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Our mission is to help you find the right portfolio landlord solution. With no limit on the background portfolio size and no need for business plans we make things simple. Just call us on 0344 770 8032 Š2019 Foundation Home Loans is a trading style of Paratus AMC Limited. Registered Office: No.5 Arlington Square, Downshire Way, Bracknell, Berkshire RG12 1WA. Registered in England with Company No. 03489004. Paratus AMC Limited is authorised and regulated by the Financial Conduct Authority. Our registration number is 301128. Buy to let mortgages are not regulated by the Financial Conduct Authority. No limit on portfolio size, subject to maximum borrowing of £3 million with Foundation Home Loans. Calls may be monitored and recorded.

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Publishing Editor Robyn Hall @RobynHall Managing Editor Ryan Fowler @RyanFowlerMI Deputy Editor Jessica Nangle News Editor Ryan Bembridge Reporter Michael Lloyd Editorial Director Nia Williams @mortgagechat Commercial Director Matt Bond Advertising Manager Francesca Ramsey Campaign Manager Joanna Cooney Production Editor Felix Blakeston Head of Marketing Robyn Ashman


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August 2019 Issue 133

MORTGAGE INTRODUCER WeWork c/o Mortgage Introducer, 41 Corsham St, London, N1 6DR Information carried in Mortgage Introducer is checked for accuracy but the views or opinions do not necessarily represent those of Mortgage Introducer Ltd.

Fingers crossed for housing top team As predicted Boris Johnson has finally gotten his clammy (at least one assumes they are clammy) hands on the keys to Number 10. In his first evening in the top job Johnson took the Harold McMillian approach to a reshuffle and had his own “Night of the Long Knives”. Johnson wasn’t messing about and he carried out a record breaking cull of non-believers/non-remainers (in this case the terms are interchangeable) from the Cabinet. As such the remainers left and leavers remained. This saw a number of briefs which have direct impact on the mortgage sector gain new Secretary of States and/or Ministers. Former Housing Secretary Sajid Javid took the keys to Number 11 and became Chancellor of the Exchequer. Javid has ordered officials to look into overhauling stamp duty following concerns the tax is having a negative impact on the housing market. Whilst campaigning Johnson had suggested drastically raising the threshold for paying stamp duty from its current level of £125,000 to £500,000. At the same time the top rate should be cut from 12% to 7%. Let’s be frank it would help the market. It’s a big expenses for some homebuyers and anything that makes the market more fluid needs to be welcomed. Elsewhere we have seen a new Housing Secretary and Housing Minister. Both of which will attend Cabinet. Jenrick, who has been an MP since 2014, has said that getting those first-time buyers priced out of the housing ladder was his priority. Former TV presenter and true-blue Conservative Esther McVey becomes Housing Minister. She takes up the role left by Kit Malthouse. It remains to be seen what this new top team can do to help support the market. But with Brexit clearly set to dominate the agenda let’s hope that housing doesn’t get left by the wayside. Elsewhere the recent Quarterly Economics Bulletin from the Association of Mortgage Intermediaries (AMI) highlighted an issue around arrears on short-term finance loans funded by peer-to-peer and other bridging lenders. This is unlikely to come as a surprise to those who know the market. There has been a race to secure new business which has seen some new entrants make risky decisions. Let’s hope this doesn’t tarnish the image of a great sector.

5 AMI Review 6 Market Review 8 Advice Review 11 Adverse Review 13 High Net Worth Review 14 Innovation Review 16 Buy-to-let Review 25 Protection Review 28 Equity Release Review 31 General Insurance Review 34 Equity Release Review 37 Surveying Review 38 Conveyancing Review 41 Technology Review 46 The Bigger Issue

We ask our industry experts: Can Boris and his government reinvigorate the market?

48 Round-table

Our experts consider the state of the later life market

56 Cover - All abroad

Ryan Bembridge explores the opportunities in the overseas and expatriate mortgage markets

60 Loan Introducer

The latest from the second charge market with commentary from Fluent’s Tim Wheeldon and the spotlight is on Selina Finance

66 Interview

Jessica Nangle catches up with Guy Harrington of Glenhawk

68 Specialist Finance Introducer Regulation, bridging and FIBA

72 Flexible Working

Increasing productivity

74 The Hall of Fame Back of the net

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20/02/2019 11:51

Review: AMI

Only the headline Freelance journalist Simon Read brought me sharply to attention when he wrote recently about whether anyone reads newspapers anymore. The march of online and the ability to get anything on Twittersphere, Messenger or Whatsapp has totally changed “communication”. As Trump continually condemns fake news, the challenge we all face is who is gaslighting who. Simon is concerned that without accessing newspapers people are less informed. News is now increasingly sourced online where some deliverers might not be terribly legitimate or could be pursuing their own agenda. In print media the tendency is still to fully research, check sources and, for critical stories, a lawyer will have reviewed the copy. Online the race to be first and generate headlines (clickbait) is the most common driver. Hundreds of stories can be published without consideration of importance, priority or implication as there is limitless space and if challenged it can be electronically erased. Much harder in print where space is at a premium and the laws of libel well defined. The more liked or shared a story

Robert Sinclair chief executive, Association of Mortgage Intermediaries

the more “coverage” it gets whether it is true or not. In the world of money where trust is the common currency that most consumers crave, we in the industry should wake up and take notice. When “tongue in cheek” the chair of the treasury select committee asked the ceo of the FCA if he reads the newspapers it was because many journalists had been trailing concerns about the ill-fated Woodford fund, which the FCA has apparently been blind-sided on. But most of the stories were in print, not obvious in the online space. It is this move to a new world where the traditional things that gave financial services an element of perceived safety and stability are challenged that should cause us all to think again. I am fortunate in that I am gifted space to give opinion in a variety of medium. It is a privilege but also a responsibility. Whilst I am paid to represent the interests of my member firms, I have always been clear to my employers that I will never defend wrong-doing or operate against consumers interests. Those employed by commercial firms do not always have that luxury.

The independence of journalism not tainted by the income of advertisers, the agenda of publishers or a view to their next job in PR has to be guarded and enshrined. The march of the PR firm spewing forth promotional material masquerading as research and firms enhancing their scale to impress investors should be sorely resisted. My concern is that the need for online content and a headline that drives the all-important advertising revenue click rate is diminishing our breadth and independent thought. Recently I found myself watching an excellent piece from the 1950’s where Orson Welles discussed the rationale for his War of the Worlds “newsflash” which brought America to panic and him death threats as well as the rights to make one of the best cult films in Citizen Kane. Back then he was trying to get the public to understand that they should not blindly believe all they were told by radio or TV. The need to trust and be trusted is a core aspect of financial services. We need to be guardians of the mortgage brand and its reputation. Lenders and intermediaries need to ensure that partnerships and communications are built on integrity and the culture we respect is based on the right headlines.

A fairer FOS? FOS have now published proposals for their future funding having considered stakeholders’ feedback and the principles FOS has established in its previous conversations. They are proposing to rebalance the levy and case fee to aim for a 50:50 split, with a significantly greater proportion of their income from the FOS levy as opposed to case fees. This will mean that all firms will pay a larger levy, with the largest firms paying most, thus retaining the principle that businesses who generate the most demand for their service in terms of individual cases should contribute more towards FOS’s costs. FOS believes that reducing the reliance on income from case fees supports


their management of complexity in the complaints as PPI subsides. It also feels that the change will protect FOS from the volatility of demand for their services. There are no proposals to change the case fee level from the existing £550 per case, based on assumptions of complaint volumes. The proposal to leave the case fee unchanged seems sensible but perhaps FOS should reconsider an increased fee for higher users and also the possibility of a ‘quality measure’ that would deliver different pricing bands. A core band of £550 per case if the overturn rate in the previous year was between say 30% and 50%. Those with overturn rates higher should pay

50% more, those with an overturn rate less than 30% pay 50% less They are proposing to reduce the level of ‘free’ cases from 25 to 10 per firm. FOS state that most of the smallest firms have never reached the 25 threshold, are unlikely to have more than 10 and many have none. Mortgage firms might be concerned that it would be inappropriate to change the ‘free’ case levels for firms at a time when they are experiencing significant interest in historic mortgage sales from numerous CMC’s. It also means that those who have more than 10 cases will see their costs rise substantially. The plans need deeper financial modelling.




Review: Market

How technology is driving the market It’s not always straightforward gauging confidence and positioning in the housing and mortgage markets, but it appears that the current pendulum may be changing direction somewhat.

A buyer’s market?

Recent figures from Rightmove indicated that the price of property coming to market fell by 0.2% (-£656) in July to represent the first monthly fall so far in 2019. While prices are traditionally weaker in the second half of the year, this year also sees the highest total stock per estate agency branch since 2015. With continuing political uncertainty in the air, Rightmove expects buyers in market sectors where there is an over-supply to have a stronger hand negotiating lower prices in the coming months. With sound underlying market fundamentals in place, it pointed out that there should be better bargaining opportunities for those who may have hesitated and missed the busier spring market. But only if they can now find the confidence to engage without waiting for more clarity around Brexit. Lenders have certainly been making a host of rate and criteria changes in recent months to better support potential buyers and help them get off the property fence.

Craig Calder director of intermediaries, Barclays Mortgages

First-time buyers and homemovers

When it comes to the first-time buyer market, the latest official data from the UK Finance Mortgage Trends Update outlined that there were slightly more first-time buyer mortgage completions in May while the number of homemover mortgages fell. When breaking this down, there were 30,720 new firsttime buyer mortgages completed in May, 0.5% more when compared year-on-year. Meanwhile there were 29,430 homemover mortgages in May, 1.2% less than in the same month a year earlier. FTB enquiry levels remain strong, although challenges do remain. HSBC UK’s annual ‘Beyond the Bricks’ survey found that the average age aspiring homeowners expect to get onto the property ladder is now 39 years old. According to the figures, more than half of those looking to buy their first home already have a family to support; and two thirds of people (64%) wanting to buy expect to buy with someone else. In addition, one in ten are said to be having to club together with a friend or family member in order to get onto the ladder. The data also showed that since January 2018 the average length of a mortgage taken out by first-time buyers has increased by three and a half years, and now sits at 332 months (or 27 years 8 months). FTBs are now, on average, taking out mortgages for six years longer than those already on the property

Mortgage rates

The latest residential product data analysis from Mortgage Brain has revealed that the majority of three and five-year fixed rate residential mortgages have seen a reduction in cost over the past six months. As of the beginning of July, the cost of a 60% and 70% LTV 5-year fixed rate mortgage was said to be 2% lower than it was in April, or 3% lower when compared to the start of the year. The same product with a 90% LTV also reportedly now costs 2% less than it did three months ago (or 1% lower compared to January



2019), while the cost of a 60%, 70% and 90% LTV 3-year fixed was suggested to be 1% lower than it was six months ago. This data demonstrates the availability of a range of highly competitive deals for first-time buyers, homemovers and remortgagers, especially for those looking for a longer-term deal and additional security over their guaranteed monthly repayments.


“FTB enquiry levels remain strong, although challenges do remain” ladder and the average LTV for firsttime purchases has increased from 72% LTV to 81% in under a year and a half. The role of government schemes, financial support from families and extending mortgage terms are just some of the factors affecting the current FTB marketplace. Although lower mortgage related costs and alternative lending options are emerging to encourage greater levels of activity, a lack of affordable housing stock coming to market and lingering affordability concerns mean that it still isn’t easy for many.

Interest rates – where do we go from here?

There are also other influences to consider, such as the impending Brexit deadline and the potential bearing this could have on the economy and interest rates. United Trust Bank’s Broker Sentiment Poll found that over half (58%) of brokers expect the Bank of England to change the base rate by the end of Q2 2020. A further 25% believed the next base rate change will have taken place by the end of 2020, while nearly half (49%) said that they expected it to increase to 1% by the end of next year. A further 22% responded that it could be changed as early as the end of this year. It’s always tricky to predict these things but even more so with Brexit uncertainly still in the air and a new Prime Minister taking the reins. Which means that the intermediary community should be engaging with potential and existing clients who are able to take advantage of favourable market conditions now, before any change could potentially impact them in the coming weeks and months.


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Review: Advice

The lines are blurring between adviser and lender It’s not often we’ve talked about the blurring of lines between adviser and lender in recent years but that’s exactly what has happened recently with the decision by Habito to begin offering its own range of buy-to-let mortgages. In fact, we think you’d probably have to go back pre-credit crunch to a time when we had a number of, predominantly packagers it has to be said, launching lenders to remember such a debate occurring. Back then it seemed an almost weekly occurrence that packagers themselves, or packager alliances, were securing the funding to get their own lending houses off the ground. If it seemed like an accident waiting to happen - we didn’t have to wait too long for it to all go spectacularly wrong. The rest, as they say, is history. Since then, and this has been as a result of regulatory design, we have developed a very siloed industry in so much that advisers have not strayed into the lending arena, and while we of course have banks with ‘advisory’ sales staff selling their mortgage products, there is generally a clarity around the fact that clients are not getting independent, professional, whole of market advice here. Indeed, far from it. You might go as far as to say that the MMR put the nail in that particular business coffin, but in recent months, there appears to have been something of a resurrection occurring. Which brings us to Habito and its recent decision to launch a range of buy-to-let mortgages, only accessible to its buy-to-let clients via its online system. Whilst we welcome all would-be disrupters in our market place and promote innovation, this has opened up a something of a can of worms in the industry not just around the rights and wrongs of an adviser offering up its own lending products, but potentially around TCF and the sort of potential issues Habito and its advisers –



Sebastian Murphy head of mortgage finance and

Rory Joseph director, JLM Mortgage Services


who sit behind its system – may face. First up, let’s look at the firewall that Habito are going to need to have in place in order to justify recommending its own lending products to its clientele. Of course, buy-tolet is unregulated but the funder of these products is not, and neither is Habito itself as the adviser. While we are sure this is something the management are acutely aware of, and will try to manage, there could be a danger that, when Habito’s advisers get their hands on the case, they may feel a pressure to move business to the lending arm or indeed that there may simply be a subconscious bias built into its system that leans towards a Habito buy-to-let mortgage. And then we have the demarcation between both the advising and lending sides; what if there is a - perhaps even unwitting - exchange of information between the two sides that makes this type of recommendation more likely? It can be difficult to guard against this and

make a system as water-tight as you would like. Which leads us to what clients might anticipate from their advisers regardless of whether you are going through a ‘robo advice’ process or not. Indeed, we might ask the question, why a buy-to-let landlord might use an automated advice system in the first place, especially given the level of complexity that we see with our landlord clients? But, back to the question: what is the expectation of advisers as clients? Surely, it’s independent advice which looks at the whole range of product options available – lest we forget this is an incredibly competitive market, and just looking at what we know is on offer in the market, and the comments of our peer group, is the Habito product range as competitive as others? In a price-fixated market, why might the recommendation be for a Habito mortgage? Perhaps they might say that the case is time-sensitive, and opting for Habito mortgage products fulfils the time needs of their customer. But what experience does Habito have of lending in this market? Are there more experienced, specialist buy-to-let lenders available who are able to complete this business in exactly the same time frame, if not quicker? It also seems an odd fit, as we can’t see how many buy-to-let landlords who will need specialist advice, opting to apply online. Which leads us back to a case which leads to a recommendation to go with Habito’s own lending products - what justification can it provide for this? In our view it is at best, a grey area. This will require a water-tight justification for a decision which picks a Habito product as the recommendation. One that is not just fit for purpose, but fully in line with treating customers fairly, especially given the large number of options available to clients right across the buy-to-let board. A fine line is being trodden here and, knowing our buy-to-let clients, the service they demand, and the results they anticipate, we’re not sure they’d want to be the ones left walking along it.


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01/05/2019 14:49

Review: Advice

A proposition should have something for everyone As a lender, we’re always considering what comes next. Not just how do we help brokers and customers with their mortgage needs this quarter, but where are the opportunities longer-term? As a building society, being owned by our members, their needs are paramount, but as a regional building society, we have an added consideration – because society matters to us too. This manifests itself in various ways: we are worked hard to maintain and grow our branch network in the North of England because we understand how much branches matter to our customers. We’ve just reopened Morpeth, Berwick and Ponteland branches after high spec refurbishments, building on our commitment to maintain a physical presence in our home ground. Going further we announced last week that we will be opening two new branches in rural locations (Wooler in Northumberland and Hawes in the Yorkshire Dales) that have seen their last bank in town close. Working closely with the local community there we are confident we have found a formula for a new but very strong partnership. Our long-term commitment is also reflected in our savings strategy – our accounts are always competitively priced, paying the very best rates we can to our members and our Community Saver accounts are designed to return some of our profits back to local charities and community groups via our Community Fund which will exceed £2m by the end of the year. Of course we retain a portion to reinvest into our business – doing things like the branch refurbs – but this means we can also develop our services to stay relevant for our customers for longer. On the lending side of the book, this means thinking about where borrowers are underserved by the market and seeking to support them so they get a fair deal. There are sev-



Stuart Miller customer director, Newcastle Building Society


eral sectors of the mortgage market that could do with a helping hand at the moment and in the future: the self-employed, those with complex income streams, those looking to purchase with shared equity (either with Help to Buy or without), those who’ve suffered minor credit impairments in the past and increasingly, first-time buyers and older borrowers. This last group present a unique opportunity for societies to add value. A report put together by Age UK earlier this year showed there are almost 12 million people in the UK aged 65 and over. Some 5.4 million of those are 75 or older and in 50 years’ time, it’s projected that there will be an additional 8.6 million aged 65 and above. Meanwhile house building remains below all estimates required to house our growing population, Brexit and lower immigration notwithstanding. The latest figures from the Ministry of Housing, Communities and Local Government showed a 9% fall in new starts in England in the first quarter of 2019 compared both to the previous quarter and to the same quarter the previous year. All commentators agree that the combination of an end in sight to Help to Buy and the continuing uncertainty that surrounds the UK’s withdrawal from the European Union is weighing, understandably, on builders’ appetite to throw spades in the ground. Particularly at a time when there is obvious pressure on house prices in some areas of the country and an apparent unwillingness to move among existing homeowners. Indeed, the UK Finance figures show there were 21,370 remortgages with additional borrowing in May 2019, 19.8% more than in the same month in 2018. For these remortgages, the average additional amount borrowed in May was £52,000. The retirement lending market reveals that homeowners are relying on

the value stored in their properties for fairly basic living needs. Figures for the first half of 2019 compiled by Key, show a year-on-year increase of 5.6% in the number of equity release plans to 22,126 while total value released edged up by 3% to £1.7bn. The firm’s analysis suggests that the biggest single use of property wealth remains home or garden improvements, at 64%, as older borrowers look to age proof their homes in order to remain in them longer. So what does all of this mean for us and our contribution to the mortgage market? It tells us, as brokers also do, that we must focus on supporting borrowers for longer than lenders have been used to in the past. The past year has seen a lot of column inches dedicated to the launch of retirement interest-only mortgages following the regulator’s rule change in March last year. Much less is said about the core of lending done for older borrowers however. We know, as do brokers, that the vast majority of homeowners either reliant on or who decide it would make life more comfortable to have access to mortgage finance for longer choose the traditional route over equity release or retirement interest-only. Generally speaking, it’s cheaper. These are also good borrowers, generally with lower loan-to-value and good reliable payment histories. They are harder to underwrite through an automated scorecard, true, but that doesn’t make them unmortgageable. Far from it. It just requires a little time from an underwriter who can make an informed judgement on whether the loan makes sense for the homeowner and they can afford it. As our population gets older, demand for this sort of lending is only going to rise. With new housing supply still insufficient, prices are unlikely to drop significantly and loanto-values will need to reflect that. That older homeowners are increasingly comfortable with debt later into life is already apparent; lenders must ensure that we are offering these customers the service and choice that they need in a fair market.

Review: Adverse

Overcoming adversity There used to be a certain stigma to having a ‘sub-prime’ mortgage and I’m sure we have all been guilty of stereotyping clients once we discovered they’re not as squeaky clean as we had first hoped. The term sub-prime in itself has negative connotations and it has been replaced by softer terms such as “adverse mortgages” or “credit impaired”. Either way we can be quick to blame financial ineptitude or be critical of people making erroneous choices with their finances and while there are many that can be accused of this, I find it not always to be the case. If I have learned anything since setting up Adverse Money, it is the total misconception of what an adverse borrower might look like. In the past few months we have dealt with well-educated, astute and highly paid professionals who have been guilty of nothing more than an oversight, or a blip as we like to call it in adverse speak. There are also those hard-working families trying to provide in a consumer driven, must have now society and where there is now too much month at the end of the money where once it used to be the other way around. Salaries are just not going as far as they used to. Sadly, there are also plenty who have suffered health or economic misfortune and where a major life event has taken place and their uninsured income has come crashing down. It is easy to criticise people from behind a keyboard but let us remember that our industry is a service industry and rather than condemn perhaps it would be more empathetic to just think “there but for the grace of God”. The FCA reports that the number of advances for ‘individuals with impaired credit history’ between April 2018 and April 2019 was 0.74% of the market. This is an increase of 0.28% from

Michelle Leyland director, Adverse money, The Money Group

10 years ago and while it is still way short of the pre-bubble peak it is still a worrying trend that appears to be increasing. It is also worth remembering that it is not always about what the regulator terms something to be, it is the lender that will decide its own definitions of credit impaired. With over 3500 CCJs being issued every day for an average of £3300 it doesn’t seem to me like we are going to be seeing a silver lining on the cloud any day soon. And let’s not forget, we are in a period of record low interest rates and record levels of employment and yet people are still struggling to adequately plan and budget their finances. So, where do people with adverse issues tend to go for advice after being turned down by their bank? Online. Type into Google key words such as ‘mortgage with CCJ, or adverse mortgage’ and you get pages and pages of companies working in that sector. There have been new lenders entering the market and, just like us, new brokers intent on making a difference in such an important area. But we need to be careful. These can be vulnerable clients and the industry as a whole needs to recognise this.

They are not simply ‘adverse clients’ they are ‘clients with complex adverse issues’. Whenever there is deemed to be risk the consumer can expect to pay more and it is essential from that first contact point with the borrower that this is explained to them. There will also be slow turnaround times, manual underwriting and, more often than not, some very arbitrary lending decisions. But what is essential to these types of clients is knowing their expectations can be managed from the start, that they are treated fairly and compassionately throughout and that they understand the broker is working to find them a solution. This part of the market is now, along with many other sectors in the industry, becoming specialist. Knowing who ignores what, how they then interpret what they don’t ignore and knowing where the grey lines are that allow the adviser to get in there and fight a client’s corner are now essential broking tools. But, and I say this having had to unwind some previous advice – if you don’t know what tools to use and try a hammer when you should be using a spanner you could be at risk of making a complex situation much worse.




Review: Adverse

It’s time to change the headlines There are plenty of concerning headlines in the newspapers nowadays and usually, there is very little we can do to change the situation. But there was one headline in The Mirror last month that caught my eye and made me determined to address the issue. The headline that ran in The Mirror on 8 June was: “Teacher refused mortgage on first home because of PARKING TICKET”. The story was that a teacher had been refused a mortgage on her first home because a parking ticket she was told had been cancelled went unpaid and resulted in a County Court Judgement (CCJ) that she knew nothing about. The teacher, Sarah, had been given the parking ticket by a private firm after leaving her car overnight in the car park of a shop. She called the shop and was told that the ticket had been cancelled and was sent further demands which she followed-up only to be told again that the ticket had been cancelled. Sarah had changed her address and so had no idea that the case had gone to county court with the original £60 penalty mounting to £197 with costs. Sarah told the newspaper: “I never received a letter from the court about the CCJ. The first I heard about it was when our mortgage application was denied. I was in tears. We had done all of the checks and were about to submit our offer. “I had to look up what a CCJ was. I am a very law-abiding citizen and I always pay off my credit cards each month. We’re absolutely devastated that this mistake has prevented us from getting a mortgage. It’s hard enough for young people to get on the housing ladder.” How many people write off their mortgage chances? Accidents do happen but the most concerning element of the story is that Sarah believed she was unable to secure a mortgage to buy her first home because she had one small CCJ on her credit record.



Clare Jarvis head of intermediary distribution, Pepper Money

The newspaper story does not confirm whether or not Sarah had used a mortgage broker. A broker would have been able to explain the plentiful options for borrowers with CCJs and defaults on their credit file. This begs the question, how many people are in just this position, writing off their chances of securing a mortgage unaware of the options they might have if they sought professional advice from a broker?

Many reasons to fail a lenders score

A disputed parking ticket followed by a change of address is a common way for people to pick up a CCJ on their credit record, but it’s by no means the only reason that someone could fail a credit score with a high street lender. We increasingly arrange our lives around monthly payments, such as mobile phone contracts, broadband, car leasing, entertainment subscriptions and gym memberships. It can be easy to slip up on one or more of these commitments and this is before you consider life events such as divorce, redundancy and illness, which can frequently lead to missed payments, arrears, defaults and CCJs. There are also many less obvious reasons why a mortgage application might be rejected by a lender that uses credit scoring to make decisions. These include:   A borrower’s debt to income ratio is higher than expected   Issues with linked addresses


  Frequent change of address   The client has been the victim of fraud   The client has too many jobs or has been in their current role for a short period of time   A borrower already has access to too much credit   A borrower has not taken enough credit in the past to establish a robust history The good news is that there are plenty of options for customers in all of these situations, from specialist lenders that are able to take a pragmatic view of an individual’s circumstance and make decisions based on an assessment of their future affordability. The less good news is that awareness of these options, and that brokers can provide the best route to access them, is still not widespread. By failing to educate people more comprehensively about the value of advice and the diverse range of circumstances that are catered for by the mortgage industry, we are failing those customers who think that they don’t have any options. At the same time, we are also limiting the potential of our own industry and the opportunities for our businesses. It’s time to change the headlines. It will take a collective effort from across the industry, and it won’t happen overnight, but if we all work to make consumers more aware about the opportunities available to them, we will all ultimately benefit.

Review: High Net Worth  

Removing the mystery from large loans     Whilst at first large mortgages can seem to be a complicated problem, in the right hands there can actually be a very straightforward, albeit bespoke solution. The key is working with a lender that is a specialist in large loans, understands this type of case and can give it the individual attention it deserves. Large loan cases are less common, particularly outside London and the South East, but the story is changing. A report by property website, Zoopla, earlier this year found that while those living in homes worth sevenfigure sums declined in London and the South East of England, other regions saw strong increases in 2018. According to the report, the top 10 postal towns ranked by the number of £1m+ properties included Cambridge, St Albans, Oxford and Bristol. Another reason why more brokers don’t arrange large loans is wariness due to the infrequency of such loans. As an area that many brokers only deal with infrequently, it can be natural for there to be some mystery around large loans. After all, the finances of high net worth (HNW) borrowers are often far from straightforward. Many HNW individuals have unpredictable income profiles and diverse investment portfolios comprising a sophisticated mix of traditional and nontraditional assets. These complexities can create challenges for even the wealthiest people when they try to secure a home loan. But while a typical large deal may well involve some factors that make life a bit more challenging, they’re usually not insurmountable, especially if you work with a lender that is used to dealing with these types of borrowing requirements. The lenders that serve this sector are primarily private banks and perhaps not the type of lender that many brokers work with on a regular basis. In fact, recently, Investec Private

Peter Izard business development manager, Investec Private Bank

Bank became the first private bank to join the panel of Sesame network. Up until this point, appointed representatives of the network would need to go off-panel if they wanted a specialist private banking solution for their HNW clients. Other networks are now investigating how they could open up extra opportunities for their members to place large loans with the inclusion of a private bank on their panel. So, what does a typical deal look like for a HNW client at Investec Private Bank? It’s a question I’m frequently asked by brokers, so I thought it may be helpful to give you an insight into the type of issues you may have to address when dealing with HNW borrowers and go some way to removing the mystery from large loans. In this case study, we describe how we fashioned a supersize mortgage against the clock for a successful designer with bespoke needs. The client was a successful designer who needed a large mortgage for a multimillion-pound London property. Despite earning a high income, the borrower had an uncon-


ventional earnings profile, as well as an investment portfolio containing both traditional and atypical assets. The designer needed a £10m multi-part mortgage and needed it quickly because other buyers were interested in the property. However, the borrower’s earnings were split between euros and pounds, and their asset mix included an existing unsold home and a multimillionpound art collection. As we understand that HNW individuals have unique requirements, we were able to structure a £10m mortgage for the designer, taking into account the time constraints and the borrower’s specific combination of earnings and assets. The offer was split into parts, with an interestonly portion tailored to be repaid through the sale of the borrower’s existing property. The remaining part would then be paid down over the course of the loan through annual capital reductions. This is a very unusual deal by high street standards but, when it comes to large loans, the multiple considerations and requirement to move quickly can be commonplace. However, don’t let this put you off – the key is to work with a lender that has a strong understanding of the market and experience of meeting the high expectations of this type of client and can give it the individual attention it deserves.



Review: Innovation

Innovation is always a work in progress It’s been an interesting month in the mortgage market. Usually July and August signal a slowdown as parents pack the kids up and set off to more reliably sunnier climes. This summer has been a little busier than is typical for this time of year. First-time buyer activity is particularly strong and, contrary to RICS reporting a slowdown in activity, we at least have seen interest pick up in London and the South East. Perhaps people are getting bored of waiting for Brexit? Perhaps they are growing their families and cannot wait for Westminster to get their act together before climbing the ladder. Whatever the motivation, there’s definitely been a bump in demand from home movers as well as those looking to purchase for the first time. The industry has also been busy. I was interested to see the news that Habito has launched a range of buyto-let mortgages funded directly by an institutional backer in June. The broker firm says it’s planning to extend this range to residential mortgages in time, presumably after establishing a successful track record lending to landlords. The home buying process has been notoriously difficult to automate, improve or disrupt largely because it is so fragmented and relies on many moving pieces and parties to work. Habito’s move – and buyto-let lender Molo’s before it – is interesting because it shows a desire to take control of a larger part of the process, with the aim of streamlining and making the experience of buying a home – or at least securing a mortgage – more efficient for the customer. Property groups have long understood the benefit of owning a greater portion of the chain. Estate agencies sit alongside valuations businesses, lettings firms, managing agents, auction businesses and mortgage advice networks for good reason. The notion of bringing funding into this mix wouldn’t make sense for every advisory firm, but as a strategy to minimise overheads and maximise



Robin Johnson managing director, Kinleigh Folkard & Hayward Professional Services


service and profitability, it makes a lot of sense. It’s also interesting from another perspective: the rise and rise of fintech in financial services has been swift and broad-based. Just three years ago no-one had heard of Monzo, Starling or Tandem; today, they are ubiquitous with the younger generations. While each outfit has a different strategy for growth, many of these newer services have modelled themselves on the idea of becoming a marketplace. Take Monzo as an example: the mobile bank launched as a prepaid card, developed its own current account and has since launched partnerships to offer its customers energy switching deals and savings accounts from various third party providers. Starling Bank operates on the same basis, offering its current account customers the option to buy life insurance from Anorak and get mortgage advice from Habito all from within its app. Digital disruptors talk about this marketplace model as something new; building on an idea styled by Amazon, Deliveroo and Uber. Effectively providing a technology platform that connects users with providers, replacing traditional distribution models. This is of course true, but I’d argue it’s only part of the picture. In the mortgage and housing markets we have operated networks such as

these for years and years: what else is the appointed representative model or property group than a platform for the distribution of multiple services related to the housing market? Property groups have long been marketplaces that allow customers to access a full range of services relating to the lifetime usage of their property. That said, what we have been less good at is automating this marketplace, at using technology to create a frictionless experience for customers who interact with it. Perhaps, driven by a lack of persistent demand from consumers who really only experience the home buying process a few times in their lives, unlike those ordering cabs or takeaways. This is changing finally however, with nearly all firms in our market now focussed on how to improve customer experience using technology. The approaches being taken are varied – something I believe offers customers choice and will ultimately deliver a better service. Disruption of the status quo can be a trigger for improvement that benefits everyone; but let’s not forget that there is already considerable value in the networks that already exist in this market. How we build on them, automate where we can and develop to support service of our customers for a larger part of their experience as homeowners will be the key to standing out in future.

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Review: Buy-to-let

The right products will keep landlords in the market When it comes to determining how a market sector is performing, then you can obviously judge it on the levels of business you are conducting, but it also helps to know the statistics for the entire lending community. In the buy-to-let space there is often a level of anecdotal evidence which is sometimes taken as fact, especially given the nature of the changes that have impacted lenders, advisers and landlord clients over the last few years. Many appear quick to decide the sector’s fate, and there are also those who appear to want buyto-let to wither on the vine, regardless of its incredible importance to the UK housing market. Recent figures from UK Finance for buy-to-let however reveal a very different picture and those who consistently suggest the sector is on its last legs might do well to review these statistics regularly because what they actually do is reveal a stable picture, particularly over the last 12 months. Indeed, if you’re looking at 2019 alone we can chart a steady improvement that shows a market growing in confidence, where lending appetite remains strong, and where landlords have a growing number of finance options to choose from.

Bob Young chief executive, Fleet Mortgages

“Recent landlord surveys all suggest that the nature of being a landlord has changed away from a predominance of small, amateur players with a very small number of properties, to a more portfolio-landlord-focussed approach” of the criticisms of buy-to-let over many years has been that it has presented a rollercoaster series of lending figures at any given time – rocketing up at frightening speed at various points, while dipping down and bumping along the bottom at others.


The latest figures cover May 2019 and show that 5,500 new buy-to-let purchase mortgages completed during the month – the same as in May 2018, and there were 15,000 remortgages, up 2% from the 14,700 in the same month last year. In terms of value, those purchase mortgages hit the £700m figure, while remortgages were valued again at £2.3bn – exactly the same values as were posted in May 2018. Indeed, if you look at the monthly figures over the course of the last 12 months, you see both a high degree of consistency and stability right across the board. That 5,500 pur-



chase mortgages completed was the highest number since November last year, and the 15,000 remortgages completed was the highest since January this year. Both have continued to inch up, which I believe belies the growing confidence in the sector, and particularly an appetite amongst existing landlords (and new) to add to portfolios. The value of those mortgages is incredibly consistent as well – each month has set a value figure of between £600m and £800m for purchases, and £2bn-£2.5bn for remortgages over the last 12 months. One


That criticism can’t really be levelled at the existing buy-to-let market, and while we might all want to see both greater numbers and values being posted, there is something incredibly positive about seeing such stability, not least because it shows the commitment to the sector from all stakeholders, but particularly lenders, advisers and their landlord clients. While those numbers/values are consistent, there’s no doubting that we have seen a shift in market shape over the past three years, primarAUGUST 2019

ily as a result of the regulatory and taxation changes. Recent landlord surveys all suggest that the nature of being a landlord has changed away from a predominance of small, amateur players with a very small number of properties, to a more portfolio-landlord-focussed approach, with larger-scale operators having more properties in their portfolios, and driving growth in terms of their appetite to add more. We certainly see this as a specialist buy-to-let lender, indeed we were set up primarily to cater for this type of landlord – those who operate via limited companies, those who want higher-yielding properties such as HMOs and multi-unit blocks; and those who have substantial portfolios in the background and for whom it is their primary source of business.


What we also wanted to maintain was a commitment to ensuring a stress-free path for such landlords and their advisers, because there can be an over-bearing administration requirement from certain lenders towards these borrowers. The paper trail asked for can often reach the gold-plating stage and that is not going to help these portfolio landlords in terms of securing their finance and adding to their portfolios. Given the way the market has evolved, and the fact that politically at least we don’t envisage any major changes in the way buy-to-let/landlords are treated (at least not in the short-term), we have to believe that this focus on portfolio and professional landlord operators will continue for some time. In essence, it may well be seen as a vindication of government policy up to this date – they wanted to professionalise the sector and move it away from amateurs and this has been the direction of travel. It’s now up to all us stakeholders to ensure we are able to offer the products and services these landlords need to keep them within the market, to keep them expanding their portfolios, and to make sure buy-to-let and the PRS continues to work for millions of tenants.

Review: Buy-to-let

The quality of the advice is key As school is now officially out for Summer, parents everywhere are busy juggling holidays, diaries, work commitments and monthly outgoings – not to mention checking weather forecasts with increased frequency. Whilst this provides a great period to spend quality time with our offspring, it also generates a little additional stress and the odd meltdown. Historically speaking, this is a time when many sectors within financial services, including the mortgage market, experience some lulls. However, through the impact of technology – in terms of research, communications and differing forms of engagement – this activity gap could, and probably should, be closing.

as the average rent hit a record high of £896 per calendar month and growth accelerated at 1.3% per year.

The rise of the portfolio landlord Ying Tan founder and chief executive, Dynamo

A sector in transition

In the lead up to this period we have seen the buy-to-let market stabilise and there is no reason to suggest that there will be any great change in activity levels over this six-week break. Official figures from UK Finance, as reported in its recent Mortgage Trends Update, confirmed this market stability suggesting that 5,500 new buy-to-let home purchase mortgages completed in May 2019, the same number as this time last year. There were 15,000 remortgages in the sector, 2% more than in May 2018. This data points to a further steadying of the ship with little evidence of vast numbers of landlords jumping overboard as predicted in some quarters. Looking at the bigger private rented sector (PRS) picture, the latest edition of the Buy-to-Let Britain report by Kent Reliance for Intermediaries highlighted that the value of the PRS has grown by £6bn in the last year, whilst the value of the average rental property saw a year-on-year increase of 0.3 per cent. It also revealed that rents are soaring at their fastest rate since 2017, pushing the average yield on a residential property up to 4.5% – its highest in two years. This comes



Inevitably, we are not seeing the vast swathes of new landlords entering the sector as in times gone by, but portfolio landlords continue to demonstrate their belief in the longerterm future of BTL, a factor which provides a big shot in the arm for lenders, distributors and intermediary firms operating in and around this marketplace. Professional landlords are not just seeking to recoup higher tax costs in the form of higher rents. Many now operate via limited companies to mitigate the impact of the changes to mortgage tax relief. Analysis of Kent Reliance for Intermediaries’ mortgage data showed that in the first quarter of 2019, 72% of buy-to-let mortgage applications were made through a limited company, significantly higher than in 2016 (45%). As outlined in the Buy-to-Let Britain report, the positive news for those landlords looking to expand their portfolios is that underlying market conditions seem to be changing. Yields are climbing as rents rise faster than house prices, providing further opportunities for committed investors. Holding property in a limited company structure is increasingly popular for landlords adding to their portfolio, while many are also remortgaging to fix outgoings by taking advantage of historically low rates.

More taxing issues

In other BTL related news, a recent campaign by HM Revenue & Customs to encourage buy-to-let investors to ‘fess up’ to their unpaid tax produced over 16,000 people volunteering to repay what they owe. An analysis of HMRC data by consumer group Which? found that in 2018–19 the number of landlords AUGUST 2019

who admitted underpaying tax on their rental income rose 145% compared with the previous year. Which? outlined that landlords who voluntarily disclose unpaid tax will face penalties of up to 20% (plus tax or interest) – significantly lower than the 200% maximum fine that can be imposed after a HMRC investigation. In total, HMRC recouped £42m from the scheme in 2018–19, double the £21m recorded in 2017–18. Tax changes are here to stay for landlords. This data underlines the importance of education around tax-related issues and how beneficial seeking the right kind of professional advice is when it comes to financing and managing a range of BTL investments.

Buy-to-let debate

Habito certainly generated some interesting debate in recent weeks when it entered the mortgage lending space by launching a range of mortgages aimed at individual buyto-let landlords. This move raised questions not only over where these products sat in the highly competitive BTL arena but also in terms of how these would be advised upon and how, as a broker, it would be able to justify placing such deals through to its own lending arm. There is no doubt that this is an innovative and progressive move – something the industry is craving – but is it the right way to go? Well, this has certainly divided opinion within the industry. What I will say is – the key requirement has to be that the client gets the correct levels of advice and is matched with the best solution of its kind for them. Will this prove to be the case in this particular scenario? It’s difficult to say without knowing all the ins and outs of the proposition or the individual transaction, but what is clear is that the quality of the advice process should always remain at the heart of any such innovation.





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Review: Buy-to-let

We need to learn from other sectors I joke that I spend almost as much time searching for things of interest on Netflix than actually sitting down to view them. Although it’s fair to say that I probably do spend more time on this research process than watching terrestrial TV, a point which offers some food for thought when you consider the recent TV licensing uproar and resulting debate. Streaming services, whether in the form of box sets, films, games or music, are everywhere and monthly subscription methods are now seen by many as being the norm, especially amongst the younger genera-

Jeff Knight director of marketing, Foundation Home Loans

“As an industry we need to keep our eyes and ears open to what is happening outside our mortgage bubble” tion. Monthly payments are hardly a new phenomenon. Back in the day, people used to rent TV’s and other household appliances. Arguably the largest shift was through the introduction of mobile phone contracts, satellite TV, broadband packages and now leasing/PCP plans are widely used for a range of vehicles. As lenders we shouldn’t ignore these social shifts. The UK population is essentially renting more services than ever on a monthly basis, so its little wonder that more people are turning to the rental market when it comes to their property requirements. Of course, it’s a little more complex than this. In some regions, house price growth has resulted in property purchases being pushed from the reach of many potential buyers. Affordability is also a prominent reason why people are struggling to get onto the property ladder – maybe they have too many monthly commitments already outside of their property needs? Choice is also a consideration for




some, in terms of how little they are prepared to compromise their lifestyle in order to raise a deposit – I will refrain from any avocado or latte references. Or maybe a growing number are simply not prepared to commit to a mortgage and would rather maintain the additional flexibility attached to renting. We are in the midst of changing social demographics which stretch way beyond homeownership. People are also making new choices in terms of how they earn a living which could also impact their initial property aspirations. With a booming gig economy plus an increasing number of self-employed people and contractors – not to mention the growth in the YouTube and Instagram generation – we are seeing more people earning money in different ways, often through multiple sources. Mainstream lenders are still uneasy in dealing with irregular income, leading them to view such borrowers as a higher risk than someone on contracted hours in a ‘regular’ job. Rightly or wrongly this will impact some borrowing requirements, especially for those potential buyers who are yet to take their first steps on to the property ladder. And the fact remains that there are no quick fixes in sight for FTBs, especially when you consider how the supply of housing, let alone affordable housing, is falling way short of the required levels. Despite mortgage costs currently being low, many challenges remain for first-time buyers and for those homeowners looking to trade-up – who by not being in a position to vacate the kinds of properties demanded by FTBs only serve to generate further obstacles. We can’t ignore that homeownership has long been an aspirational concept for people in the UK but how does this now differ through the generations? A study from BLP Insurance found that appreciating value and equity build-up are the main benefits for property homeowners. That

was the view of almost half (46%) of homeowners, with this viewpoint particularly prevalent among over 55-year-olds (56%) compared with 18-34-year-olds and 35-54-yearolds (35% and 45% respectively). Other popular benefits of homeownership included inheritance and legacy for children (42%), not having to share living spaces with strangers or housemates (41%) and ownership being a reflection of ambition and success (30%). The survey, conducted online with Opinium, also revealed that nearly a fifth of homeowners (18%) considered potential rental income to be a main benefit, with a further 17% citing property ownership as a risk-averse investment. These are interesting statistics which highlight something of a generational gap in terms of the long-term value attached to property, although a decent proportion are still realising the potential benefits to future rental income. It’s prudent to point out that not everything is black and white when it comes to property ownership or renting. And the same can be said of the current buy-to-let market. As with social demographics, the BTL sector is evolving to meet the differing needs of tenants, landlords, investors, developers, potential homeowners of the future, lenders and the intermediary market. As an industry we need to keep our eyes and ears open to what is happening outside our mortgage bubble and adapt accordingly – in a responsible manner and within regulatory boundaries. Evolution also brings opportunities. The private rented sector will become an even more vital component within the overall housing market and rental demand will continue to grow accordingly. Intermediaries remain in a prime position to guide a variety of BTL clients through what remains an ever-shifting, complex but opportunity-laden sector, a factor which only bodes well for everyone in this chain. Now where’s that remote gone?

Review: Buy-to-let

The importance of choice for portfolio landlords It doesn’t surprise me to read that, for the first time, more than half of lenders are now offering limited company buy-to-let mortgages. According to a recent article in Financial Reporter, 59% of all buy-to-let lenders offered products to landlords running their buy-to-let business as a limited company in the second quarter of the year. It’s all part of a resetting of the market which has seen growing numbers of casual landlords exiting the sector and the arrival of more professional landlords who are in it for the long-term, investing in the right strategies, in the right properties, in the right areas. It’s easy to understand why more borrowers are now operating as limited companies. They’re not affected by the phased reduction in mortgage tax relief, so all interest can be offset against profits from rental income. Furthermore, applications are stress tested at an interest coverage ratio (ICR) of 125% instead of the 145% ICR most lenders apply to individual landlord applications. The rise in limited company landlords is reflected in our own research which found that 55% of landlords intend to purchase their next buyto-let property within a limited company structure (up from 53% in Q1). The figure rises to more than 70% for landlords with 11 or more properties. In this changing market, it’s crucial that landlords can explore new areas that are opening up. Here at Precise Mortgages, we’re always trying to think of new ways to help more landlords get the buy to let mortgage they need to optimise their investment opportunities. To help this growing demographic of landlords develop their buy to let business, we’ve extended our top slicing offering across our entire buy-tolet range, including limited companies, portfolio landlords, houses in

Alan Cleary managing director, Precise Mortgages

multiple occupations (HMOs), and holiday let and student let applications, as well as personal ownership landlords (first-time buyers are excluded). By making top slicing available across our entire range, we’re opening up more options to more customers, particularly those who might have been restricted by ICR requirements in the past. As long as the landlord’s rental income meets a minimum 110% of the product pay rate, landlords can now use their surplus income to demonstrate they can meet any financial stresses on their new property application, rather than through the rental income of that property alone. They can achieve this using the rental income of the property (the historical method), the rental income from their wider portfolio, their personal earned disposable income or a combination of the different methods.

We’ve also made it easier to access top slicing via our online mortgage system. At the end of the process, you’ll be shown the products and loan size available using rental income alone, as well as top slicing. With more landlords choosing to run their buy-to-let business as a limited company, it’s important that they’re given the choice to enable them to pursue their goals – a choice of products, the choice to explore new opportunities and a choice to manage their portfolio in the way they want.

“The rise in limited company landlords is reflected in our own research which found that 55% of landlords intend to purchase their next buy-to-let property within a limited company structure”




Review: Buy-to-let

Seeking alternatives As a buy-to-let and commercial specialist, TBMC deals with a wide range of different cases from landlords, from straightforward ‘vanilla’ buy-to-let applications through to fully commercial property transactions, with a whole host of scenarios that fall somewhere in between. The buy-to-let sector in particular has been subject to a significant amount of change over the last year, including tax and regulatory changes that have affected the profitability of many property investment businesses. This has resulted in landlords looking at alternative ways of making their enterprises successful.

Jane Simpson managing director, TBMC

Complex buy-to-let

At TBMC we have seen an increase in what we think of as ‘complex’ buy-to-let cases involving, for example, limited company applications, Houses in Multiple Occupation (HMOs) or Multi-Unit Blocks (MUBs). These can present opportunities for landlords to avoid the recent changes to personal buy-to-let tax relief or to generate more rental income for their properties. HMOs and MUBs have always been popular with professional landlords due to the potential for greater rental yields from multiple tenants and there is a healthy appetite from lenders for this type of business – TBMC currently has around 25 different HMO/MUB lenders on its panel. There were new HMO licencing rules introduced in October last




year and a number of other factors that intermediaries should keep in mind when dealing with this type of case. These include: the number of ASTs in place for the property; any shared facilities such as kitchen and living room; the type of tenant e.g. students or DSS tenants; the number of rooms in the property and minimum room sizes – new regulations stipulate a minimum of 6.51 square metres for an adult bedroom. All of these factors can affect the number of lender options available to a client. Similarly, for Multi-Unit Blocks, the number of individual units, unit size and the amount of letting experience a landlord has (often a minimum of two years is required) can all affect the number of lenders and products available.

Semi-commercial investments

Since the Stamp Duty hike in 2015, introducing a 3% surcharge on second homes, we have seen a growing interest from landlords in semicommercial properties. Typically, this would mean a commercial unit such as a shop with a residential component above it, which wouldn’t be subject to the stamp duty increases and could present a good investment opportunity. Factors for brokers to consider include: lenders often prefer the residential element to make up over 50% of the building; separate access to the residential unit is normally part of standard underwriting criteria; minimum square footage of

residential flats above commercial units needs to be met; and applicants should ideally have prior letting experience. TBMC has a number of specialist lenders on its main buy-to-let panel who have an appetite for semi-commercial finance, such as Interbay and Shawbrook, and an extensive list of lenders via our TBMC Commercial proposition. This type of business seems to be more common now and can be relatively straightforward to place.

Buy-to-let bridging

Buy-to-let bridging also provides a great opportunity for intermediaries to supplement their income and is currently a buoyant market in the UK. The reputation of bridging finance being punitively expensive seems to be waning with bridge-tolet, light/ heavy refurbishment and auction finance all providing useful resources for landlords looking for bargains or ways of improving the value and attractiveness of their property portfolio. Bridging can be an excellent revenue stream for brokers and also provides the opportunity to arrange the exit finance once any works have been completed. There are lenders exploring the option of a guaranteed exit onto a standard buy-to-let mortgage – a so-called bridge-to-let product – for example Precise Mortgages currently offers a bridge-to-let scheme for light refurbishment projects. This is proving popular with landlords purchasing cheaper properties in need of a bit of attention before being let out. Despite the recent contraction of the buy-to-let mortgage market for property purchases, there is still plenty of business to be written in this sector and intermediaries with the right knowledge can help their landlords to develop profitable property portfolios. Complex buy-to-let, semi-commercial properties and bridging finance are all good examples of how intermediaries willing to explore solutions beyond mainstream buy-tolet lending can offer a wider range of services to their buy-to-let clients.

Review: Remortgages

Is ‘improving’ the new moving? In 2018, those buyers making their first step onto the housing ladder accounted for the largest proportion of the market – the first time this has happened in 23 years. And with all the incentives open to first-time buyers, it is perhaps no surprise that they are still such an important part of the market. But one of the more interesting things to note in these latest figures is the huge surge in remortgaging. Remortgaging has been strong for some time now, with first-time buyers and remortgages being the dominant sections of the market. Therefore, such a large hike on last year is quite significant. And while many of these extra remortgage cases can be put down to the fact that a tranche of fixed-rate mortgages is coming to an end, so homeowners are simply remortgaging to get into another deal, I think we are also seeing a bit of a reaction to ongoing uncertainty.

John Phillips national operations director, Just Mortgages and Spicerhaart

We have been living in fairly uncertain and unpredictable political and economic times for more than three years now, and there is still no sign of what the future holds, so I think many homeowners are locking in good, low, fixed-rate deals now, to give them at least some certainty over their mortgage payments in the medium term. I also think the rise in additional borrowing is also as a result of the uncertainty. We have seen a big increase in the past few years in the number of people who are staying in their homes and improving them, rather than mobbing. So many of the remortgages may be a symptom of that shift from upsizing to improving. According to a recent Hiscox report, the number of homeowners choosing to improve their homes rather than move has risen fivefold since 2013. In the last five years, the numbers are up from 3% of households to 15% – representing

more than four million households in the UK today. UK local councils have also a rise in the number of planning permission requests made by homeowners over the last 10 years – up by 29% - with one in 30 of all homes in the UK’s ‘renovation hotspots’ - London, the South East and the South West - making a planning application last year. While for most people, the decision to improve rather than move is a personal one, there are definitely external factors playing a part, with Hiscox research finding that one in four choose to stay put because of high property prices, one in eight because of stamp duty while one in 12 said Brexit was the reason. So what needs to happen? Well, if these stats are anything to go by, house prices need to slow down, stamp duty needs to be overhauled and Brexit needs to be sorted to get the property market moving again, so I am not going to hold my breath.

Mortgage prisoners already have options Recent proposals by the FCA to relax its affordability criteria and to introduce new, ‘proportionate’ lending rules for the estimated 150,000 ‘mortgage prisoners’ currently locked into high interest deals with inactive or unregulated firms has raised important questions about the role that brokers can play in identifying and helping those affected by these issues. The proposals, which will allow borrowers who are paying high reversion rates to switch to a cheaper deal, have been warmly welcomed within the financial industry. However, the FCA has been quick to point out that any such benefits will be reliant on the willingness of mortgage providers to offer relevant products and by the ability of clients to satisfy certain criteria. The role of brokers could prove crucial to alleviating issues like these for many clients by offering a degree

of expertise and market knowhow that could illuminate new or previously unconsidered possibilities. At CLS Money, we have already urged brokers to revisit their client banks and to contact those who have previously struggled to remortgage or been ‘ineligible’ for help in the past. For those brokers who have not wished to engage with this market, there are already a wide range of specialist lending solutions that can be applied. The specialist market has built its reputation on a lending approach which is both flexible and responsive to individual circumstances. One of the reasons why the FCA’s chief executive, Andrew Bailey, has already highlighted the significant role that the sector can play in reducing the number of mortgage prisoners, particularly in ‘more complex cases’. Yet, there are also a number of lending scenarios which could be

Clayton Shipton managing director, CLS Money


considered in less obvious situations. For example, some experts have suggested that bridging could be used to fund home improvements that will potentially boost LTVs and increase the chances of a cheaper mortgage later on - an ingenious proposal. It would be easy to ignore mortgage prisoners and wait until the regulator has given a complete response to the issue before taking action. While I can understand that advisers might be wary of acting before knowing what the final pronouncement might be, there really is no reason why you cannot look at your client base and draw up a list of those who are ‘stuck’. Time then spent in talking to them about their situations and then matching them against the current crop of lenders could provide a more comprehensive list of lenders than you might expect. MORTGAGE INTRODUCER


Review: Remortgages

Remortgages are so exciting My husband is very excited this week and it’s all because of mortgages, or to be more accurate remortgages. It has finally got to that exciting time in our lives where our mortgage is up for renewal (yes, he really does love this sort of thing). In fact, when we first started looking at mortgages nearly five years ago, he even produced his very own impressive Excel calculator that worked out exactly how much we would save over the lifetime of the mortgage by making additional payments every month based on the interest rate. He is more interesting than he sounds, honestly. So, while my husband’s eyes light up at the prospect of a lower interest rate and a reduction in monthly payments, this isn’t what has interested me. Getting to the point of remortgaging has made me stop and think. Five years is a long time and a lot can change in that period. In fact, a lot has happened since we bought our first house and took out our first mortgage. For starters, two years ago we moved to a new house and took out a far larger, eye watering second mortgage. We have both had big career changes, in my case having moved companies twice and, most excitingly, we got married (just last month). All these changes have had a significant impact on our financial situation. Some positive and some painful (weddings aren’t cheap). With our first mortgage we realised we had no clue what we were doing, and we did seek the advice of a mortgage adviser. Our mortgage adviser suggested we should look at income protection, decreasing term and critical illness cover. They explained the impact of not having some form of cover in place and gave us some real-life examples of policies paying out. We agreed to getting a quote for a life policy and we were offered a decreasing term assurance policy for £5 a month. £5 is not exactly a huge amount, and it was one we could afford, but we didn’t take it. At the age of 24 the chance of me dying didn’t cross my mind and the idea of getting sick and having to



Charlotte Harrison product manager, iPipeline


take time off work seemed absurd. So why, when we bought our second house, had my mindset changed and what was the trigger that meant I finally got the necessary cover in place? Why is it that I now realise I should have listened to my mortgage adviser in the first place? Luckily for me it wasn’t a tragic event that put things into perspective, instead it was starting to work in the protection industry. It was hearing the personal stories of others and gaining a greater understanding of what protection products can really offer and the importance of getting adequate cover in place. I realise not all couples, in fact not many couples, find the remortgaging process particularly interesting, but it’s still a great moment to talk about protection. Even more so with the increase in remortgages we have seen in the last couple of years, with remortgages growing by 8.4% compared to a decrease in first-time buyer mortgages of 3.6%. Couple this with the fact that mortgage advisers are having a big impact on the protection market, making up nearly a third (31%) of iPipeline’s new business protection sales in May, and remortgages are starting to look like an opportune moment to engage with clients and ask, do you have protection? If not,

why not? If you do, is the cover still adequate? So, remortgages are not just an exciting time (for some) to find a better interest rate, they are also a great opportunity to re-raise the topic of protection. Even if some invincible know it all (i.e. me), isn’t interested the firsttime round, it’s still an opportunity to find out what’s changed in someone’s circumstances. Maybe this time they will be more open to the conversation, perhaps they’ve had kids and they have more to protect or maybe like me they’ve grown up a bit and have realised sometimes it’s just sensible to have that additional security. When I get asked about protection during the remortgage process this time around, the answer will be: “Yes, I would like to discuss my options.” After all, quite a bit has changed over recent years and it would be good to have a look at my protection policy and ensure it is still fit for purpose. Even though I work in the industry and am fully aware of the importance of keeping it up to date, I still haven’t taken the initiative to update it myself. Therefore, it’s a perfect opportunity to be asked by an adviser and go through the process of someone explaining it. For me, that’s why remortgages are exciting, they’re a moment to have a look back and work out what’s changed and even consider what’s next.

Review: Protection

Prevention over cure “Protection these days provides so much more than financial resilience, but will people ever buy insurance for the added-value wellbeing elements?” asked Roger Edwards, speaking at this year’s Protection Review conference, held in July at the Landmark Hotel in London. Income protection (IP) and critical illness (CI) policies now offer an array of added-value services such

“A delay in diagnosis and lack of support may lead to health deterioration and an increase in claimant numbers”

Kevin Carr chief executive, Protection Review and managing director of Carr Consulting & Communications

as virtual GPs, second opinion services, nurse helplines and mental health apps – not to mention healthy living reward programmes such as those offered by Vitality and British Friendly. Might these services become more important than the cover itself? Could providers and advisers ensure the products appeal

to a much wider cross-section of society if they turned the proposition on its head? According to Steve Casey, marketing director at Square Health, added-value services have the power to help take the industry into the digital world. He said: “Apps are second nature to a huge part of the population, so it makes sense to use this channel.” With 70% of the NHS budget and half of GP time consumed by people with chronic – in other words preventable – conditions such as obesity and diabetes, it pays for insurers to collaborate with specialist wellbeing service providers to support positive behaviour change and reduce claims, added Paul Nattrass, commercial director at remote GP services provider Medical Solutions. “The challenge for insurers is to deal with an ageing and ailing population with preventable diseases. A delay in diagnosis and lack of support may lead to health deterioration and an increase in claimant numbers plus dependency on insurance for longer periods. These are the challenges for insurers. The opportunities are obvious.”

Tech powering protection sales Mortgage brokers seem to be stealing a march when it comes to protection sales, increasing sales year-on-year by 102%. IFAs increased sales by 27%. Technology is a big contributing factor helping businesses reap the rewards of streamlined and cost-efficient services, according to Ian Teague, UK group managing director at iPipeline, a provider of solutions and services to the life and pensions market. iPipeline represents the source of the statistics above, which are based on new business volumes through its protection sourcing solutions for the second quarter of 2019. The proportion of life cover containing critical illness (CI) is currently 46%. Life cover benefit

amounts increased by 7% in the second quarter, while multi-benefit policies increased by 68%. iPipeline’s existing clients contributed to a 16% increase in new business, with new clients including Mortgage Advice Bureau and Primis Mortgage Network contributing to the remainder.


News in brief • Technology firm IRESS has reported an almost 45% year-onyear rise in click-through rates for IP on comparison portal The Exchange during the first six months of 2019. • Guardian now offers its life and critical illness products via the LifeQuote portal. • LV= has extended its second medical opinion service, provided by partner Square Health, to all protection policyholders who make a claim on their personal protection or business protection policy. • The “Bank of Mum and Dad” is currently the 11th largest mortgage lender in the UK, according to a study by Legal & General. • A third (33%) of people under 35 said they expect to use private healthcare or a combination of NHS and the private sector in later life, according to polling carried out for think tank the Social Market Foundation. • One in four (24%) of British people would support “data death” when they die, according to a study by life insurance broker LifeSearch, which reveals that people worry their social media and email accounts could be hacked and upset loved ones. • IP mutual British Friendly and operations management and analytics company EXL have announced plans to develop a digital life and protection platform, with a view to helping advisers to place clients on risk more efficiently. • Protection and mortgage advice firm Albany Park has partnered with life insurance advice platform Anorak Technologies to offer online protection advice through Anorak’s platform in addition to its telephone service.



Review: Protection

Building closer links A frightening thing happened in my life: my eldest son finished secondary school. As life events go, this one has made me feel quite old and what hasn’t helped is that, instead of planning his route through college and beyond, his main focus now is on getting a car when he turns 17. He’s taken a pragmatic view of the car market and knows he’s choosing from the teeny, tiny, rubber band driven end of the scale, at which there are a group of cars which, ostensibly, are exactly the same. Many of them are actually built on the same base and the only real difference is the badge and any extras. Given the identikit nature of the cars themselves, it’s the extras which are the real area of scrutiny and this leads me to my tenuous analogy to the protection market; from a customer’s point of view, one life plan looks exactly the same as the next. As scandalous as this may sound to those of you who count conditions

Phil Jeynes head of sales and marketing, UnderwriteMe

and compare definitions wordings under a microscope, critical illness policies are much of a muchness. Even advisers often struggle to justify one insurer’s plan above another, with price often the key driver. Arguably, Vitality were the first major insurer to recognise this and focus on ancillary benefits. This has led to them garnering significant market share as well as a position on the panels of virtually every major protection firm and network. While other insurers haven’t followed Vitality’s approach as wholeheartedly, we have seen most add some bells and whistles to their products, in an effort to differentiate their offering. The latest insurer to bolster their offering is LV=. Having partnered with a healthcare specialist, Square Health, LV= policyholders can now receive a second opinion when diagnosed with an illness resulting in

a claim. At worst, this would offer valuable peace of mind to someone going through a tumultuous time; at best it could mean savings lives, as was the case when AIG Life’s Vicky Churcher sought a second opinion after her CIC claim via their third party specialist, Best Doctors, which resulted in the diagnosis of an underlying health condition which could have affected multiple members of her family. As the public’s understanding of their health increases and access to information on diagnoses and treatments improves, ancillary benefits such as these will no doubt just be the beginning of a closer link between insurance and health management. It’s vital we tell people about these differentiators when they’re choosing cover, otherwise they might end up with the equivalent of go faster stripes, when climate control was available elsewhere.

A long life is not enough The concept of retirement has changed over the past decade with many people planning an active and busy retirement, whether that’s regular holidays, looking after the grandchildren more or even jumping out of planes. No longer constrained by pre conceived ideas of retirement, we can plan for any life we want after 65, as long as we are healthy enough to do it. Life expectancy is on the up. Males born between 2014-2016 can expect to live 79.5 years and for females it’s 83.1. Yet a man can expect to spend 20% of his life (16.2 years) in poor health and women 23% (19.2 years). If we retire at 65, we potentially have many years ahead of us and our challenge is to be as healthy as possible in retirement. Within insurance, more than



half of all protection policies sold in 2018 only included life cover, but over the course of someone’s working life – and therefore when they’re most likely to have a mortgage - the chances of them suffering a serious illness can be up to two and a half times higher than death. Serious illness cover provides a safety net if something goes wrong. Additionally, with one million people taking time off work for a month or longer every year due to long-term sickness or injury income protection is also there if something goes wrong. Insurance can also go beyond just covering people for the worst. Alongside providing appropriate cover, VitalityLife encourages people to take a healthier approach to their life, in turn lowering the risk of illness. Through a range of incentives and AUGUST 2019

Andy Philo director of strategic partnerships and employed distribution, Vitality

“Being physically active one to two times a week reduces the chances of death from heart disease” rewards included with their policies, they support people choosing to live a more active life. Being physically active one to two times a week reduces the chances of death from heart disease by 41% and cancer by 18%. This can be as simple as walking to a meeting or going to a yoga session. It is great news that people are living for longer and that we can make small changes to have a long and healthy life, and active retirement. But, if the worst were to happen, it’s also important that people have the right cover in place.

Review: Protection

The advisory job is difficult when it comes to children We have seen from various numbers published over the past couple of months that the protection industry is definitely on the rise. Gen Re reported a rise of around 9% of policies written compared with 2018 and Swiss Re reported an almost 12% rise the year before. These figures may not seem staggering to the casual observer but given the previous 10 years sales were pretty flat, the trend is definitely encouraging. Various commentators have aired their views on why this has been the case, but certainly the development of products to meet customer needs in the modern era is one of them. We don’t need to go too far back in history to recall a time when protection products struggled to differentiate themselves. Critical Illness products offered providers the ability to start the battle for ‘number of illnesses covered’ but the standardised ABI definitions helped to standardise that. Roll forward to today and we are beginning to see those differentiations coming back. Serious illness payments and partial pay-outs are becoming the norm from many providers and the differentiation here can be difficult for advisers to fathom. ITSystems like F&TRC, the one Paradigm offers to its brokers, can help significantly in comparing product features across all areas of protection. Ongoing developments in this system is continuing at a pace, but there are little doubt that the more diverse the offerings, the harder it becomes, and advisers need help. If we focus on one area in particular, children’s cover, that can be a minefield in itself. Firstly, some offer it as an integral part of the parent’s contract, and some offer it as an additional benefit that needs to be purchased. Ages at which pay-outs are relevant can vary depending on student status. But, why is this so important?

Mike Allison head of protection, Paradigm Mortgage Services

Its importance can be seen to be exacerbated by the fact that child cover claims are becoming a major part of claim statistics from a number of providers, often in the top five. What seemed to be at one time an ‘add-on’ to help differentiate is now impacting on profitability hence the changes implemented by some insurers to offer it separately – which in itself adds to the complexity of the adviser’s job. What’s more, when child cover started to be added to the list of potential pay-outs some time ago, arguably children didn’t always ‘need’ that level of cover. Yet, as we now are all aware, student debt is at an all-time high – not just the reported £16bn  which is loaned to around one million students in England each year, but the credit card debts that sit alongside those amounts. The value of outstanding loans at the end of March 2019 reached  £121bn, and the government forecasts the value of outstanding loans to be around £450bn (2018/19 prices) by the middle of this century. The average debt among the cohort of borrowers who finished their

courses in 2018 was £36,000. Anecdotal evidence has been provided where students not able to fulfil a year’s course through prolonged illness have still been charged their fees – now £9k per annum. So, the ‘need’ is often there where it perhaps wasn’t in the past. Clearly it is not only illness or injury to university-aged students that can impact family households. Younger children who are hospitalised for even short periods of time need looking after and this is often at the expense of the family where extended family cannot help. According to the NSPCC, 66% of boys and 40% of girls will sustain a fracture before their 15th birthday. Research by Met Life highlights the problem further. They found that more than 600,000 people suffer broken bones each year and researchers believe that boys have a 30% chance of breaking a bone before the age of 18 while girls have a nearly one in five chance. Met Life therefore has a specific plan for the purpose of covering such eventualities. Its MultiProtect insurance, available via a limited number of distributors in the UK, including Paradigm, provides important fracture cover; it also covers adults for hospital stays and can be extended to children for just £1 a month for all children in the household. Last year around one in three claims on the policy were for children and around 5,600 claims were for hospital stays. It is not the total solution for all of those younger families or university students (up to age 23 in their case) but it can provide a useful addition when recommending other policies especially where there is a huge amount of complexity involved in the detail of the mainstream policies, and given, if it is not underwritten, a case can be completed in less than five minutes. That should be something to bear in mind when going through the minefield of child cover. As mentioned, things are not getting any simpler and therefore the need for quality protection advice for all family members has never been so great.



Review: Protection

The right tools for life events Most debt problems are triggered because of unexpected events in people’s lives, according to debt charity StepChange. Most debts caused by unexpected events can be covered by, depending on the event, income protection, critical illness or life insurance, or a combination of all three. StepChange highlights the startling statistics that three million people are in problem debt in Great Britain and another 9.8 million show ‘signs of financial distress’ and most say that the main reason they got into debt was because of a life event or shock. Once debt has taken hold it’s a bit late for putting protection insurance in place. But StepChange is calling for policymakers to prioritise the issue of problems even people in work have in building up any protection against life shocks. We would wholeheartedly endorse and support StepChange in that. Clearly there is a mental resilience need – tools to help us through upsetting events – but there is also a financial one to lift at least the financial burden and the solution to that is insurance before the problems befall.

Steve Ellis head of risk and protection, Premier Choice Group

“It really is worth reviewing mortgage and protection insurance clients in the early years of their borrowing”

Medical cover extended

Life events can be anything of course and need not be medical or health ones. However, there are many health, diagnostic and operation needs that could be dealt with faster and take the stress and worry of wait out of the equation at least. Private medical insurance (PMI) can help things move along and insurers are all jockeying to fill gaps in their offering or in the case of National Friendly recently, to address calls from intermediaries as to what they would like to see. So, on its optimum in/day Patient plan it has increased the level of cover from £250,000 to £1m, and new policyholders can now opt to include an extended hospital list and for a fee this now offers hospitals in central London.


The insurer’s Out-Patient Plan now gives customers the choice of either a £2,000 or £5,000 cover limit each policy year, again for an increased premium. PMI is another highly specialised insurance sale and we’d advocate any broker take the strain out of the advice process by forming an introductory relationship with a PMI intermediary. The value of the introduction will be well appreciated if the PMI has to kick into action and


suddenly waiting lists for diagnosis, treatment, physio, hospital expenses can be dealt with leaving the individual to sort out the coping with the illness or procedure. It is especially important for self employed individuals who may not have company cover and for whom time spent not working can mean an instant drop in income.

Equity release concerns

Equity release is a specialist market but an increasingly popular route to income for many retired homeowners and is generally seen as a financial means to make adjustments to the home, pay for holidays, etc. However, it is also being used by younger, not yet retired and not yet paid off the mortgage homeowners. This is of some concern if its use in paying off mortgage debt is a ‘last resort’ rather than something planned for. SunLife looks at what people say they would use equity release for and overall using the funds for home improvements is the most popular reason, for younger equity release customers, ie those aged between 55 and 64 paying off mortgage debt is the most popular reason. While 24% take out equity release for home improvements, 14% say they would use the cash to re-

pay mortgages or secured loans, and 10% that they would take out equity release to repay other debt. Over a quarter would use the money for either holidays or a new car and approximately 10% would gift the money. In actuality, according to Equity Release Council data 69% of people aged 65+ saying home improvements is the main reason to take equity out of the house while for the 55-64 age group 76% say paying off an interest-only mortgage is the top reason. A client using equity release for paying down a mortgage they haven’t handled well, ie paid off or to get rid of debt is a worry but needs must. But what should also be considered here is whether those using equity release for other reasons are doing so without having paid off the mortgage first. Home improvements, holidays, gifting to the kids should all come way down the list and well after clearing the mortgage. Simon Stanney, equity release director at SunLife said: “Those in their 60s, 70s and 80s who are taking out equity release generally already own their own home outright, and are therefore property rich and cash poor, so it is easy to see why many will be using the values of their homes to make improvements, and help children and grandchildren move up the housing ladder rather than needing the cash to pay off mortgages. “But those in their 50s and early 60s are in quite a different position. They have not done quite so well out of the property market, many have not got to the end of their mortgage terms yet and, as the stats suggest, some of those who took out interest mortgages in the 90s are not able to pay back the debt, so are turning to equity release.” It really is worth reviewing mortgage and protection insurance clients in the early years of their borrowing to try to make sure they have payment plans in place to avoid having to pull equity out of the home just to settle debts – especially mortgage ones!

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Review: Protection

Making it personal may be the first positive step There are many things that have changed in our industry over the years, but one topic of conversation that hasn’t changed is the perennial debate with financial advisers, business owners and industry colleagues about the actions we can take to ensure that more people are protected. Whether we are talking in the context of protecting a mortgage, protecting our loved ones, protecting our health or protecting our wealth, it all boils down to the same outcome – too many people are inadequately protected and we all have a collective moral obligation, in whatever capacity we operate, to try harder and do more to address this challenge. Our industry has delivered some amazing developments for which we should feel proud - product innovation, technology enablement and improved claims management are just a few examples. We all spend an immense amount of time, money and effort in striving to deliver the best possible outcome for the customer with the ultimate goal to ensure that whatever product or service they have bought, it delivers benefit when it’s needed most. When you then take a step back and reflect on what else we could do, you realise that we have all the ingredients for success. Therefore, it must come down to how our industry and advisers use the tools, support, products and services at our disposal to create the appetite and, more importantly, the desire for the holistic and composite protection discussion to occur. Holistic is in terms of the full and rounded advice that people deserve, and composite in terms of the commercial solutions which help advisers to achieve value creation and a sustainable business model. We are fortunate to work in an industry which truly cares and continues to evolve and adapt, with advisers being the critical gatekeepers to



David Jennings business development director, Sesame Network


the intermediary market. Unfortunately, this same industry allows the customer to continue to think that it will never happen to them or, as is often the case, simply not placing enough emphasis on sorting their protection needs now, rather than leaving it until tomorrow when it could be too late. So for those advisers who have dabbled with this dilemma in the past, but now want to take firm action and do something about it, what are some of the practical steps they can take? Talking about protection for life and death issues is emotive and it’s something that most people would prefer to avoid, so my suggestion for advisers is to personalise it by first looking at your own situation and circumstances. Are you and your loved ones adequately protected? If not, review your situation immediately – for two reasons. First, because you owe it to yourself and the people you care about most. Second, going through the protection journey yourself will make it easier to then share your experiences with customers, col-

leagues and quite frankly, anyone who will listen. After all, who’s a better advocate for our industry than ourselves? We are the people who live and breathe financial advice every day and we should feel justly proud about our ability to transform people’s lives. If you’re a financial adviser then you must do what’s right for your customers – and your business – and that means having a genuine protection conversation in every single customer engagement. If you’re unable to undertake this conversation yourself with a customer – perhaps due to a lack of time and capacity in your business or knowledge and confidence in selling the products – then you can reach out to providers and colleagues for support or you could consider referring your client on to another financial adviser who you trust. This will allow you to still play an important role in supporting every customer and ensuring they receive the full professional advice that they need and deserve. As individuals we each have a choice to make, which is why I urge every adviser to take the necessary steps to ensure that every customer’s financial wellbeing and needs are protected. It’s your moral obligation and it will ensure a lasting legacy for all concerned.

Review: General Insurance

Take these steps to select the right GI panel General insurance (GI) is a great source of recurring income for your business, or at least it should be. But there’s more than one way to work with GI providers, from engaging directly with an insurer, to panel providers, or whole of market. So, what are the various options? What are the pros and cons? And what pitfalls do you need to be aware of?

Working with one insurer

You can work directly one insurer, which may enable a really good, close working relationship. However, one insurer means one risk appetite, so if your client doesn’t fit – no quote, which isn’t a great experience. Also, insurers change their risk appetite, so renewing that client’s policy may not be as straightforward as you’d think.

Work with multiple insurers

Creating your own panel of insurers might be attractive – you may already do this for protection. Multiple risk appetites and a bit of competition for your client’s policy means you’re much more likely to get a quote and at a good price. The downside? The first problem may be building a panel – do you do enough GI to get enough insurers interested? If you do, great, but you will have to manage multiple relationships, monitor and review performance as well as ensure you know the different sets of policy wording, terms and conditions and keep up to date with any changes insurers make. That’s difficult to do without investing lots of time and resource.

Whole of market

There are multiple GI options, so why not use them all? Work with some insurers, a few panels, maybe some specialist or non-standard providers as well? This is exactly as confusing and difficult as it sounds. Happily, there are some firms that will do it for you. They run a panel

Rob Evans CEO, Paymentshield

of multiple insurers and insurance brokers where commonly each provider covers one type or area of risk. By having lots of providers and policies almost all of your clients will be able to get cover. You still have to make sure you recommend the right policy. You will have to understand all of the details for up to 15 GI policies, so the compliance and efficiency challenges remain.

Working with a GI platform provider with a panel of insurers

An alternative is working with a specialist GI platform provider that runs a panel of insurers. Providers like Paymentshield will develop a 5-star Defaqto product, as well as the terms and conditions, and then find insurers who have to sign up to the common policy wording. Designed correctly, that one policy will cover the needs of 98/99% of your clients. For you, this means the simplicity of knowing one set of policy wording as well as one quote and application process to access multiple insurers. You can manage your whole GI book using only one system, which will give you the latest on status on quotes, pending policies, renewals and all of the real-time, personalised information that you need to make a difference to your business performance. For your client, they are almost guaranteed to get a quote and will have multiple insurers competing for their custom, meaning a better price. At renewal, good GI platforms will make sure insurers don’t raise prices too much or, if they do, the platform will search their panel to find your client the best price possible.

Working with a panel of platforms

So, if working with a GI platform is more efficient and effective way of managing your GI business, then surely working with a number of different panels will multiply the benefits? I would argue not. In

fact, it is almost replicating the aggregator model. Price becomes the dominant factor, devaluing product cover, adviser knowledge, customer and claims experience and with low initial prices to win business will inevitably come steep increases at renewal, impacting on retention and recurring commission.

Size matters

A well-managed panel ensures that the blend of insurers provide maximum coverage. Too few insurers and you won’t get good quotability, but you are also at a much greater risk of the impact of an insurer withdrawing or changing risk appetite. Additionally a good panel needs overlapping risk appetites which creates healthy price competition. A panel should be large enough that is able to offer competitively priced cover for your clients no matter where they live, whether they have made a claim before, or if they have any unusual circumstances. At the same time, too many insurers on a panel means there may not be enough business to go around and so it may be hard to get good insurers interested. In my view, five insurers are too few and 10 is too many. Between seven and nine is the sweet spot. But it isn’t just about the number of insurers on a panel, it is also about the quality. The insurers are still responsible for paying claims, and so it is vital that panel provider has a rigorous due diligence and selection process for the insurers includes on the panel. Whatever your situation, the most important thing is that you’re having a conversation about general insurance with your clients. If what you currently do isn’t working, then ask yourself why and reach out for help. Even if your network decides on your GI provider, you can still influence how it works by engaging with your business development manager and giving feedback as ultimately, your network wants you to work as effectively as possible. If you successfully integrate GI into your business so you’re having a conversation with every mortgage client, it will benefit your business and your clients.



Review: General Insurance

The best defence is careful due diligence As reported by Mortgage Introducer in July, the government is appealing against a ruling by the High Court earlier this year that the Right to Rent scheme breaches human rights law because it causes racial discrimination. The ruling came following a judicial review of the policy secured by the Joint Council for the Welfare of Immigrants (JCWI) and supported by the Residential Landlords Association (RLA). The judge concluded that discrimination by landlords was taking place because of the scheme. Under the Right to Rent policy, private landlords face potential imprisonment of up to five years if they know or have “reasonable cause to believe” that the property they are letting is occupied by someone who doesn’t have the right to rent in the UK. The type of tenant is one of the main underwriting criteria on a Landlord’s insurance policy. Insurers only accept certain tenancy types

Geoff Hall chairman, Berkeley Alexander

IPT – grossly unfair HMRC has been seeking views on how to make the collection of Insurance Premium Tax (IPT) fairer and the consultation with the insurance industry closed on 17 July. We eagerly await the findings. IPT unfairly penalises those who want to protect themselves and their property – by imposing the tax in the first instance, the government has effectively deemed insurance to be a luxury purchase rather than an essential buy. Surely insuring your home and contents should be regarded as an essential, as should protecting your income if you are unable to work – think of the burden that would fall onto the state if no-one insured their property/income. Having said that, IPT is here to stay and likely to rise to the same level as VAT at some stage in the future. There has been a call from some quarters to change IPT to VAT. That would allow VAT registered businesses to claim that tax back, but it would cost the government significantly, so that’s unlikely to happen.




(working person/family, benefit assisted, students, etc) so if an insurance policy is in force on a property occupied by someone not entitled to be in the UK, as by default that person is not working legally in the UK or entitled to receive benefits or be a student, the landlord will not have told the truth to his insurer. That would mean the policy would be invalidated in the event of a claim, even if the claim were a valid one. David Smith, policy director for the RLA, was quoted as saying that, “The Right to Rent scheme…has created a great deal of anxiety for landlords who do not want to go to prison for getting it wrong.” Whilst an insurance policy can provide some level of reassurance for innocent landlords who might fall foul of this policy, clearly the first line of defence should be careful due diligence and checks at the point of tenancy application. Landlords currently aren’t required to do credit checks, and nor should they be held responsible for policing the rights of the individual to be living in the UK, but most responsible landlords and letting agents will do these as part of good business practice.

It’s a people thing… We live in a world where technology is making new advancements every day to make our lives easier and our businesses run more efficiently. It is of course important to embrace change and be open to new and better ways of working, but let’s not lose sight of the fact that good old fashioned values still matter. Broking is and always will be a people business and it would be fatal to forget that. Ultimately people do business with people they like and trust, especially in our industry. The machines facilitate transactions, and may offer attractive top line incentives, but human relationships are the glue that binds business together. You should look to partner with and build relationships with consistently well-run businesses. Aside from financial success, a good indicator of that, I believe, is the people – from the senior management team through to the staff at the front end. Look at the attitude of the senior management team – are they people who give a consistent message and people you can trust. What is the firm’s retention record like - does it retain, and more importantly hold on to its talent? If it attracts and retains its staff, then that’s a clear indication of the quality of its management and that it is a well-run business. Technology will increasingly play an important role in broking, as it will in every other sector of business and society, but in good times and bad it is those we trust and have built long term relationships with that we turn to. Humans have evolved to trust their ‘gut’ when it comes to making friends and personal alliances and there’s a lot to be said for ‘gut feeling’ in business too – we don’t partner with companies; we partner with people.

Review: General Insurance

The dual pricing paradox Over the last few months we’ve seen pressure mounting on the FCA to take action on dual pricing. In June it appeared the FCA was indeed strengthening its stance to tackle dual pricing with a suggestion of measures such as fines from the Competition & Markets Authority (CMA). However, others have warned that by axing dual pricing home insurance premiums could rise by 22%. So it appears we have a bit of a paradox on our hands. Analysts from JP Morgan have said if the FCA demands insurers offer the same price to all, then firms would ‘clearly be loss-making’ unless they hiked premiums for new customers. They suggested the FCA could take less dramatic actions such as capping prices, increased premium transparency, and enforcing CSuite level accountability for pricing practices. Whilst I am all in favour of the regulator jumping in to sort out aggressive dual pricing tactics once and for all, I think measures such as price capping and the like are so full of conflicts as to make them difficult to both implement and manage. I

Paul Thompson founder and CEO, Cavere Intermediary

don’t think the regulator would be keen to get involved to such a degree, and I don’t think it would be helpful in the long run, either for insurers or customers. I do however agree with JP Morgan’s prediction about premium increases. It is a mistake to believe that an intervention from the regulator will result in lower premiums for consumers. Instead we will see fewer cheap deals and introductory offers available, and prices are more likely to rise towards the highest premiums rather than the highest coming down to the lowest (the age discrimination act in car insurance is an example of this - female drivers now pay more rather than the male drivers paying less). So what does this mean for brokers and advisors? My belief is that a crack-down on dual pricing will create a greater opportunity for intermediaries to compete more equitably on price. Realistic pricing of risk will drive an end to premium fluctuation, drive down focus on price, and drive up the customers’ need for trusted advice. An advisor or broker who can

get their customers the right cover at the right price from the outset, so the premium doesn’t go up or even reduces at renewal will be valued.

“Realistic pricing of risk will drive an end to premium fluctuation, drive down focus on price and drive up the customers need for trusted advice” The next few months will no doubt see the pricing practices of insurers come under even closer scrutiny so intermediaries need to get prepared. Make sure you are working with a GI provider who has good relationships with insurers that have a comprehensive and documented fair pricing strategy, as well as those who offer the flexibility to consider special circumstances within their pricing strategies.

Time to brush up on your communication skills New research has revealed that the insurance industry is lagging behind when it comes to effective customer communication. This comes as no surprise quite frankly. The cyclical nature of insurance means that traditionally communication with customers has been limited. It can be argued this isn’t solely the fault of insurers but also the fact that customers rarely think about their insurance arrangements until they need to – at renewal or if they need to make a claim. It is my belief that impersonal relationships have a consequence, especially for intermediaries. Customers today are willing to build long-term relationships with their brokers/advisors and improving the

effectiveness of your communications can reduce churn rate and build the loyalty that you need. As Steve Jobs once said “Get closer than ever to your customers. So close that you tell them what they need well before they realise it themselves”. Cavere’s tech driven approach means that we deliver intermediaries with real time customer dynamics such as notifications of customer activity, cancellations, failed direct debits, cancelled mandates, etc. Using such data enables intermediaries to foster proactive engagement throughout the lifecycle of the policy rather than just at renewal. But the impact of embracing technology to bridge the customer communication

gap goes far wider than just a contract of insurance. The ability to make contact with your customers on a regular basis opens the door to value driven conversations. If you are speaking to your customers more regularly you will be more in tune with their needs across your entire range of offerings, whether that be upcoming mortgage requirements, changes in circumstances that require mid-term adjustments to life insurance or critical illness cover and so on. Done right, GI is a great door opener from which to build a more holistic view of the customer, communicate with them more regularly, and build deeper relationships.




Review: Equity Release

Property wealth can offer certainty Looking back with rose-tinted glasses always obscures the reality. While many of today’s over-55s have benefited from home ownership, stable jobs and secure pensions, that was not the case for everyone. Women have typically spent less time in the workplace and accumulated smaller pension pots as a result. Additionally, a more recent rise in single-person households has also left some with depressed retirement incomes. However, lifetime mortgages can offer those over 55s the flexibility and certainty they need to improve their financial wellbeing in retirement. More than four years ago, a change to tax rules gave people greater access to their pensions. But this increased freedom has had some unintended consequences. This year’s tax receipts have been much higher than expected, as more than one million over 55s collectively withdrew over £23bn from their pensions. Consequently, for those using their pension pots like ATMs, their increased tax bills risk depleting their pensions. For women, this reality appears even more stark when many have to contend with a significant pay gap. By April 2018, a UK Parliamentary briefing paper put the gap at 8.6% for full-time employees, leaving women’s pension pots considerably smaller on average. And when factoring in the higher proportion of part-time working women compared to men, even more women’s pensions will be stretched. Women’s life expectancies may see additional stress put on pension pots and for some this might mean they run dry. In the UK, females are expected to live more than two years longer than men at aged 65. For those women that don’t carefully plan their financial future, they risk more than just their income in retirement, but with it the chance to lead healthy, fulfilling lives.



Alice Watson head of marketing and communications, Canada Life Home Finance

Positively, recent data suggests that women are starting to recognise how their home can play a key role in holistic financial planning. More than twice the number of women living alone took out their own single plans in 2018 compared to men. But more can always be done. Whether women live with their partner or on their own, they can benefit from unlocking the equity stored in their home. They can then use this wealth in a variety of ways, from home renovations to supplementing retirement income, and much else besides. The rise in the number of singleperson households is also noteworthy. More than one in four households are now occupied by a single person, many of whom are women.

The age group where sole occupation is highest is for those aged over 45, so the industry can expect to deal with more single-person households as they reach equity release age. And given their different circumstances, providers should continue to ensure that these customers are afforded the same choice and security as more traditional lifetime mortgage customers. What gives me confidence that the equity release industry will achieve just that, is the constant product innovation and growing customer base. It’s clear that people are becoming increasingly open to drawing on their property wealth. So long as we continue to keep the customer front of mind in all that we do, the equity release market will continue to grow.

“Lifetime mortgages can offer those over 55s the flexibility and certainty they need to improve their financial wellbeing in retirement”


Review: Equity Release

Middle aged mortgage concerns are an opportunity If you were looking for your first home in the 1990s, the range of mortgages available would have looked radically different. Those first-time buyers are now firmly planted in middle age and have a completely different set of challenges when it comes to housing, mortgages and their families. A study into the happiness of people across different age groups identified that people in middle age are often the most anxious and unhappy people in the population. Those aged 45 to 59 reported the lowest levels of life satisfaction, with men on average less satisfied than women. Researchers said one possible reason for the lower well-being scores among this age group might be the burden of having to care for children and elderly parents at the same time. The changes to the economy and lifestyle trends has had a significant impact on this group in the UK.

Support for children

The ‘Bank of Mum and Dad’ has been an increasingly influential lender in the UK housing market. In 2018, it was the equivalent of a £5.7bn mortgage lender. Research suggests that it is supporting more people than ever before. Some 27% of all buyers received help from friends or family in 2018 which is up from 25% the previous year. This accounted for the purchase of nearly 317,000 homes. Estimates suggest that one in four housing transactions in the UK are dependent on support from parents who are helping their children with a deposit. However, if the squeezed middle continues to find it tough financially then this source of investment could dry up and that would be an issue for the first-time buyer market.

Retirement expectations

Those approaching retirement and retirees have very different views about their lifestyle and

Anita Arch head of mortgage sales, Saffron Building Society

tions have certainly changed over time. Retirement plans may have once extended to spending time at the allotment or a round of golf. However, those approaching the last third of their lives hatch plans that were unimaginable to their parents and grandparents, and there is a desire for much more. People stay healthier and more active for longer, they want to travel and even continue work in a part-time capacity. This gives them different aspirations and options. The over-65s are set to account for a quarter of the UK’s population within the next 25 years. Currently, 6.5 million households in England are headed by someone aged 65 and over.

Working longer

As the population ages, so will the UK workforce. A report from the government which looked at the ‘Future of an Ageing Population’ claimed that the productivity and economic success of the UK will be increasingly tied to that of older workers. Their conclusion is that enabling people to work for longer will help society to support growing numbers of dependents, while providing individuals with the financial and mental resources needed for living longer. The report concludes that to maintain the nation’s economic wellbeing, it will be critical to support fuller and longer working lives, removing barriers to remaining in work, and enabling workers to adapt to new technologies. Those in the middle of their lives can expect to remain in work for longer in a more flexible workforce

At Saffron Building Society, our conversations with customers have shown that many want to be able to efficiently support their families financially in the early years of home ownership. However, rather than just simply gifting their children and grandchildren the money, they want to lend it with a view to being able to have the money returned years later. These funds are often needed for retirement and may also be earmarked for care costs for elderly relatives. Customers often want this to be an easy to use facility where the lender manages the process rather than having to draw up legal agreements.

“The needs of the middle aged are very different when it comes to housing and there is a responsibility, and a large opportunity, to help this segment of the mortgage market”

Mortgages for the middle aged

The needs of the middle aged are very different when it comes to housing and there is a responsibility, and a large opportunity, to help this segment of the mortgage market. We have seen two distinct trends emerging. AUGUST 2019

The second trend we are seeing is for lending into retirement. When people have so much equity in their property they are looking to release this value to support their lifestyle, retirement or family members. This is not just a call for equity release although that is clearly one of the options. The difference is that the mortgage might work on an interest only basis with a view to downsizing your property to pay off your loan after you are semi-retired or have stopped working altogether. We have developed specific products to help customers. For brokers, I think there will be a large and growing opportunity as it’s not uncommon for people with these needs to have complex circumstances. The expertise a broker can bring is critical and highly valued by potential customers. In the future, we expect this sector of the market to grow. MORTGAGE INTRODUCER


Review: Equity Release

RIO has flattered to deceive Recently, I was asked – by this very publication in fact – how I viewed the later life lending market, how it had developed and what the future might be for it. My own take is that the sector is something akin to a ‘gangly teenager’ – it’s definitely way beyond a child, but perhaps has a little way to go to reach adulthood. We will, of course, get there but despite some very notable and noticeable growth spurts in recent years, there is a little way to go before we might say it has fully matured. And that seems to me an important distinction to make because while those growth spurts have been meaningful and have elevated the sector to a new-found purpose and place in the public consciousness, we cannot truly say there won’t be continued issues to overcome. As you grow up, you learn more about yourself and the world you inhabit, and some of the choices you make in those teenage years might well be mistakes, but it’s important that you make them. How else will we learn? The market however will learn and develop fast, and that’s why it’s so important for advisers to ensure they get to grips with it, that they can understand where it’s been and where it’s heading, and they do not lose track of that teenager. I’m thinking specifically about the language teenagers use, the products and services they want, and the way they are accessed. That world can seem completely alien to those not immersed in it, and there does need to be a commitment made by advisers to ensure this particular sector doesn’t get away from them. It’s not a difficult ask but it requires resource and investment, and it may well require advisers tapping into the type of proposition we deliver, to ensure they make the most of the opportunity. However, back to the gangly teenager and the mistakes it is likely to make. One area in which we are feeling our way through is undoubtedly the Retirement Interest-Only sector,



Stuart Wilson group chief executive, Answers in Retirement


where it fits, where it doesn’t, why has take-up been so low, and what can we do to ensure it plays a full and safe part in the later life lending offering? There’s no denying that RIO has flattered to deceive, and much of this is down to the compliance uncertainty that has been engendered by the product’s place in the regulatory structure. Putting it within the mainstream ‘silo’ has ultimately proved to be a poor decision – it has ended up falling between two stools because mainstream mortgage brokers, despite the fact they can advise on it, are (quite rightly in my view) scared of the potential ramifications for their clients and their business. This is because, by not having their equity release authorisations and qualifications, they can only hope to offer up one specific product option to older clients, which means they are missing out on a big part of the market, which might ultimately be more suitable for their customer. The danger of course is obvious in opting to do this – and, to be fair to the vast majority of RIO lenders, they recognise this danger too and won’t allow non-equity release-qualified advisers to sell RIOs. In a very true way, the market (for the most part) has brought in its own solution

to a problem contrived by the regulator’s approach. It goes without saying that until this issue is solved – and it may well need the FCA to relook at its rules in this area – we are going to have a subdued RIO sector. Let’s also not forget how such a situation spooks the networks – historically they have not been enamoured of the compliance risk they perceive to be greater within the equity release market, and now they too are worried about their mainstream mortgage AR firms straying into RIO and becoming a real complaint driver. In a very true sense, this is a not a level-playing field and while the regulator may need to act, we also have to be careful about what it does when it acts. We clearly do not want the regulator gold-plating the entire later life lending market, neither do we want it throwing the baby out with the bath water, when it comes to how it addresses these issues. Indeed, we may actually be better with an industry-led solution, as we sort of have now, but we would also need every single RIO lender and practitioner to agree to operate by the same ‘rules’ otherwise this problem is only going to persist. From a network point of view, there is still a reticence about the later life market, particularly equity release, but this isn’t going to stop the demand for such products growing, and it’s also not going to stop AR firms’ clients coming to them for such advice and those very same AR firms wanting to service them. In that sense, the networks may well have to bite the bullet and, for those who feel they can’t make it work themselves, then why not look at the ‘later life lending in box’-type proposition that we are able to offer. It works, it covers their risk, and it ensures they are looking both ways when weighing up client need with compliance. Overall, we’re in a very healthy spot as a sector. We’re still at the start of our life with much to look forward to, however there will be bumps in the road and obstacles to overcome. Luckily, we’re all going to have plenty of support to help us on the journey.

Review: Surveying

It’s not just Persimmon – it’s our fault too The Dispatches programme highlighting the plight of the people unfortunate enough to own a Persimmon new home last month wasn’t pretty and of course it didn’t go far enough. Over in the Surveyor Hub, the community I host for residential surveyors and valuers, we had a running commentary going whilst the programme was on (followed by the £1 house programme which on a Tuesday night is a much watch TV night for surveyors!) Many won’t dispute the state of the new home industry being a national disgrace. Good people, saving hard to own their own home left with terrible results and emotional turmoil. You may remember your first home. Maybe it was a new build like many of us. Nearly 20 years ago, I purchased a brand new flat in Surrey. I worked for the developer at the time, Laing Homes, and even though there were a few minor issues on the whole it was good. You would think it had to be with me working for the developer, but they messed up in other areas, don’t worry. New home purchasers are vulnerable even if they do not claim to be because they are not experts in our industry. They have a blinkered view of the world as their goal is typically to get into the property before Christmas, before their wedding or before their child is born and they seek our advice and guidance in whichever sector we sit. Therefore, we are the responsible adult and professional in the relationship with our customers and any court would see the same. For years, corporate social responsibility (CSR) has been seen by many businesses as nothing more than going paperless, holding charity fundraisers and reducing mileage. And yet CSR is really about ensuring companies conduct their businesses ethically and not just what they do, but who they work and associate with. And this was very well demonstrated by the Brightstar’s action over the advert and culture at BridgeCrowd, a P2P secured

Marion Ellis managing director, BlueBox Partners

ing lender based in Manchester. For RICS surveyors there is an additional layer of professional obligation under our code of ethics. How we operate as companies matters to consumers, customers, clients and employees, colleague’s past, present and future. The world is changing as we have a more socially accountable society. And it’s catching up with those in the business of buying and selling homes – not just new build. Because for a purchaser to get into a position where they occupy a new home which is defective, is not just due to the incompetence of the builder. It’s our fault too. Selling agents and the developers will have marketed the properties, often as a luxury product, free from defect and a stress-free move. Misselling? There are regulations around that, perhaps the Property Ombudsman et al could take a closer look. Conveyancers providing legal advice are not insisting the purchaser inspects the property before exchange to check they are satisfied (yes, they are allowed to do that and absolutely should). Allowing terms which suit the developer’s annual targets and do not protect the customers interests or recognise their vulnerability. That’s not truly being customer focussed is it? And yet many law firms quite happily enter awards telling the world how the customer is at the heart of everything they do, so long as the ‘process’ is clean and simple. Surveyors often do not get a lookin until after completion, but valuers are inspecting sites or valuing off plan on behalf of lenders – could there be more due diligence? The reputation and marketing of a new build development is often a consideration and so a poor reputation on the quality of the build should be a red flag for any valuer, surveyor or lender. Ultimately a lender wants to know the property is worth the purchase price and will continue to be so. A poorly built property will not retain its value until the repairs are fixed and the stigma has passed and that could be some time.

Snagging surveyors and inspectors are often seen as the solution but in reality, it is complex and very stressful, to resolve defects after owner occupation. These inspections should be carried out before exchange and during construction. Except isn’t that what the likes of NHBC do? At least in part and importantly what the purchaser perceives they do - new build warranties

“The reputation and marketing of a new build development is often a consideration and so a poor reputation on the quality of the build should be a red flag”


and guarantees to ‘fix everything’ (more incorrect information?). Supervision during construction is often poor and the situation will only get worse due to the shortage of building control inspectors because of lack of PII cover post Grenfell. And then there are the developers themselves, often poorly managed despite the bonuses and they do have a genuine issue – an onsite skills shortage which will only get worse. The upshot is, if we know new homes are of poor quality, we are all compliant in facilitating the purchase of these defective properties by vulnerable people. As industry professionals, qualified or not, we know better. The way to improve it isn’t to add more to the process, introduce better technology or penalties. Neither is it to build everything offsite. It’s to start acting ethically, stop going for the quick buck, and start really caring about the purpose of the work we do, helping people in their lives. Any one of the professionals, experts and advisors involved has the ability to say no, this is just not good enough for consumers. MORTGAGE INTRODUCER


Review: Conveyancing

Honesty remains the best policy for conveyancers Research by the property data company, Search Acumen, has revealed that conveyancing transaction volumes fell by 4% in the first three months of this year on figures for the previous quarter and by 6% on an annual basis, with completion rates within the industry reportedly growing by a mere 4% over the past two years. Moreover, as flat paced market conditions and a corresponding decline in consumer demand continues to stimulate fierce competition within the sector, the company’s latest Conveyancing Market Tracker report has also highlighted the growing trend towards consolidation at the upper reaches of the market, with larger firms sourcing their custom at the expense of smaller, or more localised, firms. Indeed, Search Acumen have confirmed that the number of active conveyancing practices in England and Wales has fallen markedly over the past few years, with 369 reported closures in the months between January and March alone. That leaves 3,961 remaining practices in total- a 9% fall on comparable figures for 2014 and the lowest recorded figures since the Land Registry began publishing its data. Yet, as intensifying competition and the rise of online conveyancing platforms continues to engender a shift towards cut-price business strategies and bargain basement package deals, so too are service levels within the industry coming under widening scrutiny, with the issue of poor or slow conveyancing services (in particular) being repeatedly highlighted as one of the reasons for increases in property fall-throughs. For example, recent research by the online conveyancing platform, When You Move, has revealed that a jaw-dropping 36% of surveyed property customers pinpointed the service they had received from their conveyancer as the most ‘dissatisfying’ part of the transaction process,



David Gilman partner in charge, Blacks Connect


with 21% saying that they would never use the same solicitor again. Moreover, some property consumers were found to have experienced average service delays of seven to eight weeks as a result of absentee conveyancers, with one in four found to be away from their office at crucial periods of a transaction and 27% of clients left in the dark as to a possible return date- a grim statistic. But, perhaps the most damaging issue to the reputation of conveyancers in recent times has been highlighted by a Solicitors Regulation Authority report into the provision of leasehold information, with some 23% of firms found to have neglected explaining the difference between leasehold and freehold property’s to their clients and around 20% (or 1 in 5) of leasehold buyers found to have received little or no information from their solicitor as to the length of leases or the cost of associated fees - a failure, in other words, to provide the most fundamental levels of advice to prospective buyers and to prejudice an ability to make fully informed decisions. Indeed, the report has revealed that some firms had blithely assumed that clients already knew about leasehold issues or had been informed in advance by their estate agents- a scarcely credible state of affairs. Yet, quite apart from the obvious criticisms which these findings raise, they also help to convey a sense of ‘crisis’ in the ability of conveyancing firms to offer acceptable levels of service to their clients and to underscore the work that solicitors perform as an impediment to timely property completions- a public relations disaster. However, there is also a strong argument to suggest that many conveyancers are being unduly criticised for delays or holdups which are ultimately beyond their control and are as much a victim of inherent procedural problems

or deficiencies as their clients. For example, the government guideline for local authority property searches is currently set at 10 working days, yet research conducted by Move IQ has established that many authorities are simply unable to meet this deadline, with some councils taking up to 25, 44 or even 95 days to respond! Moreover, once we factor in the usual conveyancing checklist of forms, examinations, surveys, restrictions, consents, enquiries and drafts (etc, etc), as well as the blood curdling possibility of a breakdown in a property chain or the inevitable hold-ups in corresponding party paperwork, we can see that the time-consuming, laborious and (frankly) archaic context of property transferal in this country is central to an understanding as to the possibility of delays. Of course, blockchain technologies and third party search providers can be useful in speeding up aspects of this process and of minimising unnecessary delays. However, the high costs needed to implement options such as these may be prohibitive for many firms (especially those at the lower end of the scale), while a single handed reliance on technology in and of itself could be seen as playing into the hands of organised criminals or online fraudsters. By the same token, a reliance on cost cutting and low-price deals (a race to the bottom if ever there was) runs the risk of compromising service standards and of exacerbating existing problems within the industry. Which means that a greater emphasis on transparency and the information that solicitor’s pass to their clients should be considered as paramount: engendering a service which is based on the (sometimes unpalatable) realities of conveyancing as opposed to a ‘bargain’ model which highlights economy over quality. Indeed, at a time of sluggish market activity and heightened competition, honesty may very well be the best policy for conveyancers to pursue if they wish to avert a genuine crisis of confidence in their services as well as a reminder that sometimes the simplest solutions can be the most effective.

Review: Conveyancing 

Don’t waste your opportunities For all the glorious benefits that better technology has brought us within the mortgage and housing markets, it seems somewhat ironic that – for many people – the conveyancing process still appears to take as long as it ever did to complete; indeed, there is some evidence to suggest it actually takes longer. We speak to lots of estate agents and mortgage advisers and there is a level of frustration with the process that doesn’t appear to ever go away. Clearly, these are firms and individuals using our services, using the high-volume specialist conveyancing firms that we offer and getting significant benefit from that. However, as the old saying goes, ‘It takes two to tango’, and while you may be recommending clients go with volume operators that can turn around cases as quickly as possible, there’s no guarantee that the other side of the transaction is. Indeed, when it comes to a whole chain of house sales, the quickest the link of that chain is going to move is the speed of the very slowest conveyancer acting for others. That can be incredibly slow if, for example, the firm’s conveyancer works three times a week, is on holiday, has prioritised other cases, doesn’t have the necessary expertise or resources to be able to deliver quickly, etc. These are very real concerns for every stakeholder, not least the conveyancers themselves who can be tarred with the same brush as others not working to the same capacity or with the same skill. This is a fundamental part that is often overlooked – conveyancing is still very much a cottage industry. Of course, over the past five to 10 years, we’ve seen a great deal of consolidation in the market, and the larger operators are taking an even bigger share of business levels, but this doesn’t stop many thousands of solicitors/conveyancers completing cases every single year. And that can cause issues with the speed at which cases can be dealt with and moved over the finish line.

Mark Snape managing director, Broker Conveyancing

Of course, the other frustrations with conveyancing are not so much in terms of the firms completing the work, but the process they have to work through. Again, while technology has helped in some regards, when it comes to ‘keeping up with the Jones’, I might suggest that conveyancing has been seen as something of a poor relation. Indeed, if you are a millennial coming to the house purchase process, after years of being able to complete so many of your everyday tasks – banking, shopping, saving, etc – on your phone, then you’re likely to be shocked at what is achievable and how we are still very much paper-based or reliant on

“Delays are going to occur for all manner of reasons, but in some very clear areas, everything can be sped up” wet signatures or insisting on faceto-face meetings or waiting weeks for the relevant documentation that is required to move a sale forward. At the moment, this is not a sector overly reliant on tech, although I think we all feel this is slowly but surely changing. Much of this can of course be placed firmly at the door of the government, and the legal sector in general. No-one likes to mention (HIPs) these days, but they were designed to collate information upfront on a property allowing the process to move much more quickly. The fact they ended up not delivering on this, and were watered down considerably, does not really mean it was a bad idea; although we’re never going to see anything called a HIP again, we are likely to see a property log book in the future which sits in place, where every home has one, and which are updated continuously, not simply at the point of sale which could be many years away. AUGUST 2019

That’s clearly going to be of benefit, and it will be held online/in the cloud allowing easy access. Then we’ll have much more focus on digital ID verification – the bane of many clients’ lives who appear to need their ID verified by every single player in the process, be they adviser, agent, lender, solicitor, etc. Having one entity that verifies ID up front, and which can then be relied upon by every party is going to cut out a considerable amount of time from the process. And, again, if we can utilise the tech, and if Land Registry can take on more of the responsibility here, then we should be able to move away from a continued reliance on paper-based documents being sent to clients, which at the moment simply involve everyone waiting weeks for them to be reviewed and signed and verified. Don’t get me wrong, delays can be down to a client but there are clearly opportunities here to tighten up and to set an expectation of a much quicker response time from all parties. We know the whole conveyancing process can be complicated, and that becomes even more of an issue when your client is within a large chain that all needs to be completed at exactly the same time. Delays are going to occur for all manner of reasons, but in some very clear areas, everything can be sped up. For advisers, I tend to think that the most important decision is the conveyancing recommendation – get that right for your client and you’re halfway there in terms of what they are responsible for, and what they can deliver. Unfortunately, there are plenty of others who might well scupper such plans, but ensuring your recommendation is taken, at the very least, means you are looking after your client’s needs, doing right by them, and ultimately giving them the best chance of completing on time. It could be your best chance of influencing what happens next. MORTGAGE INTRODUCER


Review: Technology

Perspective is needed on technological change In 2016, Professor Klaus Schwab, founder and executive chairman of the World Economic Forum, published a book called ‘The Fourth Industrial Revolution’. While previous industrial revolutions replaced animal labour with machinery, developed mass production and made personal computing accessible to billions around the world, Schwab argues the latest round of technological development is different. Digital networks, artificial intelligence, machine learning, wearable technology, mobile and the cloud have combined to create an environment in which technological evolution is becoming cognitive and social in nature. In the three years that have passed since the book was published, driverless cars, surgeonless operations and Amazon’s Alexa have reached market. It’s therefore understandable that fear of machines replacing humans across all employment sectors, is growing. It’s important, however, that we put this rapid technological advancement into perspective. Employment in the UK is at its lowest level since 1974, suggesting that we’re still rather far off this fear being realised. Rather than losing human roles to machines, we are actually seeing a new, better way of working with technology that holds enormous benefits for all of us. At the start of this year, the World Bank produced their 2019 World Development Report titled The Changing Nature of Work. In it, the Bank’s president Jim Yong Kim, wrote: ‘We know that robots are taking over thousands of routine tasks and will eliminate many low-skill jobs in advanced economies and developing countries. At the same time, technology is creating opportunities, paving the way for new and altered jobs, increasing productivity, and

Steve Goodall CEO, ULS Technology

ing the delivery of public services.’ This view is balanced, and realistic. Some jobs and processes lend themselves to automation; others, don’t. At least, not yet. The type of technology that we’re talking about is also important – automating certain processes in financial services doesn’t require complex algorithms, machine learning or AI, but a more modest shift from analogue to digital. The more complex tasks are still largely being done by people as there is a need to exercise judgement which cannot be delivered otherwise. This is also the view from the Financial Conduct Authority. Speaking at The Alan Turing Institute’s ‘AI Ethics in the Financial Sector’ conference in July, Christopher Woolard, executive director of Strategy and Competition at the FCA, unveiled the results of a joint survey with the Bank of England to assess the current use of artificial intelligence in financial services firms. “Are we really living through a crisis of algorithmic control?” asked Woolard. The answer, at least when it comes to the use of AI in financial services, is – not yet. What we found was that the use of AI in the firms we regulate is best described as nascent. The technology is employed largely for back office functions, with customer-facing technology largely in the exploration stage. ‘By and large those who lead financial services firms seem to be cognisant of the need to act responsibly, and from an informed position. Rightly, the lessons of the crisis seem to be playing on industry minds. Too much faith was put in products and instruments that weren’t properly understood. Certainly, there is no desire to reverse progress on rebuilding public trust.’ This echoes our own views and AUGUST 2019

experience of the move towards automation in the mortgage process and, more specifically, the role of conveyancers within it. There’s more than one step in the conveyance of property from one party to another, and automation and digitisation serves some better than others. Know your client checks, ID verification and anti-money laundering checks are undertaken in various ways, at the moment. Many solicitors still rely on paper processes but there are an increasing number of options to digitise this part of the process. There are at least two firms working within the FCA’s innovation sandbox to improve digital identity verification: the Post Office is looking to develop the availability of the verify service while Diro Labs offers a digital KYC due diligence service. The advantages of digitalising this element of the process are reportability, auditability and compliance. HM Land Registry also has plans for a centralised, digital Local Land Charges Register, intended to make local authority searches available online immediately, which should speed up a lot of paperwork. This is a good example of where conveyancers’ expertise and experience will remain critical, but will increasingly be supported by technology to increase efficiency, allowing them to spend more time on further enquiries and queries rather than the initial search request. The legal process is, we believe, the most ripe for digital innovation, which is why we built DigitalMove. Conveyancers and customers can upload and store documentation relating to their property transaction securely, as well as communicate through one platform. It not only provides a record of compliance, but also promotes much swifter processing and gives clients the transparency they’ve been seeking for years. With all of these moves, the conveyancing process is set to become a much faster, slicker and consistent experience for customers. There remains a vital role for the conveyancer in all of this for many years yet. MORTGAGE INTRODUCER


Review: Technology

The future of advice in a digital market At a recent broker feedback dinner in the West Midlands, the topic of conversation turned to technology. Everyone around the table had an opinion and all had practical experience of how digitalisation had become part of their day-to-day. But the impact it was having was very much up for debate. The brokers, ranging from directly authorised individuals to those belonging to a network, all agreed technology had a role to play in making them more efficient. Everyone had some form of customer relationship management (CRM) programme which helped them keep client records up to date and automated correspondence. This not only means more time to spend with clients rather than paperwork but also supports client retention with regular engagement. The overriding take-away, however, was that the human touch should not be under-valued. Whilst a CRM system sending a fact finding questionnaire in advance of an appointment can save time, it does not, and cannot, replace the face-to-face rapport-building which gives you a clear indication of their needs and the advice that will suit them best. One broker put it very well when she said having the information and documents uploaded in advance meant “I can now use the time to talk about the things that are important.” Offering advice is what brokers are here for and the human conversation, review of options and personal understanding of soft facts is something computers will struggle to fully replicate. The intermediaries we were talking to said the interaction with customers was the part of the job they loved the most, so it’s clearly not a challenge to demonstrate this is where you can add the most value.

Jeremy Duncombe director of intermediary distribution, Accord Mortgages

New ways to engage customers

Understanding what a client needs and being able to adapt was an angle which came up in another podcast recording my colleague Iain Cunningham hosted with Clayton Shipton at CLS Money. Shipton discussed how his company has embraced the digital revolution and is letting technology play a powerful part in how his business is moving forward, from having his own custom CRM to a cutting edge website and offering advice to clients via video chat at a time which suits them, often out-ofhours. Shipton referred to the changing times, with people being “time poor” so video was an obvious way

Smooth customer journey

A few weeks ago, I spoke to Mark Lofthouse from Mortgage Brain and James Tucker from Twenty7Tec,



to discuss the impact of sourcing systems on financial advisers for one of the Accord Growth Series podcasts. Whilst there can be a tendency to fear technology, believing it will replace the human engagement that is integral to our industry, it was refreshing to hear both Mark and James dispel those myths and acknowledge the role of their systems being “aligned with the broker” and not in competition with them, as brokers provide the irreplaceable value of face-to-face advice. Mark highlighted that with more than 13,000 mortgage products now available, it was exceptionally difficult for brokers to be able to know every proposition that might be suitable for their client, so sourcing systems were essentially a “Google for mortgages,” enabling suitable products to be easily identified and allowing the broker to spend more time understanding their client’s needs. James added that as the next generation of clients have an “expectation to self-serve in all elements of their life,” it’s more important than ever that technology is used alongside human interaction to add value and deliver a “smooth customer journey.”


to better communicate with these clients. He felt technology presented an incredible opportunity for brokers to grow and explore new ways of engaging customers and digitalisation of the mortgage experience meant that everything from the initial meeting to remortgaging can happen remotely without the need to travel. Ultimately, he felt it was all about giving customers a choice and making the process of taking out a mortgage as easy as possible using the available technology. If a prospective customer prefers to meet their broker face-to-face, they will of course do this as however the communication is deployed, his focus is providing a personalised service in each and every meeting.

Embracing the digital opportunity

Whilst there is no doubt brokers value the importance of a human touch throughout the mortgage application process, a sentiment which we as a lender also stand by with our principle-based underwriting and named underwriter contact, there is a balance to be struck. We know brokers want simplicity in systems and technology to allow them to focus on the elements of the job they enjoy the most. That’s why at Accord we are currently investing in a new online mortgage application platform which will process cases a lot quicker, be much easier to use and has the ability for API integration to avoid repetition in keying in cases. By speeding up the administrative processes, it also enables our incredibly valuable underwriting team to have more time to spend on helping the more complex cases get through, assisting more buyers to get the homes they want. It’s a hugely exciting part of our journey and guarantees the continual evolution of what we’re offering, implementing cutting-edge technology to complement our teams and the intermediaries we work with.

Review: Technology 

Time to play criminals at their own game The latest stats from, Cifas, the UK’s fraud prevention service revealed that fraud in the UK had risen ‘inexorably’. Identity fraud significantly increased in 2018, with 189,108 cases recorded which marks an 8% increase on 2017’s figures and a 41% increase in plastic card fraud. Cifas also found that fraud against over 60s increased by 34% - older people are more active online and more likely to be approved for credit cards, so fraudsters are targeting them online. Money mule activity was also up - a 26% rise – as more people are drawn into financial crime. The number of instances of mortgage fraud actually fell by 18%, however, Cifas said that the 70 instances of misuse of a mortgaged property recorded in 2017 was unusually high, so the decrease is more a fall back to more expected numbers than an actual decline in this sort of activity, And identity fraud in trying to gain a mortgage was the same as the previous year. Identity fraud is by far and away the biggest area of growth, and it is no wonder, as fraudsters are becoming increasingly more competent in producing false identity documents such as passports and driving licenses that are so convincing that manual checks simply will not spot them as fakes. Cifas CEO, Mike Haley says the only way to fight the threat is “to combine communication and collaboration, working together to present a united front against the perpetrators.” And whilst I agree that working together is an effective defence, using the right tools is also absolutely key. Fraudsters are becoming so sophisticated and more sophisticated methods are needed to fight them. That means we need to look at making electronic verification compulsory as it is the most efficient and reliable way of checking someone’s

Martin Cheek MD, SmartSearch

identity. Manual checks cannot cross reference a person’s ID with multiple different data sources, they can only check that one piece of documentation. If the fake passport has a real passport number, a manual check will not be able to tell if the number matches the person, just that it is a legitimate passport number. The fifth money laundering directive says that electronic verification

should be used when possible and this is why. Let’s take mortgage fraud as an example; the most common type of mortgage fraud is application fraud, but there has never been a fraudulent case linked to electronic verification. This just shows how big a part fraudulent documents are playing and how by simply employing a fully automated system – driven by top quality data – can prevent it. An electronic verification platform is the smart choice for all regulated businesses. Not only will it save time and money, but it offers a failsafe solution that ensures full compliance at all times.

“When fraudsters are becoming so sophisticated, more sophisticated methods are needed to fight them”




Review: Technology

When price isn’t everything tech has the answer So 2019 has been a year of reckoning 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. Tesco’s exit from the market, while not particularly significant in terms of volume, was a revelation in symbolic terms, particularly given its decision not only to stop writing new loans but also to put its £3.7bn mortgage book up for sale. The news garnered national interest, sparking politicians to get involved, demanding that the supermarket group commit to selling its asset only to an active lender. These announcements conflated several issues; mortgage prisoners being passed into the ownership of unregulated third parties is a very separate problem from the cost of funding and volume pressures that prompted Tesco Bank’s decision to pull out of the mortgage market. However, that the story blew up to the extent that it did is revealing. While the mortgage market is in rude health in some respects, in others, there are issues bubbling. One of the more pressing of these issues relates directly to lending appetite: the pricing pressures we’re seeing are not actually the problem, but merely a symptom of how lenders are choosing to allocate their capital. Prudential rules making higher loan-to-value lending more costly, coupled with strict affordability rules governing borrower assessment have made it expensive to underwrite customers with incomes that are anything except single-source employed. This has influenced lending strategy at the large lenders, which have vied to maintain their market shares in a market with dwindling purchase volumes by cutting pricing, putting ever more pressure on profit margin.



Kevin Webb managing director, Legal & General Surveying Services


The result is as we see today – unbelievably low rates for prime, low LTV borrowers with simple income structures; much more expensive pricing for those with complex incomes who are competing with one another for a comparatively tiny pool of funding supplied by smaller building societies and specialist lenders that have focussed on bespoke manual underwriting. The recent proposals made in the regulator’s Mortgages Market Study paper published in March, to open up the execution-only market once again, are likely to accentuate this polarisation rather than solve it – as some are arguing. The prospective rule change has divided industry commentators, garnering heated criticism from those on the advised side of the fence but prompting UK Finance to claim that customers would benefit from a much more efficient and improved mortgage application experience if allowed to choose the execution-only route in more circumstances. For me, this boils down to whether or not the market is serving customer demand. Increasing execution-only sales would free up lenders of all stripes to broaden their propositions to a wider spectrum of customers without a concurrent increase in compliance risk. However, it’s unlikely to solve the more basic problem constraining market growth: that underwriting customer affordability is getting more expensive. Cutting cost out of the front end advice part of the process will only relieve profitability pressures for so long, and for the same contingent of customers that are already arguably over-served. These considerations, fundamental though they are, are really surface currents caused by a deeper structural challenge facing the entire mortgage market: how to innovate

the process to improve customer experience (for all types of customers with all types of incomes) and control lender costs more sustainably. Lenders have a choice to make: who is your customer and how do you want to serve them? It’s not a new conundrum, but it’s an important one to reconsider in the context of changing regulation and subdued transaction volumes. Tesco Bank’s experience in the mortgage market is a case study in this dilemma. They chose to compete in the vanilla end of the market where their cost of funds simply could not compete with those of the big banks. Their profitability paid the price, and ultimately paved the way for their withdrawal from the market. Take another example, Magellan, which chose to specialise in customers with adverse credit – ostensibly a sector with much more scope for higher pricing thus supporting higher underwriting costs - was also nevertheless affected by intense pressure on pricing in the vanilla market and its knock-on effect further up the criteria curve. That no lender is immune underlines the need for a new approach. Rather than focussing on product design first, improving and streamlining the underwriting process on the way in will enable lenders to design products that can differentiate themselves based on much more than just price by the time they come to sell to customers. The second deadline under the Payment and Services Directive II is set for September this year, forcing all banking institutions to provide API access to customers transactional account data by 14 September. This will have a significant effect on third parties’ ability to automate borrower affordability assessments. Together with more sophisticated automation of the valuation process to reflect the security-based risk, lenders could begin to see tangible efficiencies in their underwriting. How these are achieved is the big question all lenders need to be asking themselves today: no two lenders are the same; so no two answers will be either.

Review: Technology 

Tech can make the difference A lot has been written about letting technology take the strain when it comes to the day-to-day running of your business. I should know as I’ve written reams on the subject! As a business whose very foundation lies in creating cutting edge technology, it’s something that I’m extremely passionate about. I’m a confirmed technophile and committed to continuing the investment we make in developing tech platforms and tools that help our intermediary partners manage their GI business better. But no-one is going to use a great bit of tech if it isn’t providing a simple solution to an issue or if it isn’t easy to use. Let’s face it, Amazon wouldn’t have become the retail behemoth that it is today if it had made it hard for the early online shoppers to find what they were looking for and buy it. They worked hard to hide the gazillions of lines of code and complex architecture beneath a cloak of simplicity for the shopper. Now we can pretty much buy anything at any time of day or night, any day of the week and get it delivered to our front door – no more stress of finding a parking space at the local retail park which was always my biggest bug bear! The wave of tech innovation that is sweeping across the financial services industry is no different. Take the Source core platform for example. It’s a pretty complex beast bringing together a wide range of products from an equally wide choice of providers so we focussed on making the process of selecting the right product from the right provider for their client quick and simple for advisers. We see technology as an enabler that stretches across a host of areas within our business from sales and communication to analysing data all the way through to education. The most profound and successful developments often come from subtle shifts not huge leaps. Purple Bricks for example identified that using an estate agent was costly,

Kevin Paterson managing director, Source Insurance

the costs largely due to people and buildings, so they moved the process online and contracted self-employed consultants to manage the face-to-face transaction all for an up-front flat fee and as a result they took more than 30% of the market share within the first 18 months of launching. Uber created a tech platform allowing casual self-employed drivers to log-on and off when they wanted and directing customers to them via an app. By putting the customer at the heart of the proposition and making the whole thing convenient for both the drivers and the customers they fulfilled an increasing desire for tech that makes our lives easier and puts the customer in control. Our tech isn’t just designed to help the advisers that work with us either – it has to make their clients’ lives easier as well. All their policy documents are stored securely online, giving them access 24/7/365 while our online claims concierge is there to help guide them through the claims process should the worse happen. Embracing technology has allowed us to offer a livechat facility which has proved hugely popular amongst advisers and clients alike as it is quick and easy to get an answer


to a simple query. Given its popularity, we’re looking to develop this further for out of hours service. So my advice is simple, ask yourself “how can I make my clients life easier”, if you are not sure then ask them, and keep asking them. Remember you don’t have to look for huge strides when looking to improve, enhance or simplify the way your clients do business with you, look for the nuggets that will give you the improvements you want by asking yourself three simple questions, does this change enable my practice to make more money, save money or make life easier for my clients and if the answer isn’t yes to at least one of these points then don’t do it. Of course the value of the change will depend on the cost of implementation balanced against the benefit. There is a lot of exciting tech out there and a lot of it can appear confusing, expensive and not necessarily relevant to an adviser’s business. The good news is that a lot of providers out there such as us who are working hard to do the heavy lifting and come up with solutions that are relevant, that are simple and that offer a range of tools that make a positive difference to how advisers manage their business.



The Bigger Issue

Our experts look at the changes to the ministry of housing and ask…

Can Boris and his government r Our new Prime Minister brings with him a new Secretary of State for Housing. Robert Jenrick is in and James Brokenshire is out. Likewise, a new Chancellor, Philip Hammond is out and Savid Javid is in. Savid Javid was a previous Housing Secretary and oversaw the housing white Sam Howard paper in 2017. He has also mooted managing the idea of borrowing £50bn to fund director, new housebuilding. There are posMagnet Capital sible clues in a selection of this team that the government may be inclined to provide the fiscal fire power needed to reinvigorate the market. Boris Johnson has been a long-term believer in home ownership. “Jenrick has He realises that homeownalready raised ers will tend to vote Conservative and if he wants to the possibility appeal to younger voters, of Help to he needs to persuade them that the dream of their own Buy being home is attainable. So it is extended” not surprising that Jenrick has already raised the possibility of extending Help to Buy beyond 2023. Boris has also talked about abolishing stamp duty on houses below £500,000 and reducing the top rate of from 12% to 7%. However, stamp duty is extremely politically charged and any cuts will be seen as a tax cut for the rich. Given that the Conservative government’s majority in parliament has been whittled down to one, I doubt whether he will risk a cut in the near future. However, these proposed measures are really only cosmetic if we are to build the number of houses we need in this country. This will take the Johnson government dealing with, amongst other things, the real skills and materials shortage in the building industry, the effects of nimbysim and a broken and under-resourced planning system. Can Britain adopt modular housing? Can it create the infrastructure necessary to support this new housing and can it curb the power of the major housebuilders and enable SME housebuilders and local authorities to build the right houses in the right locations? Only time will tell.




It’s very early days for this new administration but the early signs appear to be that the housing market is high on the agenda for Boris Johnson’s government. Exactly what it is able to achieve in what might be a very short space of time will remain to be seen. Mark Snape Perhaps a sign of this newly managing found director, commitBroker ment to “The early Conveyancing houssigns appear ing is the fact that both the to be that Secretary of State for the the housing MHCLG, Robert Jenrick, and the Housing Minister, market is high Esther McVey, will both on the agenda” attend Cabinet meetings. For too long, that ‘honour’ has been the sole preserve of the former so we might believe that the housing market’s position at the ‘top table’ is much more assured. From Johnson’s proclamations during the Conservative Party leadership hustings we might (at the very least) expect some notable changes to stamp duty in order to help stimulate purchase activity. We are led to believe stamp duty will be abolished for those purchasing up to £500k, and it will be cut from 12% to 7% for those buying at the highest threshold. Whether we will also see more fundamental changes might depend on how long this government lasts. For the conveyancing sector the good news is that, while ministers change, the civil servants tend to stay the same. And this is positive because, specifically within the MHCLG, there is an ongoing project – which I doubt will be curtailed because of a changing in ministerial appoints – to improve the whole homebuying process. You might recall a White Paper on this very issue, and I’m led to believe that the MHCLG is currently scoping out a research project on the potential introduction of reservation agreements in order to cut down on the high number of aborted transactions we see every single year. This is clearly wasted cost, resource and time, and if the government can cut this number, that will clearly be a win.

t reinvigorate the market? The ‘good news’ is that Boris Johnson appears to want to shake-up the housing market and seems likely to use stamp duty changes as his principle tool in doing this. On the Conservative Party hustings, there were talks of cuts to stamp duty for those buying Stuart Wilson below £500k, and cuts for those CEO, purchasing at the very highest Air Group threshold, but Johnson might also feel there needs to be more radical changes. Will we, for instance, see stamp duty cuts for those elderly homeowners who want to downsize? Or might we see the ultimate shift in moving payment of stamp duty from buyers to sellers? One thing we’re already acutely aware of is that we have no continuity in terms of those politicians charged with looking after the housing market. We have a new Secretary of State at the MHCLG and another new Housing Minister – soon there will be no Conservative MP who hasn’t had that particular job. That might not be a “We have no problem however if those continuity in concerned are provided with the support and terms of those resources in order to make the necessary changes, politicians and clearly when it comes charged with to new home supply there is still plenty to be done. looking after This is, after all, not just the housing about providing homes for first-time buyers to live in, market” but homes that all owners might wish to purchase. Certainly, a boost to activity is required and would be welcomed by all market stakeholders but – and this is a rather large but – there are perhaps bigger questions to be asked around the longevity of the current administration and whether it will have the necessary time in office to deliver anything of substance. The jury remains out on that one, and while we might wish to see change that ignites our market, given the current political situation, I wouldn’t be necessarily holding my breath waiting for it.

At the very start of the year I used a Mortgage Introducer opinion piece to say that 2019 will be a financial rollercoaster dictated by Brexit, add in the Conservative leadership contest and it’s been an up-and-down ride so far. Interestingly though VAS has Stephen Todd seen a consistent level of business co-founder throughout the year, with many and managing of our panel valuers across the director, country reporting likewise, even VAS Group amongst the continued political uncertainties. I think it’s likely that most businesses in the lending sector will be affected by what will happen in the coming months, but the level of affect will be dictated by either securing a deal with the EU or going straight for the hard “Boris’s big Brexit. Boris’s big pledge pledge so so far has been stamp duty reforms, and Savills far has been has estimated that an stamp duty overhaul which would raise the stamp duty reforms” threshold to £500k from £125k would cut around a quarter of stamp duty revenue for the Treasury, a whopping £2.158bn. My concern is that if this promise is not delivered quickly it could lead to an additional unplanned slowdown in the market, one that would impact both residential and specialist properties, while we wait for the potential law to be implemented and obviously whilst Brexit finally plays out. If acted upon quickly, this might slightly help the property market through the rest of the year and be a positive amongst the uncertainty. This then leads to everyone’s long held desire – a level of certainty in which decisions can be made knowing that uncontrollable external factors will not always play a huge part. Following on we build confidence. In the current market securing the best possible valuation firm is critical to reduce property specific lending risks. While the government wades through a myriad of issues people still want to buy and lenders still want to lend, but valuations have to be looked at more closely than ever to best manage the unpredictable. AUGUST 2019




Releasing the potential of later life lending Our panel discuss the state of the later life lending market and the opportunities available for brokers Jessica Nangle: To help clients take out a RIO or a later life mortgage you need CeMAP. However, to provide support on equity release you need a CeReR. Considering these are similar customers do we need to reconsider how these qualifications work? Chris Flowers: Last year there were 112 RIOs done. We’re trying to establish the market and from my perspective we don’t really know where RIOs sit in the marketplace. I think we need to let this market grow organically and to say you need another qualification might be taking a step backwards and might stifle the growth of this potential market. Peter Borley: I’m lucky enough to work with UK Finance. The 112 is a very unreliable figure. At the moment we’re still getting to grips with reporting across the industry, it could be high or lower. It’s very early days at the moment. I think RIO has its place in the market for the right customers. Customers just want a solution to help with the problem they have and as an industry we need to make sure we don’t put any barriers up to allow them to get the




right solution. If that means solving the qualifications, then that’s something we need to address. Stuart Wilson: Customer outcomes are the most important thing whether RIO or another later life solution. There’s a danger we’re in a situation where there’s a silo approach and some customers could end up with a sub-par outcome because they saw one adviser rather than another. I think this is something the industry needs to look into. I think this is a relatively immature market and we have to see where RIOs fit in and where their place is in the market. Ultimately, we have to be focussed on what’s the right outcome for the customer. Will Hale: We’re hugely supportive of the development of the RIO market. We see the innovation around the product being positive overall. We think it’s coming from the right intention in terms of how the regulator removed the rules to enable it. I don’t think we should be looking to have additional requirements for advisers to advise on it. I think it would create an unnecessary barrier to helping customers

achieve the right outcomes. I think we do need to see evolution in the market in terms of the products and advice journeys that surround them. We find the products are falling between two stalls at the moment. Most of the customers that a RIO could be a potentially appropriate solution for, are failing on affordability measures. So, until the product is better designed to support that I think RIOs will always disappoint in terms of the overall volumes achieved. I think this is a great opportunity for the broader later life lending market to educate advisers in the mainstream market on all the options available to brokers. We need to embrace that requirement from the FCA that hasn’t been highlighted by many, that the need to at least consider whether an equity release product could be more suitable for a customer before taking them into RIOs. That doesn’t necessarily mean advising on equity release but helping advisers know the products available and referring those customers to equity release if suitable. There’s a lot of customers that equity release will be a better option than RIOs.


(From L to R) Matt Taylor, Equilaw; Stuart Wilson, more 2 life; Will Hale, Key Advice; Peter Borley, Just Group; Chris Brown, OneFamily; Chris Flowers, Pure Retirement; Gary Webster, Equity Release Supermarket

Chris Brown: I agree. I think that’s part of the problem. I think there’s probably a lack of education for advisers in the mainstream market. They don’t have that knowledge and confidence around talking about equity release as an option. You need that mechanism to refer clients on and they need to get to grips with that.

referrals need to be an integral part of the journey, while at the same time, helping more advisers get the qualification and advise.

JN: So, this is less about the qualifications, but more about the education and knowledge to be directed down the right path so customers get the right outcomes.

CF: The bigger issues are after the exams. The two qualification bodies have no responsibility to make sure advisers are continually developed and keeping up to date. There’s no checks post qualification so someone needs to start having the responsibility of making sure that these advisers post qualification are upskilling.

WH: I use the analogy of the GP. You don’t expect your GP to be a brain surgeon but to spot the signs and refer you to a specialist. I think the same applies in the mortgage market. Mortgage brokers need to be aware of all the options available. So,

CB: I believe The Equity Release Council are looking at the framework around qualifications as an industry body.

Gary Webster: I think we’re assuming all mortgage brokers that hold CeMAP advise on RIOs and AUGUST 2019

that’s not the case. I think some advisers do not just fear the vulnerability around understanding the product, but health and lifestyle conditions and other areas perhaps not embedded in conventional mortgage processes. I think it’s an education piece and I put that down to the providers to drive that. WH: I think the product is there, designed with customer outcomes in mind, to help people transition off interest-only mortgages, which is a good thing. But we mustn’t allow the mainstream lenders to use it to repair their balance sheets and shoehorn customers into potentially inappropriate products. It’s a great opportunity for the advice community to show the real advantages off advice in this space. A RIO may be an absolutely MORTGAGE INTRODUCER



appropriate solution for a customer initially coming off an interest-only mortgage, but you need to engage with that customer throughout their journey, because potentially at a later point a lifetime might be more appropriate. As an advice community I think we need to be quite firm, really highlighting customer outcomes as a main driver and the benefits of advice in the process.

JN: How well do you think the later life market serves what you consider vulnerable customers? GW: Equity release is quite unique. All of our clients we see have to see a solicitor face-to-face before a completion, because of the Equity Release Council’s consumer safeguards, the code of conduct. It’s unique to any financial product, you’re going to need a lawyer. In that respect we should be very proud about what we do for our consumers and those embedded safeguards we can show other industries. That’s slightly different to how you identify vulnerable customers in the RIO space.

PB: I think since more stringent affordability requirements have come into place more customers have become disappointed, thinking they’ve found a solution to their interest-only problem but then not passing the affordability test. I think this is a great opportunity for banks to work with us as experts in the industry to say ‘there are other options out there, work with us so we can present options to these customers’. With interest rates coming down, LTVs going up, interest servicing coming in, you can pretty much get the same as you could for a standard mortgage through a lifetime mortgage, and it’s up to us to work with the banks and educate them.

SW: It’s important to know how seriously this industry takes this issue. We’ve found through research that advisers would be looking out for language barriers or trouble with numeracy, but were less tuned into triggers for vulnerability such as being in debt and medical problems. As an industry

CF: There was a lot of press saying that the reason RIOs are failing is because lifetime mortgages offered higher proc fees and I think that’s absolute nonsense and people scaremongering for headlines. The real issue around RIOs is education. With equity release it’s taken us 20 years to get to a market of this size. And secondly, it’s down to the criteria, really stress testing on the spouses for a worst-case scenario and that’s where a lot of them fall down on. I firmly believe that commission is higher in the equity release space but it’s all going back in to help educate the market.


WH: As an industry we need to celebrate that the practices that take place in this segment of the market probably set the standard. We need to be helping other sectors of the market, perhaps getting into later life lending with RIOs, showing them what good practice looks like. Key has taken steps to ensure advisers can still navigate customers with vulnerability. We shouldn’t shy away from helping them but make sure we do it in the right way. I think that’s the slight evolution we need to go through. CB: At OneFamily all of our internal teams have gone on specialist dementia awareness training. We put a whole range of measures into place in documentation and spotting the signs of vulnerability. And I think we need to do more work with the clubs and networks for the advisers on an education piece on spotting vulnerable customers. PB: As a provider we have a relationship with that customer for life. It’s therefore absolutely crucial that vulnerability is at the forefront of our minds. Customers may not be vulnerable initially but it’s spotting that vulnerability as the customer goes through their life stages and working with them and their family to address the issue. WH: If a provider recognises vulnerability, for example, when a customer goes for a drawdown,

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we need to educate to make sure advisers are looking out for signs for vulnerability. I think it’s also recognising vulnerability is fluid and people can move from one state to another at various points in their life so it’s picking up on those triggers.



JN: We’ve seen the number of later life products grow from around 70 in 2016 to 220 today. What do you think have been the biggest innovation changes we have seen thus far? CB: From our perspective 35% of our customers now make interest payments so it’s servicing that interest. That’s been the biggest innovation from ourselves, and the option of importing a later life mortgage to another property.

the provider can pass the customer back to us and we’ll help. The formalisation of those structures is something the industry perhaps needs to look at. They are lifetime products, the customer needs interaction through their lifetime and some of that may involve advice interventions. GW: The FCA has issued its first stage guidance with consultation feedback on 4 October. It’s good for the industry but one in two people have the characterises of being potentially vulnerable in the UK, according to the FCA’s Financial Lives Survey 2017. As consumers get older that vulnerability increases so the risk increases. CF: It’s not a machine decision, it’s getting an application form. With vulnerability people think of dementia but there’s so many other areas of vulnerability and it’s having the underwriters who get to understand that. We need to make sure the equity is used for the right reasons.

Matt Taylor: From a solicitor’s standpoint the biggest challenge we’ve faced in terms of vulnerability is probably educating advisers that it’s not just stress and capacity that can be a problem, but financial hardship, communication issues and bereavement can be. It’s also educating on points like characteristics on spending, do they need a huge drawdown, or are there third parties at play behind the scenes? Usually that comes out in the face-to-face meeting. The majority of our cases that are stopped due to fraud or attempted fraud are all Power of Attorney cases, with people thinking they can get a case through without having to provide the evidence required. They tend to also come from advisers that hardly do any equity release business. GW: Some customers will be vulnerable and it’s not saying we can’t deal with you at all, it’s taking them through the journey with the support of the lawyer and provider to provide the right support, whether with family members or an independent lawyer.

CF: From 2016 I don’t think products have changed that much. I think we’ve just seen a lot more people coming into this space, driving down the interest rates. PB: I think there has been some innovation. Flexibility is at the heart of it in terms of what the customer is looking for. The introduction of ERC-free partial repayments initially introduced flexibility. Our income product gives flexibility for the customer to take a regular income and adjust it as their needs change. We’ve seen a massive shift in terms of flexibility across the industry. Interest rates are so low it’s great for the consumer. WH: The closing of the gap between the mainstream mortgage and equity release market is the big factor for me. It’s not one particular innovation, it’s having this diversity and continuity of funding come into the market and this has caused everyone to look at revitalising some existing features and look at innovations around income. I think we’re in a great place with product innovation. I’d like to see further innovation around the care funding 

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space. I think there are great opportunities to either repackage products or look at influencing the regulator around taxation advantages of how property wealth can be used to fund care. I think there’s a great opportunity to fill the gap between RIOs and equity release to help show customers the product can change with them over their lifetime. So, there’s a period in their retirement where they want to service interest and another point where the product could flip to roll-up. If we could find a way to fund that, that would be a great solution. The work lenders have done to source new capital into the market means we’re in a great space, better than where we’ve been before.

PB: The challenge is not of innovation but getting consumers to consider equity release. Not enough consumers are prepared to consider it in the first place.

GW: We’ve seen old fashioned commoditisation of the market. Lenders with very sharp pricing looking to gain market share. It’s been fantastic for the customers.

CF: The issue we have is financial advisers and mortgage brokers don’t agree with the products so they’re not talking to their clients about them. Equity release isn’t on the agenda for IFAs because it’s not funds under management.

MT: The one common thing we find clients talk about is not the interest rate, they want to talk about downsizing protection or the ability to make payments. WH: I think we have to be careful from an adviser perspective that we don’t get lazy. It’s not all about rate in this market. The lowest rate may not be the right solution, it’s making sure we find the right product for the customer that delivers on their needs.

JN: When many mortgage advisers look at their client bank, they can see that they have ageing customers. Later life lending products have been suggested as an opportunity for these advisers to engage with these customers. What do you think they should be doing?

GW: If lenders want to create a bigger margin for themselves then create additional flexible features. The availability is there for funders. Consumers will suffer higher rates for greater flexible features, and I think they accept that.

WH: It’s down to all of us to educate advisers and customers on how the products have evolved to meet a range of needs. Equity release has been pigeon-holed as a product of last resort, but it

shouldn’t be limited to that, it can be used for a range of needs, for example, as the Bank of Mum and Dad helping first-time buyers. There are still only two big firms putting serious cash on customer advertising. Where are the big banks? We need to get out there and educate customers and advisers but that takes investment. CF: We need the big banks and building societies looking at the market to put their foot down and invest in it. PB: Mortgage advisers need to be having those conversations and spotting the opportunities. We need to get them to at least ask and spot the opportunity and then either do it themselves or refer to someone else. SW: I was at a retirement income debate with wealth managers and IFAs. Only about six out of 150 people put their hand up to say they talk about equity release, but when mentioning using property

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wealth to avoid inheritance tax, more were interested. It’s the language and spotting opportunities. PB: Most needs can be met with what’s out there but we just have to present the solutions differently like ‘this is a way to mitigate the tax situation to give you a better later life’, for people to consider it and advisers to be more confident talking about it. CB: Equity release should be part of estate planning. The view of some networks is starting to shift but it’s an education piece and hopefully it will change. JN: What trends are you observing in the later life market? CF: I think it’s changing from a plan of last resort and it’s used as a tool for estate planning and to pass down wealth. And with Brexit I think we’ve got about a quarter of the market that would like to do equity release but don’t need to, for things like a holiday or getting a new kitchen or car, waiting for six months to find out what’s happening with their property values. MT: We’re also seeing a shift to people who want to do it but don’t have to. We’re seeing people use it for purchases, paying for divorces, or supplementing retirement income. WH: I think we’re seeing a different profile of customer, more affluent customers who are getting more astute at shopping around for different providers and advisers which is a good thing and builds competition. I think in the shortterm I think it’s customers sitting on

the fence and greater competition that is causing some structural challenges for the distribution. Also, we’ve seen downvaluations, driven perhaps by concerns around property pricing and Brexit, causing us a significant issue particularly in the South East. GW: I think the UK housing market has been incredibly resilient. There are a number of trends coming together at once, valuations, Brexit and interest rates. No one wants to go into a lifetime mortgage and perhaps feel their net worth is decreasing. That might be a reason to wait. But there are good trends. I think more older working borrowers and older self-employed borrowers are turning to equity release. On price we’re seeing the rates on lifetime mortgages are actually better in many circumstances than RIOs with greater flexibility. Some consumers can qualify for the affordability for RIOs, but we can advise on both and lay out both options and RIOs may be better.

The demographics won’t go away. People are getting older, there will be a greater need for equity release. The market will moderate though. It can’t grow at 25% forever. A market growing at 10% is still a great market. JN: What do you predict for the later life market in the next 12 months? SW: Although this year will be more subdued than previous years, we’ll see the market go forward again. Over the next 12 months we’ll see more funding come into the market, more products and rates go even lower. It’s a really exciting point in the development of the equity release market. Pension fund money is starting to come through into the market space, allowing different types of innovation and product development. I still don’t think we’ve created anything really new in this space yet but there are plenty of ideas like hybrid products, that we could bring in if we have the right funding. Over the next 12 months I think we’re going to see more competition because of more funding coming into the space, which is all good for the consumer because it means more choice and flexibility. CB: We’re a smaller lender and we tend to verge on niche type products. We are looking at drawdown, it’s one product we don’t have. There might be more niches we explore. I think more advisers will come into the space that we need to get on top of with the education piece. And I think technology over the next 12 months will be big in terms of innovation. 

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in and smash and grab. WH: Lenders that come in and out of the market cause us significant issues operationally, but I don’t think it’s a bad thing for the market. It has its place and will work in some ways. It’ll be nice to think we can evolve some of those funding relationships to something with more continuity. I think overall, it’s a good thing, giving better outcomes for customers. I think business models will evolve and funding relationships will change. We all have to adapt.

MT: As solicitors we’re against robo advice and execution-only. Clients need to have that face-toface meeting and advice.

systems and advice delivery systems to ensure advisers can compare and contrast across all those options and deliver the best recommendations to customers, but in a way that is still supporting the efficiency requirements of the advice process. If we can then plug those advice delivery systems into the lenders to drive further efficiencies through the backend of the process, that would be very advantageous.

CF: I think some lenders need to push forward with technology more. Some do and some don’t. We need all the lenders to join us and drive our industry to where the mortgage market is. We’re similar to the mortgage market in terms of products but light years away in terms of technology. The advice piece is where you deal with the clients but at the point where they submit the application they want to go ahead and want the funds as quickly as possible.

GW: I expect there will be new funders in the market, some of which will try and come in and grab market share. CF: I don’t think it’s good when people come in trying to smash and grab and not build long lasting relationships with broker firms out there. Have they got the systems and processes to be able to go from doing no business to writing substantial volumes? It’s difficult to price products when people come

WH: I think we’ll see a continuing blurring of the lines between equity release and the mainstream. I think there’s just going to be a continuum of product options available to customers over 55. I think that will really push sorting

PB: We’re in the 21st century. There’s no such thing as a stable business model. We have to recognise it’ll change. The splash and dash funding will continue to happen and we have to work with it and adapt our models. I think we’ll see growth over the next 12 months. There’s a pausing taking place and there’s pent up demand. I see more technology being used to underpin the advice process and quicken the process and take more cost out of it. And I see repackaging taking place. I see us presenting the same solutions in a different way, so we get people to consider it, like ‘how do I solve that tax or care problem?’. Also, I’d like more introducers to consider equity release and just ask the question. They don’t have to advise on it, they can refer customers on. CF: We are going to see other areas disrupt and maybe bring other styles of working to our industry we haven’t seen before. The distribution of the market has to change because at the moment we’re over funded. 

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Interview Cover

All Today the world is shrinking, with faster and affordable travel making things more connected than ever before. It’s become more normal to holiday abroad rather than on the South Coast, or even work in multiple countries. In this global and connected environment, it’s not surprising that there is a niche yet profitable market for people looking to buy overseas with a mortgage. Overseas mortgage lending is not to be confused with expat mortgage lending, which is lending for people living outside the UK who want to buy property in Britain.

Holiday homes and retirement

Simon Conn, a broker specialising in overseas mortgages for 35 years, is one of the most prominent names associated with overseas mortgage broking in the UK today. He handles a wide range of deals in multiple countries, while he reckons around 60% of his clients purchase properties as a holiday home, with 40% buying for retirement. Sometimes there’s an overlap, with people buying in sunny Europe, renting properties out for a few years and then using them in their retirement.

Renting out a property

In much of the rest of the world




residential and buy-to-let products aren’t segregated like in the UK. Indeed, it’s up to you as a buyer to get clued up on the process of renting out a property abroad. You may need a licence to rent out a property, while a number of lenders don’t accept some or all of your rental income when stress testing a mortgage, which can make it harder to pass affordability requirements. When stress testing an investment property, lenders in France may take 50% of rental income into account, with some in Spain accepting up to 50%. However oddly enough some lenders will only stress test rental income if you purchase a house that’s previously been rented out. If there’s no rental history some will refuse to take rental income into account altogether.

Overseas hotspots

Clare Nessling, director of Conti, a brokerage specialising in overseas business – set up by Simon Conn in 1994 before he left at the end of 2008 – says Spain and France are the most buoyant countries for buyers to purchase property in. In France people either purchase holiday homes in the South, or sometimes in the North where the climate is more familiar to those used to UK weather.

Conn concurs that Spain and France are hotspots, while he adds Portugal, Italy and the USA to the list of the most popular countries for buyers from the UK. He adds that interest in Cyprus and Greece increased in 2018, though borrowing in both countries can be challenging owing to their economic problems. Turkey has increased in popularity in the touristic areas, though there are concerns about the eastern regions owing to the war in Syria. Other countries people have shown an interest in are the Republic of Ireland, Germany, Canada, Malta and The Netherlands.


For those looking to buy abroad it’s quite variable regarding how high you can go up the loan-tovalue scale. In France the limit tends to be between 80% and 85% LTV, but most nations are more restrictive. In Portugal it’s 80%, Spain 70%, Italy 60%, USA 70% with the exception of Florida at 75%, Turkey is between 60-70% and Canada 65% LTV. Meanwhile Ireland offers LTVs at 60%-65%, Thailand 60% and South Africa 50% unless you’re a South African living in England – then it goes up to 70% LTV. New


abroad… Ryan Bembridge explores the opportunities in the overseas and expatriate mortgage markets

Zealand and Australia are both available at LTVs between 60% and 70%. It should be noted that if you’re living, working and paying taxes in these countries you might be able to take advantage of higher LTVs, like 80% in Spain.


Spain is often talked about as a hotspot. Savills research published in September 2018, ‘Second Homes: Global trends in ownership and renting’, found that the country accounted for just over 21% of all sales in Europe in 2017, up from 11% in 2011. While Spain is arguably still recovering from the recession in terms of house prices, the country has strong rental returns because so many people like to go there on holiday. “In 10 years’ time it will recover,” says Simon Conn. “Now is the time to look at it because a lot of countries are starting to recover.” In Spain regions such as the Costa Blanca, Costa Del Sol, Marbella, Madrid and the islands were affected less by the global financial crisis, though if you travel 10 miles inland the price drop is reportedly huge. “Spain is affordable for most buyers, though we also get a lot of business at the top end in Menorca and Majorca,” Clare

Nessling reveals. “Mainland Spain is picking up.” Unusually, Conn says overseas buyers in Spain are currently either going for properties under £200,000 or in the £1m plus range. The market from £300,000-£600,000 which was traditionally busiest, is slow.


In France, Portugal and Spain between 33-35% of net personal income after tax needs to sufficiently cover new and existing liabilities, while it’s around 30% in Italy. People can run into difficulties demonstrating their income. Notably this can be the case when buying property abroad using money earned through a limited company. “The way overseas banks interpret it is they say ‘yes, we will take it into account if you paid taxes on it’,” Conn explains. “That’s caused us a problem when you’ve got people with good profits, have money in property, they take money out and run into trouble.” Ray Boulger, senior technical manager of John Charcol, says it’s normal to raise some money from UK property before dipping into the overseas market. “Most clients buying overseas are going to have one in the UK,” he says. AUGUST 2019

“LTVs on overseas properties, particularly when buying it as a holiday home, tend to be lower than the UK, so unless people have a good deposit it’s quite common that part of the solution is to raise some money from UK property.” However, it seems many lenders based overseas don’t take kindly to people raising money from their UK home to fund a big purchase in another country – and they will discover those details when stress testing if you raised money recently. “It causes concern that they may be stretching themselves if they do not have the deposit and other setting-up costs already to hand as either savings or other resources,” Conn adds. “If clients do get into financial difficulty at a later stage, they tend to drop the second property mortgage first before putting their main residence into jeopardy.” To overcome this issue, Nessling recommends for buyers to remortgage their UK property at least a year prior to buying abroad, as lenders typically analyse at least 12 months’ mortgage history and bank statements.

Hidden costs

When buying property overseas there may be hidden costs to account for.  MORTGAGE INTRODUCER



Conn says that in Portugal, France and Italy you must allow 10-12% of the purchase price to cover the government’s taxes, like the equivalent of stamp duty as well as legal fees. He says it can be even higher in Spain, though Nessling says some banks are now covering some of these costs, meaning you only need to allow for 8% extra. “We make the client aware early on,” she says. “A lot of people come to us unaware. “A lot of banks want people to have the money to cover the deposit fees before they even consider it.”

Independent help

Simon Conn says there are three key elements for buyers to focus on when buying abroad: use an independent lawyer, get a survey and refrain from signing a contract until you’re sure everything is above board. Conn warns against using local estate agencies’ lawyers, which he says could result in you getting “ripped off”. As part of Conn’s service, he works with lawyers, translators and surveyors in various countries. The use of translators is designed to remove the danger of there being something untoward in the contract, as well as making sure it’s been translated correctly and fully. Similarly, Clare Nessling works with solicitor Mayo Wynne Baxter to make sure you’ve got somebody in the know. The solicitor is based in the UK but has specialists in multiple countries.

Be more cautious in some countries

Ray Boulger has heard of people getting into hot water in the past when investing in countries like Bulgaria where regulations may be limited, as well as the likes of the Canary Islands. “I’m sure the situation is not as bad now but equally the UK




is at the forefront of legislation on property law,” Boulger says. “If investing overseas you need to know foreign legislation and inheritance rules. “You would need to get good professional advice, deal with good solicitors who speak English, not somebody who expects you to just sign stuff.” Clare Nessling agrees that it’s good to err on the side of caution. “We’d always suggest people are cautious because there aren’t any UK banks dealing with mortgages out there and the Bulgarian banks we used to work with don’t work with introducers,” she says. “The danger is people fall in love with property and hearts rule heads. “People would have to make sure they have specialist lawyers in that area and that things are translated.” Conn goes further, saying you need to be on your guard when buying in much of Eastern Europe. He recommends you ensure they have all the necessary licences and planning permissions in place. If a property is being sold because it has been repossessed – a situation that can occur in countries with economic problems – landlords need to do due diligence on why it has been repossessed, find out about the condition of the property, and undertake an independent valuation to determine the condition, need for remedial work and potential rental yields. It’s not a simple process.

Expat mortgages

The other side of the coin is arranging mortgages for expats – those living abroad but buying in the UK. This seems more of an achievable market to enter from both a broker and lender’s perspective, though it has its own challenges – especially as some clients have a limited or lack of a credit footprint in the UK. Payam Azadi, director of Niche Advice, is one broker involved in

that market. “We’ve seen a big rise of expats buying in the UK,” he says. “There’s a number of reasons. They are earning high salaries in other countries and are looking to eventually come back home. “The pound is relatively low at the moment, so they get decent conversions. “Some of what they are doing is buying a home for their family. I’ve got one who works abroad but his family works here, so he’s upgrading their house.”

Expat lenders

Like with overseas mortgages, Azadi says the expat market is challenging. “The expat market is a bit of a minefield,” he adds. “There are certain countries lenders won’t deal with. “Each lender has a list of countries they will and won’t deal with. If you live in Ukraine for example some lenders will not deal with you.” Some lenders dealing in expat business have offshore branches in areas like the Isle of Man and Jersey, so they can operate outside of UK jurisdiction. Lenders specialising in the market frequently named include Skipton International, NatWest International, Barclays, Arbuthnot Latham, Nedbank and Butterfield Mortgages, whilst a number of private banks will also look at expat business. Smaller building societies also garner lots of praise for their involvement. For example Tipton Building Society entered the market in February on the buy-to-let side. It is mainly handing deals outside of London where investors are buying for rental yields. “It’s been a hugely successful launch and we’ve got a big bit of business,” says Cammy Amaira, director of sales and marketing at the society.

Room for improvement

Azadi says there’s more of a choice of lenders when it comes 

Cover Cover

to expats taking out a buy-to-let than a mortgage with a view to having a family member live in the property. And this isn’t the only area he thinks there’s room for improvement. He thinks there’s not enough options for people buying in Scotland. Indeed, many building societies who deal with the expat market only lend in England and Wales. Another issue is lenders tend to be better at catering for employed applicants than self-employed. Finally Rob Gill, managing director of Altura Mortgage Finance, thinks more lenders should accept top slicing, where you supplement affordability with your own savings. “Most expats are wealthy individuals who can easily afford to subsidise their rent with income,” he explains. “I had one who is living in a part of Asia with a cheap cost of living. We did the maths and worked out that if he was allowed to subsidise the rent by £5,000 a year he could get 75% LTV. “But I couldn’t find any lender that would allow him to top slice so we could only get 65%. “For me that’s a gap in the market.”

Currency risk

An issue for both overseas and expat mortgages is currency issues. If the pound dips it affects the cost of paying for a property in euros, while the same is the case the other way around for expat clients buying in the UK. This can be one of the benefits of investing in property overseas, as your risk is spread by assets funded in multiple currencies. Rob Gill says dealing with currency conversions for people buying in the UK from overseas has been harder since the Mortgage Credit Directive came into force in 2016, introducing new foreign currency rules for lenders. The rules determined that if two currencies fluctuate by at least 20% lenders will need to

offer an option of switching the mortgage to the same currency as their earnings, or country of residence. If you earn money in a different currency but are buying in the UK in pounds it’s normal for lenders to stress tests against the currency losing 20% of its value – so if you earn 100,000 they will accept 80% of your salary. Gill says it’s normal for lenders to ‘haircut’ the amount of foreign currency income they will accept for affordability, say by 25%. However Payam Azadi blasts some lenders for having what he deems “silly rules” regarding currencies. Azadi says one lender takes the lowest figure of the currency exchange in the past five years. And given the pound’s unusually rapid fall against the euro in that time that significantly reduces how big a loan he’s been able to get his clients. Clare Nessling notes that people need to be aware of the exchange rate whenever making a purchase abroad as it has a direct impact on affordability. Meanwhile Nessling highlights that some lenders in Spain offer their clients mortgages in the currency a client earns, which could make things easier to buy in the country in future.


The dreaded B-word has affected both the overseas and expatriate markets. With overseas, Simon Conn says a lot of people have put things on hold, though things have at least improved this year. “What I have found is that since March, since the first original date we were thinking it’s going to pass, we’ve had people move forward because they can’t be bothered to wait around,” Conn says. “They are taking a hit on the currency because at the moment it’s rubbish.” Since Boris Johnson has become Prime Minister and talked up the prospect of a hard Brexit

things have got worse again though, as the weakening pound has put some buyers off. Conn thinks that we could see a surge in overseas activity if there is certainty regarding the Brexit vote, as some people are waiting around to see what happens. On the other hand, in some ways Brexit has been a blessing for foreign nationals, because the value of the pound has fallen rapidly against other currencies – the question is how far the pound could fall if there is a no deal Brexit. Unfortunately for brokers a lot of transactions from foreign nationals are made in cash. Azadi says there are some opportunities when it comes to arranging bridging and commercial mortgages.

Widening your expertise

There are clearly some significant barriers to entry for both these markets. With overseas mortgage lending, referring the business over to another expert is very common. Indeed, John Charcol has been referring business to Simon Conn for some time. “For overseas mortgages I think referring business makes sense for the vast majority of brokers,” Boulger says. However it seems easier to get involved in expat mortgages directly. “You’ve got to look at different things these days; you’ve got to,” Azadi urges. “Everyone’s got different circumstances. “Out of every three expat cases two are for existing clients I arranged residential mortgages for who moved abroad.” It seems the mortgage world is starting to get clued up on the process of facilitating property purchases overseas, as well as helping buyers based abroad get involved in the UK market. The world has steadily become more connected – and if this process continues the opportunities are only going to rise regarding overseas and expat mortgages. 




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Will there be a Boris Bounce? Tim Wheeldon, COO, Fluent Money, ponders whether the new PM’s housing sound bites are actionable or just hot air When Boris Johnson left his post as Foreign Secretary in Theresa May’s last government, it seemed as if we had seen the last of him; certainly as far as frontline politics were concerned. Fast forward just one year later and cripes, here he is as the newly ‘crowned’ Prime Minister, having culled the previous cabinet. Whatever our feelings about Boris as broadcaster, journalist, author, politician and human being, there is no doubting his unquenchable positivity, regardless of his past misdemeanours and gaffes. His victory in the race to lead the Conservative party and become PM owed as much to his personality as it did for the policies he claims to espouse. Conservative rank and file members who voted in the leadership contest (and the rest of the country regardless of their political hue) had grown tired of the submissive manner in which negotiations were perceived to have been held. He certainly brings a welcome ‘can do’ attitude to the challenges he faces. We have had to watch the painful and drawn out procession of meetings in Brussels for too long with Mrs May toing and froing across the Channel and returning with more air miles, but ultimately empty handed. Regardless of the No Deal or Negotiated Brexit options on the table, the majority of the population, whether Leave or Remain, will be secretly pleased not have to endure what the Daily Mail referred to as “servile posturing from our diplomats”. Our new PM, who it is said, sees himself as a modern day successor to Winston Churchill, will surely not allow that to happen




again. He will certainly have to bring the same positivity to the challenges he faces on the home front. His first speech from the steps of Downing Street seemed to promise much – no, let’s not talk about the cost yet- and was exactly the kind of positive rhetoric that had something for everyone. This neatly segues to more pertinent issues to our sector on which Boris had spoken about during his leadership campaign. His utterances on housing, but particularly stamp duty and inheritance tax could be interpreted as just more political promises which make good sound bites but would ultimately be forgotten once attention is diverted elsewhere. Let’s be clear, making properties valued below £500000 free of stamp duty and reducing the top rate on which stamp duty is paid from 12% to 7% is not going to be vote loser even though it could cut the income to the Treasury by as much as a quarter, or over £2bn. Popular though this policy will be with the voters and most of Middle England, will it have the effect of stimulating the property market? Surely a lot depends on

when this promise is fulfilled. The timeframe is important particularly as buyers are more likely to hold back if they think new rules are likely to be implemented. The government needs to be specific in its timing on this topic or risk the very real danger of the market grinding to a halt as people delay their plans, whilst waiting for the reduced stamp duty fees to some into effect. And what are the chances of these stamp duty changes actually taking place in the face of the countdown to a final break with Europe? (or is that the Final Countdown by Europe?) It would be easy, as previous governments have done, to make an attractive headline grabbing policy announcement and then quietly let it wither. Our new government has committed to meeting the October deadline to leave the EU and with this unfeasibly tight timescale, Brexit will be all consuming. The kind of radical domestic agenda proposed by Boris Johnson, of which the concerns about the housing market make up only a part, will most likely have to wait until the Brexit fallout dissipates. Let’s see if the rhetoric is matched by action.

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Digital seconds Natalie Thomas talks to Selina Finance to find out why it thinks it represents a ‘new breed of secured lender’ Digital lender Selina Finance recently unveiled its proposition to the intermediary market. Referring to itself as a ‘new breed of secured lender’, it pledges to cut the length of a typical completion time in half and provide smaller secured loans in two working days. Loan Introducer catches Michael Bieman up with its managing director Michael Biemann, to find out what attracted the former Harvard University teaching fellow to the UK secured loan market. How does your proposition differ to that of other lenders? The main differentiator is the flexibility we offer our borrowers. Our product has been designed to act like a credit facility, enabling borrowers to draw down and repay their funds in separate tranches whenever it suits them. For example, we recently completed a loan for £360,000 to a borrower that required the funding to carry out renovations to their property. They were able to draw down £150,000 of the funds to complete the first stage of the work, while leaving the rest untouched to use later on in the project. We also pride ourselves on the speed with which our technology platform can deliver funding. You’ve pledged to cut second charge completion times in half, how can you do this? It all comes down to the fact that our platform is entirely digitallydriven, and highly streamlined as a result. However, we always

encourage brokers and their clients to actively check the status of their application through our online portal, as some cases may require slightly more time to complete than others. What were you doing before the launch of Selina? I started my career working at a major mortgage lender in the US, where part of my role was to process home equity loans. After that, I joined one of the largest investment firms in Europe, who also purchased an enormous amount of mortgage securities, where my role involved working in product management and the executive office. Following that, I became a teaching fellow lecturing at Harvard University specialising in finance. Immediately prior to launching Selina Finance, I worked as a consultant for the Boston Consulting Group, where I worked with some of the largest lenders in Europe. What attracted you to the second charge market? The main reason I was attracted to the second charge market was because I spotted a lot of demand from UK borrowers that simply wasn’t being met by existing lenders. I witnessed so many people relying on high-cost alternative ways of obtaining finance, including the use of unsecured business loans, extortionately high-interest credit cards and bank overdraft facilities, all because they didn’t want to go through the stress of applying for a second charge mortgage on their property. AUGUST 2019

What are some of the best, and worst, things about the second charge market? One of the best things in the second charge market is the quality of brokers operating in the sector. Since launching past month, we have dealt with dozens of brokers in this space and they all demonstrated a tremendous amount of expertise. The second charge market in the UK remains buoyant and we’re confident that our offering is an attractive mixture of speed and certainty. I’m scratching my head to think of the worst thing about the second charge market. If anything it’s probably the lack of awareness about the role these sorts of flexible loans can play. Do you think the future of the UK second charge market is online? Absolutely. More and more borrowers are expecting and demanding to be able to do everything online. It’s becoming the default setting these days. The flexibility of having the option to access your funds directly online is crucial for some, as this enables them to draw down their funds whenever. However, for the whole of the second charge market to transition to online could take some time, as the effort and resources needed may not be available to all the lenders active in this space. While the online component will grow in importance, at Selina we are still urging all borrowers to keep in touch with their brokers, as one thing technology can’t replace is the human touch and understanding. MORTGAGE INTRODUCER


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Is 100% lending so bad? Natalie Thomas asks the experts for their take on 100% LTV second charge lending Lenders offering up to 100% loan-tovalue in the second charge mortgage market is nothing new and has been quietly happening behind the scenes for some time. Yet the recent launch of Optimum Credit’s 100% LTV product has grabbed the headlines and propelled the issue of high LTV lending into the spotlight. Optimum is offering up to 100% LTV on its variable and fixed rate loans from two to five years - up to a maximum of £100,000. Its commercial director, Simon Mules, says the prime product is for “borrowers with a track record of sound financial management,” and it will employ “a robust affordability assessment” to ensure borrowers can repay their loan. Nevertheless, the topic of 100% LTV lending is a sure way to spark debate amongst brokers, lenders and beyond due to its historical negative connotations. So, Loan Introducer asks: “Are 100% LTV second charges good for the market?”

Marie Grundy, sales director, West One Loans It is for every lender to determine their own risk appetite, but to offer products up to 100% LTV at a time of sustained political uncertainty and against the backdrop of an unsettled property market is undoubtedly a high-risk strategy for both the lender and borrower.

Lucy Barrett, managing director, Vantage Finance Although the reality is that most clients won’t qualify for 100% LTV products, I still think the direction of travel is a little alarming. The issues that caused the financial



crisis were deep rooted, and not just around high LTVs, but those lenders who maintained sensible LTV’s prior to the financial crisis over 10 years ago had a real advantage over some of their competitors due to their prudent approach. Personally, I am not a big fan of 100% LTV but there will be clients who will benefit from it if managed in a controlled way with good underwriting around loan purpose, repayment and affordability.

Tim Wheeldon, chief operating officer, Fluent for Advisers With 100% mortgages commonplace in the first charge sector, why would it be questionable for secured loan lenders to offer the same facility? It opens up new opportunities for advisers whose customers have been stymied by more restrictive LTVs. However, we are getting into an area where the accuracy of the property valuation, the potential effect of a downturn on that valuation and affordability calculation will need to be particularly robust. More than anything, lenders will be relying on master brokers to present cases that make sound business sense and are an appropriate product for their customers.

Steve Walker, managing director, Promise Solutions Lending up to 100% LTV has actually been available for a long time in the second charge industry, which is a good thing because it offers choice. It won’t always be suitable for everybody but the ability to offer high LTV’s, even with a little adverse credit or arrears, is going to be beneficial to some borrowers.


Darren Perry, head of second charge mortgages, Brightstar A second charge in itself is of greater risk to a lender than a first charge mortgage, so a second charge at 100% LTV is a massive risk. If property prices drop at all, a lender is going to find themself in a spot of bother if they ever had to reclaim their money. However, it’s not 100% lending for the sake of it and the affordability checks the borrower is going to need to meet in order to qualify for this type of loan are going to be hard, due to the increased rate and monthly payments. There will be some the product can help though, such as a borrower who has moved home recently and drawn all of the equity they can from their first-charge lender but need additional funds. If they are carrying out home improvements for example, they are hopefully increasing the value of their property which in time will give them a greater depth of equity. Optimum’s product has the potential to be popular but will come with a higher rate than we’re used to seeing, with the rate based on the customer’s risk profile.

Alan Cleary, managing director, Precise Mortgages 100% second charge loans in my opinion is the wrong thing at the wrong time. We are in the latter stages of the economic cycle and there are a lot of crosswinds such as Brexit and the increasing prevalence of international trade wars. Any of these factors could cause a reduction in house values and/ or an increase in unemployment. I would be worried that those people taking out one of these loans would be immediately in negative equity if something went wrong. However, I doubt very many

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people could qualify for aa 100% second charge loan because the Financial Conduct Authority regulations mean that they would have to be able to meet the payment plus a stressed rate for future interest rate rises and responsible lending principals would have to be a key consideration.

Rob Sinclair, chief executive, Association of Mortgage Intermediaries Provided the affordability is done properly, the risk clearly sits with the lender. If they have to go through a forced sale, the lender is never going to get anywhere near 100% of the value of the property. While the risk to the borrower is that they could be left with the debt still outstanding in the event of repossession. If you borrow that much against your property, affordability really needs to be provable and then the challenge is; why would the borrower be doing it through a second charge and not a different way? It might be that the borrower has a great rate with their first charge lender which they don’t want to disturb and therefore want to borrow up to 100% LTV through a second charge. Or, they might want the money to buy another property or to gift a deposit to their children, but normally borrowers would have other assets and means of doing this. The circumstances in which it could be used are quite narrow and niche – I think it would work more for a wealthy borrower than it would for one under financial pressure.

Anna Bennett, marketing manager, Positive Solutions There are lenders on our panel offering 100% LTV second charge mortgages; these are designed for prime borrowers with a good financial track record. The largest demand we receive for high leverage lending is from the more vulnerable clients. However, as 100% rates can be high, we seldom sell above 90% LTV. It is hard to justify value in the 100% rate when unsecured loans could be more attractive. That said, on occasion and for the right client scenario, it could work.

Buster Tolfree, commercial director – mortgages, United Trust Bank It’s not a place UTB are planning to go. With a 100% LTV, at best borrowers are relying on house values increasing to avoid eradicating all of the equity in their property and at worst, becoming mortgage prisoners. I can’t imagine many circumstances where putting a customer at risk of being in that situation would be a good outcome, even more so if debt consolidation is involved. There is a reason why in a post-Mortgage Market Review world of responsible lending, some products should stay on the dusty shelf of the past.

Damian Cain, director, Complete FS 100% LTV lending does have a place in the second charge market, but it is likely to remain very niche and only suitable for clients in very specific circumstances. The primary consideration when lending/borrowing 100% would be that it must either improve the client’s current situation or be a means to an end.




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Things are on the up Natalie Thomas considers the impact of high-net-worth clients on the growth of the second charge market ‘The only way is up’ – not just for Yazz but for the second charge mortgage market it would seem. High net worth (HNW) clients and second charge mortgages might sound like an unlikely combination but it’s proving to be an increasingly popular one. The fact the sector is now attracting HNW clients shows how far it has come in recent years and is quite the turnaround for a market once dubbed the ‘lending of last resort’. Whilst a HNW client might be rich on paper, it doesn’t always follow suit that they have large sums of cash in the bank or easily at their disposal; which is where a second charge can come in. Figures from the Finance & Leasing Association show not only are the number of second charge approvals up year-on-year, so too is the value. Second charge mortgage business totalled £108m in May 2019 – a 23% increase on May 2018. While overall, second charge lending has totalled £1,1bn in the 12 months to May – a 12% increase on the previous year. So how much of this is attributable to HNW clients?

High time for a second charge

Just like the first-charge mortgage market, the second charge sector is also in the midst of its own ‘rate war’ which has undoubtedly increased its appeal to savvy HNW borrowers. “With the cost of second charges so low, HNW clients may well have their cash tied up in something which earns more than the rate charged on the loan or is inconvenient to liquidate,” says Steve Walker, managing director of Promise Solutions. “HNW client’s requirements are often linked to business opportunities or home improvements and for one reason or another they don’t want to disturb their



mortgage or use other assets,” he says. Darren Perry, head of second charge mortgages at Brightstar, says whether a client is HNW or not, it can sometimes work out more cost effective to borrow funds rather than use their own or pull it out of other investments. “We are certainly seeing an increase from HNW clients,” he says. “Such clients may not have assets readily accessible, so a second charge can help in that situation.” Perry says it sees a lot of company directors who fall into that bracket. “They might have very successful businesses on paper but their money is not sat there readily available, so what do they do? They utilise one of the assets they have and secure the funds against it. They could need the funds to grow their business, start a new one or for home improvements,” he says. Nick Jones, head of specialist


distribution at Together, says just as with any typical second charge applicant, a second charge can make sense to a borrower who might be locked into a fixed-rate first charge mortgage with a hefty early repayment charge (ERC). Likewise, they may be on an interest-only deal they do not wish to disturb or on such a good mortgage rate they don’t wish to remortgage. “They may also want to borrow at a higher LTV,” he says. Tim Wheeldon, chief operating officer at Fluent for Advisers believes HNW clients are likely to require a second charge for the same reason as anyone else. “The only differences are in the overall numbers of those who would see themselves as HNW and the fact that loan sizes would likely be proportionately larger given the value of their properties and their financial status,” he says. “Many HNW clients may be asset rich but cash

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poor at particular times and see a second charge as a pragmatic and sensible way to raise cash quickly with minimal exit fees to pay, if they decide to repay early,” Wheeldon adds.

What’s behind the increase?

So, what’s behind the so-called current uplift in enquiries from HNW clients? Perry believes the shift in the sector’s image has definitely helped widen its appeal. “HNW clients are no different to anyone else when it comes to why they turn to second charge but what has helped enormously is the education in recent years around second charges. They are becoming much more widely accepted. It’s a fantastic product and that message is getting out there to the consumers and brokers,” he says. “I don’t think seconds have necessarily had the press coverage they deserve in the past and I think people are now starting to look at them as a viable option to a remortgage or other type of finance,” Perry adds. Jones stipulates that second charges may have traditionally been used for things such as renovations and debt consolidation but he believes brokers and their clients are seeing the value of using this kind of finance for many other purposes. “We’ve lent to wealthy borrowers who have taken out seconds secured against their own home, maybe to buy a second property to live in or a holiday home abroad or to expand or improve their buy-to-let (BTL) portfolios,“ he says. A HNW borrower may also want to release equity they’ve built up in the large home they currently live in to expand their

business or pay the deposit for a home for their grown up children, he adds. Damian Cain, director at Complete FS, says it is seeing a growing number of HNW enquiries from portfolio landlords and property investors. “The purpose is commonly to use equity from existing assets to either invest further or repay directors loan accounts, which have been used to obtain quick short-term capital without the need to take out a bridging loan.” Buster Tolfree, commercial director – mortgages, United Trust Bank, says the loan purposes for HNW clients are fairly varied. “We’ve had customers using substantial second charges to buy investment properties or homes for family members. Others are releasing equity to invest in businesses or substantial home extensions and improvements. The question should be why wouldn’t they use a second charge? “These borrowers are usually sophisticated and well informed, with highly competitive first charge products they want to leave alone. Second charges are quick, convenient and pricing has never been more competitive. If they have good reasons for wishing to leave their first charge alone, a second charge with an efficient, competitive lender, recommended by a fully qualified adviser, may be a really good option,” he adds. UTB is not alone when it comes to lenders securing deals for HNW clients. Prestige Finance recently completed its biggest ever second charge residential loan for over £1m. Its client had recently completed a major refurbishment of their main residence using funds raised via two BTL

properties, credit cards and personal loans. The client’s current first charge provider was not able to consider lending the required amount but Prestige was able to refinance the client’s outgoings using a second charge. While HNW clients were once solely associated with private banks, the plethora of specialist lenders are also meeting their needs. Jones says: “There may be all kinds of factors why a HNW client cannot use a private bank or high street lender, such as their age, which may mean they won’t fit the lending criteria of high street or private bank. “HNW borrowers also often have multiple income streams rather than simply being employed or self-employed and specialist lenders have the capability to look closely into the client’s background and the affordability of the loan rather than relying purely on loan-toincome and calculating income multiples as mainstream lenders tend to,” he adds. In addition to this, wealthy clients may live in properties made predominantly of materials such as glass and steel, or be large, heavily-converted homes or penthouse flats, Jones says. These may be considered non-standard by the high street, again meaning they could be unwilling to lend. The increase in demand for second charges from HNW clients is yet another example of how the second charge sector is breaking free from the stereotypical restraints that once defined it. With the last year in particular showing some healthy increases in both application numbers and loan volumes, it seems the only way is definitely up for the second charge sector.

Commercial second charge used to expand a BTL portfolio

Nick Jones head of specialist distribution, Together

We were able to deliver a second charge loan to three HNW directors who owned nearly 250 properties and ran their property portfolio through a limited company structure. They wished to

purchase more properties to add to their BTL empire and we were able to provide a second charge loan over 26 of their rental homes - worth £3.5m. The three investors, two who are self-employed directors of the property business, wanted to keep their favourable interest rate on the current first charge buy-to-let mortgages on the portfolio of properties across the North of England, which they bought before

the financial crisis of 2008. However, the customers wanted to unlock the equity they had built up over the past decade through a second charge loan, and wanted the deal to complete quickly so they could press ahead with adding to their property portfolio. We provided £879,000 in seven days through a second charge loan, agreeing repayments on an interest-only basis.





The disruptor Jessica Nangle meets Glenhawk founder and chief executive Guy Harrington to talk about his plans for the future Glenhawk is a lender with a difference. Guy Harrington, founder and chief executive, describes the company as having ‘the head of an institution and the heart of a startup’ and this is a vision that runs right through the business. Glenhawk wants to take tradition and turn it on its head, with its belief of client transparency and fairness giving it a unique proposition in the marketplace. Jessica Nangle spoke to Harrington about how the past 18 months have been, how technology can influence the market, and his plans for the future.

Starting out

Harrington has had a passion for property for many years, choosing to do a degree in commercial property management at Sheffield University but later dropping out thanks to an entrepreneurial effort selling mobile phones to fellow students. Following this stint, Harrington began building a buy-to-let portfolio by buying a couple of properties in Derby after he which he moved south to the capital and began doing property development in South West London. As a curveball, during this time Harrington set up the world’s first voice-based dating app with a good friend of his, called ‘Revealr’. After selling this to one of the largest dating groups in the world, Harrington set his sights once again on property, describing how Glenhawk began through being startled at the amount of fees bridging loan companies were charging. This,




Harrington explains, prompted a desire to do things differently and create a lender which ‘looks like a bank but isn’t’. Thus, Glenhawk was born. Since launching in January 2018, it’s been an exciting time for the lender, with Harrington’s ambitions of creating a market share in this industry based on complete fairness and transparency running at its core. “We came into a competitive market which still remains highly competitive,” he says. “Considering the economic and political headwinds, we have had a very successful time. Traditionally, our sector has been dominated by a lot of lenders who chase aggressive returns for their investors and on the back of that, their approach has been

quite heavy-handed to borrowers. We carved a niche out – which was hard to do – but in the way we treat people and commercially with fees and rates; operating at that level where we can live as a business and pay the bills but offer a very competitive product has been a big learning experience for us.” Glenhawk now has a team of just under 20, following a number of recent new hires and joiners on the horizon, all of whom have a share in the business. “We have a team who we think are some of the best in the industry and who are pushing every day for innovation,” Harrington explains. Attracting the right talent has been paramount and offering good packages for its employees and giving them the options in the business has been part of that. “This way everybody benefits,” Harrington says. “We pay well and give a generous package. I think that is why we have been able to add some really exceptional people, but we have been lucky.” Along with other more unique benefits, such as unlimited holiday, staff attraction and retention has been a key objective for Glenhawk, and Harrington believes this will continue to be an imperative part of the business moving forward.

Track record

Unlike other lenders who report a changing marketplace and recruitment at the forefront of their key challenges, Glenhawk, being a new business, has faced different difficulties. “One of the


biggest challenges has been dealing with senior funding lines as a startup,” he explains. “You need a track record; they like to see redemptions, loans coming back in and loans going out. The trouble is, this takes time, and obviously we wanted to grow. Getting over that hump was hard.” Glenhawk now pride themselves with nearly £60m lent in the past 18 months with no defaults, capital losses or delinquencies, which has given both current and potential funders peace of mind. “I would say this went on until the first round of redemptions which was back in December 2018 – after that point people began to see that we were doing a good job,” Harrington explains. “Any funder can go in now with the assurance that we have a track record, which is a relief.” Despite this challenge, interest in the lender has been rife with established challenger bank Shawbrook choosing to get involved in September 2018. “I think Shawbrook took a bit of a risk with us,” Harrington said. “It worked out, and Insight [one of the world’s largest asset managers] was a firm that came with them, which was great.” Glenhawk has recently appointed EY as it explores its next funding line, and with a number of leading investment banks and other institutions showing interest, it appears this initial funding challenge will not be so for much longer.


Becoming regulated is important to Harrington, who believes that regulation in the right form is good in this sector. “As long as we are treating the borrowers fairly and explaining the products to the client that is our side done,” he says. “There is going to be a clear definition between the guys who decide to go down a regulated route like ourselves versus the unregulated. I think regulation is necessary for growth - we won’t get to the size that we want to be if we don’t become regulated.”

Along with plans to be FCA regulated, internal governance has also been at the forefront for Glenhawk with the recent appointment of Caroline Ong as a non-executive director. Formerly a non-executive at Octane Capital and chief operating officer at Pamplona Capital, Ong has come on board to aid with governance and growing the business, working alongside Rightmove co-founder Harry Hill who is also non-executive director at the lender. “Both Caroline and Harry have pushed and questioned me which is good, as I like to be questioned on my decisions,” Harrington says. Along with Ong’s appointment, Glenhawk has also appointed a head of compliance, who came from a home collect credit firm; one of the most regulated markets in the UK. “We now have a really good governance framework supporting us on the regulatory and corporate sides to make sure that I am accountable for how we are doing and how we continue to grow.”

The changing borrower

Glenhawk has publicised the fact that they will not deal with ground up enquiries, in part due to being a complex part of the market that requires a specialist team. Harrington believes this has led to more interesting enquiries from clients in recent months. “We are beginning to see interesting refurbishment schemes coming through, and are definitely seeing a different type of borrower – mainly because we do not want to go near ground up.” Development exit products are also proving a popular option in the current climate of sluggish housing sales and a more regulated buy-to-let market. “I think the development exit product is popular at the moment thanks to the economy and where we are in the cycle. However, we have to really believe in our borrowers. We will never take a loan on if someone is unsure how they will successfully repay it, s AUGUST 2019

that is unfair on both sides.”


Working in what is a traditionally ‘manual’ business, Harrington has mixed views on the rise of technology. “You can run this business, if you wanted, on an Excel spreadsheet,” he argues. “However, unless it is a super simple mortgage by one of the new online brokers, you need human input. You need manual underwriting, you need relationships and phone calls.” One step Glenhawk has autonomised however is its internal processes, opting for a personalised internal software system over those available in the market. “We went to all the main providers,” Harrington explains. “They all came in and pitched, but we just could not find a solution which worked for us from both a technical and pricing perspective.” After deciding to hire a specialist to create a personalised system for Glenhawk, Harrington is thrilled with the results. “The software that has been created is super slick, super safe, and has all of our loan monitoring on it which is ideal for us,” Harrington says. “As we grow, we do not have to pay hundreds of thousands a year in software costs which as an IP value for the business is attractive.” However, the chief executive remains clear on his views on automating this industry. “Aside from our internal software, this is a very difficult market to autonomise, which I think will be the case for a while.”

Looking forward

With new hires set to join the business in the coming months and FCA regulation expected in the near future, Glenhawk is one to watch. However remaining true to their core is more important than anything for its founder, with the lasting words from Harrington being clear: “We want to continue bringing fairness to the mortgage market and look at ways in which we can improve that part.” MORTGAGE INTRODUCER


SFI: Execution Only

Be careful what you wish for The FCA has suggested a series of changes to its mortgage sales rules, including proposals to widen the definition of execution-only. However, some lenders have argued that these rules are inhibiting their ability to develop online products which could be used by customers to search for and filter a wider range of potentially cheaper options. Consequently, the regulator is now looking to redefine some of its rules to allow customers to search and filter without the information that is returned being regarded as advice. Moreover, these changes could be extended to allow for a differentiation between platforms which offer information and those which allow for transactions, thereby placing current mortgage rules in line with those that govern investments. However, many within the mortgage sector are understandably

Shaun Almond managing director, HLPartnership

wary of the current proposals, with some suggesting that a rise in execution-only options could actually reduce product options, lower the standards that were established by the 2014 Mortgage Market Review and increase the risk of consumers making unsuitable product decisions. Moreover, some experts contend that an emphasis on price and cost efficiency, as opposed to the formerly touted principles of consumer protection and the promotion of appropriate choice making, could undermine the role of brokers. The benefits of customer orientated advice within the mortgage process would then be undermined and could lead to a ‘two-tier’ pricing system. Indeed, many critics argue that there is a fundamental difference between the decisions involved with purchasing an investment and the kind of information

that is needed to complete a property purchase. This makes the need for clients to take trusted, expert advice all the more imperative when considering the slew of available products and lenders on the market. In addition, the presence and influence of brokers within the process is widely regarded as indispensable for maintaining market confidence, promoting a level of trust and peace of mind amongst consumers that a tech-based approach could never hope to replicate. So, in short, what we need is a clarification of certain fundamental points that are not addressed by the proposals in their current state. Ultimately we must question whether this direction of travel, and the reasoning behind it, can only be perceived as an abandonment of consumer protection principles and the primacy of advice.

SFI: Auction Finance

No longer business as usual Property auction purchases and bridging finance will forever be intertwined, and it’s ultimately very easy to make the odd token nod to the sector and just believe it’ll keep ticking along regardless. Ho hum, job done. But actually things are changing, and not necessarily for the better. As with many sectors the auctioneers are experiencing their own difficulties, and as per the finance sector the answer lies in embracing the world of online opportunity. In February this year, EG ran an article based on exclusive data from the Essential Information Group which stated therein ‘all but four of the top 12 auction houses reporting declines in totals raised in 2018’. It carried onto state that ‘the majority of declines across the auctioneers were in double digits’. As we know auctions are expensive to host, and there is an issue with



volumes and ultimately achieved values throughout the vastly different performing regions of the UK. It’s then interesting to compare these findings Bridging Trends. Based on the recently released Q2 figures auction purchase represented 7% of bridging loan purposes, which was the same as 2018 compared to 9% in 2017. Given the annual increase in the total of bridging finance lending this represents a steady performance, but nothing to write home about. Should we just assume that the sector will continue to provide a sound foundation which requires little attention? No, because behind the scene things are changing. It was reported in Property Investor Today at the start of the July that Loveitts held it’s first eBay-style property auction, one that saw its first lot sell for over twice the original asking price. (For the record AUGUST 2019

Jo Breeden managing director, Crystal Specialist Finance

an 0.11-acre piece of land went for £20,500 as compared to £10k.) The quote from Sally Smith, auctioneer and director of Loveitts, explains the rationale: “Online auctions provide all the benefits of buying and selling by auction, just with an eBay style of bidding. Rather than having to wait until our next regional in-room sale, properties are readily available online at any time, with exchange on the fall of a virtual hammer.” She continued to state the plan is to bring “the best elements of a traditional auction to the public through a digital framework”. The key for the bridging sector is to ensure it adapts to these new platforms and delivers not only the products, but the technologically advanced service which keeps the ultimate purchase as seamless as possible.

SFI: Bridging

Bridging is developing nicely… With more lenders and brokers segueing from bridging loans to development finance, it is time to look at the opportunities. For brokers with the necessary skills it is an exciting space in which brokers handle larger loans, with an average size between £500,000 and £2m, and with the demand for new housing far from satisfied and the high street banks reluctant to lend, the opportunities are endless. It is not quite as simple as it first looks and may not be easy for brokers who are inexperienced in development finance, but good lenders will work closely with their brokers to both educate and, where there is a live deal, assist to complete the loan. So, let us look at the process. Developments fall into two distinct sectors – ground-up new build or conversion of existing properties either under Permitted Development Rights or following planning permission being granted. The process for each is similar but often lenders will offer better terms where the property is “wind and watertight” as

Brian Rubins executive chairman, Alternative Bridging Corporation

should be the case for conversions or where the new build project is at a midway stage and needs refinance. The first step is to gather in all the necessary information. It begins with details of the developer and his relevant experience evidenced by previous projects. Next details of the proposed scheme - a development finance application form supported by a cashflow forecast, construction cost data, planning consent and approved plans as well as information on anticipated selling prices so that a meaningful decision in principle can be given. Cutting corners on information will delay the process! After a positive decision in principle, the lender instructs its valuer to report which will include the current value of the site and the anticipated gross development value (GDV) and commentary on demand and competing projects. Secondly, the monitoring surveyor’s report which will comment on the method of construction procurement, the experience and ability of the contractor or, where the de-

veloper is also managing the process in-house, his skills and capability to organise the team of specialist subcontractors. The monitoring surveyor will also review the adequacy of the construction budget or, where the scheme has started, the cost to complete, the contractual relationships between the developer, professionals and major sub-contractors and report on the conditions in the planning permission. The lender’s legal due diligence will be wider and, as a result, more expensive and take longer to complete than that for a simple bridging loan as in addition to the usual report on title it will include a review of the planning permission and S.106 Agreement (if there is one), the terms of the building contract and the legal relationships created by the developer with its professionals and sub-contractors. Yes, there is much more to think about than for a simple bridging loan but learning to navigate the process is rewarding and doubly so as, with good service, developers become serial borrowers.

The importance of first impressions As I write this piece Boris Johnson is chairing his first Cabinet and many of those new cabinet members will be conscious of the importance to their new roles of how they are perceived by the country at first sight. The same ‘consciousness’ should also be true for every profession involved in the short-term lending sector. We all need to be prepared to make that first impression and that really boils down to doing our homework and determinig exactly what the people we are meeting are expecting from us. This year after six successful years of below the radar growth Apex Bridging adopted a strategy for growth and embarked on a period of field research. This involved getting

to know more about what our new potential industry partners expect of us and in return what they can expect of us once we have assessed their needs and embraced them in our business model. The point I am making is that lenders need to spend time meeting with cherry picked targets amongst, valuers, solicitors, brokers and other distributors to determine how they have to revise their model if they are to forge long-term relationships that will sustain their growth ambitions. I recently spent a fascinating day with Vic and Dale Janells at Impact Specialist Finance, a distributor we have not done business with before but after understanding better how their model works, Apex Bridging will be looking at what we can do to

Sonia Shortland director, Apex Bridging

modify our model to generate business with one of the most trusted and established businesses in the lending market. It is no longer a sales pitch, it is a relationship pitch and as with all relationships that you hope endures, we need to know more about the people we are getting into bed with and that means face-to-face honest exchanges. My trip to Horsham was a 10 hour round trip (thanks to the M25) but it was worth it, I learned a great deal and I know from the horse’s mouth what Apex Bridging, as a lender in an increasingly competitive market, must do to be on Impact’s radar. I hope I made the right impression at my first meeting with Dale and Vic, they impressed me.



SFI: FIBA Bridging

Looking for more transparency One of the guiding principles on which FIBA was established is that we strive to ensure that standards in the industry are maintained but also improved. Recently, we have taken the opportunity to look at the subject of transparency around the fee structures of some specialist property finance lenders and in this particular case, short term lenders. As you may have seen in a recent trade press article, the issue centres round the absence of clarity concerning these rates of interest charged when a customer goes past their end date for repayment and needs to extend the loan period. These instances can be because of cashflow problems or simply because the project being worked on has run over. Of course, lenders have the right to set their criteria to lend as it is important that a tight rein is kept on funds that are out with their customers and I am sure the intention is not to hide or obscure the true costs. In addition, there are a number of advisers in the process, including the customer’s solicitor, who are acting in a principled manner to make this information available to the customer. We are just seeking a way of making this simpler to view at the outset of the process. Regardless of whether the lender is or isn’t regulated, the principle of ‘caveat emptor’ or ‘buyer beware’ does not apply nor is it a substitute



Adam Tyler executive chairman, FIBA


for treating customers fairly. Customers and their advisers have the absolute right to know in advance what charges will be levied during the potential lifetime of a loan and beyond. Terms and conditions when made clear and easy to digest mean that there is no room for doubt that when a contract is made, when each party is fully aware of the terms of the deal, it will always lead to a better outcome for all. To that end, FIBA will now publish data on all customer rates for all of our lender partners in the members’ section of the FIBA website. This will include additional fees and rates for extending the term of a loan. We work very closely with all of our lenders and not one so far has raised any objection to our stance. It is vital that our members have clear and unambiguous guidance so that they in turn can be confident when they advise customers as to the best options. Our lender panel aims to represent not only the best of breed, but also those whose terms and conditions are completely clear and utterly transparent. While I would say that the specialist property finance sector has much to be proud of overall, in terms of rates, loan purposes and its sheer variety, it is true that some lenders in the market may not be as clear and open about the charges or extension rates it applies to borrowers during the life of the loan and we

would like to help make a difference. I have spoken many times about the value that FIBA offers to its members in terms of facilities and as a voice that is heard at the highest levels of government. However, its mandate is about the maintenance and improvement of standards and we shall continue to call for transparency and fair dealing in every aspect of our industry. There are new lenders joining the short term lending space all the time and currently there are no real barriers to entry for any firm with a funding line to open for business in the non-regulated sector. As a strong believer in a free market, I feel there is much to recommend the pioneering spirit of enterprise that makes room for new lenders to emerge and add to the multiplicity of choice available to advisers and their customers. After all, competition is the lifeblood of any healthy industry and provides the spur for innovation, service and helps to drive costs down. However, there is a danger that in an already crowded market the imperative to write new business can increase the likelihood of credit policy and underwriting standards being compromised. Trying to establish a presence in a successful market like the short term lending sector as a newcomer is becoming harder because of the sheer level of competition. It takes ingenuity and the ability to demonstrate USPs that can be used to show introducers and their clients that a particular proposition is worthy of consideration. The dangers come when too many exceptions to policy are made for immediate new business gain, but which sow the seeds of longer term inability to manage loans that are more likely to go delinquent because they feel outside written criteria and where exit strategies have been ignored. FIBA will always welcome new lenders to our lender panel, but we always vet them thoroughly to see that their business plans are sustainable and their offering provides something that can make them stand out, such as demonstrating where they can provide funding in a particular niche, for example.

SFI: Flexible Bridgingworking

Flexible working and increased productivity An increasing number of workers are asking their bosses for flexible working hours as they feel they would be more productive if offered earlier finishing times. With 73% of UK businesses stating they are finding it hard to find the right staff, could flexible working be a simple solution to solving this recruitment problem and increasing productivity? “Working 9-5 what a way to make a living”, goes the song as belted out by a certain Dolly Parton back in 1980. The lyrics were critical then of a 9-5 day and so is this the way that people really want to work in the 21st century? Is the regimented ‘9-5esque’ work day the best and only way for organisations to get the most from their employees?

Clare Jupp director of people development, Brightstar

Less conventional

I would argue that ‘9-5’ is not the way most people want to work and also that less conventional approaches to the working day can (and in my experience do) bring fantastic results. Furthermore, I am a firm believer in the benefits of a flexible approach to working and thus, also an advocate of the ‘output’ argument versus working a set number of hours within a regimented structure to prove your worth and ‘get the job done’. Therefore, I was both hugely encouraged and very interested by the findings of a recent piece of research which has presented some illuminating findings surrounding people’s attitudes to flexible working. The study was conducted via the Totaljobs database to over 2,400 adults aged 18-65 between April and May 2019. According to Totaljobs, a huge 84% of workers are asking their employers to consider flexible work, with 62% stating they feel they would be more productive and get more done during the day if they could leave earlier. This view seems to be held by middle managers as well as almost three quarters (73%)




think that their team would be more productive if they were offered an earlier finish. If you’re interested in the findings and want to pilot a scheme, then now could be the moment to take the plunge. This is because the research also showed that more than a fifth (21%) of workers think they are more productive during the summer months and so Totaljobs believe this is the best time to implement flexible working. With 73% of UK businesses stating they are finding it hard to find the right staff, flexible working could be the answer to this problem. If retention is an issue for your organisation, then perhaps a change in work pattern could help to reduce your staff turnover. Indeed, 80% of respondents said they would be less likely to leave their current position if they were offered flexible working hours. From experience, I know that we have not only ‘scooped’ some amazing employees as a result of offering flexible working, we’ve also kept a great many too. Why on earth would you deny a great team member a slightly different structure to their working week just for the sake of convention? Despite the clear desire for flexible working however, the research revealed that there may be some barriers to overcome within organisations so as to create the right business culture for flexible working to actually work. Furthermore, 44% of workers said they would be worried about leaving early as they think their colleagues would judge them. More than two fifths (42%) admitted to feeling guilty even when their manager has allowed them to leave work earlier. This is regrettable but somewhat inevitable as it is probably the case that many organisations aren’t quite ‘culturally’ ready for the shift. If this is the case, then my advice here would be for organisations to ‘lead from the front’ when it comes to flexible working; to set the

tone, to make the exception become a norm and to prove that it’s all about results and output, not hours spent sitting in the office, without necessarily achieving good things.


Our executive team and management team are both diverse in so many ways, but we share some commonality: most of us are parents, some of us are carers and all of us have strong priorities out of work that are respected and valued by the rest of us. Our approach is simple. If we deny ourselves and our colleagues the opportunity to do these things that are so important to us, what effect and impact could that have on mindset, mental health and productivity whilst in work? We appreciate the opportunity to work differently when required and we work hard to make everything work. Nobody is resentful or questioning about the need to work flexibly and neither are we apologetic or afraid to ask for flexibility. Yes of course it requires professionalism, full commitment and teamwork for this to work, but if your top levels in the organisation can achieve this, it sets a fantastic tone and helps to build a strong work culture. Championing the flexible approach to work has really helped Brightstar to achieve greater gender balance, especially as it is something that we have afforded to whomever ever has needed it, regardless of gender. Indeed, it is my opinion, working is something that organisations should offer to all employees of required: it’s not just women who want it or indeed whom have to balance responsibilities and commitments. Men are parents and carers too. If flexible working arrangements were applied equally and accepted by the entire team as part of the business ethos, there would be no ‘shuffling backwards’ out of meeting rooms or ‘feeling bad’ for needing to be in half an hour later. There would, in fact, be a shared understanding that people have lives and commitments beyond work and a shared belief that everyone can achieve everything well rather than doing a half-baked job of everything.




We are a small group run by volunteers who help and support women going through breast cancer, treatment and beyond.

Saturday 21st September 7.30pm till late Liverpool Marriott Hotel

Steered by women we provide invaluable support during the emotional, mental and physical recovery of those affected by breast cancer.

We are holding another big fundraising evening with a welcome drink, 3 course meal, DJ & raffle prizes. Smart dress.

B OOK A C ORP OR AT E TA BL E Only two corporate tables remaining for parties of 10. Tables cost £1,000 Contact Ann Coffey for details: 07815 619 971





FS1010-Sunshine-Charity-Ball-BLDad-2019-AW_2.indd 1

26/07/2019 14:03

The Hall of Fame

Wellies at the ready... Many industry events end with more than a few participants finishing the night a little worse for wear. That in mind you can imagine the excitement in some quarters when Complete FS announced its music festival themed expo. Luminaries flocked to the south coast to join the guys and have Dolly Parton and Boy George (allegedly) greet them on the day. However rather than portaloos and vomming teenagers the event was much more civilised with roundtables and speeches from a range of keynote speakers. One broker, who looked a little out of place, told The HoF “I feel like a bit of a t**t now. Turning up with wellies and a sleeping bag to an industry event is bad enough; where I hid the vodka bottle though just adds injury to insult.” Luckily over 100 brokers read the invite properly and enjoyed a another cracking Complete FS expo. Keep up the good work guys.

Back of the net Who says mortgage broking doesn’t pay? As the football season gets underway it’s great to see full-back Tyrone Mings had been sold to Premier League club Aston Villa for a cool £20m. The defender, 26, was a hit during a loan spell at Villa in the second half of last term, helping the club win promotion. Boss Dean Smith always wanted to sign Mings permanently and it was simply a matter of the Villa striking a bargain with the Cherries. Those with long memories may well remember Tyrone from 2012 where he spent 10 months kicking about as a mortgage broker for London & Country. Following his stint at L&C he moved to Ipswich Town then left for AFC Bournemouth in 2015. Nothing like being on the ball.

And the winner is...

Well this is how to bowl a maiden over! This month’s winner is: David Horsman, business development manager, Metro Bank




Red Carpet Treatment…

Help for the homeless Two Leek United colleagues spent a night sleeping out under the stars to help raise awareness of – and funds to help – homeless and vulnerable people. Marjory Beech and Amy Morris, from the Society’s Hanley branch, took part in a 12-hour open-air sleep-out in aid of Stoke-on-Trent-based The Gingerbread Centre. They joined a dozen other volunteers for the 7pm-7am event, which was held overnight in the grounds of All Saints’ Church,Hanley. And organisers are hoping it will have succeeded in raising more than £1,500 in total to help Gingerbread’s work. “Bedding down out in the open, we could hear all sorts of noises from the surrounding area at all times of the night,” said Marjory, deputy branch manager at Leek United’s Hanley Branch. ‘It really helped us to understand how vulnerable people must feel out on the streets, in all kinds of weather – although on this occasion, the weather was kind to us.” As a big supporter of homeless charities guys The HoF salutes you.

This month’s caption competition

Win a Pimms Summer Pack, courtesy of the kind people over at Brightstar Financial! Simply email your witty caption to with the subject line CAPTION. Every month the best will be published

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Generous rental calculations, no maximum age, and accepting recently incorporated companies are just a few of the things we do to make limited company buy to let cases more straightforward. Just turn to Foundation, and it’s Solution Found. ©2019 Foundation Home Loans is a trading style of Paratus AMC Limited. Registered Office: No.5 Arlington Square, Downshire Way, Bracknell, Berkshire RG12 1WA. Registered in England with Company No. 03489004. Paratus AMC Limited is authorised and regulated by the Financial Conduct Authority. Our registration number is 301128. Buy to let mortgages are not regulated by the Financial Conduct Authority. No limit on portfolio size, subject to maximum borrowing of £3 million with Foundation Home Loans. Calls may be monitored and recorded.

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Mortgage Introducer August 2019  

Mortgage Introducer August 2019