Special Feature
Reasons to be cheerful Are these the best times to be a broker? Darrell Walker Head of Sales InterBay Commercial
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t would be too easy for Brexit and the general discord in government to contribute to a sense of malaise for brokers as the effects of the ongoing saga seem to have contributed to a paralysis within the UK housing market. Anyone would be hard pressed to accurately predict what might be next on the horizon. For brokers, however, the picture isn’t quite so gloomy. Growing complexity, both in the demand from buyers, and the increased range of financial products, brings with it opportunity. As changes arise as a result of market forces and government policy, the market responds with new products. It is increasing in complexity as specialist areas of lending grow in importance to respond to new demand. This new level of complexity is a good thing for the broker. In fact, we are beginning to wonder if there has ever been a better time to be a broker. Indeed, the most recent report from IMLA suggests demand for professional advice amidst these uncertain times has reached an historic high – up to 90 cases p/a. The bridging market is a good example of an area that has expanded over recent years with new lenders entering and new products being introduced to the market, providing a new potential revenue stream
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for brokers. Our own research found that 70% of brokers believed demand for bridging has risen in the last year, and 68% of brokers noticed an increase in the number of bridging products available. This increased activity brings opportunity with 65% of brokers attesting to the fact that as bridging cases often involve higher fees, it presented an opportunity to earn additional income. As the number of bridging cases increases, so does the complexity of cases requiring bespoke solutions. An example of this was when we were approached by a client about a soon-to-be-completed development of nine houses and nine flats in Battersea, South London. The developer was looking for an exit from seven remaining houses valued at £16.35 million, with costs of £11.34 million. As the agreement drew to a close, the client wanted a product that could repay the outstanding development finance and allow the sale of the units over a 12-month period, avoiding the need for a quick-fire sale. InterBay created a bespoke product that meant as the client sold the units; the bank would retain full sale proceeds until the LTV fell below 50%. Once this had been achieved, the developer would then retain a share of the profits, as long as the LTV didn’t exceed 50%. Government policy is another area which has created opportunities for brokers. As the mortgage tax relief begins to bite even more in this tax year, more and more landlords are turning to specialist brokers as they seek to borrow through a limited company to offset the changes to the tax treatment of Buy-to-let. Our research from a year ago, in conjunction with BVA BDRC Commercial, found that one in five landlords had already set up a limited company. Additional research