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Movin’ with the times John Ahmed talks about all things conveyancing and bridging
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Publishing Director Robyn Hall Robyn@mortgageintroducer.com @RobynHall Publishing Editor Ryan Fowler Ryan@mortgageintroducer.com @RyanFowlerMI Deputy Editor Jessica Nangle Jessica@mortgageintroducer.com @mi_nangle Reporter Michael Lloyd Michael@mortgageintroducer.com Editorial Director Nia Williams Nia@mortgageintroducer.com @mortgagechat Commercial Director Matt Bond Matt@mortgageintroducer.com Advertising Sales Executive Tolu Akinnugba Tolu@mortgageintroducer.com Campaign Manager Joanna Cooney email@example.com Production Editor Felix Blakeston Felix@mortgageintroducer.com Head of Marketing Robyn Ashman RobynA@mortgageintroducer.com Printed by The Magazine Printing Company, using only paper from FSC/PEFC suppliers www.magprint.co.uk Mortgage Introducer, CEDAC Media Ltd 23 Austin Friars, London, EC2N 2QP
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Welcome to certainty
appy New Year! Welcome to the first issue of Bridging Introducer for 2020. Last year the bridging market was aﬀected by the uncertainty facing the country. But after a nervous General Election and a Brexit deadline seeming to be met, it appears the year has got oﬀ to a steadier start. This issue focuses on a new year and a new start. It appears that after the election on 12 December, many lenders have been seeing an immediate uptick in activity as the uncertainty shifts and confidence resumes. The festive period, which is usually a quieter time on the year, saw many working around the clock to get deals across the line and many are predicting this will continue to be the case in 2020. This year will be a big year for trade bodies as much of the industry call for increased consolidation and a more involved approach taken by trade bodies to stamp out bad practices in the bridging market. Our round-table this month on page 20 looks at the year gone by, with our panel discussing what they would like to see in the coming year – and what they are keen to avoid. The peer-to-peer market was also part of the discussion, with many concerned about the diﬃculties the sector faced last year and how it may fare over the next 12 months. In this issue, you can read industry comment from stalwarts such as Kevin Thomson and Roger Morris looking forward into the new year and our cover star John Ahmed from Movin’ Legal talks to us about all things conveyancing and bridging on page 26. All-in-all a busy first issue to start the year, but let’s hope that the stability remains for a successful (and calmer) 2020.
Contents 5 Bret Jackson The benefits of certainty 7 Kevin Thomson A closer look at the 2020 commercial market 9 Roger Morris Advice is key when it comes to HMO’s 11 Dave Pinnington Developments in development finance 12 Feature: The role of development finance in fixing the housing crisis Can development finance help solve the UK’s housing crisis? Michael Lloyd investigates. 20 Round-table – Reflecting on 2019 Our panel of experts look back on a challenging year for the UK property sector 26 Cover: Movin’ with the times Robyn Hall talks all things conveyancing and bridging with Movin’ Legal’s John Ahmed
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How one word makes all the diﬀerence Bret Jackson head of marketing and communications, BWD
All of the obligatory messages of Happy New Year will have happened by the time you get to this page, so I’m not going to go through that. What I will say is, let us make it a bloody good one. And please, no more puns or posts about 2020 vision and all that. Already tiring. I have previously talked about how one word was having an impact across the financial services industry. Uncertainty. I am hoping now, with the landslide victory for the Conservative party, we can change this word to certainty. Despite many still seeing opportunities in an uncertain world, which is the right attitude, others can now push on. I believe the anti-business stance, purveyed by the Labour party was scaring many of us. The comments made by Mark Posniak in his December blog are brilliant. “Corbyn and his GCSE Marxism pals have been politely told by the British electorate to zip up and will soon be heading to the back benches and total political irrelevance. A few may miss them but the many certainly will not.” People have had their say, it is now time for the party to deliver on the mandate and get the right trade deals for the country.
Whilst these types of investments are only a relatively small, if not a tiny part of the sector, they can have a detrimental effect, if this is not resolved. With the collapse of LC&F being the most prominent firm to date, we now have smaller operator Blackmore in serious trouble. Delayed interest payments, auditor resigning, changing of accounting period, and as I write this, still not filed their accounts, the writing is on the wall. Similarities between the two are very evident. Offering ridiculous rates of return on investments linked to property. The phrase of ‘if it sounds too good to be true, it likely is’ certainly fits the bill with them. They can have a negative impact on similar ISA-based propositions, offered by reputable established businesses, who utilise them as part of their funding programme. Many of the novice investors will not get their money back. The outgoing chief executive of the FCA, Andrew Bailey, could of and should have put an end to this, as soon as it became evident. I urge the next incumbent
For those of you who know me, I am not renowned for sitting on the fence with my opinions, and this is no different. The FCA should ban these unregulated entities that are promoted and marketed to investors with little or no knowledge of the market. Just ban them. www.sfintroducer.com
The election result should provide certainty
who takes this position, to make this a priority, before other scams are created, investors get burnt again, and it has an impact on the good reputation gained in the industry. THE FUTURE
I am still shocked that we are 20 years into this century. Worryingly, I was thinking what I was about to embark upon in the year 2000. I had just finished my Financial Planning Certificates (FPC) and was in the process of being signed off as a qualified adviser. Much has been talked about qualifications within the specialist finance sector. CeMAP qualifications are ok, and are required for advice on regulated bridging deals, but is the sector ready for a new suite? Will it lift the profile and the professionalism further, or will it add burden and just another way for exam boards and bodies to increase revenue? In addition, how does the industry attract young professionals, or other financial services individuals to move over? �uestions have been raised relating to these matters at roundtables. It was stated at one of these events, how diﬃcult it was to get Underwriters and BDMs of the quality they desire and a good to exceptional one, could determine their own package. FPC exams were relatively new when I joined the industry. Many of the established advisers were not interested in sitting these exams and duly left when they became compulsory. Whilst these changes had an impact at the beginning, if you see where the advisory sector is now, in terms of professionalism and reputation, it is a far different world from when I joined. The industry is still growing and will need quality individuals to support it. With the likes of Revverbank coming to the market in full during 2020, I don’t see a slowdown happening anytime soon. I think it will be interesting what happens with exams and taking it to the next level, but with all the trade bodies associated with lending, perhaps a conversation is required with the CII or LIBF on what their thoughts are. B I JANUARY 2020
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Eyes on commercial property in 2020 Kevin Thomson sales director, Connect for Intermediaries
ell we finally have a majority government. At last we should at least get some element of certainty which will help us to plan for the future. Of course, we still have Brexit to negotiate followed by a number of trade deals, not least with the EU, so there will be plenty for the press to get their teeth into for some time yet. However, at least we will no longer have the ‘will something get through parliament or not’ antics that we have been experiencing. Hopefully this will mean that the government can also start looking at the domestic agenda again and towards the top of that list needs to be the property market. An element of certainty might now create a rise in demand as investors start feeling a bit more confident in the outlook. In 2020, we therefore have to be ready to look after our investor clients who will be looking for areas of yield growth outside of the traditional buyto-let market.
commercial assets have historically provided the investor with higher yields than other assets and, fundamentally, there is no real reason for this to change. However, that is not to say that commercial assets are protected against potential downfalls and the different sectors will have different outlooks. Retail units, for example, is one to beware of with so many mainstay retail names announcing they had to leave our high street in the past year and no doubt more to come in 2020. Demand in oﬃces and business services however, together with factories and industrial units, have remained strong and are likely to remain that way during 2020, with the caveat that, in the event of a no deal Brexit, it would be diﬃcult to see any major increases in rental yields. OPPORTUNITIES
Whilst accepting the backdrop of Brexit and the uncertainty that causes, there are still good reasons to be optimistic about 2020 for brokers who can advise on commercial mortgages. The first is the end to the period of stagnation that we have experienced for the past three years, ending one of the key reasons businesses may have sat on their hands and chosen not
to expand. Many investors are now actively looking to diversify and are seeking high yielding property assets, which many areas of commercial are. At the same time the pound has bounced a little on the result of the General Election making it a little more expensive for buyers from overseas to buy commercial property here and correspondingly easier for the domestic investor. Valuers should also have more confidence in the commercial market and reflect that in their valuations. Interest rates look to remain low for the foreseeable future, being kept low both by the Bank of England and the increase in competition in the commercial mortgage market. More lenders are entering this space creating more competition and more competitive products. The advantage for brokers is that more products means more complexity; investors therefore have a growing need for advice on the best possible financial solution to meet their needs. OVERVIEW
Property has been, and will continue to be, the backdrop of the UK economy. It has had its ups and downs but in the long-term, property has always been seen as good investment, whatever the immediate economic and political backdrop I am confident that the commercial sector will experience positive growth in 2020 and wellinformed, knowledgeable brokers are in the best possible place to satisfy that growth and benefit their own businesses at the same time. B I
There is no getting away from the fact that commercial property forms an important part of the UK economy and is fast becoming an asset of interest to property investors. The diversification of property investors’ portfolios to include either commercial or semicommercial assets will surely continue to increase in 2020. This will be driven partly by the tax changes to buy-tolet, which one can only hope will be amended under the new majority government. Looking at yield growth alone, www.mortgageintroducer.com
Demand in oﬃces and business services together with factories and industrial units have remained strong
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Advice is always key Roger Morris sales director, Precise Mortgages
magine you’re a landlord who is thinking of purchasing a two bedroom flat in Edgbaston, an area of Birmingham popular with students. Many of the other houses have been converted into student accommodation. You buy the property and let it out to three students who form more than one household. All seems to be going well, but four months later you get a letter from the city council saying that you’re in breach of an Article 4 Direction and that you need to apply for planning permission to convert the property. Unfortunately, your application is rejected, the students have to leave the property, and you could be facing a fine. LANDLORD NIGHTMARE
Sounds like a nightmare? Well, this will be the situation facing HMO landlords in Birmingham after the city council recently announced it would be introducing a city-wide Article 4 Direction in June this year. It means landlords will soon have to submit a planning application for proposals to convert family houses (C3 use class) to small HMOs accommodating between three and six people (C4 use class). With five universities across the city and with one of the highest number of students in the UK, it’s perhaps no surprise that the council is taking action to try and control the number of HMOs. And it’s by no means the only authority looking to impose similar limits on the mushrooming number of HMOs springing up in towns and cities across the UK. The growth in small HMOs took off following the government’s announcement in 2010 that homeowners could make certain changes to a property under a General www.sfintroducer.com
Permitted Development Order, now more commonly referred to as Permitted Development Rights (PDR). Suddenly homeowners could use PDRs to convert a C3 dwelling house to a C4 HMO property without the need to apply to the local authority for planning permission. At the same time, the government also introduced Article 4 Directions to encourage the retention of high quality architectural features and to preserve and enhance the character and appearance of the built heritage. As part of the directions, local authorities were given the power to remove permission for change of use from a C3 to a C4 by means of an Article 4 Direction. However, the use of Article 4 with regard to HMOs has been inconsistent with different authorities adopting different approaches. Birmingham City Council will become one of the first in the country to introduce a city-wide Article 4 Direction after concerns that high concentrations of HMOs in certain areas of the city are harming their character, putting pressure on infrastructure and diminishing community cohesion. A mapping survey found there were more than 6,100 HMOs across the city. Landlords of existing HMOs are currently being asked to declare them
There are mushrooming numbers of HMOs
and provide the council with the property’s address and any evidence which shows it is an existing HMO, but how many landlords would know a two bedroom flat rented to a couple and their friend is classed as an HMO? This ensures the council will have as much information as possible about existing HMOs before the Article 4 Direction becomes enforceable on 8 June. Any HMOs which have not been declared after this date will need an application for a certificate of lawful use or retrospective planning approval. HMO DEVELOPMENT
The council is looking to turn down applications which would result in more than 10% of homes in an 100 metre radius becoming HMO properties, where a family home would be sandwiched between two HMOs and where it could result in three or more continuous frontages of non-family homes. Now don’t get me wrong. An HMO can be a fabulous investment opportunity. They can provide landlords with a superior rental yield – 6.5% compared with an average overall rental yield of just 5.6% - and the security of knowing that, as each tenant is on a separate agreement, voids are spread and only affect a proportion of the income, reducing the risk of payment shortfalls. As well as students, they also provide much-needed accommodation for other people in single households, such as those on low incomes, young professionals and recent graduates at an earlier stage in their career. What I’m advocating is that landlords carefully check with their local authority about any Article 4 Directions before committing to purchasing and converting a property into an HMO. It concerns me that landlords might be pressing ahead with their development plans without seeking the advice of their local planning oﬃcer and checking if they need planning permission first. B I JANUARY 2020
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Continuing the build in 2020 Dave Pinnington director of intermediary relations, Finance 4 Business
new year usually means a new start. But whatever your New Year’s resolution is, at Finance 4 Business we are refusing to rest on our laurels. In 2019 we completed a record number of development finance transactions and this year we envisage continued expansion of this area of our business. We recently completed a £9.8m development deal with Together Money, which has been a great way to start the year on a positive note. As development finance becomes more mainstream, it’s not hard to see why it has become increasingly popular thanks to its appealing returns and speed. In 2020, the demand for UK property is set to rise but so is the lack of available supply. As an industry we looked towards the housing policies from each party during the General Election hoping for a resolution but this is a crisis that has existed for many years and shows no signs of changing. The expanding demand and lack of supply fuels development finance as developers become increasingly under
pressure to build housing to tighten the gap. This formerly ‘alternative’ type of finance is vital for the property market in its current form, and helps both investors, developers and end users alike. It is key to create propositions that provide the best outcome possible in the quickest time without making shortcuts. INCREASING POPULARITY
The popularity and need for development finance has meant that we have been looking at our proposition to make it the most appealing for developers and investors. We pride ourselves in working with both firsttime and experienced developers. The importance of a specialist broker is key for both first-time and experienced developers as each case is totally unique and the key drivers will vary be it, rate, leverage or speed. Despite development becoming more mainstream it is still an alternative form of lending which can seem complex to those who need it. We specialise in various areas including, acquisition, ground up development and refurbishment (something we saw a lot of in 2019). In addition, joint venture options have become more popular and the need for mezzanine is still prevalent. Having a wide span of specialisms
In 2020, the demand for UK property is set to rise but so is the lack of available supply
simply increases our exposure in an increasingly competitive market. Some lenders have announced their return into the development finance space, along with new entrants challenging the marketplace. This means that in this new year, now more than ever, it is vital that we stand out from the crowd in delivering excellence to our clients and introducers alike. Since the election we have seen a significant uplift in clients wanting to progress with transactions that were otherwise on hold due to the uncertainty leading up to the result. A great example of this was the previously referenced deal with Together Money. This was a complex transaction with a number of moving parts over multiple securities. The successful outcome was down to fantastic collaboration with all parties involved, lenders, valuers, conveyancers and the clients including dealing with Spanish solicitors as one of the parties is an expat living in Spain. This was clear evidence of the relationships that Finance 4 Business has built with professional advisers and clients, being able to get all interested parties around the table on a number of occasions to ensure the transaction progressed both quickly and without incident, is a clear demonstration of our reputation and standing in the market place. We are looking forward to another great year with initial indications showing that activity levels are high and confidence is certainly back in the property market. We will continue to work closely with clients and our professional colleagues to ensure that we deliver the service that Finance 4 Business is renowned for. In addition to our specialist finance offering, we will continue to collaborate with our other internal companies to optimise benefits for clients, including land acquisition, stamp duty land tax relief, property sales and asset backed lending. Here’s to a great 2020. B I JANUARY 2020 BRIDGING INTRODUCER
How development finance could solve the housing crisis Michael Lloyd looks at the role which development finance can play in helping to fix the UK’s housing crisis
urprisingly for many lenders: we’ve seen Secure Trust Bank, AA Mortgages, Magellan Homeloans and Tesco Bank all close their doors to new customers, citing specifically fierce price competition as the reason. It is no secret that the UK faces a housing crisis, but the question is how it can be solved and where development finance can play its part. The government has an ambitious target of delivering 300,000 new homes a year until the mid2020s, but critics claim that is unviable. A Public Accounts Committee warned last summer that the government lacks a clear plan on how it will meet this target, with poor performance in the planning system delaying progress. In December house building dropped for the seventh month running, according to the UK Construction PMI. Bridging Introducer explores how development finance can help tackle the crisis. THE IMPORTANCE OF DEVELOPMENT FINANCE Matthew Dailly, managing director of specialist brokerage Tiger Financial, says that development finance is vital in helping to tackle the housing crisis as it provides flexible funding to developers as opposed to the main banks which are more risk adverse. “It’s absolutely critical because the alternative lending market has an appetite, is flexible and lends at high loan-to-values (LTVs) to ambitious developers to build as many homes as possible,” he says. “It just creates an easier route for developers to build more houses. They’re helping the market by being
BRIDGING INTRODUCER JANUARY 2020
flexible and giving developers the funding they need.” Michael Fisher, head of development finance at Crystal Specialist Finance, agrees about the importance of development finance. “More money to build invariably leads to more houses being built, but above this government, both nationally and locally, needs to do a lot more to support SMEs and their housebuilding objectives,” he adds. Adam Tyler, executive chairman at the Financial Intermediary & Broker Association (FIBA), says that the record number of new development finance lenders will certainly help solve the housing crisis. “The challenge is to match developers with financial advisers, who can show them the opportunities presented by the diverse borrowing propositions that are now available,” he says. In the government’s 2017 White Housing White Paper it acknowledged the importance of smaller sites, which create opportunities for custom builders and smaller developers. “Small developers will not solve the housing crisis on their own, but the government has recognised the significant role they can play,” says Nicholas Christofi, co-founder at Sirius Property Finance. However Neil Leitch, director of development finance at Hampshire Trust Bank, says although development finance has a role to play, it cannot solve the housing crisis in isolation. “There are a number of factors here such as a stable or growing wider economy and improvements to the planning system which when taken together www.sfintroducer.com
DEVELOPMENT FINANCE will seek to improve the supply of housing to the market,” he explains. In November 2019, the National Audit Office (NAO) revealed that the government has failed to deliver any starter homes since 2016 when Royal Assent was given to the framework for the relevant legislation. Adam Tyler says that he met with the Housing Minister during the coalition government twice to talk about how development finance could help solve the housing crisis. “A succession of Housing Ministers have been interested in how other forms of finance can help solve it,” he says. “The problem is you had 25,000 small developers who were around the UK pre-2007 and the crisis led to them having financial problems when lenders withdrew funding. “They lost sites and the majority of developers left and didn’t return, so for a long period we didn’t have those regional and local developers building small affordable numbers of units. ENCOURAGING LOCAL DEVELOPERS “Today, we need to encourage local developers to help solve the housing crisis and we need them now.” He goes on to say that small developers do not know there is now a wide range of funding options and the challenge is making them understand that they need to talk to brokers who have the knowledge and can advise clients about this specialist area. “It is all about raising the profile of brokers within the local population who can give advice to developers and provide them with the finance to return to small scale property development,” Tyler says.
“More money to build invariably leads to more houses being built, but above this government, both nationally and locally, needs to do a lot more to support SMEs and their housebuilding objectives” “They need to be made aware there are some great specialist lenders out there offering a wealth of funding options in total contrast with the situation 10 years ago. “I spoke about that at 10 Downing Street twice during the coalition years and we need to make politicians aware these SME developers can come back and there are lenders with a wide choice of good rates and GDVs. “You can get some quite competitive deals in development finance.” Chris Whitney, head of specialist lending at Enness Private Clients, says that clearly the availability of → www.sfintroducer.com
JANUARY 2020 BRIDGING INTRODUCER
DEVELOPMENT FINANCE development finance at cost effective pricing and gearing levels is going to get more homes built. Similarly, Matthew Dailly describes that development finance lenders have more flexible lending criteria and can lend at higher loan-to-cost and gross development value (GDV) than the main banks. “There are a wide variety of development finance lenders looking to lend money and this makes it easier for developers to get the funding they need,” he says. Dailly describes that there are some lenders which will lend the equity for developments. “It’s a higher risk but they will offer a profit share with the developers,” he adds. “That helps the housing shortage as that gives developers as many opportunities as possible”. Michael Fisher says that development finance is primarily used by SME developers for smaller new build or refurb projects. “This finance option allows developers to release much needed cashflow – for instance by preselling houses or apartments during the build phase – which then allows then to spread their contribution across multiple projects as opposed to putting all their eggs into one basket,” he says. Robert Orr, managing director of development finance at Paragon, says that development finance opens the door to smaller-scale developers, who may not otherwise have the capital required to carry out a project. “Naturally, if more developers are given the opportunity to build housing, this will contribute towards solving the crisis,” he says. “Often the projects by developers result in smaller and more affordable developments that appeal to a broad market.” However, Lucy Barrett, managing director of Vantage Finance, does not believe development finance can solve the housing crisis. “I think there is a good amount of money in the market to go out for new projects, but the biggest blocker is the planning system in the UK,” she adds. FUNDING GAP FOR SMES Robert Orr believes SME developers across a range of sectors have generally found obtaining finance from the major high street banks difficult in recent years, particularly where they have more complex borrowing requirements. Neil Leitch agrees that the needs of SME housebuilders are often misunderstood or neglected by the high street banks. “Specialist banks, on the other hand, can have a lot to offer SME housebuilders, their specialist teams will spend the time to fully understand their requirements and provide a tailored facility that fits the criteria and suits the client,” he says. Fisher highlights how it can be a minefield for SMEs to source the right lenders as there are so many out
there and all have varying criteria. “Without an experienced hand to help them navigate this it can be daunting to say the least,” he adds. “It’s very important that the right lender is sourced at the outset who understands the build, what is required, and when.” Ashley Ilsen, chief executive of development finance lender Magnet Capital, says development finance is an essential tool for builders and developers of all sizes. He believes that it is a key area where the industry can start making serious headway into solving the housing crisis by assisting the SME developer, who has traditionally struggled more when it comes to access to finance. “The key is making sure that the right developer is matched with the most appropriate lender and that will always be down to the skill of the broker,” he adds. Ben Barbanel, head of debt finance at OakNorth Bank, says since its launch in 2015 it has lent over £4bn, directly helping to create over 13,000 new homes. “There is a huge housing gap in many major cities across the UK so we’re proud to support the many SME developers who are working to close this gap,” he adds. →
Access to ﬂexible funding Ashley Ilsen chief executive, Magnet Capital
s a specialist development finance lender we consistently hear the same complaints about a lack of quick and flexible funding and I hasten to add that there are still plenty of lenders operating in the development finance sector that don’t have the required expertise. Aside from this I believe the main area where we can improve the supply of new housing stock is the current planning system. Our current planning system is arguably dated and not fit to handle the increasing demand that we need to fill for new homes. My previous conversations with government bodies about the planning system have inevitably proved to be unsuccessful and I have found that this has mainly been down to an unwillingness to change. Dramatic change to the ways, and
more importantly timescales, that developers are able to obtain planning would no doubt improve the current state of play and this ties in closely to how us as funders can deploy our capital. Closely linked to the planning system is the availability of land which could be used for development. As we have seen with permitted development, it only takes a slightly more innovative approach to make a big diﬀerence. As with most supply side factors, the onus is on the government to help stimulate these areas to help SME builders and developers make a larger contribution to new homes in the UK. As such, I think we are in danger of becoming over-reliant on the major housebuilders. One thing that’s very evident when we go to visit our clients on site is how much of a more superior product SME smaller builders are able to produce. Perhaps the question shouldn’t be as focussed on quantity, but more on quality.
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DEVELOPMENT FINANCE However, Matthew Dailly believes the difficulty does not lie in getting the finance, but the deals because planning consent seems to be the biggest impediment to the deal flow. “Getting consent can be complex and time consuming,” he adds. “When the deal comes to me the developer may have spent hundreds of thousands to get to the point where they are ready to get the finance.” HELP TO BUY Back in 2013 the government launched the Help to Buy Equity Loan Scheme whereby the government pays 20% of the equity. It has not only had a huge contribution to delivering new homes but has made homes more affordable for first-time buyers. Figures from the Ministry of Housing, Communities
Helping the housing crisis Adam Tyler executive chairman, FIBA
he UK housing market used to be sustained by thousands of SME property developers building new homes alongside the larger wellknown builders. This benefitted local communities where those builders knew their environment, had experience with the planning departments, were feted by local high street bank branches and worked well with the local trades. In 2008 everything changed, in particular access to finance, with the usual sources stopping overnight and some in the middle of building projects. At that point in time and for the following few years, there was no development finance available or it was expensive funding available in isolated pockets. So, we lost vast numbers of small developers through uncompleted projects because of funding withdrawal and through a real loss in market confidence. As a consequence, and alongside a very difficult housing market, the stock of new houses across the UK
dropped away rapidly and then lost pace with demand, creating an expanding shortfall of new properties and a growing housing crisis. It is well documented that in the past 10 years we have witnessed the growth of new specialist property finance lenders covering all aspects of the market. These have included development finance lenders of all types covering everything from single units to multimillion pound sites to 100% funding and every conceivable combination in between. I have spoken many times, both within the industry and in Westminster about the complete change around from having no lenders to now having the widest choice the market has ever seen. Whilst the major builders have been boosted by government initiatives such as Help to Buy, we still need the small developers to come back to the market to use their local knowledge and begin to fill those gaps that I mentioned above. The knowledge that funding is available from multiple funding sources and that there are specialist brokers and advisers available in most local communities is a key message that we must spread to help alleviate the housing crisis.
BRIDGING INTRODUCER JANUARY 2020
and Local Government (MHCLG) show that more borrowers used the scheme to buy a property in the year to 30 June than that of the previous year. In the first six months of 2019 in England, home purchases completed under the scheme totaled 52,268, up 6% year-on-year. Adam Tyler emphasises the scheme has promoted a lot of housebuilding across the UK. “Of course, a lot of building done has been on the back of people using Help to Buy,” he says. “Help to Buy has been hugely successful in helping the larger developers build more houses because with the Help to Buy scheme and 20% deposit, house builders have had a better chance to sell those houses.” Chris Whitney agrees and says that there is a consensus amongst most lenders that new developments that qualify for Help to Buy have a strong demand from buyers that now have the means to attain them. “Therefore, they feel the exit risk is lower,” he adds. Dailly says Help to Buy has been absolutely critical with the majority of lenders wanting to see developers building houses eligible for the scheme. He says one of the important factors is the developer has to be building the right type of home for the location. “The majority of development lenders want developers to build houses that can get the Help to Buy loan which means they have to be affordable and within the normal price range for that postcode,” Dailly adds. “The lenders prefer to see developers build average houses in average locations for average people because they sell better and there’s less risk.” However, Michael Fisher says development finance lends itself for schemes to maximise profit, whereas with Help to Buy homes the margins can be seen to be a bit lower and thus less appetising. “Government incentives for the developers to build would have more of an impact,” he adds. AFFORDABLE HOMES Development finance may help fund the construction of new homes but how many of these are affordable? Figures show a mixed picture with data from the MHCLG revealing only 57,485 affordable homes were delivered in England between 2018 and 2019. However, this is a rise of 22% year-on-year. Data from the National House-Building Council conveyed between September and November revealed the number of homes registered in the affordable and rental sector grew by 28%. Adam Tyler says a development site has to have a certain percentage of affordable homes which are sold to housing associations for either rent or Shared Ownership purposes and that is taken into account with development finance. → www.sfintroducer.com
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DEVELOPMENT FINANCE Robert Orr says more funders are joining the market and more are specialising in supporting smaller developments. “Many of these developments are offering homes at lower price points or alternatives, such as shared living,” Orr says. Chris Oatway, owner and director at LDNfinance, describes that the level of affordable homes is predominantly determined by the planning systems rather than development finance, and the key to resolving this crisis will sit with both sides. “Planning laws need to be revised to release more land for developers, and the price of acquiring the site needs to be at the right level,” Oatway says. “There must be a solution which allows multi-unit placemaking deals to be fast tracked through the planning system whereby experienced teams work together in various regions to bring forward high volumes of housing.” PROBLEMS FACING THE DEVELOPMENT FINANCE SECTOR Although development finance performs well in helping to fund more homes, inevitably there are problems too. One highlighted by some is whether the construction sector has enough staff and resources to meet demand. According to the National Federation of Builders to cope with increasing work demand the construction industry needs to recruit at least 35,000 new workers every year. “I think the rising cost of materials and supply of skilled labour has been and still is a concern,” Chris Whitney says. “We also still face uncertainty as to exactly what impact Brexit will have on these factors.” He goes onto cite a barrier in the process that frustrates many. “We also still have a planning system that is far from perfect and inconsistent across the country which just serves to be an additional cost, barrier and risk,” he adds. Similarly, Chris Oatway describes the planning system as in dire need of a complete overhaul. “Land needs to be released for large scale developments which satisfy the lack of affordable homes across the UK,” he says. “The speed and the process needs to be improved, and more importantly a cross party agreement is the only way we will have a chance of achieving any real long-term change.” Oatway says that rising competition will lead to an increase in processing speed, making funding easier to secure for developers and that there needs to be a focus on modern construction methods which allow quick build timeframes and reduce costs. “These need to be supported by the development
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“We’d like to see a clear and sustainable housing strategy from the government and strong longterm thinking to support the growth of all housing tenures as demand is only going to grow” finance lenders,” he adds. “One of the main challenges for developers is finding land that can be acquired at the right price as there is so much competition due to the lack of supply. “Other challenges include rising build costs and a stagnant economy which shows the importance of embracing new construction methods and investment in infrastructure.” Matthew Dailly criticises the planning process for how long and bureaucratic it is. “I’ve got developers pulling their hair out dealing with it,” he says. “There’s a lack of pragmatism and there doesn’t appear to be a willingness to get deals done and through.” He also says selling stock is a problem with some developers building the wrong type of house for locations, as well as downvaluations having a detrimental effect on expected profits and causing some deals that were viable on paper, to be lost. This uncertainty in the market is cited by many as having a troubling effect on sales. The Rightmove House Price Index showed that in November 2019 the number of new sellers dropped by 14.9% year-on-year, whilst the price of property coming to market fell by 1.3% from October. Furthermore, data from HM Land Registry revealed in November the number of new build sales received for registration fell by 19% from November 2018. Marcus Dussard, sales director at Castle Trust, says that properties are taking a long time to sell and transactions are taking a long time to complete. “This means that developers can no longer rely on selling all of the units in a scheme ahead of the redemption of their development funding,” he says. “Consequently, more developers are looking for exit funding at the end of their development loans and often for longer periods.” THE ‘BORIS BOUNCE’ Since Boris Johnson was elected as Prime Minister, first in July after winning the Conservative leadership race, and then confirming his place with a landslide victory in the December General Election when the country voted in a Tory majority government, there has been much talk of a so-called ‘Boris Bounce’, to give the country the certainty it needs. The Halifax House Price Index showed average house prices increased by 4% in 2019, driven by the www.sfintroducer.com
DEVELOPMENT FINANCE biggest monthly rise of the year in December at 1.7%. According to Rightmove, demand across the UK from prospective buyers rose by 28% in the four days after the election compared to the same four days in 2018. “Since the election there is more certainty so we should be looking to a brighter 2020,” Adam Tyler says. Lucy Barrett feels there is more confidence in the market but says only time will tell. “I would hope that the fog of recent times will start to lift as the country finds itself moving forward after so much political uncertainly,” she adds. Robert Orr says developers that may have been sitting on their hands may start to act as they get more certainty and a clearer direction going forward. “We’d also expect to see demand from home purchasers to rise as confidence grows,” he adds. “Going forward, we’d like to see a clear and sustainable housing strategy from the government and strong long-term thinking to support the growth of all housing tenures as demand is only going to grow.” BROKER EDUCATION Chris Oatway says it is a great time for advisers to widen their knowledge into the development finance sector, as long as they take the time to learn the intricacies this sector has. Meanwhile, Lucy Barrett says that it’s a specialist market and help is available from a number of specialist partners. Michael Fisher claims development finance has often left brokers perplexed and anything to help the broker navigate the landscape is beneficial. Meanwhile, Robert Orr believes an education piece needs to happen as awareness of development finance outside of a core group of brokers is limited. Miranda Khadr, founder of Yellow Stone Finance, says brokers don’t have access to enough accurate and reliable information about development finance and this is constraining the growth of the market. “There isn’t an industry-driven education programme, which means that brokers currently have to learn on the job and this isn’t ideal for brokers or their clients,” Khadr says. “I would like to see industry bodies being more proactive in offering support and materials to educate brokers and introduce initiatives to increase knowledge, understanding and, ultimately, opportunity for the market.” Vic Jannels, the new chief executive at the ASTL, believes more broker engagement is required to increase the market to reach more brokers and clients. “This means engaging with brokers who have not traditionally been involved in this area, working with networks and packagers to initiate more conversations and awareness,” he says. “In order to do this, we must protect and advance www.sfintroducer.com
the reputation of the sector and take a proactive approach to promoting our market.” The industry agrees that development finance plays a huge role in solving the housing crisis, via its flexible funding to SME developers. Help to Buy has been a contributing factor to many deals too, providing affordable homes. Despite problems such as a slow planning process and uncertainty in the market, with buyers and sellers acting with caution, the situation looks to be improving with a so called ‘Boris Bounce’ injecting more certainty into the economy. “Ultimately, supply in the UK is still an issue, so by simply funding the development of new homes across the UK, we can help reduce the impact of the housing crisis,” Neil Leitch says. “Housing starts need to increase annually to meet government targets and to increase supply in the housing market.” B I
Development is a key issue Gavin Eustace head of residential development, Octopus Real Estate
evelopment finance is a key part of solving the housing crisis. The UK needs to produce at least 300,000 new homes a year over the coming years and development finance is one of the key components required to deliver on this target. Traditional lenders have retrenched from the sector and are largely only lending to established larger housebuilders, so appropriate development finance can be harder to secure. SMEs looking for development finance find it hard to secure appropriately geared financing and the process can also be slow and isn’t necessarily fit for purpose. The speed of decisions can also be a barrier. Slow decisions at origination can lead to missed opportunities. Once on-site, a slow drawdown approval process can cause delays and increase costs with contractors; all of which erode profit. As a sector we need to act faster to increase development opportunities. We are living in a time where climate
considerations and future proofing needs to make its way onto the development agenda. Development finance can promote ecologically sustainable homes by funding and encouraging innovation and Modern Methods of Construction (MMC). These Modern Methods of Construction will promote employment, speed up the delivery of much needed housing, as well as reduce running costs for homeowners. It is imperative that development lenders support MMC and take an innovative approach to funding these schemes. Interest rates remain low, employment levels are high, wage growth is outstripping inflation and the need for housing continues. Following a somewhat uncertain year, the market should look forward to continued growth and stability. Unlocking development finance can do much more than just make an impact in solving the housing crisis. M o re n ew d eve l o p m e nt ca n promote employment and increase innovation into sustainable methods of construction. New players in the market and SMEs can often be the ones who spearhead innovation and MMC and so should be encouraged and nurtured.
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Stop and start Our panel discuss the year ahead and reflect on a challenging 2019 Jessica Nangle: What are your thoughts on 2019? Gareth Lewis: It was a tough year because there was always uncertainty. You have plans at the beginning of the year, you want to roll out what you want to do and unfortunately the political atmosphere had an impact on that and consumer confidence wasn’t as high you would have liked so it does have an impact on the property market and the mortgage market. Anybody who says it was a rocketing year or the best year they’ve ever had was either on a steep growth curve or doing something slightly wrong. It was a good year from the perspective it gave you the opportunity to really bed in your practices. Emma Hall: It was probably one of the slowest of the decade I thought. Mike Strange: Uncertainty was massive and that doesn’t help anybody. I think some people have issues and step back a bit in terms of their aggressiveness. Some of the peer-to-peer (P2P) businesses had an absolute nightmare and imploded. Once confidence is gone from that sector they will really struggle I think. But for us, for lenders without any bad debt issues, we really did have a great year. We picked up so many more brokers than we did before, grew a lot and had no legacy issues. We saw the market pick up for us but maybe things are a bit slower by and large in terms of getting deals from start to finish, driven by the uncertainty. I think there were definitely winners and losers last year. GL: I think that’s the toughness I’m talking about. Your transaction flow was sort of okay but your time from start to finish was a lot more elongated. There was less drive to get things along the line as quick as possible. I think people were more cautious and valuers were taking more time to take stock on what they’re providing from a valuation perspective and the due diligence that comes with that. Mark Posniak: We saw both sides of the spectrum but we’re still a very new business. 2019 was our second full year of trading and for us it provided huge growth but that’s because we’re still in our infancy and are fortunate that we have no legacy and are starting to
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build that trust with our partners. We engaged with far more brokers last year than the year before and that sets us up with a great platform for 2020. The year had uncertainty and was a stop start year. You had to stop and pause for Brexit, it didn’t materialise and you felt this kick when it was extended the first time. It then paused again and then for the election for the fear of a Corbyn government. As soon as the election happened December was ridiculous, especially the last couple of weeks. We were working around the clock to deliver because everybody who was saying ‘I’m just going to wait and prolong this and extend this a little bit’ went bang, ‘can I do this next week?’. The underwriters were working to all hours and the sales team said they couldn’t cope. It was unbelievable and hopefully we get more of the same in 2020. Simon Chapman: There’s more positivity. The whole year was stop and start throughout the whole cycle and you could never really know what would happen next. There was always uncertainty which made a lot of people think twice about what they’re doing. That’s from client, lender and broker perspectives. When we knew we would get some kind of response of where we’ll end up, that freed up people to start thinking about what they’ll going to do. In December it was like there was a collective sigh of relief. Sundeep Patel: December was our second busiest day of the year, we were phenomenally busy. After the election result confidence grew. We took the whole year as an opportunity to do some work operationally, to get our platform ready and make sure we’re as efficient as can be in 2020. That stop start did help us develop that internal side when the market was a bit instable. EH: We did a lot of stuff in the back office because we had the opportunity to actually do it ready for this year. JN: Were there any other pivotal moments of the year? Craig Booth: We were quite new so everything yearon-year just gets better. I know you guys have similar sort of products but developer exit products were key www.sfintroducer.com
[From L to R] Ashley Ilsen, Magnet Capital; Mike Strange, Funding 365; Craig Booth, Sirius Property Finance; Gareth Lewis, MT Finance; Emma Hall, Movin Legal; Mark Posniak, Octane Capital; Sundeep Patel, Together; Simon Chapman, Pluto Finance; Matthew Anderson, Bath and Bath West Finance; Gary Feast, Robert Sterling Surveyors; Damien Druce, currently consulting at Interbridge,
to us last year. I’m sure most brokers are the same. There wasn’t a lot of new business, people couldn’t sell and needed to restructure. We did really well out of it. It didn’t really affect us negatively. August was dead, everyone disappeared on holiday. EH: It is certainly something that will help for new businesses. It’s been a challenging market for a few years now and 2019 has been no different. The most pivotal moment of the year looks most likely to have been the General Election. Ashley Ilsen: We’re also very new. It’s almost artificial what you’re creating because you’re trying to create growth in what is essentially a non-growth environment, very saturated already, which creates its own challenges in many ways. What I think was tough to do this year given that stop start nature was to be able to innovate and do something different because you’re that reticent about the market and feeling your way, so it creates its own challenges. MS: If you take out Brexit, Trump and the General Election, nothing happened last year. The economy was fine, it bumbled along, employment stayed high, interest rates stayed low, nothing happened with regulation in our space. MP: I think there were a few pivotal moments such as the demise of certain P2P lenders, which really came into the fore last year with some big casualties. Amicus was the December of the year before so there were www.sfintroducer.com
rumblings and a little movement in that respect. It’s not just the market and political uncertainty, you are starting to see the P2P sector as a whole really start to feel pressure and that’ll start to continue into this year. From a personal point of view as a new business for us it was a very big year and two big milestones for us was passing half a billion in loans and a quarter of a billion in redemptions in such a short space of time. For us it’s now putting our foot down and taking that next step in our journey. JN: Looking forward to 2020 what things would people like to see? Damien Druce: You want to see that translate into consumer confidence, that’s the natural direction of travel you want to go in. You want the confidence to return to consumers, borrowers and start picking up on that, making brokers’ phones ring and lenders busy issuing terms and helping them realise their goals and ambitions. It’s relatively simple. I’d like to see P2P lenders get their act together and for that market to stabilise a little bit because it does have the risk of affecting us all if they don’t get their act together. Matthew Anderson: Talking reputationally there’s a new chair of the ASTL. It would be an idea for the ASTL to step up more and maybe now it’s time for the ASTL to lead and not follow. MP: I completely agree and for me that’s the big → JANUARY 2020 BRIDGING INTRODUCER
MARKET GL: It certainly is interesting. Each lender has their own appetite and risk appetite. The product hasn’t changed in the make up of what’s needed for the consumer. It is always about that flexibility, that ability to have a common-sense based approach to lending, whether it be bridging, development or buy-to-let mortgages. That will always be the constant. How far you can innovate on the back of that will always be the challenge because ultimately you can’t make it a tick box mentality to lending because there’s always a quirk to it. MA: Have we moved too far away from what bridging originally was and become too mainstream?
thing I want to see this year. Ultimately, it’s time for these unscrupulous practices to disappear. People who think they can charge default interest double or sometimes treble for your normal rate is just not acceptable or fair for your consumer, the same way that charging 5% if the loan goes beyond term by just one day, it’s not fair and not reasonable and not in line with TCF regardless of whether the loan is regulated or not. It’s not something we’ll be backing down with. We’ll be talking closely with the ASTL and FIBA. I’ve already had a chat with Vic and we’ll be getting together early in the year. I’ve also spoken to Adam at length. This has to stop. JN: Is there anything else people want to happen, or not to happen. in 2020? AI: We’re a specialist lending industry and we’re in danger of everyone offering a very homogeneous product. I would like to see how better we define ourselves as being specialist lenders. What do we focus on? That comes down to innovation and can certain lenders do things differently. Maybe you disagree as a broker but in the market there’s 100 to 200 lenders wherever you are and we’re seeing lots of the same. The challenge as lenders is how we differentiate ourselves - how do we specialise in what we’re good at?
GL: I think there are certain facets out there that have because I guess it’s the beast you are. Once you get to a certain size and level, to have an eyes on approach to every single transaction and key decision means it will always be hard to roll out every deal. It’s all about scale. If you’re completing 200 deals in that area, how do you get that flexibility and common-sense based approach? CB: It’s tough. GL: It is tough but that’s down to lenders to choose what they want to be. Do you want to be that vanilla straightforward lender that ticks every box or do you want to be what bridging was when we were getting into it? In terms of what you’d like to see happen in 2020, the biggest thing from my perspective is getting property investors who want to invest more. How many times have we heard presentations on taxation of buy-to-let? It’s this whole element that it’s been depressing for them, they’ve had taxation and stamp duty. There’s always been something to stop them from wanting to transact in property. SC: We have the Budget coming up and maybe that’s a key point coming up and hopefully they’ll do something in that Budget to help push the market forward. SP: There just needs to be a period of stability to help give people confidence. From speaking to people confidence has grown particularly following on from the General Election back in December. There was always something thrown in every two years which
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MARKET caused things to drop. We just need stability. MP: I would love to see some stability. What I’d really love to see when the Budget comes out is a tweak to stamp duty. It’s too high. They’ve gone too far and they need to correct it slightly. MS: It’s a disgrace for London and the South East. They should change that. MP: They don’t need to pull it, they just need to tweak it. DD: The Budget will be in March. If we leave the EU on 31 January, the trade talks start pretty much immediately. There could be some fallout there so this Budget might not be the calm we’re looking for. It might be something that tries to calm the market a little more. There is still a bit of headwind. Calm and confidence would be in an ideal world but we’re still not in an ideal world stage yet. GL: It’s never an ideal world. DD: But we’re talking about the property market, experience and the journey we’ve gone through. Those trade deal talks according to the professionals are the hardest part of Brexit and the withdrawal agreements should have been relatively easy. It’s the next stage where the real challenge is.
stability, continuity and confidence. And businesses like the results. Whether they like the guy or not is a different question. I think that’d be helpful. JN: Do you expect lower rates to be seen in this increasingly specialist environment? CB: I don’t think anyone knows where we’re going over the next couple of months with the Budget and everything else. I don’t know but I think it will. EH: Do you think people will try and boost the market a bit for themselves? CB: It depends what comes out of the Budget and Brexit trade negotiations. There are a number of factors. They have it in their locker to do so if they need to. EH: Do you think people will go for more market share this year? GL: But how do you get market share? That’s the age-old question, it’s by taking somebody else’s lunch. This market isn’t growing at a huge rate so you then have to think of innovation and diversification of your product range and criteria range and I think that’s where you’ll do it. Is rate a good idea? Does →
MS: In 2020 I hope Trump gets re-elected. No matter what you think of the guy as a person, the US is booming economically, it’s never been stronger in terms of many metrics. If there’s one thing Britain is tied to it’s the US economy. If they catch a cold, we do too. While everything has been pretty stable here, the economy is very fragile. DD: Trump would probably help the UK. MS: For sure, he’s desperate politically to get a trade deal with the UK. We need the US to be strong for all of these reasons but also because there is no growth that can come from cutting interest rates anymore. Our growth is very low 1% at best at the minute give or take. If we suffer any sort of recession, I don’t know how we plug that gap. It is a fragile year and I think if he was back in it would bring a bit of
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MARKET it move away from the core value of what we do? MA: I don’t think it is. EH: I think it is also about products too. Having the right oﬀering is key for any business. That is a universal truth regardless of what sector you work in - the oﬀering is key. SP: It is down to a number of factors. One not mentioned so far, but of high importance, is the consumer’s delivery. The bridging market is of a finite size and everone is chasing an increased market share. It’s diﬃcult to achieve. MS: It’s a little bit of all the above. The odds are the Bank of England, are going to cut rates by 0.25% this year. I read it’s a 60% chance. 0.25% isn’t much by the grand scheme of things. Rates have been low for almost a decade. Institutions have been coming in to fund specialist finance. You all probably have some sort of institutional funding. That’s getting more aggressive. They’re funding more products and are helping to spur innovation. I think that’s not going to change, they need to put money to work, they have investors themselves. While they’re giving higher leverage and more aggressive terms and letting us tweak around the edges of our existing products. Like we can now do modular building and probably
couldn’t have done three years ago. I think in spots you’ll find competitive products come in because of people like us who get cheap funding. EH: Do you think as well it’s about having sensible criteria for real people? MP: I think it’s more than that. The market needs to price for risk and a number of people aren’t because they’re just desperate for market share and that’s the danger. The bridging sector is a specialist sector and comes with more risk than mainstream mortgages. It’s the nature of the beast. However, those with experience who understand risk and how to price for it know it’s never been about rate, it’s always been about certainty and delivery for clients. The more we go down the it’s just about rate the more dangerous it gets and the more casualties that happen because people who don’t understand it put the wrong loans out to the wrong people at the wrong price to the wrong loan-to-value. If funders who fund them get caught it aﬀects everyone around this table and beyond. That’s the bigger issue rather than how low rates can go. It’s actually to make sure we protect the industry as a whole. SP: Clydesdale dabbled with bridging but decided it wasn’t for them and they came in low, so it shows pricing isn’t the driver of it. GL: I think probably the regulator space more so. There are rates from 0.48% or whatever it is currently and there is a driver from a broker to give ‘my best advice is rate’ but I think it’s on a knife edge because if it takes double the time to get that rate over the line, is that better for the client if they need a transaction to be completed eﬃciently and quickly? CB: Will they deliver what they say and will the structure suit what the client requires? MP: And also, where does the rate go when they miss their deadline because they might because history will show you probably about 50% of people can’t redeem on the date they said they were going to? GL: The onus gets put back onto the broker to say ‘actually when I’m giving my best advice, if my compliance team are turning around and saying the
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MARKET only thing you can hold your best advice on is rate, it’s not always rate, there is a definitive that a client has a need that has to be met well.’ MP: But brokers are scared of losing that client to another broker who just sells on rate. AI: In our part of the market we’re still seeing the same problem. We’ll quote and a lower rate will come in but hang on here’s a load of fees with it. Rate is one thing but there is still not enough transparency from some lenders who have a great rate but charge fees for picking up the phone to them, and other fees. All of a sudden that rate is irrelevant. MA: I can lose deals and I’m not even close, it’s not just someone is a lot cheaper but they’re lending a lot more and you just think ‘good luck’. I’m surprised we haven’t seen more consolidation in the market and maybe a few more casualties because I look at what people have lent on and the rates and risks they’re taking and you think that’s not sustainable. AI: Some are lending on a loss for sure just to maintain market share which is mad. JN: The UK is set to leave the EU on 31 January. Do you expect any industry impact? SC: It’s difficult to predict what’ll happen to the property market because the property market isn’t an instant reactive market, it reacts to historical movements like with valuations you’re lending against stuff valued three months ago. But it must have some sort of impact on a grander scheme within the UK. I’m not an expert within the different industry fields and I’m not entirely sure, but surely it has to be something. Gary Feast: I think it’s interesting the Budget has been brought up. I would love to see some tinkering around stamp duty rates. I think that’d have a massive impact particularly around the top level. MS: I don’t think anything will happen on 1 February. I think in Q4 we’ll almost inevitably end up talking about a no deal with the EU. That’s inevitably going to come up in discussions and will probably result in the market stopping for a while until that get figured out. Hopefully the next three, six months is plain sailing.
GL: I think as well if you look at the signs for the consumer, affordability is there - they’re not stretching themselves above their means. From a perspective of borrowing money, they’re in one of the best positions they’ve been in for years so providing the property market has some stimulation it’s a positive thing and a good position to be in. People aren’t just ramping up credit card debt but the majority are just using it as a charge cuff facility nowadays. You’re not sitting here with a big huge underlying debt problem so hopefully if you can get that comfort and transactional flow going through property there will be stimulation. Whilst people aren’t having to worry what the ramifications of Brexit may be or if we’re going to do it, people will buy property. That’s what estate agents I’ve been talking to have been saying. There is a buzz about it now, they are wanting to put their house on the market and are wanting to see what they’re able to buy. SP: The project fear didn’t happen, the financial wellbeing of people suffering because of Brexit didn’t happen and that’s a good sign. While we’re going through this politically unstable period, the economy hasn’t been great but hasn’t dramatically dropped. Average wages are rising slowly so the fear element didn’t materialise so hopefully with a period of stability we can see that as a positive step. B I
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0330 024 9123 JANUARY 2020
Movin’ with the times I
t’s safe to say John Ahmed is somewhat a ‘canny’ buyer, or should that be ‘Safe Buyer’? Ahmed has been selflessly missing from the mortgage trade press for some years and during that time he has been quietly working away on projects that could quite possibly spin several markets around. The ‘Safe Buyer’ scheme he helped set up enables conveyancers to stop what’s called ‘buyer redirection fraud’ and ‘property hijack’ to protect clients’ buyers. The scheme was set up by Ahmed and his associates and is now run as an independently owned and managed company in the South East of England. But that’s just one part of a journey that has seen Ahmed cross more traverses than Captain Scott navigating the Ross Ice Shelf in the Antarctic. Back in 1992, Ahmed ran his own Newcastle-based brokerage called Mortgage Advisory Service and it was there that he took the full front of customer service, trying and succeeding to fulfil his clients’ dreams of home ownership. In March 2005 he was appointed commercial marketing director of network Home of Choice and then went on in May 2010 to become financial services director of network Intrinsic, now Quilter – a position he held until April 2013. Running alongside those latter years he was involved in Manchester-based brokerage Aspire and in October 2017 formally cemented his position with Movin’ Legal. Movin’ Legal is a panel manger that ‘provides a simple, quick and efficient way to refer your clients to a law firm for conveyancing’. You could say Ahmed’s a jack of all trades, or maybe he’s just a canny fella? So what keeps Ahmed movin’? Robyn Hall put the questions to him.
BRIDGING INTRODUCER JANUARY 2020
John Ahmed talks to Robyn Hall about all things conveyancing and bridging What was your motivation behind setting up Movin’ Legal? Having worked at the coalface for many years I understood the problems intermediaries faced on a day-to-day basis. Clients need real care – especially in the legal space – and I wanted to set up a proposition that would help both brokers, lenders and their clients with a real service in the conveyancing space, hence Movin’ Legal. What sets you apart from your competitors? Conveyancing can be brutal. When you think about the size of the market and the number of transactions that take place solicitors can often be marginalised. But without the solicitor both deals and transactions simply wouldn’t go through. To be blunt, you don’t get paid, nobody gets paid, until we push the button. What I’ve done with Movin’ Legal is to put the needs of the adviser and their clients at the heart of everything we do – and make sure they get paid on time! www.sfintroducer.com
INTERVIEW Talking about money and getting paid, there’s not a lot of money in conveyancing. So how do you make it work? What sort of question is that? Just offering cheap conveyancing isn’t going to help anyone, let alone the buyer who is looking to secure their dream home. I’ll be specific here – no business is run as a charity. At the end of the day money is a by-product of doing any job or providing any service. The better the job done, or the service provided, the better the by-product! We exist to make the adviser and their clients happy. There really is nothing better than seeing someone complete on his or her new home, its good for the client, the adviser and of course Movin’ Legal. we like making advisers and their clients happy.
“At Movin’ Legal we act as a natural extension of the brokers’ business, providing both a backup and service to them. I guess in some ways we’re a natural extension of that business without them having to put up or cost factor in the extra resource”
Do you think conveyancing is overlooked as a key part of the house buying process? I wouldn’t say that it is overlooked, although I do think is that some advisers are not that canny about it. From experience they often get frustrated by the lack of communication during that part of the process. This is where Movin’ Legal comes in. We understand advisers and their processes. Not meaning to shout about it all, I’ve been there and got the T-shirt many times over. As a company we have massive experience. We’re canny about doing things the right way. All of us have experienced backgrounds and understand 100% what the adviser needs or, indeed, is lacking in this area. Should brokers and lenders spend more time trying to understand the conveyancing process when speed can often be a factor? That’s what Movin’ Legal does! If a broker wants to know the ‘ins and outs’ – and hopefully they do – we talk them through the process. The real issue here is that brokers already have enough to do. More often than not they rightly just want the job done for their clients if not for themselves. You are proud when a deal completes and rightly so. At Movin’ Legal we act as a natural extension of the brokers’ business or businesses, providing both a backup and service to them. I guess in some ways we’re a natural extension of that business without them having to put up or cost factor in the extra resource. Much like a packager does we can provide the extra services that often small businesses can’t afford to invest in – so we will chase up cases and work for the broker making sure deadlines are met and the deal gets over the line. When it comes to bridging and commercial deals we offer a professional service to ensure that our brokers are connecting with the right conveyancer or solicitor → www.sfintroducer.com
JANUARY 2020 BRIDGING INTRODUCER
INTERVIEW to meet their clients’ needs. Sometimes these cases aren’t straight forward and getting ‘Joe Bloggs’ off the high street isn’t going to cut the mustard when it comes to getting the deal done. But we’re the brokers’ champion – we’re the champion of the mortgage professional and will always endeavour to get the client over the line and help create a happy outcome. Is speed always best? Now that’s a canny question. You see speed is only part of the way forward. However, that said, what we do is provide a combination of speed, communication and service. The result of which is ‘Hey Presto! – BOOM!’. It really does depend on client circumstances and we will always tailor our approach accordingly to make sure that not only is the job done but that it’s also done to a standard that we can all be proud about and hopefully leave the client smiling. In bridging finance speed can be important but it’s all about communication. Without the latter you don’t get the speed. This is why we are in contact from instruction and making sure everyone knows what’s happening. Without that communication you just don’t get the speed. What we try to do is make sure that our brokers are aware of any potential hurdles and that they have clear and direct communication with us with any acting conveyancer or solicitor. Do you still think bridging has a negative perception? Only if it’s not explained properly! Would a bridging qualification help grow the market? Yes! I would say though that all specialist lending areas need more magnified scrutiny and that of course would include bridging. The perception issue is nonsense. Bridging is all about flexible finance. But with that comes great responsibility and a qualification of some sort would add a new level of confidence to the sector. Don’t get me wrong, there are hundreds of smart professionals in this market but maybe, just maybe if we had a benchmark we could get to an even better place. I’d even be happy to take an exam myself – I’ve already done the basics! Do you think the Bank of England will reduce interest rates again? Yes, I think rates will reduce slightly in spring to boost the market… and products will continue to develop for a competitive environment as lenders start to chase market share.
BRIDGING INTRODUCER JANUARY 2020
What were pivotal moments of 2019 and what do you expect to see in 2020? Without a doubt it was Brexit and the General Election. I was happy to vote ‘Leave’ and I truly believe we have a bright future ahead of us. Going forward for the next 12 months I would like to see stability and confidence return to the housing market. The early signs are good. You can start to see that it’s creeping in if reports are to be believed. The end of this month and February is always a good litmus test. In my expectation we’ll see some pent-up demand for house sales… just don’t expect a boom. The housing industry will continue to grow overall... prices will increase slightly and so will transactions. Brexit will offer both a good opportunity with a little risk, as always. I want to see more push for consumers to use a mortgage broker. This is perhaps the only way that they can get real choice along with the right advice and balance. The industry should look at maintaining housing dynamics in all areas as well. I guess that means a more productive approach to planning and building; including incentives for older properties that need to be refurbed and such. We need to look at lending criteria as well... sensible criteria for real people in today’s real world that is not just driven by a computer; building more houses is one thing but to get the whole industry moving we need to look at incentives for every client type. So that’s taking into account first-time buyers, home movers and those who want stay put but want to extend their home, including clients in retirement. I really want to see more specialist lenders with innovative products to help clients get what they need. The clients are out there and they are waiting. Let’s start the party! B I www.sfintroducer.com
IN OUR OPINION
Keep on Movin’ Conveyancing is not straight forward when it comes to specialist lending, but having access to an expert conveyancer can smooth the rocky road ahead
ovin’ Legal is a simple, quick and efficient way to refer your clients to our specially selected panel of law firms for conveyancing. We are a team of experienced professionals from the financial services and legal sectors. Movin’ Legal offers exceptional professional services that you can pass on to your clients without fear. Using our system we can source the best conveyancing needs for your clients. Our conveyancing evaluation system consists of solicitors from around England, Scotland and Wales who are able to provide their services at a fair and competitive price.
However, it is not just about price. We only use conveyancing specialists who have a proven track record of service to intermediaries and who work to our service level principles of course, this is why we believe Movin’ Legal offers a unique service in today’s marketplace. If you would like less hassle and your clients to be part of Movin’ Legal’s service, then all you need to do is simply enter your details in our quick and easy registration form and once you have registered we will email your username and password to your inbox immediately. It is that simple. Once you see how effortless our service is we promise you your business will benefit greatly from using Movin’ Legal. BRIDGING FINANCE We know that bridging transactions are, by default, generally of an urgent nature. Your client will normally need to complete quickly and as a result, we can help you. Our legal partners provide the following solutions: Access to a panel of experts in the fields of investment and development property, both residential and commercial. Tightly managed and monitored deadlines. Our Movin’ Legal fixed-fee guarantee means no more hourly rates. That means… Mortgage and re-mortgaging Movin’ Legal clients will benefit from our exclusive range of highly competitive “Fixed-Fee” legal conveyancing rates. Purchasing clients buying use our professional proactive approach for speed and efficiency when bridging. At Movin’ Legal, we know this is a highly specialised area of law and our proposition provides clients access to bridging experts, at a sensible fixed price, rather than paying an hourly rate, without the need to clock watch. Turn over to read about the Movin’ Legal ethos: “sensible practical advice every time” →
JANUARY 2020 BRIDGING INTRODUCER
IN OUR OPINION
Movin’ Legal benefits Simple online quote and instruction Powerful but simple to use software, you can compare, instruct and track online. You can choose your law firm by mortgage lender, location, price and service rating. Real-time all-inclusive and guaranteed quotes The price you are quoted is the price your client will pay. No hidden charges, no additions to your client’s bill that they weren’t expecting allowing them to eﬀectively budget their conveyancing costs. Online Case Tracking With regular updates on all your clients’ cases, you will have up-todate status reports available, 24-hours a day, allowing you to remain in complete control.
should your clients property purchase fall through Secure document upload A facility allowing you to upload documents including certified ID, mortgage oﬀers, fee agreements and proof of funds directly to the solicitor handling your clients case Law firm ratings Star ratings on all law firms based on your direct scoring at the end of each conveyancing completion. Lender panel The ability to select a lender prior to generating a quote ensuring only law firms on that lender’s panel will show in the quote comparison, saves intermediary time work and client disappointment.
Commercial property Our expert panel of solicitors oﬀers high-quality services on a wide range of commercial property transactions We can help with… Purchasing of freehold or leasehold commercial property New commercial leases (acting for the landlord or tenant) Buying development land Plot sales The purchasing of a business via an asset or share sale We oﬀer sensible pricing and fixed fees; no hourly rates and we make sure that our experts follow the Movin’ Legal ethos – “sensible practical advice every time”.
Protection for your clients– free home buyer protection Providing cover for conveyancing fees, mortgage arrangement fees, survey fees and valuation fees up to a combined (aggregate) maximum payment of £600.00
Commercial conveyancing Our expert panel of solicitors oﬀer high-quality services on a wide range of commercial property and business transactions oﬀering sensible pricing and fixed fees with no hourly rates.
Please just give us a call We are here to help and want to hear from you. Sean Kelly operations director: email@example.com / 07932993015 Lyndon Whistance sales director: firstname.lastname@example.org / 07899321774 Emma Hall key relationships director: email@example.com / 07725356879
We can then put you in touch with one of our excellent BDMs
When buying or selling a property at auction, we know that timing is critical We can help with… Purchasing of residential or commercial property residential or commercial property at auction. We oﬀer sensible pricing and fixed fees; no hourly rates and we make sure that our experts follow the Movin Legal ethos – “sensible practical advice every time”.
YOUR BRIDGING & COMMERCIAL CONVEYANCING SPECIALIST MAKE MOVIN LEGAL YOUR FIRST CALL → 30
0330 024 9123 www.sfintroducer.com
Development Finance? Talk to the real experts. Our team is highly experienced and knowlegeable, so we can go beyond the tick-box and provide real solutions for your clients.
We’ve funded the equivalent of 1 in every 100 new build UK homes last year, so if you’re looking for development ﬁnance, look no further.
Tim Harper, Head of Credit
Real world lending 0800 470 0430 www.assetzcapital.co.uk