fall apart. You have to trust your client and in order to do that you need to do your due diligence on them properly and bring it together.

DD: In terms of what bridging lenders can do to change, maybe it’s not the product but the model.

Can we utilise BDMs differently going forward, implementing a more relationship management

So what does £5.4bn buy you? www.specialistfinanceintroducer.com

“One of the biggest challenges is making sure you’re pitching at the right audience” Rachel Anderson approach? Brokers are quite hard to get in front of nowadays. They get inundated by emails from lenders and don’t want to waste an hour sitting down with them so maybe the BDM can be best employed by meeting the borrower prior to drawdown and getting that trust and relationship.

BC: We tend not to meet our clients, but we always speak to them as early in the process as possible.

The reality is we can’t rely on all the brokers. They’re fearful of losing that client I guess by asking probing and difficult questions and I think as a lender you’re in a better position to do that. Customers appreciate that.

DD: Is a BDM working with a broker to get a deal over the line more valuable and important rather than sitting, talking about products?

PM: A bad deal with a good customer is better than a good deal with a bad customer. And when working for a lender, I always met the client to help me to understand what development finance is all about.

Especially when the market turns, a good customer would fight his corner to finish the scheme off and get out and a bad customer would just hand over the keys and leave. I like meeting BDMs, but it is a bit of a time sink. I wouldn’t agree with the observation about brokers not telling the lender things.

BC: I’m saying there’s some brokers that’ll shy away from asking difficult questions if they generated a lead 

12,381 Rolls Royces.

More than three times their total annual production.

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that package and the education you provide on the back-end becomes key. It’s not people deliberately doing the wrong things but not knowing how to do the right things.

PM: I think it’s incumbent on the lender visiting the site. And it doesn’t have to be a BDM. They might not have the skills to interpret it. But you have asset managers. There are ways. It might add a layer of issues and timing, but if you’re lending a big ticket of money you should be doing it.

“Knowing your customers is key. You have to know if they’ve got a clear exit” Richard Deacon over the internet, for fear of losing that client. They’d rather get terms out quickly.

PM: Yeah. But aren’t they wasting their own time by trying to pull the wool over your eyes?

BC: I don’t think they’re trying to pull the wool over our eyes. I think they’re just taking a reasonably minimalist approach.

JN: So, you’re saying you don’t have total trust and confidence in the person handing over the deal?

BC: It depends on the person and deal. There are many different types of introducer. If one gives me a potential deal and client’s number I’m more than happy to sort that out.

RT: It depends how you set up your BDM sales force and incentivise them. If you unincentivise them for volume that’s what you’ll get. If you incentivise them for quality and volume, the quality of the package and customer journey, you’ll get that behaviour.

BC: Are lenders incentivising BDMs on the front-end basis and back-end basis, i.e. when it redeems?

RT: Our BDMs are incentivised against a basket of different measures and that’s part of it. It’s looking at the whole value of the loan, the quality and volume of the loans. With many more brokers getting into the market that don’t really understand it, the quality of

They say it takes 10,000 hours to master something, when it comes to bridging loans we have 83,490.

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DD: To you as a broker Phil with the whole BDM model evolving, is it about them talking about products or a hybrid BDM that can do both? Isn’t that the way forward?

PM: I prefer the hybrid. I don’t need to be told about what they do.

DD: The young people should be on the phones, learning on smaller deals.

PM: And shadowing.

AD: That comes back to education.

BC: Back in the day I used to put promising underwriters in an internal business development executive role, a bridge between the external BDMs, the clients and bank so it was a tough job but tremendous grounding before going out on the road.

DD: I think credit risk savvy BDMs are the way forward.

BC: A BDM that used to be an underwriter is great. In a sense you don’t find them, you train them to bring through.

AD: The trust is two way and many lenders say we need to learn how to trust our brokers but it’s a two-way role and has to be earned. I think academies or qualifications enhances that potential.

RF: Three quarters of ASTL members expect their business volumes to grow over the next few months. Do you agree or disagree and why?

BC: I’d say three quarters of members when asked said their business would grow. Who would say ‘we

togethermoney.com/ bridging

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expect to shrink’ so I question the actual validity of the numbers. People will say what they feel like they needed to say.

DD: I think people hope it’ll grow.

TP: Do the ASTL audit your reports on lending?

AD: No. TP: That is useless then.

RT: That’s why it’s so difficult to get industry stats.

The first charge market is audited and without that you won’t get good stats.

BC: If you ask some members if they meant it afterwards, they say ‘no’.

TP: According to ASTL stats its members wrote twice the business of the entire market last year which I found fascinating.

RF: Does anyone anticipate we’ll see a drop?

RD: I think there will be a drop without a doubt.

House prices are going down and down, valuations are becoming more prevalent and you’re asking the question whether it’s the lender asking the surveyor to take 10% of before they give it to you and then you take 10% of. Going back to risk, 80% is risky in this market unless it’s a really solid, secure deal and client. There’s also the exit route to consider. There’s trust elements and a good BDM must have knowledge of underwriting, but you can’t train a good salesman. You can learn the knowledge, but all good salesman are good relationship builders which is key. If you’re at the high end risk curve with a slightly sketchy exit route or customer in these times, it only takes a 10% fall in the market and only takes them two weeks to sell because of some fault in the property and there’s a chance of making a loss on the deal which no lender ever wants to do.

RT: I think it’s more likely there being an issue in the supply end of the market. I think demand will grow out of the uncertainty. If you’re looking at the difficulty around valuations or risk that’ll cause lenders to condense down quite rightly so that supply will be harder to get to. Demand will increase and out of that

Since our first bridging loan in 1985… www.specialistfinanceintroducer.com

will be innovation and new supply. I think there’ll be a period this year where that’ll be quite difficult.

GF: It’s an accurate valuation of the product at the time and it’s about timing. You can know the value of the property at the time and none of us have a crystal ball and will know which direction exactly it’ll go in. If certain valuers think it’s clever to take 10%, 15% of across the ball, I don’t think that’s a realistic valuation.

We’re getting asked more from our lender clients ‘where do you really think this is?’. That’s almost a desktop valuation, getting more of an idea because they don’t want an applicant to commit to fees and costs and a valuer to create a realistic valuation at the time, which is 20% below their expectations at the time because that will blow the deal out the water.

Sometimes we have to tell the lender that won’t work but going back to trust, lenders appreciate that dialogue, that we can say that’s not realistic. Too many applicants wear rose tinted glasses and assume that because they bought for £2m last year it’ll now be worth £2.2m.

RD: That’s when knowing your customers is key. You have to know if they’ve got a clear exit.

GF: We’re just trying to get the valuation right. We like to know as much information as possible. It’s difficult to say where the marketplace is going.

AD: Are many lenders looking to another valuer for a second or third opinion? 

“Assessing risk should be more on the borrower than on the security” Jonathan Newman 

The world record for longest bridge has been broken 3 times.

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GF: No not really. We’ve seen it a couple of times but only out of desperation from the applicant not able to get the deal across the line. It’s not an issue. We just try and do the best we can.

RF: It’s been claimed that the regulator is preparing a crackdown on peer-to-peer marketing this year. It’s worried customers have been lured into high risk products without warning. Do you think that’s a fair assessment, do you think P2P is doing enough to warn people and do you think bridging lenders are doing enough?

DD: We consider ourselves more of a marketplace lender now rather than a true P2P. Our investors span retail, business, banks, family offices, institutions so aren’t wholly reliant on pure retail deposits. We have two risk warnings on our website. P2P is under the spotlight. There’s one lender under special measures and being monitored by the FCA closely. What is being spoken is there could potentially be a review.

It’s not set in stone. There will be and quite rightly some changes and those that are truly retail only P2P lenders need governing.

RF: Do bridging lenders do enough to advertise their fees?

TP: I think good lenders do and bad ones don’t. The good lenders make their fees very clear in more than one place.

JN: Some have default rates of 6%.

RT: Technology plays well. Bridging sourcing is difficult. Bridging sourcing still forces people to source on pay rate rather than fees. And something can be done there.

TP: That’s a good point. Some things that you read of sourcing systems are quite misleading. The lender has given them the information and quite often it’s not recorded in the same way as them reporting it themselves direct. That could be improved.

SC: You see few lenders note on an APR on any of their products, which is across the board. The easier way to compare products is by APR but a lot shy away from doing it because it exposes some of the fees they’re charging.

RD: When is a bridging lender a bridging lender? There are high net worth guys who have just put tighter on their £5m, £10m fund. When’s that a bridging lender?

Bridging has a bad name for these guys.

DD: Now it’s such an experienced market, the bridging market shouldn’t be afraid of regulation. If it’s okay to regulate a five, 10-year-old market as heavily as the FCA do then why aren’t we regulating bridging?

RD: And the same with the bridging qualification. The only thing that professionalises that and adds credibility to the market is a qualification.

DD: We can get rid of these rogue lenders then and 6% default fees if they have to go through that regulation process because it will scare half of them off.

BC: Rates of return being offered are between 3% and 6% by some P2P lenders and one P2P lender was advertising 12% return, one 16%. How does that even work?

DD: Maybe they’re the bridging lender with the two in and two out a month. They have to charge that to be able to justify them returns.

BC: They’re going to have a detrimental impact on the likes of yourself and these here.

DD: My belief is that we shouldn’t over regulate some sectors and leave others alone. Let’s drive regulation forward for bridging. We’ve self-regulated for years in the FCA’s eyes, I think.

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BC: We’ve self-regulated in the sense that we’ve identified the main key lenders are doing a good job. I think we all pride ourselves onworking closely with the ASTL, NACFB in driving things forward. We can do more with a qualification. It’s at the periphery when you have P2P lenders offering returns of 12%, 15% returns which can’t work.

DD: The boutique/family office/high net worth fund lenders will always be able to play in a self-regulated market but in a regulated market by the FCA it makes

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it less easy to play, so if we get to a fully regulated status in this bridging market it’ll be harder for them to operate.

RT: And regulation would bring more stringent financial promotion parameters.

DD: In a regulated market you’ll find these boutique funds gravitate into commercial and specialise in commercial bridging finance because commercial remains unregulated.

AD: I’ve done reviews into transparency. How many use video facilities to ensure your proposition is transparent and others have understood it? You review it and look at how transparent you are and get brokers in to find out if its what they and the stakeholders want. A lot have been slow in utilising video interviews. You could start at completion to make sure there’s no doubt the client understands the funding.

BC: I’m not entirely sure you need to do that if you have very rigorous legal advice for the client at the point of completion.

ACF: I suppose one better is meeting them in person, showing them the terms and saying ‘does that make sense?’.

JN: What came out of a court decision was the most important factor for the lender was separate independent legal advice.

RF: How do we envisage a potential bridging qualification and what should it contain?

DD: It has to contain an element of deal ratification/ sign off that involves meeting the borrower.

BC: I think if you try and be too ambitious, you’ll never get anything off the ground which the last number of years has proved. Everyone’s talked about it and nothing’s happened. Start with the basic foundation course and get one or two of the big brokers to sign up to it and as soon as everyone sees Brightstar’s staff has their bridging foundation course certificate others will follow. Don’t try and do a CeMAP equivalent. Just start somewhere and build from there. I would say standards would be driven within broking firms and in my experience, staff will embrace it. With FISA all the staff had their certificate pinned proudly to their desk and there was friendly competition on grades in the office.

DD: It should be a module of CeMAP like the old commercial mortgage certificate.

RT: CeMAP adds credibility. If you have too many different qualifications, you dilute people to those

www.specialistfinanceintroducer.com

“The bridging market shouldn’t be afraid of regulation” Damian Druce qualifications. It doesn’t have to be as stringent as a CeMAP qualification and later life isn’t as stringent a paper in CeMAP as the rest of them are.

DD: You could have it as a module in CeMAP. You could choose bridging as a unit you want to get the qualification in and if you go through the others you have the advanced CeMAP position.

RT: And as a lender you can then decide if you want to only deal with the credited or qualified advisers. I think BDMs should take the qualification to be credited and show if they’re going on the road, they know what they’re talking about. We put them on an accreditation before they go out.

AD: Add it onto CeMAP. DD: When I did my commercial mortgage certificate you didn’t need to have CeMAP, it was just that unit and if you wanted the whole thing you had to upskill and go through advanced CeMAP. A certificate in bridging finance as a standalone qualification brings all the credibility in and it’s consistent with other forms of learning. This is about industry standards.

PM: You can do this in many ways. You can have it at component level and call it upskilling. You can do the full paper or a smaller paper. I’m a member of the NACFB and I have to go in every now and then and show I’ve done training, I’ve done roundtables, something to earn CPD points. You can do a little paper and go online on NACFB and answer about 20 questions. It’s something which is better than nothing.

You can build from there. I agree with the full paper getting everyone CeMAP. I’m an advocate of it.

BC: At the FIBA ASTL joint meeting I thought there was a startling lack of ambition from a lot of lenders, who were just not interested in a qualification, thinking they train their staff anyway. 

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Cover

All Together now Bridging Introducer caught up with Richard Tugwell, group intermediary director at Together to get his take on the bridging market You have been working with brokers for a number of years now, how has the relationship with brokers changed?

I think that with the advent of better sourcing and more focussed and relevant marketing the lender/ broker relationship has become more about education at the front end and problem solving for any issues that may arise during the application process. The days of BDMs being a living rate guide are in the past. They are much more aligned now to the needs of the brokers and their clients.

Why hasn’t there been greater uptake of specialist finance by brokers?

I think that there are three main reasons for this. Firstly there is a lack of awareness of the solutions available in the specialist market and of the number of clients that are not being satisfied by high street lenders. Our recent research showed how many clients are becoming disillusioned by the lenders that they are offered who cannot meet their needs and that realisation is slower to register with mainstream brokers.

Secondly the bulk of lender recommendations remain on the high street. It’s undoubtedly a much harder conversation when in front of a client to start with a high street recommendation and then

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gradually go through lenders who will not accept the client for various reasons until they find a specialist lender whose rate will probably higher. A more thoughtful advice process would dilute this.

And thirdly time is also a factor.

The advent of product transfer proc fees and the broker process that sits with this has made investigating specialist cases less viable for many brokers. We saw this some years ago when the mortgage market was busy and protection sales dropped due to time constraints and this is now a factor in the specialist sector.

even if they are a smaller population than those that fit the high street as they are growing in number and dissatisfaction.

What do brokers say are the main barriers to getting more involved in specialist finance?

Where do you see the London market going over the coming months? Could it rebound?

Knowledge, time and different process to their core business

What do you think brokers want from specialist finance provider like Together?

Education, good client solutions and a supportive network of experienced relationship managers to help them through the process

Is there a risk to brokers who don’t integrate specialist finance into their business?

I think that those that are very busy on PTs need to think about the model that they will adapt when this business dries up as it inevitably will. Research has showed the dangers in ignoring client needs,

APRIL 2019

What does the next 12 months hold for the UK property market?

Without a crystal ball this is impossible to predict but uncertainty would be the key word. Need for property, owned and let, hasn’t gone away but not knowing where prices are going, regionally and nationally creates stagnation and I feel that transaction levels will be down until the outcome of Brexit is clearer.

It can of course but is likely to remain steady and relatively uninteresting until the outcome of Brexit is clear.

What areas of growth do you see?

The number of clients unable to mortgage or remortgage on the high street must create a market for brokers who understand or want to understand specialist lenders.

If a client has a good product with their existing lender but cannot raise more funds with them second charge mortgages should be considered alongside remortgages.

Non-standard properties, high net worth individuals, those on or right for interest-only loans and/or www.specialistfinanceintroducer.com

Cover

Richard Tugwell, group intermediary director, Together

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Cover News

“The number of clients unable to mortgage or remortgage on the high street must create a market for brokers who understand or want to understand specialist lenders” something they don’t know and open up new opportunities.

How confident are you in the specialist finance sector?

Very, our research shows the weight of clients requiring specialist finance.

What stumbling blocks, if any, do you see for the market?

House prices, particularly in London and the South need to be watched carefully. Funding for some lenders will become tighter either through the source of this funding or in some cases the risk-weighted returns that lenders can achieve. www.specialistfinanceintroducer.com

With a housing deficit in the UK how important is the role of specialist finance?

It is frustrating to see non-standard construction properties advertised as ‘cash buyers only’ when good specialist lenders will have the appetite to provide finance. A buoyant specialist market will create opportunities for clients underserved on the high street to buy property and for landlords to continue to provide good quality rental properties.

How important is technology in this sector?

The rise of criteria-led technology is very welcome and the blending

of this with other product software (the acquisition of criteria hub shows this) will hopefully begin a link to more customer focussed solutions from sourcing rather than a price led search only. From a lender perspective technology will continue to create ever smoother journeys with all important personal interaction where needed.

Have you got any specific aims this year that you want to share?

To create environment where specialist lenders are considered alongside high street lenders as a holistic client solution and not only as a solution when all else fails.

Launching with clubs and networks extends the reach and increases knowledge of our proposition which club and network firms can then choose to access directly or introduce via one of our specialist distribution partners who understand the needs and complexities of our market well.  APRIL 2019

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In Our Opinion

The new normal Is bridging becoming the ‘new normal’ for our aging population?

Many mainstream lenders’ approach to older borrowers is somewhat paradoxical. It seems like every week there’s a new report in the media about how wealth is increasingly concentrated among Britain’s older generations, that they have better pensions than today’s twentysomethings can ever hope for, and so on.

Yet – despite this accumulated wealth, longer working lives, and a potentially comfortable retirement

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– they are frequently overlooked by the mainstream lenders. Time and again, those over 50 are turned down for a loan by many high street lenders, particularly if they’re already claiming their pension.

With options reduced, we’ve witnessed an increasing openness among this generation to alternative finance providers. I believe it’s because, unlike some other lenders, we understand ‘the new normal’ that these borrowers are living in; a

APRIL 2019

“As a segment, the over-50s are widely regarded as more financially savvy than younger generations. This is, in part, thanks to the wealth of life experiences they have under their belts” www.specialistfinanceintroducer.com

Advertisement Feature

Case study: Short-term loan for older borrower takes just three days to complete Working with specialist distributor Clever Lending, we were able to complete a regulated bridging loan in just three working days.

The customer applied for the loan for home improvements (in a bid to boost the value of her home before sale) and to pay £10,000 of existing credit. As an older borrower, the applicant had previously paid off her mortgage, leaving the property unencumbered.

Clever Lending brought the case to us as the customer needed a speedy and efficient service. We looked into the case and carried out a desktop valuation of the customer’s house before agreeing the 12-month short-term loan of £25,000. It was offered at a rate of 0.49%, one of the lowest in the market.

The loan was secured against the customer’s detached three-bedroom 1930s home, which is now on the housing market. Following the completion of her refurbishment project, she expects to sell it for about £270,000 to exit the short-term loan and move to another property which she owns nearby.

Nick Jones, our head of specialist distribution, says: “This was a great outcome for the customer. After paying off all her

Britain in which they could, for instance, need to raise cash to help financially-squeezed children onto the property ladder.

Consequently we’ve seen significant growth is in bridging loans. Our loans can, when the situation demands, be delivered within a tight deadline for borrowers who need cash quickly.

We’ve identified three key reasons why, we believe, these loans are particularly appealing to older borrowers:

1. More financially experienced

As a segment, the over-50s are widely regarded as more financially savvy than younger generations.

This is in part thanks to the wealth of life experiences they have under their belts; they’ve seen several booms and busts; watching their investments rise and fall; and bought and sold a house or four, which (in some cases) they may have already paid off. You could argue that this additional asset wealth and life experience enables over-50s to be more confident with their finances, and more open to less-common products like bridging www.specialistfinanceintroducer.com

existing credit, she has £15,000 to carry out improvements, hopefully adding to the value of her home.

“Clever Lending brought the case to us on a Thursday, and it was so expertly packaged that it made it easy for our residential underwriters to provide the finance on the Monday, three working days later. This was a great example of when lenders work seamlessly with trusted partners to provide fast, tailored finance.”

Sam Kirtikar, managing director of Clever Lending, said: “We understand everyone has different circumstances, and this is a great example of how our experts work with specialist lenders, such as Together, to turn cases around quickly and provide clients with the best possible outcome.

“Following an increase in enquiries, we also recently launched a new in-house regulated bridging advice service, so if people do need funds to help them move quickly whilst their property sells for example, we can now offer in-house advice and ensure clients are provided with the most suitable solution based on their needs.”

For more information about Together’s Bridging products, visit www.togethermoney.com/bridging

loans. Combining this with a trusted financial adviser or mortgage broker – with whom they may have an established relationship – may make this even more true.

2. Investing for retirement

Life expectancy in the UK is as high as it’s ever been, so there’s never been such pressure on our pensions and savings to support us as we get older. We believe this is one of the reasons that some over-50s are looking at supplementing their pension pot by investing in property. This may be purchasing a property that they intend to renovate and quickly sell on – hopefully at a profit – or acquiring a property with a view to letting it, and using the income to supplement their pension income. No doubt inspired by the popularity of daytime property show Homes Under the Hammer, many look to secure a potential bargain by buying a ‘doer-upper’ at an auction. With tight completion deadlines of 28 days (or less) the norm, bridging loans provide a means of purchasing because of the speed and convenience they provide.

3. Looking to downsize

When children have long since flown the nest, or mobility is becoming restricted, downsizing to a smaller, more manageable flat or bungalow could be regarded as a wise move – financially or otherwise. Not only can the proceeds of the sale be used to top up pension pots, they can also provide cash that helps younger members of the family to buy a property, or make a major purchase like a wedding.

These forever homes are often the most important, so finding the perfect one is paramount. So with their dream home found, many retirees face difficulty selling their old home – perhaps because it needs modernisation, or the local market is flat. Those who struggle to find a buyer may find themselves stuck in a chain, or discover that the vendor is unwilling to wait.

A bridging loan transforms them into a cash buyer while their agent seeks to sell their old property. As a personal (i.e. regulated) bridging loan, there are no monthly repayments to make, because interest is rolled up and settled at redemption – allaying any fears about paying two mortgages simultaneously.

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Comment

Reputation, reputation, reputation How strong is yours and the lenders you use?

March saw the culmination of the early year awards programme and all the accolades have been distributed amongst the hundreds of categories that now attract all stakeholders in the lending market to the prestigious venues packed to the rafters with old hands and new hopefuls, all looking for acclaim.

There is no doubt that winning an award brings with it boasting rights and the opportunity to populate your home web page with more logos bearing testimony to the success of your business, but do they enhance your reputation to the extent of generating more business?

Cynics will say it is the size of your marketing (transfer) budget that determines the trophies in the cupboard. Take the example of Manchester City, but in recent years I have seen many worthy winners who have won on merit and with modest marketing budgets, just like Leicester City.

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BRIDGING INTRODUCER

I have just been retained by a lender whose current reputation in the short term market is modest, as intentionally they have operated below the radar, choosing to ensure their proposition was strong enough and flexible enough to withstand the competitive pressures that now exist in a maturing market, before they back the reputation they have established with their small number of brokers and other stakeholders with a much more ambitious distribution strategy.

I often write and talk publicly about the absence of the word TRUST on many lenders and brokers websites and how that surprises me in a sector when that should be the must word to capture the interest of potential clients. It is no secret that a person’s reputation is based on the trust others have in them and that is equally true about any business. Can they be trusted to deliver to their boasts?

APRIL 2019

Alan Dring director, MAD Approach

In business, as in life, our reputations are made with the people we work with, the people we need to forge relationships with and very importantly the competition we strive to defeat. All the award winners will have enhanced their reputation and as such will have set the standards for others, but more significantly for their own people who now have an enhanced reputation to live up to.

The impact of social media on the reputation of businesses is an increasing influence on their public image and how they rate against the competition.

It is an interesting exercise for a lender to ask their coal-face workers two questions 1) What is our reputation in our market and 2) What reputation do our main partners have in that market. The outcome should lead management to appreciate better how strong their reputation is and how best for them to promote (boast!) it for competitive advantage.

I am sure if just referring to a balance sheet determined the success of a business then reputation may not be the be all and end all if your product is in demand but in the financial service sector I maintain that trust built on a reputation for honesty, transparency and service will ensure you keep ahead of the competition.

My message to lenders and brokers would be, unlike Iago in Othello, protect your reputation at all costs and don’t jeopardise it to get more market share. Do what you did well to gain your awardwinning reputation and use it to improve the performance of others in the sector so your clients can have more TRUST in more businesses in a market that does not always come across with the best reputation. www.specialistfinanceintroducer.com

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SPECIALIST LENDING SOLUTIONS REFURBISHMENT BUY TO LET

Maximise rental yield and increase capital value with Refurbishment Buy to Let If your customer is looking to buy a property in need of refurbishment with a bridging loan, but would like the peace of mind of an exit onto a buy to let mortgage once the work is complete, our Refurbishment Buy to Let range could help.

Contact your local BDM 0800 116 4385 precisemortgages.co.uk

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Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549).

Registered in England and Wales (company number 06749498). Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.

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With our unique approach, your customer benefits from a single valuer for both the bridge and Buy to Let Mortgage, and one conveyancer with discounted legal fees. Meanwhile, you can enjoy a single application which we key for you, a dedicated underwriter for the entire case and two procuration fee payments.

They say it takes 10,000 hours to master something, when it comes to bridging loans we have 83,490.

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For professional intermediary use only. Includes commercial and regulated bridging loan applications over 33 years.