The Intermediary – April 2025

OPINION ⬛ Expert insight across residential, buy-to-let, specialist finance, and more

Q&A ⬛ The Cumberland on broker relationships and the evolving holiday let market

BROKER BUSINESS ⬛ From choosing the right model to tips for complex cases

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www.theintermediary.co.uk | Issue 27 | April 2025 | £6

PAST, PRESENT AND FUTURE-PROOFING The social impact of 250 years of building societies

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02-03-03 (2)

From the editor...

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025, as many will already be well aware, marks 250 years since the formation of the UK’s first building society. A typically British institution in so many ways, the first building society was, of course, founded in that most sacred of our institutions, the local pub.

While the Golden Cross Inn may no longer exist, many of its ilk still do. In fact, plenty of those reading this magazine will have spent some of the sunny Easter long weekend with a cheery pint in an establishment that, thanks to our love of preserving history, and our unwavering preferences when it comes to drinking holes, harks back to those days – or even older.

I can personally pretend my ill-spent years as a student in York had a slightly more respectable air because we were drinking in pubs that, in some instances, had been serving patrons since the 1600s. There were fewer Jäger-bombs back then, of course.

In one sense, then, it isn’t all that hard to cast our minds back to the se ing of those early building society meetings.

Most of us will have had our fair share of rousing social discussions with peers in the snug of an old pub, and we’ve all had our own highminded business ideas a er too many pints.

It’s also not hard to imagine a time when the people si ing in those pubs were watching the world change drastically around them, leaving them wanting more control, greater security, and a more meaningful say in politics and public

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discourse. One might even argue that it all sounds eerily familiar.

While many of our pubs seem to be preserved in time, and our politics along with it, the truth is that the world has changed vastly since Richard Ketley first set out his idea, and so have building societies. They have progressed through periods of growth and contraction, and at times it has seemed as if the writing was on the wall for the mutual model.

Nevertheless, our feature this month explores why this model is just as important a part of the British financial and social structure as ever.

Indeed, as we increasingly focus on factors such as consumer protection and sustainability, the role is clear. I would argue this goes even further – in the midst of what is seemingly an increasingly cruel and violent global narrative, it is natural that a model that espouses something more than profit for profit’s sake resonates.

You’re welcome to disagree with me in a rousing debate down the Coach and Horses.

Throughout the magazine, you’ll spot thought leadership from building societies on everything, from residential and buy-to-let, through to later life lending and technology. Meanwhile, there’s always more to be found within our pages, from analysis of the Renters’ Rights Bill as it speeds through Parliament, to changing development trends, high-net-worth banking, affordability for first-time buyers, and much more. ●

Jessica Bird @jess_jbird

@IntermediaryUK

Contributors

The Team Jessica Bird ....................... Managing Editor Jessica O’Connor .................Senior Reporter Marvin Onumonu ......................... Reporter Zarah Choudhary .......................... Reporter editorial@theintermediary.co.uk Stephen Watson .................................. BDM stephen@theintermediary.co.uk Brian West ............. Sales Director (Interim) brian@theintermediary.co.uk Ryan Fowler ................................ Publisher Felix Blakeston .............. Associate Publisher Helen Thorne .............................. Accounts finance@theintermediary.co.uk Orson McAleer ............................. Designer Bryan Hay ......................... Associate Editor Subscriptions subscriptions@theintermediary.co.uk

Ahmed Michla | Andrew Gething Angus MacNee | Anna Lewis | Ashley Pearson Averil Leimon | Beth Yolland-Jones Chris Blewitt | Claire Askham | David Castling David Lownds | David Whittaker Emily Hollands | Emma Cox | Gina England Grant Seaton | Greg Went | Hugo Davies Jason Berry | Jerry Mulle | Jess Trueman Jonathan Fowler | Jonathan Pearson Kate Davies | Kathy Bowes | Laura Sneddon Laura Thomas | Louisa Ritchie | Louise Pengelly Martese Carton | Matt Aston | Matthew Cumber Neal Jannels | Paul Adams | Peter Izard Richard Armstrong | Richard Howells Rob Clifford | Rob McCoy | Rob Oliver Roxana Mohammadian-Molina | Roz Cawood Steph Dunkley | Steve Carruthers Steve Goodall | Steven Macdonald | Tom Brown Tom Denman-Molloy | Will Calito

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OPINION ⬛ Expert insight across residential, buy-to-let, specialist finance, and more

Q&A ⬛ The Cumberland on broker relationships and the evolving holiday let market

BROKER BUSINESS ⬛ From choosing the right model to tips for complex cases

Intermediary.

The

www.theintermediary.co.uk | Issue 27 | April 2025 | £6

PAST, PRESENT AND FUTURE-PROOFING The social impact of 250 years of building societies

Copyright © 2025 The Intermediary

Cover illustration by Eduardo Luzzatti Printed by Pensord Press

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April 2025 | The Intermediary

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From first-time to experienced landlords, Together is here to help your clients build and diversify their Buy to Let portfolios.

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Contents

INTERVIEWS & PROFILES

The Interview 42 S HAW BRO OK

Emma Cox discusses evolving strategies to support landlords and brokers

Feature 34

42

PA S T , P R E S E N T A N D F U T U R E - P RO O F I N G

Marvin Onumonu looks at the social impact of the building society movement

REGULARS

Broker Business 64

A look at the practical realities of being a broker, from managing stress, choosing AR or DA, and the monthly case clinic

On the move 82

An eye on the revolving doors of the mortgage market: the latest industry job moves

SECTORS AT-A-GLANCE

Residential 6 Buy-to-let 24 Specialist Finance 42 Later Life 56 Second Charge 58 Protection 60 Technology 76

Profiles 14, 74 INVESTEC

Peter Izard explores innovative strategies in high-net-worth banking PRIMIS

Rochard Howells on consolidating success and planning for the future

Q&As 30, 54 CUMBERLAND

Grant Seaton discusses broker relationships and the changing holiday let market STREAMBANK

Roz Cawood and Richard Armstrong celebrate the firm’s second birthday

Meet the BDM 20 FA M I LY B U I L D I N G S O C I E T Y

Gina England on the challenges and opportunities facing business development managers

The Intermediary | February 2023

3

RESIDENTIAL Opinion

Energy bill hike highlights need for near-prime options

M

any households will have winced at the news that the Energy Price Cap is being increased once

again from April.

Millions of us are on energy tariffs that are covered by the cap and will likely see our monthly outgoings on gas and electricity increase in the months ahead as a result.

However, higher energy bills are not just a concern in the present; the growth seen over recent years has been a driver in payment issues for plenty of households, contributing to the growing need for lenders to improve how they cater for near-prime borrowers.

Feeling the strain One of the clearest pressures on budgets in recent years has been energy bills. In the a ermath of the pandemic, we saw energy prices pushed to levels we simply had not seen before in the UK. Ofgem, the energy regulator, sets the Energy Price Cap, a limit on the amount suppliers can charge their customers for typical use, based on wholesale prices. That cap was on course to be set above £3,000 a year, prompting the intervention of the Government at the time, through the lower Energy Price Guarantee.

While prices have dropped since then, they remain higher than was the norm in the preceding years. And with the Price Cap due to rise once more in April to £1,849 for typical use – a hike of 6.4% from its current level – plenty of homeowners will once again feel the strain.

Ofgem publishes data on energy arrears, and it’s a stark insight into just how much of an impact these

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The Intermediary | April 2025

rising prices have had. According to its latest figures, the average level of arrears for those in debt but without a repayment plan in place hit £1,568 for electricity and £1,324 for gas. To put that into context, that’s up by about a third on the same point in the year before.

Meanwhile, Citizens Advice reported that it helped around 60,000 people with energy bills last year, up by 20% from the year before.

Mortgage borrowers For some, energy bill debts will be a long-term concern. But for others, they will be the result of a temporary issue, a short-term payment problem which threatens to have a dramatic impact on their borrowing ability for longer than is really necessary.

That la er group of borrowers may be an outstanding prospect for mortgage finance, yet find themselves excluded by mainstream lenders and pushed towards the specialists who can cater only for those with adverse credit.

When we redesigned our Near Prime proposition last year, it was driven by the desire to support more of these borrowers on the path towards regaining prime status.

Broadening our criteria meant we would be able to consider more cases, and address a clear need that brokers were seeing for a mainstream lender to help these borrowers.

Clearly, utility bills are a significant factor for plenty of borrowers with less than perfect credit records, which is why we doubled the unsatisfied defaults cap from £250 to £500.

Importantly, that figure applies to the current level of debt, not the original level, which means we are be er placed to work with those who have made progress in clearing what

DAVID CASTLING is head of intermediaries at Atom bank

they owe, even if it was initially a substantial sum.

Given the incredible increases to house prices that we continue to see, high loan-to-value (LTV) lending has never been more important. That goes for near-prime borrowers as much as those with spotless records, which is why we have now increased the maximum LTV on our Near Prime range to 90%.

Payment issues can happen to any of us. But they should not have an oversized impact on someone’s ability to secure a mortgage.

Brokers need an answer Energy bills are far from the only outgoing that has put budgets under strain over the last few years. We know that brokers are seeing greater numbers of clients who have a lessthan-spotless credit record, and it’s a situation that seems likely to continue.

We received record levels of Near Prime applications in February, the second time that new highs have been set within the last six months alone. That isn’t just a reflection of our pricing and criteria – though they obviously are a huge contributor – but also the growing need for more flexibility from lenders.

That’s why it’s crucial for brokers to identify the lenders that are serious about providing finance for Near Prime borrowers in the here and now, but which can also support them as and when they improve their credit status. ●

RESIDENTIAL Opinion

Maintaining new-build momentum

H

omeownership goals, affordability challenges and house prices remain key concerns for borrowers, and a regular feature in the headlines.

At the same time, we’re seeing growing interest from consumers in the housing supply chain, drawing greater a ention to the positive role being played by the new-build sector.

Not only is this sector helping to address the shortage of homes, but it’s also supporting rising demand for energy-efficient properties and lower household running costs.

This a ention is being mirrored by buyer awareness and sentiment.

January’s Barclays Property Insights report revealed that 65% of respondents support accelerating housebuilding efforts to address the UK’s housing needs. In addition, 42% see new-build developments as delivering a ‘halo effect’ for local communities, driving economic upli and regeneration.

Unsurprisingly, location remains the top motivator for those considering a new-build (51%). Other key a ractions include the absence of a property chain (38%), modern fixtures and fi ings (35%), and energy efficiency (24%) – a growing priority for many potential purchasers and existing homeowners.

Rising tides Younger buyers, in particular, are leaning into the appeal. While 42% of UK adults say they would consider a new-build, this rises to 52% among 18 to 34-year-olds. When compared with over-55s, younger buyers are also three-times more likely to view new-builds as offering be er value for money than existing homes.

This is emerging against a backdrop of structural change, with the recently announced Planning and Infrastructure Bill likely to be pivotal in the new-build journey.

Aimed at streamlining planning processes, unlocking land, and supporting strategic, cross-boundary development, the bill has the potential to remove longstanding roadblocks to housing delivery. For the mortgage market, that means more homes and more choice.

In parallel, the Chancellor’s £2bn package to deliver up to 18,000 new social and affordable homes adds further momentum. The funding will support development on sites that can be delivered within this Parliament, helping the Government work towards its 1.5 million target.

Projects must begin by March 2027 and be completed by June 2029, with most of the funding allocated for 2026/27 – following the conclusion of the current Affordable Homes Programme in 2026.

These combined initiatives are set to increase the volume and variety of housing stock and, in turn, prompt more conversations with clients around new-build options.

First-time buyers (FTBs) remain a key factor. According to the latest analysis from the Office for National Statistics (ONS) and Financial Conduct Authority (FCA), the overall number of new first-time buyer mortgages in the UK has been falling since the peak in 2021, and in 2023 was the lowest since 2013, at 282,000.

However, sales of first-time buyer mortgages made up a greater proportion of total residential property sales in 2023 (38.4%) than they did 10 years before (28%).

Affordability continues to shape buyer behaviour, with many FTBs

MATT ASTON is head of new-build at Barclays

moving beyond major urban centres.

In 2023, the South East, North East, and Northern Ireland all recorded a rise in the share of FTB mortgage activity, underlining the growing importance of accessible pricing and perceived value.

Quality concerns have traditionally been a barrier when considering newbuilds, but the industry is actively addressing this. The New Homes Quality Board (NHQB) is driving a change in standards, with more than half of new homes across England, Scotland, and Wales now covered by the New Homes Quality Code. From improved complaints handling and best-practice snagging to developer audits, the NHQB is raising the bar and rebuilding buyer confidence.

Lenders also have an important role in driving the success of the market, and close working relationships with intermediary partners are essential.

Not only to provide buyers with the right products, but also to support more informed decision-making.

From affordability solutions to incentives linked to energy performance, advisers and lenders working together can help shi outdated perceptions and highlight the real value of new-build homes.

Whether it’s guiding a first-time buyer or advising movers looking for low-maintenance, energy-efficient living, the intermediary market remains central to helping clients weigh up their options.

By operating in unison, we can help more buyers see new-build as a smart, sustainable choice, and support the wider effort to ease pressure on the UK housing market. ● April 2025 | The Intermediary

7

RESIDENTIAL Opinion

What a difference a year makes

W

e are about to start interviews with lenders large and small as part of the research process we undertake each year to produce our annual Mortgage Efficiency Survey Report.

It’s a fascinating time, talking to key people and really working to understand the day-to-day. They know what is keeping lenders up at night, and by speaking to them year in, year out, it’s amazing to see how priorities ebb and flow over time.

It’s also an opportunity to understand and articulate how these priorities depend on the size and focus of the lender, establishing where there are trends emerging that cross the market, and where risks and opportunities are more nuanced.

Last year, we found widely differing views between lenders on the impact and implementation of the Consumer Duty, artificial intelligence (AI), green lending and cyber security.

Lenders continued to rely upon broker distribution, with 91% of applications sourced through intermediaries – a very marginal upli from last year’s figure of 90.9%.

There are good reasons to expect the intermediary market share to remain at this level into 2025 – the Consumer Duty rules mean lenders can derisk the advice from their propositions.

But how sustainable this is in the longer-term is a moot point.

When we looked at average conversion rates last year, lenders were clear that the volatile interest rate environment had impacted their ability to convert. This issue had real commercial impacts for some, as brokers swapped products post-application in the quest for the best pricing. Some reflected that the app-to-offer timescale must improve to deter product swapping in a volatile pricing environment.

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The Intermediary | April 2025

This year looks to be li le different – the Bank of England cut rates twice last year and again in February.

Markets are pricing in further reductions later in 2025. We are also facing major tax changes in April as the nearly one-year-old Labour Government implements the majority of its fiscal plans. That is going to have an impact on affordability for borrowers and employers, which are likely to continue to adjust headcount over the next 12 months.

Not all lender systems are equipped to cope with pricing volatility and the speed of repricing that entails.

We expect another year where product and flow management are challenging for many.

Shifting priorities Last year, the average retention rate of 62% in 2023 had improved incrementally to 66%. High street lenders led the way with an average of 77%. Challengers and specialists significantly rose from 36% last year to 47% this year. For some newer players, this reflected improvements in processes over the last 12 months, and more generally, be er strategies for coping with maturing product cohorts.

Product transfers have dominated the refinance side of the market, both in residential and buy-to-let (BTL) sectors, ever since rates started to climb in December 2021. The rampant inflation experienced through 2022 exacerbated borrower affordability concerns, and made an internal transfer the indisputable best option for large numbers of those coming to the end of their product terms.

The argument for remortgaging over internal product transfers is strengthening this year. It’s likely that we will hear from some lenders at least that retention strategies are a key priority. The steep product rate cuts seen in Q1 are testament to this already playing out.

STEVE CARRUTHERS is business development manager at MSO Mortgages

Just a few years ago, the ‘environmental’ element of environmental, social and governance (ESG) sat at the heart of many lenders’ plans. Last year, we saw that impetus slow. This year, we expect the green agenda to ramp back up for lenders.

A series of regulatory and legislative deadlines are now imminent. The Government is currently consulting on how to make energy performance certificates fit for purpose.

Landlords in the private rented sector (PRS) have very li le time le to address insufficient energy efficiency ratings in their portfolios.

We’ve already seen moves by lenders to link pricing to Energy Performance Certificates (EPCs) and adjust loan-toincome (LTI) ratios. That is likely to continue this year.

Last year, there was total consensus about the need for cyber security and its impact on the larger lenders’ willingness to integrate and exchange with third-party systems. The risk and reward equation of external technical infrastructure or data relationships was, for many, at the heart of any decision to move forward with external partners.

The prospect of huge data leaks does worry lenders, and sizeable provisions are o en in place for such an event.

Where lenders were considering making new data purchases – such as Auto Income Verification – or developing elements of Open Banking functionality, it was through established players.

We’re expecting li le to shi on this front. Integration is increasingly necessary, particularly where competition is fierce.

The question is now how lenders achieve it without exposing themselves to security breaches. ●

RESIDENTIAL Opinion

Building continues, but is housing still out of reach?

R

achel Reeves delivered her Spring Statement recently, at a time that, arguably, wasn’t ideal in the housing sector. There were plenty of positives discussed, although these don’t quite meet the initial manifesto when Labour was lobbying for power, and the plan for growth in housing sector wasn’t quite enough in my opinion.

The Office for Budget Responsibility (OBR) said that housebuilding will reach a 40-year high, with 305,000 homes being built per year by the end of the forecast period (2030). This would equate to 1.3 million homes being built in the UK over the next five years. Granted, it’s less than the 1.5 million promised, but regardless, it’s an incredibly positive thing to hear for the property industry.

The timing, however, wasn’t great. Growth estimations for the wider economy and country’s GDP are looking lower than before, and inflation is expected to reach around 3.7% later this year – which naturally could have some knock-on effects when the Bank of England considers reductions to base rate.

Those looking to get on the ladder might still encounter hurdles to achieve their goal. Coupled with Stamp Duty thresholds reducing back down to previous levels, this is likely to leave some first-time buyers nervous about buying their first home.

Not only that, but this affects those looking to simply move home, too.

Granted, the Financial Conduct Authority (FCA) has been very vocal in wanting to relax and simplify mortgage requirements to increase affordability, and we have seen a number of lenders displaying their compliance with this, whether

they’re able to increase income multiples for certain loan-to-values (LTVs), have specific options for ‘professionals’ or stress affordability in a more relaxed manner for a longterm fixed rate.

However, what I really think we need to see is some form of scheme, similar to Help to Buy, in order to give those wanting to acquire the new homes being built some substantial confidence and backing.

Now, I know there are private schemes in place and many developers look to offer some form of incentive at present, but a universally understood

scheme would be ideal. It might not counteract the obstacles faced entirely, but it would at least give first-time buyers – and those in need of upsizing or downsizing for that ma er – some confidence, and perhaps the push they need to start the discussion with an adviser to work out a viable option for them, or at least put in place a rigid plan to get them purchase-ready.

So, although it’s exceptionally promising to hear about such a boost to the housing sector in the UK, having a clear scheme in place should be a focus for the Government, in order to propel the housing market forwards even further.

JONATHAN FOWLER is founder and managing director at Fowler Smith Mortgages & Protection

Having a clear scheme in place should be a focus for the Government, in order to propel the housing market forwards”

This, coupled with stronger affordability offered by lenders – and hopefully a continuation of more palatable interest rates – would surely mean all those properties being built will also be occupied, without lastditch a empts to sell-off stagnant stock by developers.

It must be noted that the Chancellor of the Exchequer did also mention an investment of £2bn in social and affordable housing. This is always a promising thing to see, but eventually some of those renting via affordable housing are likely to want to get on the ladder – and I’d really like to see such support offered.

With some lenders increasing loanto-values on new-build properties, we’re seeing positive changes on the whole.

I’d just like to see more done to prompt further conversation, where we as industry professionals can be fully on board with a Government scheme introduced, and can help to ensure the new housing being built is occupied by those who are striving to own it. ● April 2025 | The Intermediary

9

RESIDENTIAL Opinion

Addressing varied FTB needs

G

e ing a foot on the property ladder has become quite a challenge for firsttime buyers (FTBs).

Rocketing house prices and stagnant wages have made saving for a deposit extremely hard, while ongoing economic uncertainty has brought about higher interest rates and tighter credit conditions.

This has resulted in living costs hi ing an all-time high, further squeezing household incomes and pu ing the goal of homeownership further out of reach.

Helping these FTBs, and other would-be homeowners, has been a key priority for Darlington Building Society ever since it was first established in 1856.

While the housing market has changed significantly since those early days, the importance of FTBs as its foundation has remained the same.

Changing challenges Without FTBs, second-time movers become stuck and the property market starts to stagnate. Therefore, evolving mortgage products to meet the everchanging needs of borrowers is crucial to maintaining a healthy and buoyant housing market.

Given the challenges faced by FTBs over the last couple of decades, it is li le wonder that many of these borrowers now come with varying levels of complexity. A first-time buyer in today’s market is not necessarily a young person fresh out of college looking to buy a home.

Instead, they come from all walks of life, have multiple jobs, are selfemployed and have lived overseas.

With the average age of an FTB now si ing at 34, many may have also studied or retrained in another profession. Therefore, adapting products to help these borrowers a ain their homeownership aspirations is crucial.

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The Intermediary | April 2025

Changes in the employment market also mean that many borrowers, FTBs included, now have different and multiple income sources, which is why it is important to offer mortgage products that reflect the different ways in which many people now work.

Varied income streams – such as overtime, bonuses, commissions and bank work – can o en now be accommodated by certain lenders, while those on zero contract hours and the self-employed are also more readily catered for in the modern mortgage market.

Similarly, FTBs with a second and third job, or those in receipt of a stipend or bursary, can also be more readily accommodated, provided they meet the minimum lending requirements, such as six months’ minimum employment, while in some cases, there is a need for another income source.

The rise in self-employed workers in the UK over the last few years has also seen enhancements to the product offerings available to this FTB demographic. Many are now able to secure a mortgage using the last two years’ net profit as well as any directors’ remuneration, while dayone contractors o en just require a minimum of two years’ experience in the same industry.

Without FTBs, others cannot climb the ladder

CHRIS BLEWITT is head of mortgage distribution at Darlington Building Society

A first-time buyer in today’s market is not necessarily a young person fresh out of college” One of the many phrases associated with FTBs is the ‘Bank of Mum and Dad’, which has played a major role in helping many get a foot on the property ladder. This has led to an uptick in demand for Joint Borrower Sole Proprietor (JBSP) mortgages, which enable up to four applicants to join forces to increase borrowing power and purchase a property.

This can be extremely helpful for parents looking to support their children’s home-buying aspirations, but who may not want to gi a lump sum for the deposit in the current economic climate.

Of course, it is important to remember that there will also be people living in the UK from overseas who decide to stay and make the UK their home. These FTBs can also be catered for, with some lenders offering up to 90% LTV mortgages for those on a skilled worker visa and no minimum time required in the UK for foreign nationals.

Understanding the various levels of complexity and the diverse range of needs of the first-time buyer market is crucial to helping these borrowers get a foot on the property ladder. Not only does this support product evolution, but it also broadens the range of product options available to FTBs, ultimately helping more of them achieve their property dreams. ●

RESIDENTIAL Opinion

Supporting buyers with non-standard income

I

n a recent report, UK Finance predicted a gradual improvement in mortgage affordability throughout 2025.

It said lower inflation, rising real wages and gradual cuts in mortgage offer rates meant the market showed greater than expected resilience throughout last year.

One of the reasons given for that resilience was “extensive lender forbearance,” and there’s no denying that we’ve seen the industry rally to keep the market moving and dreams of homeownership alive.

However, we’re by no means out of the woods when it comes to affordability, and as lenders, we can’t take our foot off the gas.

The latest Nationwide House Price Index shows a prospective buyer on the average UK income, buying a typical first property with a 20% deposit, would have a monthly mortgage payment equivalent to 36% of their take home pay. This is above the longtime average of 30%.

House prices remain high relative to earnings, with a first-time buyer price to earnings ratio of 5, well above the long run average of 3.9.

From our own experiences, affordability is still one of the main reasons for applications being declined. So, we need to continue identifying the barriers to securing a mortgage and addressing them where we can.

We did a lot of work on this last year by talking to brokers, monitoring trends and analysing data to make sure we fully understood where the main affordability challenges lie.

We changed criteria, reduced fees, launched new products and entered new areas of lending.

Using all that information, we’ve focused our proposition on four core

areas of lending that reflect the main solutions we offer to the most common challenges faced by borrowers today.

Along with first-time buyers and helping clients revive and rebuild their credit, we also specialise in helping applicants with non-standard income.

Complex employment For a whole multitude of reasons, people’s employment statuses are not as straightforward as they perhaps once were.

The rising living costs of recent years have been a significant contributing factor, as people have sought new and additional ways to make ends meet.

A recent survey by Finder suggested that 39% of Brits have at least one side hustle – which includes a second job or business – in 2025. This percentage increases as you go down the generations, rising to 61% of Gen Z. There are many other income streams and employment types that don’t always tick the boxes.

If you take an employment quirk and then add another factor, such as a credit blip or debt management plan, the chances of meeting criteria narrow even further.

Tick-boxes We know from broker feedback and the cases we look at, that there are many people who don’t tick the standard income boxes, but who would be able to afford a mortgage.

That’s why we are as flexible as possible when it comes to nonstandard income. We also made some changes last year to further bolster the list of scenarios we can consider.

Income such as second jobs, bonus, commission, overtime, self-employed (two years income evidence), up to 100% of town allowance (including

CLAIRE ASKHAM is head of mortgage sales at Buckinghamshire Building Society

We need to continue identifying the barriers to securing a mortgage and addressing them where we can” and beyond London), up to 100% car allowance, multiple income streams (employed and self-employed), contract workers on a day rate, CIS workers, net profit and salary where the applicants are 100% shareholders in a limited company, sole trader to limited company change of status, and many more.

Brokers can find the terms of those on our website, but the overriding aim is to ensure our offer reflects the genuine needs of today’s homebuyers and homemovers.

Even when the income isn’t yet quite at the level needed for affordability, other things might come into play, such as a Joint Borrower Sole Proprietor (JBSP) option.

Non-standard income plus a credit blip doesn’t always mean the end of someone’s homeownership dreams.

The main thing we advise brokers to do if they have a non-standard income application is to get in touch with the right lender.

A bespoke, manually underwri en lending approach will consider each case individually, with the aim of creating more pathways to homeownership for clients who may struggle to meet traditional high street lending criteria. ● April 2025 | The Intermediary

13

In Profile.

Investec

Marvin Onumonu sits down with Peter Izard, head of business development intermediary mortgages at Investec, to explore innovative strategies for the evolving landscape of high-net-worth (HNW) banking

P

eter Izard, who joined Investec 11 years ago, has nearly 35 years of experience, including roles in large corporations, emerging startups, and building societies.

Guided by a client-led philosophy as well as Izard’s own years of experience, Investec primarily targets clients in the UK with a primary income of over £300,000, and ideally, net assets of £3m or more. However, according to Izard, it is not just the financial metrics that define Investec’s clientele.

Where traditional banks see risk, Izard sees untapped potential. He says: “Our focus is on entrepreneurially minded clients on an upward earnings trajectory.”

Optimism amid economic shifts

In an era characterised by economic uncertainty, high living costs, and general negativity about the property market, Izard provides a refreshingly optimistic perspective.

He says: “Any economic uncertainty provides opportunity. High-net-worth individuals are naturally entrepreneurial. While no one loves uncertainty, it invariably leads to opportunity.”

He adds: “Clients don’t perceive debt as an obstacle to be shunned. They consider it a necessary tool to capitalise on growth opportunities.”

It is this understanding of strategic leveraging that aligns closely with Investec’s broader financial philosophy, which endeavours to see potential in places others might overlook.

Reflecting on the current interest rate landscape, Izard hopes that this sense of potential extends beyond the individual borrower, impacting broader financial markets in kind.

He says: “The current thinking is that World Central Banks, including the Bank of England, may well have to reduce interest rates further than they perhaps were predicted to, and if the cost of borrowing comes down, that gives the high-networth market an opportunity as well.”

Despite these opportunities, Izard acknowledges the challenges: “[Economic] uncertainty means that businesses may not invest. They may sit on 14

The Intermediary | April 2025

their capital and choose not to do anything with it. We need to be in a cycle of growth in order to move forward.”

Discussing the impact of global trade tensions, such as the ongoing turmoil around US President Donald Trump’s tariff announcements, Izard notes: “The macroeconomic issues that this tariff uncertainty gives don’t help any of us. It’s a very fast-moving situation, and every day the news agenda changes, but I’ve always been a great believer that we can only control what we can control. So, you must act with what you’ve got, and the information that you have ahead of you and be pragmatic.”

Following the recent Spring Statement, Izard notes the lack of Government intervention regarding the struggling housing market.

He says: “There wasn’t too much direct assistance in the mortgage world or in the intermediary world at all. The only thing was the reaffirmation of the desire for the current Government to massively increase the amount of building supply.”

Despite a lack of movement on housing reform, Izard emphasises the ongoing influence of economic uncertainty on investment strategies. “Any economic uncertainty provides opportunity,” he reiterates, emphasising that “high-net-

PETER IZARD

I N P RO F I L E

worths are very entrepreneurially minded, and while no one likes uncertainty, uncertainty does lead to opportunity.”

Izard also discusses interest rate fluctuations, advising that reduced rates present new opportunities for the HNW sector.

“We want to go on that journey with that client, taking them from an initial lend, helping them buy their property, and then in five years’ time, we’ve helped with their investment properties,” he says.

“Standing still is not an option. Our clients [are] constantly looking at the next opportunity. We need to be doing exactly the same.”

Navigating regulatory changes

In the face of ongoing regulatory changes, Investec aims to be both flexible and forward-thinking.

Izard says: “With any regulatory change, one needs to be kept fully informed, work with the regulators and embrace that change.

“We’ve got an excellent team that works with our regulators, that cascades that information and interprets it.”

He also highlights that regulatory changes are adopted with a focus on the end consumer, through tangible actions like capping fees.

He says: “We now cap our residential property arrangement fees at £50,000, and previously we had an uncapped arrangement fee. From a Consumer Duty perspective, it’s important that we looked at those. Consumer Duty is now well over a year into its new world, but we’ve proactively taken the decision to move forward on that.”

Tech and the human touch

Technology is transforming Investec’s approach to intermediary business development. While the bank aims to streamline processes, it hopes to strike a balance between modernisation and a more personal touch.

Izard explains: “We want to embrace AI 100% but not lose that relationship-driven world that we absolutely strive for. Technology will streamline some of the processes and the more manual side of things, freeing up time for the human element on the most important elements.”

He notes some specific applications of AI, such as the ability to “analyse bank statements in seconds” and condense meeting notes.

Despite these advancements, Izard acknowledges the irreplaceable value of direct human interaction, noting that anyone who has found themselves stuck in an endless chat queue will understand the frustration.

Investec’s clients prefer to communicate with real individuals rather than chatbots.

For Izard, building and nurturing relationships is at the heart of successful banking.

He says: “High-net-worths look for three things: a long-term relationship, which is a meaningful and deep relationship; certainty; and someone with whom they can have a real conversation.”

Investec aims to meet these expectations by pairing each client with a dedicated relationship manager, who is “there to serve their day-to-day banking needs.”

Izard says: “This approach ensures a deep understanding of their comprehensive financial ecosystem. We aim to accompany our clients on their journey – from securing their first property to navigating complex investment strategies, we’re committed to their prosperity.”

He adds: “These are multi-successful clientele who are senior executives in their own right. They also want speed of service; if you say you can do something, can you deliver it in a timely manner?”

This commitment extends to Investec’s intermediary partners, Izard says: “We’ve got to constantly listen, because our intermediaries are dealing with our prospective clients day in and day out. We’re allies in progress, not competitors.

The best partnerships are reciprocal, allowing for feedback and the sharing of insights.”

Fuelled by innovation

Izard’s vision for the future is clear, as he says: “Our clients are perpetually seeking the next opportunity, and we must mirror that same dynamism.”

In discussing key trends shaping the future of the financial services industry, Izard highlights the paramount importance of innovation.

He says: “I see innovation as an opportunity to cater for the HNW market. You’ve got to constantly self-evolve. So, you’ve got to say, ‘What am I serving today, and what is the market direction of tomorrow?”

Investec’s top priorities for driving growth focus on strong relationships and communication, particularly with its broker partners.

Izard says: “I spend as much time talking to our intermediary partners as I do talking to our clients.

The one thing that I’ve never forgotten is that you know you need to constantly listen. We want to continue to grow the opportunity that we have with our intermediary partners. We want them to be part of our successful growth aspirations.”

A client-centric approach remains central to Investec’s strategy, Izard explains: “No one’s better in a place to say where the opportunities lie than our own existing client banks.”

Izard concludes: “Lenders that stand still go backwards, so you’ve got to constantly move with the times. You’ve constantly got to innovate, but you’ve got to listen. And if you listen and you engage, you will create opportunity!” ● April 2025 | The Intermediary

15

RESIDENTIAL Opinion

Flexible solutions for borrowers in need

F

or mortgage applicants who have experienced some sort of credit blip, the process of securing a mortgage can o en feel daunting.

When faced with the automated credit scoring systems of the large banks, many of these borrowers o en believe their credit history will prevent them from securing a mortgage, or that their only option is to turn to a specialist lender.

However, this isn’t always the case. Mansfield Building Society, for example, can also cater to applicants with less-than-perfect credit histories while offering competitive rates and flexible product options to meet their needs.

Rather than using a one-sizefits-all approach when assessing mortgage applications or pigeonholing borrowers, we use a more personal approach to underwriting.

This enables us to get a be er understanding of the borrower’s circumstances and the reasons that may have led to the credit blip.

In many cases, these blips tend to be temporary and are o en the result of major life changes, such as redundancy, divorce, or most recently, the Covid-19 pandemic. O en, the borrower may have also made a empts to improve their credit score or found a new job, and is already on the path to rebuilding their finances.

Combinations of criteria Adopting a personalised approach to underwriting o en means that lenders can offer a broad range of product solutions, too. These include the ability to combine criteria and cater to borrowers looking to consolidate debts to make managing money easier, or supporting borrowers with a non-

16

The Intermediary | April 2025

standard income stream, such as the self-employed and contractors.

As a lender dedicated to helping borrowers achieve their goals of homeownership, Mansfield Building Society prides itself on its accommodating approach and an ability to grade products according to risk, whether the applicant is perceived to be a prime or ‘specialist’ borrower.

For example, our Credit Repair range of products have been specifically designed to help borrowers who have experienced credit challenges. This includes those who have previously been discharged as bankrupt, hold an existing individual voluntary arrangement (IVA) or borrowers with up to £6,000 in County Court Judgments (CCJs) that are over 12 months old.

We can also accommodate borrowers with less severe credit issues, as well as quirky circumstances, such as unusual properties or clients with limited employment or self-employed history.

Real life lending Quite o en, we can become fixated on product pricing. That’s understandable when the monthly repayments are such a significant part of the borrower’s experience with a lender. Yet it is equally important that lenders enable healthy and positive outcomes for borrowers, and we take pride in showcasing case studies of how we’ve helped.

In one particular case, Mansfield approved an application from borrowers owning a property a ached to a windmill, who were seeking to remortgage at 30% loan-to-value (LTV) to consolidate credit card

TOM DENMAN-MOLLOY is intermediary sales manager at Mansfield Building Society

borrowing and raise money for home improvements. The mortgage also incorporated interest-only repayments with property downsizing to repay the capital at the end of the term.

In another case, we helped a family with a Right to Buy purchase at 100% of the discounted price with affordability assessed on multiple income sources, while taking into account historical adverse credit with a satisfied CCJ. Helping borrowers that require a more flexible and personal approach to lending is what many smaller lenders and building societies do best.

Working with brokers to understand the needs of these borrowers, and cater for their circumstances, will not only provide flexible solutions for their purchase or remortgage needs, but also set them on the path to a be er financial future. ●

RESIDENTIAL Opinion

Helping first-timers face affordability challenges

T

here is no sugarcoating the fact that affordability for firsttime buyers is the worst it has been for almost 70 years.

A report from the Building Society Association (BSA) last year showed how first-timers face a double whammy from the high cost of buying – thanks to the larger deposits required – plus a higher cost of finance, with higher interest rates pushing up mortgage repayment costs.

Rising property prices over the past 10 years have exacerbated both issues.

Looking across the decades, there have been periods when higher interest rates have made the cost of ownership expensive, but mortgages were available on high income multiples with li le or no deposit.

Conversely, in the wake of the Global Financial Crisis, the reverse was true: interest rates fell to historic lows, but lending restrictions resulted in stricter affordability tests and larger deposits, making it difficult for many first-time buyers to access mortgage funding.

Today’s new purchasers face challenges on both fronts. However, at the same time, we must admire the resilience of the first-time buyer market in the UK. According to Finder, there were 341,068 first-time buyers in the UK in 2024, up 19% on 2023, and this borrower demographic has certainly been a dominant one for overall purchases.

Mutual innovation Part of the reason homeownership is still not completely out of reach is the work of building societies like Hinckley & Rugby, as we continue to play a crucial role in supporting the first-time buyer market.

As the sector marks its 250th anniversary, mutuals continue to provide innovative lending options, at a time when the Government has said it wants to grow the number of first-timers, but has not resuscitated schemes like Help to Buy, and closed the temporary extension to the nil-rate Stamp Duty threshold for first-time buyers. Lifetime ISAs (LISAs) are viable, but these are primarily a savings tool and do li le to address affordability issues.

This is where Joint Borrower Sole Proprietor (JBSP) and tailored term options come into their own.

These offer practical solutions to affordability constraints for first-time buyers, without needing parents to hand over significant sums of money.

JBSP can boost affordability, by allowing a relative or family friend to contribute their income to the mortgage application. Unlike other guarantor arrangements, JBSP enables the additional borrower to support repayments without taking legal ownership, ensuring that firsttimers retain full ownership rights of the property.

For parents, this can be a more a ractive option than gi ing a substantial deposit, which can deplete their own retirement savings. Many may also be wary about acting as guarantor by underwriting the equity in their own home.

Tailored or split terms can also help to facilitate ge ing first-time buyers onto the ladder. Those supporting such a borrower are likely to be older, so may not want a standard 25-year mortgage term extending well into their retirement. Split terms offer flexibility by aligning different terms to each party – older borrowers get the shorter term they need, while younger borrowers can opt for longer terms,

LAURA SNEDDON is head of mortgage sales and distribution at Hinckley & Rugby for Intermediaries

further helping with affordability by reducing monthly repayments.

We have embedded this flexibility across all aspects of our lending proposition, ensuring it responds to the needs of today’s would-be home buyers. This can be seen in the more pragmatic and individualised approach to affordability calculations, which take into account diverse income streams – be they earnings from freelance work, a second job, or rental and investment income.

These are also adapted to more modern forms of working and can even include streaming revenues from Twitch or YouTube sites, or sales earnings from businesses on online platforms, like Etsy, Vinted or eBay.

Broker awareness Building societies have a long tradition of supporting homeownership, offering innovative solutions to those who might be excluded from mainstream lending.

We celebrate our own 160th anniversary this year, and our JBSP and tailored term options show this tradition continues to flourish.

For mortgage brokers, familiarity with these various product options will allow you to extend your client base, to meet the obvious continued demand to buy a first home and enable you to help more customers secure a mortgage in today’s challenging market.

For those looking to support first-time buyers, building societies really do remain a trusted partner.

By championing modern lending solutions, mutuals can ensure that homeownership continues to remain within reach for the next generation. ● April 2025 | The Intermediary

17

RESIDENTIAL Opinion

The evolving role of BDMs in a changing mortgage market

F

or as long as I have worked in the industry, it has been clear to me that business development managers (BDMs) play a crucial role in placing mortgage cases, helping to achieve the right outcome and pu ing homeownership within reach of more people.

BDMs are o en cast in the role of coach and coordinator to mortgage advisers, on top of their core role of educating brokers on the range of products offered by the lender, the processes they should follow, and the myriad changes happening across the industry.

In fact, the role of BDMs is probably more crucial now than it has ever been. A good BDM doesn’t just find the quickest solution, they can add value and shape cases. The unique challenges we face today demand an even more strategic approach.

Something I am proud to say I witness every day among my colleagues.

Over recent years, the dream of homeownership has moved even further out of reach for would-be first-time buyers, as earnings are being outstripped by house prices and the cost of living impacts the ability to save a large deposit.

This is something that is proven in our report looking into the many barriers facing first-time buyers, and the impact that current economic conditions could have on the housing market. The findings show that everyone working in the mortgage industry has a part to play in helping to address these hurdles.

First-time buyers are earning incomes above the historical average, and yet they face challenges incomparable to previous generations

18

The Intermediary | April 2025

– a triple combination of historically high house prices, high deposit values, and high mortgage repayments.

As a lender, we continue to work on solutions to increase affordable routes to homeownership, and support people to save for their deposit.

Through extensive training and an ongoing programme of learning, including the same training and quarterly knowledge checks as our underwriters, our 31 BDMs – both field and head office – are equipped with the knowledge and skills to find solutions for those stepping onto and up the property ladder.

Ensuring support According to a recent broker survey, clear and concise criteria, and being available and responding to communications, were among the most important factor for brokers in choosing a mortgage lender. We’re also hearing from our intermediary partners that they are busier than ever, and that the uncertainty in the mortgage market is making it more difficult to get cases over the line.

So, as well as investing in our relationship management teams, we’ve also invested heavily in our technology to ensure that we are constantly improving systems to be er support our brokers, ensuring

MARTESE CARTON is director of mortgage distribution at Leeds Building Society

that we can give a quicker answer on the solutions available and say yes more o en. To conclude, it’s vitally important for lenders to be there to support brokers throughout the mortgage journey, and being available at the end of the phone, email or webchat to give a quick and honest answer is crucial.

We have a range of contact options all staffed by experts. These include dedicated contact telephone numbers for new or existing applications, a live broker webchat service, and a dedicated and local BDM for every broker. Our teams are commi ed to providing timely updates, sharing product knowledge, and to helping brokers navigate complex cases.

This relationship isn’t just about answering queries, it’s about working closely together to ensure the best outcomes for brokers and their clients.

I am proud to work as part of the growing team at Leeds Building Society, which was founded 150 years ago to help people get closer to pu ing down roots in their community by buying their own home.

This is exactly what our BDMs are doing today, helping find solutions for brokers and their clients to make homeownership dreams a reality. ●

RESIDENTIAL Opinion

Raising standards in surveying

A

s cases become more complex, customer expectations rise and lenders manage risk closely, surveying can directly impact the success of a transaction, and the wider health of the property chain.

Whether you’re a broker trying to keep a client on track, a lender looking for confidence, or a borrower making one of the biggest commitments of your life, you need to be sure the information is accurate, timely and consistent. Professional surveying can make a real difference.

Accountability Surveyors are part of a wider process, where what they say can have a significance influence the outcome of a transaction. It ma ers that decisions are based on clear evidence, local knowledge, accountability and sound judgement. Technology has an increasing role to play here.

Tools like our newly launched automated risk management solution,

QualityShield, remove some of the more time-consuming manual admin tasks, allowing surveyors to focus on complex issues where their expertise makes a real difference.

Nevertheless, systems can support a decision, but they can’t make a call in the same way a trained surveyor can. The combination of automation and qualified, professional judgement is se ing the benchmark for best practice – enabling experts to do their best work, while creating a culture where high standards are maintained.

Training new talent The future of the profession depends on how we bring through new talent.

The pipeline needs strengthening, not just in terms of numbers but diversity of background and experience.

Structured schemes like our AssocRICS training programme make a difference. Our most recent intake includes nine trainees, six of whom are women, much higher than the industry average. Many come from roles in energy assessment, le ings

MATTHEW CUMBER is managing director at Countrywide Surveying Services

and property sales, bringing a broader perspective. This strengthens the industry’s ability to meet changing needs, by bringing in people who understand different parts of the property market and are willing to learn and grow.

For brokers, a more consistent, professional surveying process means fewer delays and less firefighting. For lenders, it brings more confidence in valuations and home condition reports, backed by be er data and stronger oversight. For customers, the result is a be er, smoother experience, where decisions are made fairly, and issues are flagged early.

Surveying might not always be the most visible part of the process. But when done well, it helps everything else run more smoothly. That’s something worth investing in. ●

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19

Meet The BDM

Family Building Society

The Intermediary speaks with Gina England, business development manager (BDM) for the East and West Midlands at the Family Building Society How and why did you become a BDM?

What brought you to the Family Building Society?

I started my career in financial services at Lloyds Bank, commercial lending division, which I enjoyed and where I learned a great deal.

However, after lockdown I decided I’d much prefer to work in an environment where I could be out and about meeting people and building relationships with brokers.

The opportunity arose to join the Hinckley and Rugby as a BDM, which was very refreshing after a mainly phone-based role at Lloyds. I then joined the Coventry, also as a BDM, where I stayed for some two years, which again I enjoyed, particularly liaising with brokers to find solutions to the more complex cases.

I was approached by a recruiter about an exciting opportunity. When I was told it was the Family, I was very excited as I had heard a lot of good things about the society.

I was very pleased when Darren Deacon, head of intermediary sales, offered me the job of East and West Midlands BDM – an area he used to cover. Darren is now fully concentrating on his role managing our growing team of BDMs and our business strategy.

These are exciting times for the mutual sector and a growing market for the ‘niche’ lender. By lending to typically underserved borrowers, mortgage providers

20

The Intermediary | April 2025

such as the Family offer a solution to those would-be borrowers who traditionally believed that no institution would ever lend to them.

What makes the Family stand out?

Family by name, family by nature.

The society is a genuine multigenerational lender; from first to last-time buyer, lending to those underserved by the major, former high street lenders.

It is truly innovative, making decisions on underwriting the more interesting and less straightforward applications. More importantly, decisions on lending are taken on a case-by-case basis. There is no onesize-fits-all approach and there is no computer to say ‘no’.

MEET THE BDM

What are the main challenges facing BDMs right now?

Put simply, BDMs need up-tothe-minute knowledge and understanding of the market.

Economics is a love of mine and l learn a lot from speaking to local businesses to keep up to date with the local as well as the national market, particularly the details and trends involved and how they change. And they do – particularly since lockdown and the era of ultra low interest rates – and not only a weekly or even daily basis, but also from morning to afternoon in this era of volatile swap rates and currency fluctuations.

What are the opportunities?

The more challenging a volatile market is, the more opportunities it presents. This is more pronounced in the specialist sector in which we at the Family excel, specifically as almost 90% of loan applications come from intermediaries.

We might not beat other lenders on rates, but lending into and in retirement, the growth of Joint Borrower Sole Proprietor (JBSP) and the reverse ‘Bank of Mum and Dad’, if you like, are clear opportunities. Take the example of the cash poor, asset rich 75-year-olds, who have found a new lease of life and don’t want to downsize but want to free up cash and realise some dreams.

I can help them, and if I can’t, at least I know other experienced BDMs who may have better connections elsewhere. There is now shortage of business out there, after all.

How do you work with brokers to ensure the best outcome for borrowers?

It is not just my knowledge of retail lending, but my experience of

commercial lending that gives me a distinct edge and helps brokers.

I make sure I go through the whole lifespan of a loan, from application to offer and completion, and keep the channels of communication open all the way.

I’ll pick up the phone, meet for a coffee and really get to know the brokers on my patch.

I love meeting people, and as I am no more than two hours drive from the most distant one, I’ll happily turn out at short notice.

support the broker from the start of the application process, to offer and beyond.

We need to bear in mind that most brokers, who more often than not use the major ‘high street’ lenders for their more straightforward cases, are likely to be unfamiliar with our products and service.

Since I started at the Family in January, the relationships I have built with brokers over the years that I have been a BDM have proven invaluable in landing new business.

What advice would you What is something give potential borrowers people might like to given the current climate? know about you outside of work?

No one really wants to borrow, but almost everyone has to in order to get on to the housing ladder or to enjoy retirement and assist – often but not always – younger family members financially. In many ways it is a blessing to be able to borrow at any time in one’s life, so don’t be afraid to. And don’t worry about timing. If it is the right time for you to borrow, do it. You’re not going to beat the market and you’re not going to foresee ‘events’, global or closer to home, that impact the economy.

Finally, look forward, not back!

Who knows if we will see ultra low interest rates again.

What is the importance of your relationships with brokers, particularly as a building society BDM? My relationship with brokers as a smaller, niche building society BDM is pivotal to the success of brokers placing their cases with the Family Building Society.

It is important for a broker to have a trusted and knowledgeable contact at a building society, one who can not only explain lending criteria and the likely viability of each and every would-be borrower on a case-by-case basis, and also

I have lots of interests and hobbies, but my main one is training my two dogs Buddy and Bertie. I have recently become a volunteer dog trainer at my local club. I enjoy helping other dog owners, particularly inexperienced ones, train their pets too! ●

Family Building Society Established 2014 Products • Under-served borrowers • First-time buyers with low deposits • Owner-occupier mortgages • Fixed, discounted, and tracker rates • Offset mortgages • Later life mortgages, including retirement interest-only • Expat mortgages • Buy-to-let, including limited company buy-to-let • Product switches and further advances Contact details 07572 417 978 georgina.england@familybsoc.co.uk April 2025 | The Intermediary

21

RESIDENTIAL Opinion

The rising influence of self-build

S

elf-build continues to play a modest but crucial role in expanding and diversifying the UK’s housing stock, offering a viable and a ractive alternative to the mass-produced homes that dominate the market.

By enabling individuals to design and construct properties tailored to their needs, the self-build sector nurtures innovation, sustainability, and architectural variety. All of which are becoming far more appealing to a new generation of potential homeowners, and for those looking to leave a lasting property legacy.

With a host of Government initiatives aiming to streamline planning processes and improve land availability, this is a sector which is also poised for further growth, offering new opportunities for mortgage intermediaries to support an increasing number of clients looking to build their dream homes.

Government reforms The UK Government has recently introduced the Planning and Infrastructure Bill, designed to simplify the planning system, accelerate infrastructure projects, and support the construction of 1.5 million homes by 2029.

Key reforms include: Faster approvals: Reducing bureaucratic barriers to speed up the approval process for housing and infrastructure developments.

Community incentives: Offering energy bill discounts to residents living near new developments such as electricity pylons.

Environmental measures: Establishing a ‘nature restoration fund’ to encourage sustainable building practices.

Decision-making changes: Allowing planning officers to approve more applications and reducing council

22

planning commi ee sizes to expedite decisions.

DAVID LOWNDS is head of products and marketing at Hanley Economic Building Society

For the self-build market, these reforms could potentially lead to quicker planning approvals, greater land availability, and enhanced financial incentives for eco-friendly builds. As a result, self-builders may face fewer delays and more options to create energy-efficient, sustainable and personalised homes.

Unique funding Unlike traditional residential mortgages, self-build loans operate on a staged payment system. Instead of receiving the full loan amount upfront, borrowers access funds in phases aligned with different construction milestones. This structure ensures financial stability throughout the project and minimises the risk of overspending.

Key advantages include: Cost savings: Self-builders o en save on labour and materials compared to purchasing a home.

VAT refunds: Many building materials qualify for VAT relief, reducing overall project costs.

Flexible payment structures: Some lenders offer interest-only options during the construction phase to improve cashflow.

Supporting borrowers Self-build remains a niche market, meaning advisers may not frequently encounter clients seeking this type of mortgage. However, understanding its complexities is vital to any future growth.

Not all lenders provide self-build mortgages, so intermediaries must be familiar with those that do and their specific criteria. This is especially apparent for building societies that are active in this area of lending.

Considerations for advisers: Lenders require detailed project plans, cost breakdowns, and proof of

planning permission before approving a mortgage.

The type of construction method and property design can impact loan approval.

Borrowers must ensure they have a warranty provider in place before applying.

For mortgage intermediaries, partnering with a building society specialising in self-build lending can provide invaluable support in securing appropriate finance for clients.

These lenders offer expertise, resources, support and bespoke solutions, ensuring that intermediaries can confidently guide borrowers through the complexities of self-build homeownership.

The future The self-build sector is gaining momentum, with a growing number of lenders introducing tailored products to meet rising demand.

Many of these offerings emphasise sustainability, aligning with increasing consumer and regulatory focus on energy-efficient housing.

By staying informed about market developments and lending criteria, advisers can help borrowers navigate the complexities of self-build finance and turn their property ambitions into reality, as more and more opportunities self-build arise across the UK. ●

The Intermediary | April 2025

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‘Well I’ll be...

I didn’t know you did all that!’

For 250 years, building societies have put people first. And as a proud member of the Building Societies Association, at Family Building Society, we do the same. That’s why we offer flexible solutions for a wide range of customers who don’t quite fit the mould.

Why choose us?

— No ‘computer says no’ underwriting – We’ll listen to your clients’ stories and our human underwriters make a common sense assessment based on the merits on each individual case — No credit scoring – We offer tailored credit checks, taking a holistic view of your clients’ finances, not just assessing a predefined set of criteria — No ‘one size fits all’ – Unlike many mainstream lenders, we’ll offer mortgages to a wide range of clients – through products such as Joint Borrower Sole Proprietor (including reverse JBSP) and Buy to Let (including Expat & Limited Company). We also offer mortgages to those who are self-employed, as well as those approaching or in retirement — Other acceptable income – we accept income from pension pots (up to 90%), investment portfolios, stocks and shares ISAs, other ‘unearned’ or passive income streams such as rental income, state pension and any other annuities can be added to the assumed income.

WE TAKE GREAT PRIDE IN HOW WE DO THINGS, AND IT WORKS.

intermediaries.familybuildingsociety.co.uk C A LL US ON 01372 744155 OR EM AIL mortgage.desk@familybsoc.co.uk VISIT

FAMILY BUILDING SOCIETY, EBBISHAM HOUSE, 30 CHURCH ST, EPSOM, SURREY KT17 4NL Family Building Society is a trading name of National Counties Building Society which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. National Counties is on the Financial Services Register. Firm Reference Number 206080.

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08/04/2025 16:17

B U Y - TO - L E T Opinion

Renters’ Rights Bill could be net positive for the sector

T

he Renters’ Rights Bill is speeding towards the statute books. It was only published last September, and yet is very nearly through Parliament. No one is contesting its stated intentions – greater security, and safe, decent homes for tenants – but it is also being described as “the biggest shake-up to the private rented sector [PRS] in three decades.” So, what is the fuss about?

There are around 11 million private tenants in England and Wales – almost 20% of the population. One thing on which all main political parties agree is that they deserve greater protections.

The previous administration introduced a Renters (Reform) Bill, with similar aims, and many of the measures in that prospective legislation are in the current iteration. However, the earlier Bill dragged through Parliament for a year before being abandoned – amid disagreements over whether it could succeed in its aims.

In the new Bill, landlords will be forbidden from discriminating against prospective tenants and will no longer be able to accept offers above the advertised rate, to discourage bidding wars. It will also end fixed-term tenancies, so all new contracts will be on a rolling basis – although tenants can give a month’s notice. However, landlords will face greater challenges regaining possession, as Section 21 ‘no fault’ evictions will no longer exist.

Landlords must soon use set grounds under Section 8 to recover properties, giving four months’ notice.

Meanwhile, rents can only be raised once annually, in line with market rates, with tenants gaining free right of appeal to independent tribunals.

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STEVEN MACDONALD is national head of intermediary business at Handelsbanken

Realistic expectations Groups representing tenants have welcomed many of the measures – no one will argue with those surrounding safety or treating renters fairly. However, even the fairest provisions will mean increased costs and administrative burdens – which are likely to be passed on. Some could even have serious unintended consequences.

The right to appeal rent increases has always existed, and were such appeals expensive, it would exclude the very people who need protection.

But if there is no downside to an appeal, it opens the way for automatic challenge of every increase.

Previously, tribunals could find rents were actually below market rate and increase them – even backdating the increases – which acted as a bar to vexatious claims. Now, the worstcase scenario for a tenant is that the increase is upheld, and even then it may be delayed, possibly for months given the likely case backlog.

Meanwhile, replacing Section 21 with Section 8 means landlords may have to prove their case in court, risking both income and legal fees.

In short, landlords will see both risks and costs shoot up, while their opportunities to increase income through raising rents are curtailed.

The most likely scenarios are that they front-load such increases or sell up. The first raises rents directly – and, if everyone does so, sets a new, higher, market rate. The second will cause supply shortages.

Pros and cons When landlords leave the market, so, usually, do their properties – in the last five years more than 160,000 rental properties became owner-

occupied – great news for buyers, but not for those still hoping to rent.

None of this might be an issue if rents were not already at record highs, but it now risks overheating an already febrile market.

Are there any positives?

If the market rebalances in favour of institutional and professional landlords and investors, then many of the costs could be absorbed.

Such landlords have the scalability and expertise to deal with the new requirements – and could take advantage of new opportunities, since casual landlords moving to more profitable assets will want to dispose of their properties. This, in turn, will be excellent news for intermediaries.

As interest rates se le, lenders are becoming more innovative; this suggests plenty of opportunities for new business, especially around refinancing.

The new standards – as well as the retrofi ing required by upcoming energy efficiency rules – will mean work, which needs finance, which should mean even more business.

There is every possibility that, managed well, the Renters’ Rights Bill could become a net positive. Tenants will be more secure, and they will also be renting from professionals.

Those landlords will have an opportunity to grow their portfolios.

Lenders will have plenty of new business, while brokers and advisers will be vital to shepherd the sector through the transition. However, this can only happen if everyone involved starts planning for it – now. ●

B U Y - TO - L E T Opinion

Clarity needed on landlords’ right to raise rents

M

ore than three years a er the Conservative Government published its first whitepaper on Rental Reform, the Renters’ Rights Bill looks set to take effect by the Autumn.

The lion’s share of the Bill is now set in stone, including the removal of Section 21 ‘no fault’ evictions and the abolition of Assured Shorthold Tenancies (ASTs).

However, there are a few important areas where the particulars are yet to be worked out, including the details around rent increases.

Rent rises Under the new rules, landlords will be permi ed to propose a rent increase once a year. They must do this by serving the tenant a Section 13 notice, two months before they intend to put up the rent. In its present form, the Bill states that any proposed increase must be in line with local market rents and evidence provided if required.

If a tenant believes that the proposed increase is unfair or excessive, they can appeal to a First Tier Tribunal, and no increase can be implemented until the tribunal has made its ruling, which could take months.

If the tribunal rules in favour of the landlord, the tenant only needs to pay the increased rent from the next month onward, rather than making up the shortfall that may have built up over some time since the proposed rent rise. That, in itself, seems rather unfair to the landlord. Of more concern, however, is the definition of ‘local market rents’, which will vary enormously depending on not just supply and demand in a local area, but the type and quality of properties and the definition of a ‘local market’.

There is also the issue of undercharging. Research carried out by Pegasus Insight in the first quarter of the year revealed that 80% of landlords were charging less than the going rate for at least one of their rental properties. This tends to happen when a landlord likes a tenant and wants to keep them in situ.

Both the logic and the sentiment of this approach are understandable, but the net result is to artificially subdue ‘local market rents’. So, under the new system, landlords could be forced to charge lower rents to all tenants, rather than those with a proven track record.

Given the time it takes for Government and councils to gather and publish data, there is also a risk that any ‘local market rent’ figures will be out of date by the time they are applied to appealed cases, and rulings could be unfairly based on historic rents.

If the se ing of rents in the private sector is no longer to be permi ed based on the free market principles of supply and demand, surely it would make more sense to link the maximum permissible increase in annual rents to a less arbitrary figure than ‘local market rent’, such as a set percentage above the rate of inflation?

This would at least bring clarity to the process and minimise the need for costly and time-consuming tribunals.

KATE DAVIES is executive director at IMLA

on possibly outdated and inaccurate ‘local market rents’ risks placing landlords in this invidious position.

Beleaguered landlords already feel the Government and the regulator are intent on stacking the odds against them running their businesses successfully, and the Renters’ Rights Bill may be the last straw for many weighing up the pros and cons of remaining in the market.

Linking permissible rent rises to inflation is no panacea, but such a measure might go some small way to reassuring nervous landlords that they will not be flying completely blind in future when it comes to balancing the books. ●

Stacking the odds More than half of the UK’s landlords are small business owners, and they are subject to the same cost-of-living pressures and inflationary strains as everyone else.

No other small business in the country is legally restricted from passing on their cost rises in the form of higher prices to consumers. Relying

Landlords could be flying blind in future

April 2025 | The Intermediary

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I

Renters’ Rights for new

t often feels like there is a whirlwind of legislation floating around the private rental sector (PRS) at any given time, particularly when it comes to the rules and regulations that landlords are subject to.

For the past 10 to 15 years, Governments of all different colours appear to have had the private landlord in their sights, with some warranted legislation aimed at them, and let’s be frank, some unwarranted.

There has been no let-up in the past year, as the Labour Government has not eased back, with its own Renters’ Rights Bill containing a significant number of changes that are likely to impact hugely on landlords.

Nevertheless, it feels like the Bill is going slightly under the radar at present.

It might be understandable if your existing landlord clients haven’t given this too much thought yet, given that the Bill has yet to pass through Parliament, but it’s not like we have years to wait.

As I write this, the Bill is at the report stage in the House of Lords; however, the anticipation is that it will become law by this summer, which – by the time this is published – means that we will have mere months to wait before we see some significant changes for landlords to get their heads around and implement.

So, what are they? Well, one of the main ones is that the Bill will end Section 21 evictions and will limit the grounds on which tenants can be evicted full stop. However, where I think there is the greatest potential for sizeable changes in the PRS is in the changes to the law around rental increases.

Let’s be frank here, the Renters’ Rights Bill outlines a much more prescriptive, and dare we say

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restrictive, process for how and when landlords can introduce rent increases at their property.

Rent increases Under the new rules contained in the Bill, landlords will only be allowed to raise the rent once per year using a Section 13 notice, which tenants will be able to challenge if they believe the increase is above the market rate. The notice must expire at least 52 weeks after the last rent increase, and it will only take effect at the start of the next tenancy period.

Very soon, a landlord will only be able to increase rent to a maximum level determined by the current market rate, and if the tenant feels any proposed increases are over and above this, then they can challenge this at a First Tier Tribunal. On top of this, rent increases can’t be backdated, and therefore if they are challenged, but the Tribunal agrees in the landlord’s favour, the higher rent will only apply from the decision date.

On the face of it, it will therefore ‘pay’ for the tenant to challenge their rent increase, because depending on how long the Tribunal takes to come to a decision, the tenant is going to be paying a lower rent up until that point, rather than the higher one from the point the landlord would like to introduce it from.

Interestingly, if the Tribunal feels the rent increase is below the market rate, it can’t increase it above the amount proposed by the landlord.

Plus, the Tribunal can defer any increase in rent by up to two months if it believes the tenant is in financial hardship. There is also a limit on the amount of rent the landlord can ask for in advance.

Given all of this, and as mentioned, the fact that – to a large degree – the ability to increase rents to a level the landlord needs is being significantly

LOUISA RITCHIE is national account manager at Fleet Mortgages

restricted, it is perhaps not surprising that there has been further talk about the disincentive this might apply to ongoing property investment.

My expectation is that landlords will need to be much more cautious when increasing rents, ensuring they have strong evidence that the proposed increase is justified by the current market conditions.

Now is the time to communicate with clients about the Bill” It seems likely that tenants are going to want to challenge rent increases a lot, given the state of grace they will get on any rise while the Tribunal makes its decision. Again, this will need to be weighed up by landlords – they are much more likely to accept a smaller rent rise at the immediate start of the next tenancy, rather than potentially waiting months to get a Tribunal decision.

The other big question will be around how the Tribunal is going to function, how resourced it will be to

B U Y - TO - L E T Opinion

Bill – planning realities potentially deal with large numbers of tenant challenges, etcetera. There will probably need to be a large degree of automation at play here, but will that deliver fair results? A lot is still up in the air.

Mass exodus Am I expecting large swathes of landlords to exit the sector because of this? No. But it will clearly require a much larger degree of planning and preparation on their part – and that of the letting agents they use – in order to get to the level of rent they might require to maintain ongoing

profitability, and importantly, to be able to secure the mortgages they need.

That is a hugely important question, and one that advisers might wish to set their landlord borrower clients right now, because rental levels are clearly going to be hugely important in the next mortgage recommendation.

Plus, of course, for purchasing landlords – already hit by the further increase in the Stamp Duty surcharge – understanding what the current market rent might be set at, and

therefore what is likely to be the most rent they can secure, is going to impact on their decision to buy a property or not.

Overall, advisers might feel now is the time to communicate with all their clients about the Bill, its likely impact, and what this will mean for financing going forward.

In a couple of months, these proposals become reality, and they need to be aware of them and plan accordingly. ●

April 2025 | The Intermediary

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B U Y - TO - L E T Opinion

Not dying, but the business model is changing

F

ew sectors get the sort of bashing that buy-to-let (BTL) does. In the socalled ‘good times’, when lending was soaring and new landlords were coming to market in their droves, the sector was blamed for hoovering up stock supposedly meant for first-time buyers. Although I have never bought into that argument.

That narrative has changed. Now volumes are lower than they were a couple of years ago, it has been taken as a sign that BTL is a dying market.

That argument conveniently misses the fact that lending is down across the whole mortgage market, not just BTL. Where are the people arguing that the mainstream market is dying?

What the critics have failed to spot is that what the numbers show is not that BTL is dying, but rather that the business model is changing.

Professionalisation The market is becoming more professional – and it will continue to do so. That is evident in the number of landlords who have incorporated over the past few years.

According to Hamptons, the number of BTL limited companies surged past 400,000 in February, an increase of more than 332% over the past nine years.

To put that into perspective, there are now more limited company buy-to-lets in the UK than fast-food takeaways or hairdressers.

This surge, of course, has been driven by tax changes phased in from 2016 that stopped landlords purchasing in their own name from claiming tax relief on their mortgage interest.

As a result, buying through a limited company structure has

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DAVID WHITTAKER is CEO at Keystone Property Finance

Younger investors see BTL as a serious, long-term business opportunity” become a more a ractive, taxefficient alternative to buying in your own name.

In fact, it has become such an a ractive alternative that 70% to 75% of all new purchases are now made through a limited company structure, according to Hamptons, with the total number rising by 70,000 to 100,000 annually.

Big ambitions Why does this ma er? Because landlords who use limited company structures tend to have larger portfolios.

According to the most recent English Landlord Survey, 86% of individual landlords own between one and four properties, with almost half (48%) owning just one.

In contrast, the majority (56%) of company landlords own five or more rental properties, including 13% who own 25 or more.

As more investors use limited companies, the number of properties they own will increase, helping to maintain the stability of the private rental sector (PRS).

Another equally important point is the age profile of these new limited company investors.

While the average landlord is 59 years old, a remarkable 60% of all new buy-to-let companies set up in 2024 were owned by shareholders aged 45 or under, according to Hamptons.

The next evolution of landlords have clear ambitions

This is a clear signal that younger investors see BTL as a serious, longterm business opportunity, not just a way to supplement their income.

It also tells me that they have clear ambitions to build considerable property portfolios, rather than remaining content with a couple to bolster their pensions.

The future’s bright The days of the so-called ‘Dinner Party Landlord’ may be numbered, but they are being replaced by a new generation of strategic and business-minded individuals. While it may take them years to build those portfolios, their intent and commitment is clear.

This all points to a more professional, more sustainable BTL market in the future, a trend that should give us confidence in the longterm health of the sector.

Critics will only truly appreciate this shi when the recovery is further down the road than it is. That may take some time, but it will happen. ●

B U Y - TO - L E T Opinion

Broker opportunities in expat BTL

W

ith more than 5.5 million Britishborn expats estimated to be sca ered across the globe, according to the Institute for Public Policy Research (IPPR), it’s no wonder some choose to stay connected to the UK by owning a buy-to-let (BTL) property back home.

The expat BTL market has shown impressive resilience over the past few years, managing to withstand the turbulence of Brexit, the disruptions caused by Covid-19, and ongoing costof-living pressures. This resilience can, in part, be a ributed to the steady rise in the number of British expats, which have risen from around 4.7 million in 2011 to more than 5.5 million today, according to Home Office statistics.

Each expat has their own motivations for investing. While the goal of a passive income and long-term capital growth still holds weight, sentiment can also play a part. For some expats, investing in UK property is their way of staying connected to home – whether it’s securing a property to return to one day or providing a home for family members back in the UK. While some brokers may be put off advising on expat BTL due to the perceived complexities of overseas incomes, the fundamentals of advising don’t really change compared with advising BTL investors based here in the UK. In recent years, many building societies have become actively involved with the expat BTL market.

Dudley Building Society, for example, has long been an established lender in this space, and can help brokers find flexible lending solutions that are tailored to meet the unique needs of expat borrowers.

Expat BTL investors come from all walks of life, each with their

own unique financial situation. For example, they could be a high-networth (HNW) individual who has travelled overseas for work and views UK property as a solid, dependable investment. They might work in a high-earning sector such as finance, IT, energy, or law, perhaps based in the UAE, the wider Middle East, Australasia, or the US. On the flip side, a BTL investor might be an older borrower who has moved abroad in search of a quieter pace of life, to a country such as Spain. The recent news that Spain is considering a property purchase tax of up to 100% for non-EU citizens highlights some of the challenges of buying property abroad – this could be a reason why some expats prefer to rent overseas and keep a property back in the UK. Regardless of their reason for investing, expat BTL investors need clear, accessible advice from brokers and lenders who truly understand the ins and outs of the market.

Lending challenges Building societies are a natural fit for the expat market, primarily because of the personalised approach many take when assessing cases.

This tailored approach is particularly important for borrowers with complex income structures – such as those with multiple income streams, some in different currencies or from self-employment. In these cases, a one-size-fits-all solution doesn’t always work.

Not all lenders are able to provide this level of personalisation, and some even put up extra barriers for expats.

A common example is applying a ‘haircut’ to an expat’s income – which can mean a cut of up to 20% to account for currency fluctuations. At Dudley Building Society we take a different approach, and can consider 100% of an applicant’s income paid in a foreign currency, using the lowest exchange

ROB OLIVER is director of distribution at Dudley Building Society

rate from the past three years, subject to lending criteria and underwriting.

Another challenge expats can face is jurisdiction restrictions. Some lenders rule out applicants based in certain countries, like the US or Australia, or other regions that they consider higher risk.

Tap into expat BTL If expat mortgages haven’t yet come across your radar, now is the time to take notice. With the number of British expats on the rise, we are seeing interest from directly authorised (DA) and appointed representative (AR) brokers, who are recognising the opportunities in this market.

While the BTL market for both UK and overseas-based investors continues to face legislative challenges, economists remain optimistic about the potential for some more reductions in the base rate this year.

As we move further into 2025, if the Bank of England base rate continues to decrease, we could see renewed confidence in the market, along with increased interest in discounted mortgage products for expat BTL investors – both for remortgages and new purchases.

Building societies have become key players in the expat BTL space, particularly for borrowers who don’t meet the rigid criteria of some mainstream lenders.

At Dudley Building Society, we remain commi ed to working closely with brokers, providing practical, tailored solutions that reflect the unique needs of expat borrowers. ● April 2025 | The Intermediary

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Q&A

Cumberland Building Society

The Intermediary speaks with Grant Seaton, head of intermediary lending at Cumberland Building Society, about broker relationships and the evolving holiday let market It’s The Cumberland’s 175th anniversary. How does a mutual with that kind of heritage stay relevant to today’s broker market?

When you’ve been around as long as we have, heritage is naturally part of the story. But we’ve never stood still. What has kept us going for 175 years is our ability to evolve while staying true to the values that matter – supporting people and the communities we serve.

That same thinking runs through everything we do with brokers; we’re here to build lasting relationships. Since launching our intermediary division, we’ve grown the team, introduced new tools and widened access to our product range, but our approach has always stayed consistent.

We haven’t lost sight of what brokers need from us, which is responsiveness, clarity and a common sense approach.

We’ve grown into Cumbria’s largest financial institution, with £3.2bn in assets, 762 colleagues and 31 branches across the region. Those numbers sound big, but we still pick up the phone, know our customers by name, and care about every case.

What is The Cumberland’s particular lending specialism?

Holiday lets are where we’ve really built up longstanding experience. We’ve been supporting brokers in this space for over two decades, lending across England, Scotland and Wales, and over that time we’ve developed a strong feel for what makes a viable holiday let proposition.

The holiday let market has seen some tightening of criteria or pausing of certain types of new business recently. At The 30

The Intermediary | April 2025

Cumberland, we’re fully committed to supporting the holiday let market for the long term, and last month we reduced our core range fee to support landlords looking to keep costs manageable.

With our Specialist Range we offer lending to all entity types where they have portfolios of up to 20 properties. We can arrange finance on up to 10 properties in that instance. We’re also happy to consider first-time investors. When it comes to limited company lending, we set ourselves apart as we don’t require personal guarantees as part of the transaction.

With the market tightening, how are you helping brokers with more complex cases?

Let’s be honest, most holiday lets are no longer straightforward, if they ever were. But that’s where we thrive and our approach really comes into its own. We don’t follow a rigid formula. Every case is manually underwritten, which gives us the flexibility to really understand the story behind each application rather than rely on set criteria.

We recently funded a converted grain mill near Eyemouth, Scotland. It had history, character, and no shortage of quirks, not many comparables, no holiday let licence in place and a tight timeline. Some lenders said ‘too tricky’, but we said ‘let’s see what we can do’.

We worked with the broker, made the license a release condition, and kept everything else moving. It’s that kind of flexibility brokers really value, especially when their clients are trying to bring something special to life.

Cases like that show the importance of staying close to the detail. When brokers bring us something unusual,

Q&A

Holiday lets are where we’ve really built up longstanding experience. We’ve been supporting brokers in this space for over two decades, lending across England, Scotland and Wales, and over that time we’ve developed a strong feel for what makes a viable holiday let proposition” we’ll take the time to explore it with them and see what is possible.

What does ‘kinder banking’ mean for brokers in practical terms?

At its core, it means putting people first. That includes brokers, clients and everyone we deal with. For us, it’s about building relationships, being approachable, and being consistent.

We’ve built a team of 22, with many years of mortgage experience. Most have been on both sides of the desk – advising, underwriting, managing. We know the pressure brokers are under, and we’re here to help, not hold things up.

Every broker we work with has a named point of contact. That person knows your processes and how you work. It’s all part of building trust over time.

What improvements have you made to support brokers in the day-to-day?

We’ve made real progress on the digital side in the past year. One of the biggest changes has been the launch of our affordability calculator for residential cases. It’s intuitive, easy to use and is already making a big difference in helping brokers assess cases upfront.

We’ve had really positive feedback on it, both for speed and clarity.

Alongside that, we’ve introduced a new broker portal, making it easier to submit and track applications. We’ve also added our products to platforms like Trigold, Mortgage Brain and Twenty7Tec so they’re easier to find and compare.

But the tech is only part of the story. Service still comes down to people. Brokers want someone who picks up the phone, gives a straight answer and sees the case through. That’s what we focus on every day.

How are you balancing growth with that level of service?

We remain fully focused on the service we deliver, and on being reliable and available.

Our residential lending is focused on Cumbria, Southwest Scotland, North Lancashire and West Northumberland, plus a small number of longstanding London brokers.

We also work with directly authorised (DA) firms and appointed representatives (ARs) through partners like Sesame and Mortgage Advice Bureau.

What changes are you seeing in the holiday let market, and how are you adapting?

It’s maturing. Landlords are becoming more professional. Regulation is tightening. Demand is still strong, especially in the right areas, but the bar is higher. That’s why we keep our approach flexible.

Sykes Cottages recently reported average gross annual revenues of over £34,000, and more for well-located, year-round lets. So there’s still a strong business case, it just needs a lender that understands how to assess it properly.

We’re ready for what’s next. With a big remortgaging wave expected in 2025 and 2026, brokers need lenders they can trust.

How does being a mutual influence how you work with intermediaries?

It’s everything. We’re not driven by shareholder returns. We’re here to support our members, and that includes brokers. We reinvest our profits into the business – into people, into service, into tech that improves the customer experience.

We look forward to continuously enhancing our service and supporting brokers who do a fantastic job in supporting the market. ● April 2025 | The Intermediary

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Three facts that support positive tenant relationships

T

he private rented sector (PRS) loves a buzzword.

You’ll surely have come across them in one place or another. Broker support badged as ‘education sessions’ or ‘masterclasses’ is something I roll my eyes at each time I see it – I can’t be alone!

Far be er value, I think, is something people can take inspiration from quickly.

For me, I look out for the facts and figures that back up a story and make it credible, or that leave you thinking about how you can add value to your clients.

I got to thinking about this a er reading the output from OSB Group’s latest ‘Landlord Leaders’ research.

It’s in its third year, and polls an even split of 1,000 professional and non-professional landlords, demonstrating trends in the landlordtenant relationship and providing insights that could benefit anyone with an interest in the PRS. I’ve summarised some landlordtenant relationship facts below:

They’re both interesting takeaways alone, and if you couple those two things together, you get a narrative that isn’t played out through national press – an encouraging trend suggesting that the UK rental market is thriving on healthy, stable relationships.

84% of landlords describe their relationships with tenants as positive

53% of landlords are now communicating directly with their tenants at least once a month

That’s four in five landlords operating in the private rented sector who are happy with their relationships with tenants and describe them as something they’re proud of.

It’s backed up through tenant research conducted by the Landlord Leaders Community, in which 69% of tenants said they are happy with the speed of response from their landlord.

This is an encouraging reminder for landlords that tenants value a direct and responsive relationship.

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80% of landlords are spending or plan to spend more time thinking about their tenants Four in five landlords said they’re now spending more time planning and thinking about how they can improve their tenants’ experiences.

The research found that the average tenancy length is just under 2.5 years, and with 40% of landlords suggesting they’d prefer tenancy lengths to be longer, this shows that planning strategies for improving tenancies is top of mind.

This is strengthened through learning that 44% of landlords want to do this with a view to build a be er relationship with their tenant.

More than one in two landlords are now speaking with tenants directly and regularly, choosing to cut out the middleman and deliver service directly to their tenants.

That’s fuelled by the 41% of landlords who told OSB Group that they value tenants who are willing to commit to longer tenancies.

This regular communication could be a tactic landlords are employing

EMILY HOLLANDS is group head of distribution at OSB

to maximise the length of their relationship with tenants.

Combine that with the number of landlords managing the tenant relationship themselves (52%), and it’s a signal that relationships will strengthen through a handson approach.

As with any good relationship, trust and stability are key, and it’s satisfying to see so many landlords eager to extend tenancies, which helps build a positive, secure and valued rental market.

If you’re interested in reading more insights, visit the Landlord Leaders Community, which is a membership group of individuals focused on creating a fairer and more sustainable private rented sector. ●

The real relationship narrative is often a positive one

The Intermediary | April 2025

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10/04/2025 12:43

PAST, PRESENT AND FUTURE-PROOFING THE SOCIAL IMPACT OF THE BUILDING SOCIETY MOVEMENT

by Marvin Onumonu At a pivotal moment in history, the 250th anniversary of the building society, we find ourselves reflecting on transformative solutions from the past, namely those of the late 18th Century, when a quiet revolution began in the pubs of Birmingham.

Amid the clinking of pint glasses and animated debates, the first building society emerged, igniting a movement that promised empowerment and social mobility to those long excluded from economic opportunity.

This shift offered the working class a chance at homeownership, challenging the strict power structures of a land-dominated society and laying the groundwork for generational wealth.

As we navigate an era filled with economic uncertainties, the enduring spirit of these societies, rooted in mutual aid and democratic participation, calls once again for reflection and revitalisation. This is a legacy that compels us to ask: can we look towards this transformative ethos to meet present-day challenges, and what lessons can we draw from the past to shape a more just housing market future?

Forging foundations Looking back to 18th Century Birmingham, the seeds of a transformative financial movement were subtly being sown. Social structures were extremely rigid, and yet in the heart of bustling industrial cities, a revolution was brewing.

Robin Fieth, CEO at the Building Societies Association (BSA), paints a vivid picture of the inception of these societies as grassroots initiatives, referring to them as classic “self-help schemes.” He explains how a group of workers, discontent with poor living conditions, gathered

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at the Golden Cross. It was here that the landlord proposed the idea of starting a savings club, which eventually "went on to be big enough to buy land to build houses for all of them."

Fieth is particularly captivated by the innovative trust model at the core of these societies, comparing it to modern mortgage systems. He says: "If you're the last person in the lottery, you still get the prize, but it relies on everyone else continuing to pay into it – a bit like paying your mortgage today."

Mark Bogard, CEO of the Family Building Society, says: “We were set up by postmen in 1896. We didn’t have a branch network because the original members posted savings and their mortgage applications. We may have been the first direct financial services business in the world, a very long time before the old Midland Bank introduced First Direct!”

In a similar spirit, a spokesperson from Yorkshire Building Society reflects on its longstanding history, beginning over 160 years ago. The society, rooted in early-morning meetings in Huddersfield, owes its legacy to those who pledged their time to a cause that today supports more than three million customers.

"Yorkshire Building Society was founded with a clear purpose: to help people save for what matters to them and enable them to buy a home of their own," the spokesperson adds.

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, underscores the foundational role these societies played during their inception.

“The society was created to help everyday people save and buy homes at a time when owning property was out of reach for many,” he explains.

p

These societies enabled individuals to support one another by pooling resources, fostering a more secure future.

Stinton says: “By making homeownership more accessible, [they] gave more people the chance to build communities, stability, and independence.”

In these early days, each society contributed uniquely to reshaping the landscapes of community and belonging, one home at a time.

Marsden Building Society was founded in 1860, and chief executive Rob Pheasey says: "By offering members an alternative to traditional banks, we helped local families achieve financial stability by providing the means to secure housing."

Challenging the status quo The creation of building societies marked a significant shift from the existing norms, offering a lifeline to the working class that went beyond basic financial assistance, fostering unprecedented social mobility. In doing so, they did not just disrupt entrenched economic systems – they created a ripple effect that resonated with the rising momentum of the trade unionist movement, amplifying the collective voice of the industrial workforce. This convergence of economic empowerment and social progress set the stage for a new era, where workers could not only dream of a better future, but actively participate in shaping it.

Fieth says: "Before the great reforms of who could vote, a man had to be a freeholder with land to the value of 40 shillings, which was a lot of money.”

He adds that freehold land trusts emerged, with the specific intent of extending voting rights to working men long before universal suffrage was achieved.

Pheasey reflects on the ways in which Marsden facilitated social mobility and enfranchisement by making homeownership accessible to the working and middle classes.

By pooling savings and accessing affordable mortgages, members not only gained financial independence but also enhanced their socioeconomic status.

"Homeownership has historically been associated with voting rights, so as more people became homeowners, political engagement naturally would have increased," Pheasey explains.

He adds that the building society model helped to break down these barriers, allowing countless families to create better opportunities for future generations, saying: “The mutual nature of building societies also builds strong community networks, further enhancing social mobility and support for all.”

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Economic empowerment As these initiatives laid the foundation for widespread empowerment and political engagement, they also opened doors to new dimensions of societal change. Building societies have always played a crucial role in creating generational wealth and inclusivity.

This next phase would see not only men but women and marginalised groups finding their rightful place within the financial sector, as the focus shifted towards broadening access and opportunity across all segments of society.

"When you look at those original mutuals, the definition of ‘marginalised’ at that time was just people who haven't got any money, people who are being exploited as workers who have no land rights," Fieth explains.

He points to a notable example from 1781, where a building society in a Birmingham pub was named after its landlady, Sarah Northwood, noting: "That's probably the first evidence we can find of women's involvement."

Pheasy says: “Women and other marginalised groups play a crucial role in both our history and our future. While the early societies were largely male-dominated, Marsden now proudly boasts a senior leadership team that is 55% female and is a proud member of the Women in Finance Charter.”

He continues:: "Marginalised groups, such as working-class communities in Lancashire, have benefited from the society’s structure by gaining access to financial resources and opportunities that were often restricted by traditional banks.

"The society was established by, and is operated for the benefit of, these members; without them, the Marsden would not exist today.”

Modern realities Entering the 21st Century, these institutions continue to be vibrant and skilled at navigating modern crises like Covid-19, the rising cost of living, and housing affordability.

Fieth says: “A lot of people at that point were saying: ‘If I could pause the mortgage, the money is better in my bank account than it is in the banks and building societies’, at least until they knew what was going to happen.”

For example, societies like Coventry offered payment holidays, financial guidance, and community aid to assist members and vulnerable groups during the pandemic.

Fieth adds that building societies were among those lenders that maintained a physical presence during the pandemic, continuing to safely provide in-person support for those that needed it while others were shuttering their branch operations.

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Anne Hodgson, Business Development Manager – The Cumberland for Intermediaries

RELATIONSHIPS built on

STRONG FOUNDATIONS

The Cumberland, 1939

Since our beginnings in 1850, we’ve supported our customers.

We pride ourselves on the strong relationships we build with the brokers we work with, now and in the future.

To find out more scan the code or visit cumberland.co.uk/intermediaries For Intermediary use only

Stinton says: "Even as a lot of financial services go digital, we have kept close to our community roots by keeping branches open and making sure members can always talk to a real person. This builds trust, emphasises accessibility, and keeps our service personal.”

Family Building Society also assisted customers during recent difficult times.

Bogard says: “About 16% of our mortgage customers asked for a mortgage holiday during Covid-19. We spoke to every one of them where we could, and treated them as an individual according to their own circumstances.”

He adds: “As the mortgage market evolved and times got tougher for brokers, we equalised the proc fee we pay for a product transfer – we hoped more providers would join us in supporting brokers in this way, but they haven’t.”

Pheasey notes: “During the Covid-19 pandemic, [Marsden] took the time to reflect on our contributions to the community, and identified areas where we could be more involved in the neighbourhoods we serve.”

He adds that, for members, branches remained open with health and safety measures in place, and support was readily available via phone and email. Within the organisation, Marsden also implemented strategies such as hybrid working, adoption of Microsoft Teams, and wellbeing initiatives like virtual social events and mental health resources, ensuring a holistic response to the challenges of the time.

Today, the cost-of-living crisis and housing affordability remain pressing challenges for many individuals and families across the UK, influencing the strategies and offerings of building societies.

Pheasey says: "We recognise the impact the cost-of-living crisis can have on our customers,

Building Societies Timeline A timeline of significant events and advancements in the building society movement

and we’re committed to offering support, raising awareness and providing resources to enhance the wellbeing of our members."

Yorkshire Building Society’s spokesperson says: "In 2021, we piloted a partnership with Citizens Advice, which has since expanded to over 40% of our branch network.”

The society’s funding enabled Citizens Advice advisers to provide free, face-to-face consultations, offering independent and unbiased guidance on a variety of issues at numerous high street locations.

Tim Bowen, CEO of Mutual Vision, emphasises the continued importance of building societies' historical trust, and their ability to understand local needs.

He says: "Building societies still have a unique position as member-based mutual organisations that really rely on fostering strong relationships with their members. Some of these organisations are over 150 years old, which is incredibly important because it leads to the understanding of local needs, and then the ability to respond to local opportunities and needs."

Social responsibility Building societies are deeply invested in community wellbeing, with a focus on contributions to social good, local initiatives, and sustainability. Fieth highlights that societies are not only maintaining their branch networks, but reimagining them to serve a more active role in the community.

He says: "We’re seeing societies using the space in their branches for wider community involvement, and quite a few are designating branches as safe spaces for women."

Additionally, societies are collaborating with organisations like Citizens Advice to facilitate

THE FIRST BUILDING SOCIETY Richard Ketley founded the Ketley Building Society at the Golden Cross Inn in Birmingham, England.

This mutual society was created to help members build and own homes.

1775

NATIONWIDE EXPANSION AND

BUILDING SOCIETY

EVOLUTION

FOUNDATION

Many new societies formed, including permanent societies as opposed to terminating ones, where the society would dissolve once members had homes.

Originally founded as the Provident Union Building Society, it later merged with Nationwide, one of the largest mutual financial institutions in the UK.

1830s

1846

advice surgeries, making them valuable resources for addressing a variety of community issues.

Bogard notes: “Our main focus is helping to fund the local Citizens Advice Bureau. Our staff also volunteer at the local food bank and Age Concern, we provide gardening support for the Princess Alice hospice, decorating for SeeAbility and the women's hostel, and we also support Surrey Young Carers.”

Fieth also mentions trials supporting access to cash via universal banking machines, allowing transactions regardless of bank affiliation, and co-locating branches with other community organisations, as seen with the refurbishment of a library in Newcastle that now includes a mini-branch.

Yorkshire Building Society has been actively supporting charities and good causes through its Charitable Foundation since 1999. The society has donated over £10m, and colleagues are given 31 hours of paid volunteering time each year to contribute to social good in their communities.

Stinton reinforces Coventry Building Society’s commitment to social causes, such as homelessness and financial literacy, with £4.5m donated last year and over 12,500 hours of employee volunteering.

"Our efforts include reducing our carbon footprint and supporting green housing initiatives," he adds.

Pheasey speaks to Marsden’s dedication to fostering supportive, inclusive, and sustainable environments that enhance financial wellbeing and customer satisfaction.

"Our goal has always been to build a better community, which goes beyond simply helping members save and own their homes," he explains.

Since 2023, Marsden has made 22 donations totalling over £60,000 through its Charitable

INDUSTRIAL AND ECONOMIC GROWTH The industrial revolution led to demand for housing and the growth of societies. The Building Societies Act 1874 provided the legislative framework for current and future societies.

1860s1880s

THE WAR EFFORT

By WW2, building societies were on the decline and mergers began to occur. Those that remained played a key role helping build vast numbers of new homes after the devastation of the war.

1939

Foundation in Lancashire. The society also offers a Volunteering Policy, allowing colleagues two paid days each year for community activities.

Marsden Building Society is equally committed to sustainability, aligning with the UK’s net zero goals by transitioning to electric and hybrid vehicles, installing electric vehicle (EV) charging points, and using 100% renewable electricity tariffs. The society aims to further assist members living in less energy-efficient homes in collaboration with public sector bodies and third-parties, to reduce emissions and improve environmental impacts.

Through these comprehensive efforts, building societies demonstrate their commitment to creating lasting, positive impacts in their communities and advancing sustainability and social change in the modern age.

Digital transformation Building societies are also on the cusp of a digital transformation as they evolve to meet the demands of a modern financial landscape while preserving their deep-rooted heritage. Bowen emphasises that technology is key for building societies' evolution.

Following Mutual Vision’s acquisition by Big Ideas Group in October 2024, Bowen highlights the alignment of values, saying: "They believe in the power of local banking, mutuality, and putting people before profit."

This acquisition aims to propel building societies into the digital age, providing them with tailored solutions to streamline operations and enhance member experiences.

However, many customers, particularly older savers, still prefer traditional methods of communication, such as phone conversations, letters, and cheques.

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FIRST ADOPTION OF COMPUTER TECHNOLOGY

BUILDING

Building societies began adopting computer systems to manage accounts and transactions, marking a significant technological advancement.

SOCIETIES ACT

1960

1986

The Act allowed building societies to expand their services beyond mortgage and savings accounts, introducing wider banking services.

Bogard says: "My mother will never use online banking – she doesn’t trust it, and the message about scams has been reinforced to her over and over again. There are huge numbers of people who feel the same and need to be looked after."

At the same time, he highlights his organisation's commitment to technological advancement, emphasising the importance of striking a balance between hands-on customer service and modernisation.

"We have invested heavily in IT and have a slick online service,” he adds.

Bowen envisions artificial intelligence (AI) and automation playing pivotal roles in revolutionising in credit assessment, fraud detection, customer service, and advice in general. According to Bowen, these technologies will become essential, enabling societies to access broader market areas, improve member experiences through advanced front-end solutions, and support data-driven decisionmaking while ensuring compliance with regulatory standards.

Mutual Vision's strategic vision over the next five to 10 years is to "integrate and aggregate bestin-class solutions to produce a banking stack suitable for a tier one or tier two bank, without the prohibitive price tag."

Bowen argues that this commitment to technology and innovation ensures that building societies can maintain their foundational trust and community focus, while adapting to the fastpaced digital era.

Meeting future challenges While many societies boast the flexibility to adapt to the modern age, what challenges and opportunities lie ahead for the sector as it navigates an ever-evolving financial landscape?

HALIFAX Halifax converted to a bank, reflecting a broader trend as some societies sought access to capital markets.

The financial crisis affected many financial institutions, but some building societies remained resilient due to conservative lending practices.

1997

2008

DEMUTUALISATION

34

FINANCIAL CRISIS

The BSA remains committed to helping people achieve their homeowner dreams.

Fieth says: "Part of the inspiration for the future is how we continue to help people from all parts of the UK community to fulfil their dreams of homeownership, and importantly, build their financial resilience through having a reasonable pot of savings, so when something goes wrong, they have something to fall back on.

"Whether we’re in a traditional branch-based environment or an AI-driven virtual environment, our fundamental purpose remains the same – a safe home for your savings, and savings for your home.”

Bowen advises societies to embrace technology without losing their core touch.

"The most important things are being prepared to embrace digitisation and technology adoption," he notes, underscoring the importance of balancing innovation with personalised member engagement.

Bowen adds: "There are huge waves of change coming – market forces, regulatory changes, tech and AI. Firms that embrace change early and adopt a change of mindset will be the ones who thrive the most.”

Challenges include changing customer behaviours and expectations, evolving marketplace dynamics, and uncertainty in regulatory approaches, alongside global economic impacts. Bowen emphasises the need for building societies to keep pace with larger industry players through digitisation and technology, which requires a shift in boardroom and executive mindsets. Additionally, cybersecurity and data risks present ongoing concerns that must be addressed.

On the other hand, there are several opportunities that building societies can leverage

DIGITAL RETURN TO

TRANSFORMATION

Public trust in mutuals grew as they were seen as more customerfocused compared to traditional banks.

Building societies have increasingly adopted digital technology, including online banking and mobile apps, to enhance customer experience.

2010s

2020s

MUTUALITY

in this changing landscape. Bowen points out that enhancing customer experiences and achieving operational efficiencies are key benefits, along with using data aggregation to gain market insights and reach new customer segments.

Bowen sees collaboration with fintechs and startups as a valuable path to integrating bestin-class solutions. Moreover, he underscores that open banking and API integrations provide small and mid-sized firms with more autonomy and the potential to deliver innovative services.

Core values As building societies continue to navigate the complexities of the modern financial landscape, they remain anchored in their core values of trust, heritage, and community.

Pheasey, for example, emphasises that it is Marsden’s history that shapes its purpose: "There are many key lessons that we can take from our past that reinforce the significance of a memberfocused model that puts customer needs before profits."

Bowen also highlights the unique strengths that building societies have compared to new entrants in the market: "Building Societies have something new incumbents can’t fake – trust, heritage, and deep community ties.”

Nevertheless, he acknowledges that "standing still is not an option," and emphasises the importance of leveraging digitisation to amplify rather than undermine these strengths.

"Utilise tech to serve, not replace," Bowen advises, seeing it as a tool to enhance efficiency, reduce costs and errors, and personalise the member experience without losing the essence of what makes building societies special.

He also says: "Branches matter because the communities you serve matter, and tech will help you deliver your services and values better, faster and smarter."

While the fog of the Industrial Revolution may have vanished, the driving force of building societies – forming, flourishing, and fortifying community bonds – remains ever-resonant.

As they chart their course through modern challenges and opportunities, the commitment to fostering a better society continues to be at the heart of their journey, honouring the past, embracing the present, and paving the way for a promising future.

Bowen concludes: “When it comes to Building Societies, which were the original innovators and pioneers, the future belongs to those that can modernise without losing their core purpose and principles. That’s where building societies can and should lead.”

●

A journey of social transformation Professor Carl Chinn MBE, social historian

The building society movement represents a remarkable journey of social transformation, rooted in the democratic aspirations of working-class and lower-middle-class men in the late 18th Century. From its origins in Birmingham's pubs in the 1770s, this movement was never just about bricks and mortar, but about empowerment and social mobility.

These early societies were groundbreaking in their approach. Members democratically elected committees, controlled their own development and created pathways to homeownership that were previously unimaginable. Initially focused on prosperous working-class men, they laid crucial foundations for broader social inclusion.

The movement's evolution mirrors Britain's slow march towards democratic representation. From the restrictive 1832 Reform Act to the gradual expansion of voting rights, building societies consistently pushed against societal barriers. They weren't just financial institutions, but engines of social change.

By the early 20th century, building societies had transformed homeownership. Before the First World War, more than 90% of people rented. Through the interwar years and post-war periods, these societies enabled middle and working-class families to purchase homes, fundamentally reshaping social landscapes.

Their impact extended beyond mere property acquisition. Building societies represented hope – the opportunity for families to build generational wealth, to have security, to participate more fully in economic life. They democratised a fundamental human aspiration: having a place to call your own.

Women played a subtle but significant role in this movement. From female publicans hosting early meetings to widows inheriting membership, they were integral to the societies' social fabric, even when formal participation was limited.

Today, as we face unprecedented economic challenges, the core principles of those early building societies remain vital: mutual support, democratic participation, and creating opportunities for those traditionally excluded from economic systems.

The building society movement isn't just a historical footnote – it's a continuing testament to collective economic empowerment.

April 2025 | The Intermediary

The Interview.

Shawbrook

Adapting strategies

Jessica O’Connor speaks to Emma Cox, managing director of real estate at Shawbrook, about the bank’s evolving strategy to support landlords and brokers amid market pressures

I

n the ever-evolving landscape of real estate finance, few figures have had a front-row seat to as much change – and a chance to steer through it – as Emma Cox, managing director of real estate at Shawbrook. With over 25 years in the industry, Cox’s journey is not just one personal progression, but of commitment to a business that she helped shape from its inception. From her early days as a business development manager (BDM) to becoming a guiding force behind Shawbrook’s specialist lending strategies, her career mirrors the transformation of the market itself.

The Intermediary spoke with Cox about the lessons learned so far, the challenges and opportunities facing landlords today, how the bank has stayed agile, and why broker collaboration remains central to its model.

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The Intermediary | April 2025

Cox’s role at Shawbrook is rooted in her alignment with the ever-changing needs of the property finance market.

“I’ve actually been with Shawbrook since day one,” she shares.

When asked what led to this longevity, Cox explains: “It’s such a dynamic place. We’re always on the move and trying new things […] it feels like every couple of years there’s something new to go for.”

This constant innovation has meant it has “never really got boring or stale,” making her time at the company a “great journey.”

Meanwhile, Shawbrook’s proposition reflects this same dynamic ethos, especially when it comes to supporting professional landlords with more complex portfolios. The lender has been embedded in key areas of the market since its inception and prides itself on evolving in tandem with investor strategies.

Cox says: “The thing that has always been really important to us is to try and align ourselves to what the investors need. Their needs and strategies have changed over time, so we’ve tried to build a proposition that is tailored to meeting those needs.”

For instance, in the past couple of decades, houses in multiple occupation (HMOs) have become more popular among investors, transitioning from a fringe asset type to a more attractive, mainstream investment due to the propensity for higher yields.

“When we first started lending, they were quite a new asset type and were probably somewhat in the shadows,” Cox explains.

“As that started to evolve, we then tailored our proposition to meet the needs of investors, recognising the yield-based values that you could achieve through HMOs.” This responsiveness is central to Shawbrook’s value proposition. The lender focuses on enabling investors to optimise returns by offering flexible valuation approaches and supporting greater leverage, where appropriate.

“We recognise that leverage is really key,” Cox notes, adding that the bank takes care to do this “safely,” no matter the chosen asset class.

Shawbrook’s proposition also factors in evolving tenant profiles, whether social or

T H E I N T E RV I E W Shawbrook

private, thus ensuring its policies remain relevant and supportive.

Cox says: “It’s about reading the markets, investors, their needs and adapting to their strategies as they evolve and trying to keep up.”

Supporting diversification

As the landlord landscape becomes increasingly diverse, Shawbrook evolved its proposition to support investors moving beyond traditional residential buy-to-let (BTL) models. It has seen a number of its investor clients move into more complex asset classes of late, particularly that of semi-commercial and pure commercial investments.

“For a landlord to shift away from the standard sort of residential buy-to-let and move into the semi-commercial space, they would have had to have really given that some thought,” Cox explains.

“It comes back to trying to support those investors as they transition and diversify those portfolios into different asset classes.”

This shift introduces new challenges, from navigating different tenant profiles to managing commercial leases, which differ significantly from standard Assured Shorthold Tenancies (ASTs).

Shawbrook recognises that this transition requires more than just financing; it requires insight and infrastructure.

Cox says: “It’s about making sure that the landlords are set up to manage that differently to how they may manage a buy-to-let. Have they got the right team around them? Have they got the right infrastructure in terms of managing this change? Have they got the legal teams and the right accountants?”

For example, commercial income profiles differ from those of residential tenants, and landlords must manage scenarios like quarterly rent payments against monthly mortgage obligations.

The bank’s proposition goes deeper than surface-level lending criteria. Shawbrook invests in understanding the investor’s longterm strategy, Cox explains: “You can find that they are diversifying because they want better yields, and they’re looking at assets that require a more careful handling in terms of valuations. We need to make sure we’re guiding them to make sure they are making the right choice when choosing the right asset type.”

In these cases, Shawbrook ensures landlords are not only financially equipped but also operationally prepared to succeed.

Having initially started out in the commercial investment space, this area remains at the core

of the bank’s identity, making it Shawbrook’s “bread and butter.”

Cox says: “The very first mortgage that we lent at Shawbrook was onto a commercial investment, so we’ve stuck really close to it. It’s in our DNA.” This foundational expertise allows Shawbrook to help landlords “navigate some of those complexities in a very clear way,” offering not just funding but a reliable, ongoing partnership.

Cox says: “We don’t just give you some money and it’s out the door and off you go.

It’s a continual partnership, and we’re a good partner to have as part of your borrowing strategy. We’re a safe bet.”

Incentivising energy efficiency

In light of the ongoing regulatory changes around energy efficiency, particularly the increasing pressure for landlords to achieve a minimum Energy Performance Certificate (EPC) rating of C or above, Shawbrook has placed this issue “front of mind,” shaping the way it designs and evolves its product offering.

One of the ways Shawbrook does this is through its tailored short-term lending products, specifically aimed at investors looking to upgrade their buy-to-let properties.

Cox says: “We do short-term lending, but with a product that’s designed specifically for those investors looking to make improvements to their buy-to-let assets.

“We will do that on a light refurb or a heavy refurb basis. One of the requirements at the end of that loan is that we would expect that property to be a minimum Band C or above.”

Once the refurbishment is complete and the property achieves the required EPC rating, Shawbrook offers an incentive in the form of discounted arrangement fees on a follow-on term loan. This creates a “full lifecycle” product experience for landlords – from acquisition and improvement to long-term financing – with energy efficiency embedded throughout.

Cox acknowledges that this area is still evolving, and with regulations continually in flux, Shawbrook is treading carefully. She says: “It’s still a bit of a work in progress […] it’s quite easy to fall foul of thinking, ‘right, we’ve got the solution’ and then realise there’s a bit more to it.”

Nevertheless, the lender’s commitment remains clear.

Cox says: “The one thing we are committed to is supporting landlords that are investing in improving properties up to C and above, and we’ve got those lending solutions.” → April 2025 | The Intermediary

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T H E I N T E RV I E W Shawbrook

“The heavy refurb product in our bridging is a really good product, it’s utilised an awful lot by investors that are looking to build portfolios, but on a long-term basis.”

She adds: “That’s a great way to extend the economic lifespan of that asset, and obviously getting to an EPC rating of C or above is critical to that.”

Shawbrook sees this not only as a market opportunity but as a social responsibility.

Cox says: “It’s a very important metric we are committed to providing a good, decent level of housing stock in the UK. This is a way that as a bank we can contribute to that.”

Tailored support

Aside from its commitment to improving energy efficiency, Shawbrook takes a tailored approach to working with landlord borrowers, recognising that every investor is at a different stage in their property journey.

Cox says: “If you’re a landlord and this is going to be – even if it isn’t quite yet – your main income stream, then you’re a professional landlord.”

However, the way Shawbrook caters to its customers differs based on whether they are just starting out or are already managing large portfolios. For those at the beginning of their investment trajectory – typically nonportfolio landlords – Shawbrook has developed a digital proposition that prioritises simplicity and speed.

Cox notes: “Our digital proposition is for nonportfolio landlords that are starting out with an intent is to become bigger, we’ve got a very easy on boarding process at Shawbrook.

“It’s very slick – there are automated valuation models (AVMs) where possible, so they can get to their end position in a relatively frictionless way, to allow them to start to build that base for their portfolio.”

As landlords grow and their strategies become more sophisticated, Shawbrook hopes to evolve with them.

Cox explains: “We can then get the right balance and build their strategies out in that space, knowing that they’ve got the certainty of a lender like Shawbrook that can provide the finance for them.” The philosophy is to “follow the full life cycle of an investor,” supporting them from their first buy-to-let property through to expansive portfolios. Whether it is bridging finance to fund refurbishments or long-term loans for holding assets, Cox says Shawbrook has a product to suit.

She adds: “If you’re just starting out – there’s a product for that. If you’re an experienced 44

The Intermediary | April 2025

landlord and you’ve got lots of properties, we’ve also got a product for that. We’ve seen plenty grow with Shawbrook that started out with just a small handful of properties and are now into tens if not hundreds, and that’s lovely to see.”

Backing brokers

At Shawbrook, brokers are not just intermediaries, they are partners in the success of the business. As Cox puts it: “The real estate business at Shawbrook is intermediary led.

“The success at Shawbrook has been built as a result of us working with brokers, and hopefully supporting brokers to also become successful. It’s a genuine partnership and we’ve always seen it that way.”

This philosophy is embedded in Shawbrook’s operations, where brokers are relied upon not just during the application process, but throughout the entire lifecycle of a loan.

Cox explains: “We rely on our brokers a lot.

Those that work with us will probably testify to that. They create an awful lot of value in how we work with the end borrower.

“They’re not just transacting with Shawbrook, they are working with us to get to the right outcome for that borrower.”

Brokers play a hands-on role in every stage, from working with Shawbrook’s valuation and legal panels to helping ensure a smooth completion, and even staying involved once the loan is in place.

Cox adds: “We still consider the broker to be a partner in that transaction, even though the transaction may have originated years ago.

“Our business would not be what it is today without that genuine partnership with brokers, and I’d like to think that they see that as a reciprocal relationship as well.”

Importantly, Cox notes that Shawbrook’s lending proposition is shaped by feedback from these brokers. She says: “They tell us what they need. Sometimes we don’t always get it right and there’s a bit of trial and error.

“We don’t just land products out there and expect brokers to take them up. We work with them so hopefully we give them solutions that they can offer up to the customers.”

Shawbrook’s support does not stop at product design. The bank invests in broker education, hosting events and creating opportunities for brokers to engage with valuers and understand the nuances of property finance.

“It’s about sharing that information and knowledge,” Cox notes. “That’s something that we take a lot of time on and we’re quite thoughtful about.”

T H E I N T E RV I E W Shawbrook

This emphasis on collaboration and mutual growth ensures that brokers, and in turn their clients, are equipped to succeed in a constantly evolving property landscape.

In light of shifting interest rates and market complexity, Shawbrook also sees brokers as indispensable guides for landlords navigating their finance options.

Cox says: “Some banks do a great job working direct, and they’ve got the resources to be able to ensure that customers still get good products and offerings, but to really get the optimal offering, you have to work with a broker that’s confident in knowing the market.”

New developments

Cox maintains a cautiously optimistic outlook for the private rented sector (PRS), despite ongoing economic volatility and regulatory shifts. The landscape for landlords is constantly evolving, with new legislation around tenants’ rights and EPC requirements shaping how landlords operate.

Cox says: “When I look across our community of investors, those that do better are those that are ahead of those changes, and adapting their business model so that actually this is not a big shock to them.”

Shawbrook encourages landlords to anticipate changes and build regulatory readiness into their long-term strategies. While some see these challenges as signalling the decline of the PRS, Shawbrook believes the sector is simply evolving.

“Whenever there’s a challenge, it always creates an opportunity,” Cox explains.

She adds: “The one thing that I can speak to over the years is the resiliency of those professional landlords.”

Indeed, those with robust business models, the right lending partners, and a commitment to quality housing, are well placed to thrive.

Cox notes: “It is right that there is a professionalisation of the landlord space. It is right that some of it is regulated. And it is right that it’s considered to be an important structure of our community. It’s fundamental, in fact.”

Shawbrook views the ongoing regulatory momentum not as a threat, but as a driver for evolution and a higher standard across the market. As long as the UK continues to face a housing shortage, the PRS, operated by experienced and responsible landlords, will remain an essential part of the national housing strategy.

In terms of Shawbrook’s own direction, the bank is doubling down on its digital innovation.

Cox says: “Something to look out for from us is that there will be that continual progression and investment in using data and technology to really drive efficient and frictionless journeys for brokers and customers.

“Every two weeks we’re making small but incremental changes to the way that we process applications to try and take that friction out. That’s the continuum.”

In this vein, a recent development was the launch of the lender’s structured real estate team, catering to customers with more complex, high-value needs.

Cox says: “This was about trying to attract those customers that have more complex needs. It’s about following that thread. We’ve got the proposition bit, but we now also have a very specialist dedicated team that can handle those £10m-plus type transactions.

“We don’t necessarily apply the standard pricing or standard approach, we literally put the deal together based on the borrower need, the asset types that tend to be a little bit more exotic, and then we come up with a whole package that may look and feel quite different to the standard buy-to-let.”

Already, the team has seen success with bespoke transactions in the £15m to £30m range, and feedback has been positive.

Cox notes: “We’ve had a number of larger transactions […] and we launched that last year, so it’s made quite a big impact already.

“The feedback that we’ve had from our brokers is that they really think it’s a great addition to what we do. Again, it’s all part of that evolution.”

Further down the line, Shawbrook is exploring a return to the commercial trading space, specifically property-backed, owneroccupied businesses, after stepping back during Covid-19. It is also rethinking borrower profiles, moving beyond the traditional lens of asset value and landlord experience to consider the individual behind the investment.

Cox says: “We’re exploring how we can better serve some of the customers that we see today that may look and feel slightly different to the type of borrowers that would have seen five years ago.

“They might have more complex needs in terms of their financial background, for example – we’re trying to take it down a level from just looking at the asset […] to question, what about the actual investor themselves?”

This reflects Shawbrook’s overall approach to lending. As Cox concludes: “No two years look the same. No two months look the same.

There’s always something new we’re doing.” ● April 2025 | The Intermediary

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S P E C I A L I S T F I NA NC E Opinion

Financing the commercial-toresidential boom

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he UK’s real estate landscape is undergoing a major transformation.

With soaring office vacancy rates, shi ing work pa erns, and a deepening housing crisis, developers are increasingly turning to commercial-to-residential conversions as a viable solution.

Supported by changes in permi ed development rights (PDR), this trend is reshaping city centres and unlocking new opportunities.

However, financing these projects presents unique challenges, requiring specialist lenders that understand the complexities of repurposing commercial assets into homes.

As remote and hybrid working pa erns persist, office vacancies continue to rise, leaving many commercial buildings underutilised. At the same time, the housing crisis shows no signs of abating, with demand for homes outstripping supply.

According to the Home Builders Federation (HBF), 10% fewer housing projects secured approval during 2024 than during the previous year.

Against this backdrop, commercial-toresidential conversions have emerged as an increasingly popular solution.

The financing challenge While office-to-residential conversions offer clear benefits, securing funding for these projects can be complex.

First, many traditional banks remain cautious and risk-averse when it comes to financing conversion projects, particularly in uncertain market conditions.

Second, it is o en easier to build from the ground up than convert an existing building because once

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you start digging, you don’t know what you’ll encounter. In other words, conversion projects involve unforeseen costs, such as structural modifications or asbestos removal to meet regulations.

Third, there are important cashflow considerations when undertaking conversions, because unlike new-build developments, office-to-residential projects may not generate pre-sales, requiring flexible financing options to cover ongoing costs.

Unlocking potential With mainstream lenders o en hesitant to fund conversion projects, specialist lenders have stepped in to bridge the gap.

These non-bank specialist finance providers play a critical role in enabling developers to successfully convert office buildings, by offering tailored funding solutions designed to support developers throughout the process.

Unlike traditional banks, which o en take a more rigid approach, specialist finance providers offer the flexibility necessary to navigate the complexities of commercial-toresidential conversions.

Specialist lenders assess projects based on their potential and viability rather than a one-size-fits-all approach. This means developers can access tailored funding solutions that accommodate the specific needs of their project, whether that involves securing finance before full planning approval, covering unexpected construction costs, or bridging shortterm gaps in cashflow.

Specialist lenders also bring a deep understanding of the development process, allowing them to work closely with borrowers to anticipate potential risks and structure financial

ROXANA MOHAMMADIAN-MOLINA is CSO at BLEND

solutions accordingly. Many offer staged drawdowns, ensuring that funds are released in phases as the project progresses, helping developers manage costs effectively. They also tend to have a more streamlined approval process, which allows developers to access funding quickly.

An example of this is BLEND’s funding of a £1.5m senior debt facility to support the conversion of an office building into nine two-bedroom flats in Radstock, Somerset. This project exemplifies how specialist finance can unlock the potential of underutilised commercial spaces, helping to deliver much-needed housing while revitalising local communities.

Traditional lenders may have been hesitant to back such a scheme due to the risks associated with conversion costs. However, BLEND’s sector expertise and tailored financing approach enabled the developer to secure the necessary funds to complete the project efficiently, ensuring a successful transition from office space to residential use.

To conclude, in a market where mainstream lenders o en hesitate to back unconventional projects, specialist finance providers are stepping in to bridge the gap, offering developers not just capital, but a true partnership that helps bring conversion projects to life.

Specialist lenders’ willingness to finance projects that fall outside traditional lending parameters makes them an invaluable resource for developers looking to transform redundant office spaces into highquality homes. ●

S P E C I A L I S T F I NA NC E Opinion

Leasehold to commonhold: Investor impact

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he Government’s proposed ban on new leasehold flats in England and Wales marks a significant shi in property ownership, and so will be of keen interest to investors. The proposed transition towards commonhold, a system where homeowners collectively own and manage their buildings, aims to provide greater control and transparency for property owners.

The intention is that this will create greater confidence in the market – but are there any considerations for brokers and their clients at this stage?

The Leasehold and Freehold Reform Act, which became law on 24th May last year, has already introduced key changes that will make it easier for leaseholders to buy their freehold, extend leases to 990 years, and challenge unreasonable service charges.

The ban on new leasehold flats aligns with the Government’s broader objective of moving away from a system that many see as outdated and unfair. However, the details of the transition from leasehold to commonhold are still emerging, and investors will need to stay informed as the Government publishes further guidance.

Commonhold is being positioned as a viable alternative to leasehold, allowing homeowners to own their flats outright while sharing ownership of communal areas.

This system eliminates many of the issues associated with leasehold, such as escalating ground rents, high service charges, and restrictive lease extension processes.

Historically, some freeholders have taken advantage of leaseholders through excessive fees and

mismanagement, and the plans hope to limit leasehold abuses. For existing leasehold properties, the Government is expected to introduce policies that will make it easier for leaseholders to convert to commonhold.

Despite the benefits a ached to commonhold ownership, it hasn’t been widely adopted in the UK due to the complexity involved in transitioning the ownership system.

Additionally, mortgage lenders have traditionally been reluctant to finance commonhold properties, fearing complications in management and resale value.

Acknowledging these issues, the Government has commi ed to introducing measures to facilitate commonhold adoption, including financial and legal reforms. A dra bill, expected later this year, will provide further clarity on the transition process, potential exemptions, and implementation strategies.

So, what does it mean for property investors? As ever, the devil is in the detail, and as is o en the case, there isn’t a great deal of detail available currently.

The underlying theme is that greater transparency and confidence in the ownership framework of a property will instil greater value in the market, although this will clearly be dependent on the propensity of mortgage lenders to lend on commonhold properties.

There may opportunities for current owners of leasehold properties to switch to commonhold, which could potentially increase value – but again, the process and any costs for this are yet to be defined.

The biggest considerations are likely to be for investors and developers who are creating multi-unit freehold

ANNA LEWIS is commercial director at Castle Trust Bank

Details of the transition from leasehold to commonhold are still emerging, and investors will need to stay informed” blocks (MUFBs). Traditionally, the individual properties in an MUFB might have been sold on a leasehold basis.

With potential reforms around the corner, investors will need to decide on the best strategy for their scheme. A commonhold title, for example, may provide some futureproofing to the investment, helping to support its value if the proposals do come into force, but it could also limit immediate resale potential if lenders continue to be cautious on commonhold properties.

The coming months will be critical as further details emerge about the transition to commonhold and how it will be implemented in existing leasehold properties.

As brokers, all you can do in the meantime is to be proactive in advising your clients about the potential changes. As the market adapts, those who stay ahead of these changes will be best positioned to make informed investment decisions. ● April 2025 | The Intermediary

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S P E C I A L I S T F I NA NC E Opinion

Keeping track of property trends

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s with any other investment, developers and investors must focus on their end users and strive to provide people with places they are happy with for a project to be successful.

First and foremost, that will mean the location of a particular development. And for the rental market, which is where a lot of our current deal flow is focused, it means asking the following questions: do people want to rent there, and for long periods of time? How well is the property positioned in relation to local services and infrastructure? What does it offer people, and is it value for money and affordable long-term, especially in a cost-of-living crisis?

This last one is complex, because there’s such a thing as too many facilities, and over time, this might just equate to more expense. You’ve got to get it right for your market, understand it, and create something with long-term, durable appeal.

Investors and developers – and the people creating those spaces and our communities – should look at how to a ract people to not only live in their buildings, but to enjoy living there and want to stay there. Something sustainable in a financial sense that offers what occupiers need, but on balance, doesn’t require too much in terms of additional service charges.

At the moment, given the way we’re increasingly living as a country, we are looking ahead to a more European model – which is ironic a er turning our backs on Europe politically! This means greater investment in co-living, the private rented (PRS) and Build to Rent sectors, which provide spaces to work, live, and relax.

We’ve all seen a huge trend towards a mixed living and working from home approach following Covid-19, which le us all in a very different sort of world. I don’t think we’re ever

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fully going back to the office, and developers will need to plan living space thoughtfully, so people have good quality space to work from home regardless of whether they’re renting or buying.

It doesn’t suit landlords – institutional or individual buy-to-lets (BTLs) – to have too much churn.

They want tenants to be there for a long time and to engender a positive relationship with their customers.

Changing tenant demands When it comes to changing tenant demands, do developers need to change their approach? It depends on which segments of the market you’re going into.

If we start with the co-living market – which may well be the entry-point for post-graduate living and working in a new location for the first time – you’re probably not looking for lots of space.

What you’re looking for is something that’s central, well located for your work, and to live alongside people with a similar outlook or of a similar age group. These tenants might want to live somewhere with things going on nearby or in the building – yoga classes perhaps, and places to socialise and grab food and drinks together.

Space inside the property may also be less important – these tenants probably haven’t yet accumulated large amounts of stuff. Instead, they may prioritise experiences and living life as fully as possible.

On the other end of the spectrum, those aged over 55 who are still living in the rental market will have different requirements. They will probably have accumulated much more, and maybe they won’t want discos in their buildings. They want space and accommodation that complements their way of life.

We have to think through and provide for different segments and

TOM BROWN is managing director, real estate at Ingenious

Developers will need to plan living space thoughtfully, so people have good quality space [...] regardless of whether they are renting or buying” life stages with various sorts of accommodation, and here the rental market needs to play catch up.

Shift in perception The property market, and specifically investors, developers and lenders, need to look at the PRS for the provision of greater volumes of traditional family housing, where there seems to me to be a massive gap.

We must recognise that we need to give people who are less likely to own property than previous generations something that’s right for them, and that fits conveniently with where they are in their lives.

Ingenious has heavily supported these concepts, working with developers and other counterparties to fund the delivery of schemes thoughtfully delivered for their end users.

Rental market trends are changing, and as an industry, we probably all need to play catch-up.

Renting will be the future for many of us throughout the various stages of our lives, and the market must evolve to meet those challenges. ●

S P E C I A L I S T F I NA NC E Opinion

Savvy shopping and mortgage declines

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any consumers consider interestfree credit a savvy way to manage large purchases.

Whether it’s a new kitchen, a bathroom renovation, or high-end electronics, spreading the cost without paying interest can seem like a sensible decision.

However, for mortgage applicants, these borrowing decisions could have unintended consequences when securing a home loan.

While these financing options don’t accrue interest, many mortgage lenders still consider them outstanding debt, which means they can influence a customer’s debt-toincome ratio (DTIR).

A high DTIR indicates that a significant portion of an individual’s income is already allocated to servicing debt. While customers may feel confident in managing their finances, many lenders will take a cautious approach and impose a maximum DTIR across

all applications. As a result, an outstanding balance from an interestfree credit arrangement could tip the scales, leading to a declined mortgage application.

Affordability remains one of the biggest challenges for mortgage customers today. With the cost-ofliving crisis driving more people to rely on credit, the issue is only becoming more pronounced.

According to UK Finance, outstanding credit card balances grew by 9.9% over the 12 months to March 2024, with nearly half incurring interest. While interest-free credit arrangements don’t add to this burden in the same way, they still increase overall financial commitments and, consequently, DTIR calculations.

At Pepper Money, we understand that borrowing decisions aren’t always as straightforward as they appear on paper.

Unlike many lenders, we don’t impose set DTIR limits. Instead, we assess each application on its individual merits, considering the

PAUL ADAMS is sales director at Pepper Money

broader context of a customer’s financial situation.

If there’s evidence that a customer can sustainably afford their mortgage payments despite a higher DTIR, we may still be able to offer them the loan size they need. This can be particularly valuable for customers looking to consolidate debts or restructure their finances.

While interest-free credit may seem like a smart financial move, it can still impact a mortgage application if lenders consider it as part of a borrower’s overall debt profile.

By working with lenders that take a more holistic approach to underwriting, brokers have options to help customers access the mortgage finance they need, even if they have large outstanding credit balances in the background. ●

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S P E C I A L I S T F I NA NC E Opinion

What GDP growth means

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DP growth is more than welcome, but global uncertainty, tariff wars and financial market chaos is the bigger story for investors. The UK economy grew by 0.5% in February 2025 – its strongest monthly rise in nearly a year, smashing consensus estimates of 0.1%, with gains across manufacturing, construction, and services.

It’s an undeniably positive sign of domestic resilience, suggesting that some sectors are acting proactively ahead of trade warinduced uncertainty, that consumers, buoyed by real wage growth, are still spending, and that businesses, broadly speaking, are simply ge ing on with things – despite the Autumn Budget.

For property investors, however, it represents just one piece of a much more complex puzzle, and investment decisions should not be rushed based on this datapoint alone, particularly given the rising geopolitical and macroeconomic uncertainty.

Caught in the crossfire While the recent GDP beat may offer some reassurance – and provide the Chancellor with a brief reprieve – it remains a single, backward-looking

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datapoint. In fact, viewed in broader context, monthly GDP has fallen more o en than it has risen over the past nine months.

With the UK exposed – albeit less than some – to the growing threat of a trade war, long-term borrowing costs are spiking. Yields on 30-year gilts have briefly touched 5.63% at the time of writing – the highest level since 1998 – a er being swept up in a global bond sell-off triggered by US tariffs and escalating tensions with China.

Although they’ve since eased back to around 5.50%, that still places them at levels not seen in over 25 years.

The sell-off in 10-year gilts has been less extreme, but yields remain higher than they were in summer 2023 and autumn 2022. Elevated 30-year yields reflect market expectations of persistent long-term inflation and signal that today’s trade tensions could profoundly reshape global supply chains. Meanwhile, higher 10-year yields suggest growing investor concern about the medium-term impact on economic growth.

The Bank of England was even forced to cancel a scheduled auction of long-dated gilts – a clear sign of mounting pressure in the market, and a stark reminder of the risks associated with locking in high-cost

HUGO DAVIES is chief capital officer and managing director for mortgages at LendInvest

debt at a time when the UK economy is grappling with the threat of stagflation.

It looks like swap rates are going to get caught in the crossfire – between volatility in bond markets, where bond yields are effectively se ing a de facto floor for swaps, and expectations of a falling Bank Base Rate, as reflected in market-implied Sonia pricing.

Ironically, both are being driven by the same backdrop: weaker global and domestic growth and tightening fiscal conditions.

Bond markets are under pressure because investors expect Governments

S P E C I A L I S T F I NA NC E Opinion

for property investors

Elevated 30-year yields [...] signal that today’s trade tensions could profoundly reshape global supply chains”

to issue more debt as tax receipts decline – and they want to be compensated for heightened inflation and growth risks.

Meanwhile, the Bank of England, aware of the limited fiscal headroom available to stimulate the economy, will likely explore all options in its monetary arsenal. That’s behind the sharp repricing of Sonia over recent months.

Market-implied pricing for the base rate at the next Monetary Policy Commi ee (MPC) meeting on 18th September has now fallen to 3.81% – nearly 75 basis points lower than the current base rate. At the start of the year, that would have seemed highly unlikely – pricing peaked

at 4.35% in mid-January. It’s been a dramatic shi .

If swap rate beta versus the implied base rate path worsens – in other words, if bond yields begin exerting more influence – we’re likely to see a rise in the popularity of tracker mortgage products, particularly discounted options over 1-, 2-, or 5-year terms. These o en come without early repayment penalties, which is key. At some point, swaps may catch up with the Base Rate, and in that context, fixed-rate products could once again look relatively a ractive. Time will tell which force wins the tug of war.

This tension – between the Base Rate and bond yields – is already influencing how lenders price mortgages, or more accurately, how they’re not pricing them. Recent falls in swap rates haven’t been passed on as quickly as in previous cycles, with lenders wary of a potential correction.

This is already shaping how investors are structuring finance for property deals in the months ahead.

What we must consider In today’s environment, long-term planning must be paired with shortterm agility. Our key messages for property investors are:

Watch swap rates, not just bond yields: Gilt yields are influencing swap rates, but the relationship isn’t linear. Swaps have traded in a much tighter range than bond yields in recent weeks.

Reassess fixed versus tracker options: With heightened uncertainty, and the possibility of swaps catching up with the implied path for the Base Rate – or surprises such as a new UK free trade agreement or fresh volatility from the US – discounted tracker mortgages may offer be er relative value and greater flexibility, especially for short-term or exitdriven strategies.

Stress-test your exits: Global market shocks can impact both property valuations and refinancing liquidity. Ensure your deals are resilient to delays, repricing, or a change in exit conditions.

In short: UK GDP is trending in the right direction – but global volatility is already affecting property finance conditions at home. Investors shouldn’t be spooked, but they must stay informed.

Keep your strategy flexible. Build in contingency. Follow the data that ma ers. ●

April 2025 | The Intermediary

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S P E C I A L I S T F I NA NC E Opinion

The power of site visits

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ellies, a hard hat, and the ugliest highvis known to humankind – three essentials that permanently live in the boot of my car. Come rain, shine, or even snow, I’m always ready to be on site, and as many of my clients know, once I’m there, you might struggle to get rid of me – especially if it’s a barn!

For me, there’s nothing be er than seeing a development project up close, even if it’s just a bare field or a run-down building. It’s the potential that excites me most. Sure, trudging through the mud might make you question your life choices for a moment, but in the end, it’s always worth it to see the client’s vision taking shape, and being part of bringing that to life.

As a lender, everything we do is guided by our appetite for risk. A key part of my role is assessing that risk and conducting due diligence to ensure a successful scheme. While there are multiple ways to navigate this process, being on site in person allows us to properly appraise the current condition, the local area, and the overall potential of a project. It also helps us identify possible risks at an early stage, rather than waiting for a valuation report to highlight issues that could derail a deal.

My approach isn’t to walk away from challenges, but to discuss them with clients and understand their mitigation strategies.

Recently, I visited a potential site in a historic town centre in Sussex.

Before I could even raise my concerns, the client had already identified the key issues and outlined their plans to work around them. Hearing that there’s a proactive strategy in place is always reassuring from a lender’s perspective, and seeing the site in person brings a level of clarity you just can’t get from plans or Google Maps.

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In a time when transactional business o en takes priority over long-term partnerships, the oldfashioned handshake deal is becoming increasingly rare. But personal connection still ma ers – especially to me. Meeting clients face-to-face isn’t just a preference at Magnet Capital, it’s how we work best.

Whether it’s over a bacon roll at a greasy spoon (or a barm, cob, or batch for the Northern lot) or a pint at the pub (a firm favourite among developers) meeting face-to-face continues to be the best way to build genuine relationships.

It allows for deeper conversations, greater insight into a client’s longterm goals, and a level of trust that emails and phone calls simply can’t replicate.

Site visits aren’t just about ticking the due diligence box; they’re an opportunity to add real value for our clients. Walking a site together allows us to have more open, constructive discussions about the challenges, the solutions, and the best path forward – and not from behind a desk, but while standing on the exact ground where the project will take shape.

WILL CALITO is sales executive at Magnet Capital

Site visits aren’t just about ticking the due diligence box; they’re an opportunity to add real value for our clients”

Whether it’s suggesting alternative build methods, highlighting potential planning considerations, or simply providing reassurance, being on site gives us the chance to collaborate rather than just evaluate – transforming our role from lender to partner. Lending isn’t just about the numbers – it’s about understanding the big picture and helping our clients confidently navigate the journey from concept to completion. ●

Being there in person can promote open dicussions with clients and developers

S P E C I A L I S T F I NA NC E Opinion

Do Labour’s latest housing reforms go far enough?

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ast month, we came closer than ever before to understanding how the Government plans to accelerate housebuilding across the UK. The Planning and Infrastructure Bill, which was introduced to Parliament on 11th March, contained a ra of announcements that have been predicted to deliver thousands more affordable homes.

These kinds of announcements are certainly much needed. Organisation for Economic Co-operation and Development (OECD) data shows that Britain has the highest rate of homelessness in the developed world, and yet builds fewer homes relative to its population compared to other developed nations.

Labour has long promised to tackle this crisis, but has always remained less forthcoming when it comes to how much it intends to invest in new housebuilding.

Planning progression In the meantime, housing associations have always said they stand ready to scale up their housebuilding efforts in line with the Government’s ambitions; first, though, they need to know how much money is available and how it would be allocated. It is impossible for them to plan multi-year developments, with the necessary financial commitments, without this.

Delaying the spending review from March into June this year has only compounded the uncertainty facing the sector, but we have now been promised an additional £2bn investment for up to 18,000 affordable and social homes across the country.

This is alongside over £600m in investment to train 60,000 more construction workers.

Meanwhile, the new planning bill’s proposed measures include banning unwieldy planning commi ees, encouraging mandatory training for planning commi ee members, and determining which types of planning applications can be determined by planning officers alone.

It will also give Mayors and local authorities new powers to look across other local authorities for the most sustainable areas to build. It will strengthen development corporations to make it easier to deliver large-scale development, and it will let councils set their own planning fees to allow them to cover their costs.

So, will this give Britain’s housebuilding the boost it desperately needs? Certainly, bringing forward billions in housing funding ahead of the long-awaited spending review should be welcomed by many, especially as it is underpinned by millions of pounds of investment in training thousands more construction workers.

Entrusting more decisions to qualified planning officers, rather than o en less experienced local councillors, also provides some hope that we could start to see an end to the delays that are stalling the construction of new homes.

I have a ended too many planning meetings led by councillors who reflect a narrow demographic and are influenced by a fear of how new housing might affect their re-election prospects. However, when planning inspectorates review appeals, the process is generally more impartial because they disregard the subjective reasons that might sway local councillors, applying the policy and regulatory framework more fairly.

Handing greater control to Mayors and local authorities could serve

JONATHAN PEARSON is director at Residentially

the same purpose by ensuring that decisions serve the needs of the wider area, rather than focusing narrowly on one local authority’s interests.

Providing certainty It is especially important that local authorities are empowered to set their own planning fees and reinvest income back into the system.

Years of underinvestment have le many councils lacking enough planning officers to progress even straightforward applications.

If the Government intends to speed up decisions and tackle some of the blockers to economic growth, strengthening frontline teams is going to be critical.

It remains to be seen whether last month’s announcements go far enough in reassuring housing associations and private housebuilders that the Government is as serious about investing in new homes as it has promised.

Many in the sector are still questioning when these measures will actually come into force, and whether the upcoming spending review in June will provide the genuine, multi-year investment needed for affordable housing developments.

If the Government truly wants to boost housebuilding and tackle the UK’s homelessness rate it must back up these proposals with a firm timeline and secure funding.

Without this certainty, local authorities and housing associations alike will continue to face challenges, and these reforms risk being yet another set of pledges that fail to deliver the homes so many in this country are waiting for. ● April 2025 | The Intermediary

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Q&A

StreamBank

After a rise to profitability in year one of trading, The Intermediary speaks to Roz Cawood, MD property finance, and Richard Armstrong, CCO at StreamBank, as it celebrates its second birthday What can you tell us about StreamBank’s plans for this year?

Richard Armstrong (RA): We’ve successfully established the bank and have been profitable every month since February last year. Now, we’re ready to step into the market with greater confidence and scale up.

Fortunately, our shareholder takes a long-term view, so there’s no pressure to chase rapid, highrisk growth. Instead, we’re taking a measured approach – accelerating at the right pace to build a loan book of £210m to £250m by the end of next year.

The trust we’ve built is paying off, with strong broker relationships and a growing base of repeat customers.

Roz Cawood (RC): It’s been agreed that our current strategy will remain largely unchanged.

The bridging market is where we need to stay and establish ourselves. Towards the end of 2025, we’ll be exploring adjacent markets that complement our existing products and allow us to deepen our relationships with current clients.

Why has StreamBank succeeded where other entrants struggled?

RC: At the time we launched, several new banks were either entering the market or signalling their intention to do so, and some had a shaky start. A few decided not to proceed after obtaining their restricted banking licences.

The bridging market offers relatively high returns, which is one of the reasons we chose this product set. We’ve built a model that works for us today, focusing on managing our people costs while growing the business.

The challenge is market perception. Building a £120m loan book is no small feat. If your service fails, that’s a rookie mistake. The real challenge is maintaining the service levels people expect while 54

The Intermediary | April 2025

managing costs and resources effectively. That has been the biggest test for us.

Are you exploring the possibilities of artificial intelligence (AI)?

RC: The big five banks are adopting AI rapidly because they want automation and straightthrough processing for ‘perfect’ customers. This has created an opportunity for specialist lenders, much like it did after the financial crisis.

The key for us is to strike the right balance between AI-driven efficiency and human expertise.

AI encompasses many different tools, some of which could help with heavy lifting and process acceleration. We’ll explore these options and see how they could enhance StreamBank, but we will never be a front-runner in AI adoption. We are technology-enabled and people-led.

Where are the biggest broker opportunities this year?

RC: In a fast-moving market with high deal volumes, it’s easy to focus solely on new business.

However, in a downturn, brokers need to leverage existing client relationships to create new opportunities.

By nurturing long-term client relationships, brokers can establish a lifecycle approach, supporting clients through different financial stages while generating referrals from their network. This strategy helps brokers future-proof their business, ensuring stability even when market conditions fluctuate, rather than relying solely on the next big development deal.

What are your expectations for the regulated bridging market?

RC: Market activity will have been heavily influenced by the Stamp Duty deadline on 31st

Q&A

March, when the temporarily reduced thresholds reverted. This is when customers turn to bridging finance – to secure their purchase.

RA: Looking at last year, interest rates did not fall as expected. Swap rates have remained higher than anticipated, meaning prime first charge mortgage rates also stayed elevated.

Many borrowers may still be hoping for lower rates before the end of 2025. We’re seeing some customers use bridging instead of committing to high long-term fixed rates, waiting for better deals later in the year. At the same time, other borrowers are beginning to re-enter the market, realising that ultra-low interest rates are unlikely to return.

As a result, we expect the mortgage and property markets to pick up momentum this year.

RC: Bridging may seem expensive at first glance, but it is often a necessity rather than a choice, particularly for those who don’t fit traditional affordability models in a higher-rate environment.

How might regulated bridging deal types change this year?

RA: We’re seeing more properties that aren’t currently mortgageable. Many of these require refurbishment before they qualify for a standard

term mortgage, making bridging finance an essential tool for property investors.

We’re also noticing an increase in capitalraising transactions, where homeowners use their residential properties to release equity for investment purchases or general financing needs. Chain-breaks have been a common driver for bridging, but as the market shifts towards a buyer’s market, where properties sell faster, we may see fewer of these transactions.

How can brokers maximise opportunities in a market upturn?

RC: Brokers must have a comprehensive understanding of the full range of financing options available to their clients. The days of operating within a narrow product focus are over.

Bridging, second charge mortgages, and alternative finance solutions should all be part of a broker’s toolkit.

Strong relationships with packagers and specialist lenders are also crucial. These partners can source bridging solutions and assist with administration, allowing brokers to concentrate on servicing their clients effectively.

For us, it’s still early days, but our packaging and distributor relationships continue to evolve and will play an essential role in the year ahead. ●

RICHARD ARMSTRONG AND ROZ CAWOOD

April 2025 | The Intermediary

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L AT E R L I F E L E N D I NG Opinion

Time to think about older borrowers more carefully

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his year has seen stiff competition between the market’s biggest lenders, with several offering rates more than half a percentage point lower than the base rate. This has generated lots of headlines, but it’s worth reminding ourselves that rates under 4% are just that – headlines.

They’re typically available to the safest of safe borrowers on the lowest loanto-values (LTVs).

As a building society, we remain commi ed to understanding not just our own customer base, but also borrowers currently underserved by the market more widely. O en, these borrowers still need and deserve access to mortgage finance. It’s just that systems, aggregators and affordability models don’t do justice to understanding their personal financial circumstances, which is interesting, given that this is such an integral part of the mortgage advice process.

We’ve commissioned detailed research into how the market serves so-called ‘older borrowers’. We hope to share the finished report with you in May, but we’ve got some early insights worth thinking about now.

Who are you calling old?

At the moment, there’s a general consensus that later life begins at 55.

That’s when you can access equity release, and it’s when most people are able to consider drawing their personal or workplace pension.

However, 55 is 11 years before the current state pension age, which is set to rise to 67 between April 2026 and March 2028, and to 68 between 2044 and 2046 for those born on or a er 5th April 1977.

In addition, according to the Office for National Statistics (ONS), the age

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where more than half of people were retired increased from 64 in 2011 to 66 in 2021, and we believe this age will only continue to rise with longer life expectancy, be er health and the desire to enjoy the time we have le .

Life expectancy is now 78.6 years for men and 82.6 years for women. As life expectancy increases, the length of life a er retirement is going up. ONS figures show that in 2022, there were around 12.7 million people aged 65 or over in the UK – 19% of the population.

By 2072, this could rise to 22.1 million people, or 27% of the population.

Understanding borrowers People are living and working longer, and there must be a fundamental shi in mindset if we’re to support this group of older borrowers effectively.

As an industry, we perhaps don’t give enough nuance to the changing needs of these customers over the different stages in their lives, especially when we compare them to other types of borrowers.

We know the plight of renters and their struggle to save large enough deposits. We understand how to give families the opportunity to use their own finances to support the younger generation, and we have an acute awareness of first-time buyer needs.

While we’re starting to think about the journey for older borrowers, and advisers are o en aware of a customer’s needs up to and beyond retirement, there are currently a small number of lender products which offer suitable solutions.

This limitation is hampering the industry’s ability to deliver on the Consumer Duty to help consumers achieve good financial outcomes.

Broadly speaking, at present, the later life lending market offers standard residential mortgages to

KATHY BOWES is intermediary manager at Cambridge Building Society

some borrowers, with upper age limits usually between 70 and 85 years at the end of the mortgage term.

Retirement interest-only (RIO) mortgages, for example, have no set repayment term – the mortgage is repaid when you sell the existing residential home, move into care or pass away, with interest payments continuing throughout the loan term Then there is the more widely recognised equity release lifetime mortgage, available from age 55, with an increasing range of repayment options, including interest roll-up or interest payments for a fixed term converting to roll-up at a later date.

These products do the job they’re designed for, and in many circumstances do meet the needs of the borrower.

We don’t currently understand how o en older borrowers ask for equity release, but are redirected to taking a standard mortgage they didn’t know they could afford. We don’t record how many ask for a mortgage, but are turned away because an adviser isn’t qualified to understand their income complexity. We don’t know if borrowers are taking out a lifetime mortgage because they believe it’s the only solution available to them.

What we do know is that older borrowers are a growing market, needing more thought, education and innovation.

To ensure sensible and responsible lending, an adviser must be able to address all of their customer’s needs, and lenders should consider offering a more flexible and tailored underwriting approach. ●

L AT E R L I F E L E N D I NG Opinion

Opportunities prevail in later life lending

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any people now live and work well beyond the traditional age of retirement, either because they need or want to receive an income, or enjoy the mental stimulation and personal interactions that work can offer.

This presents both challenges and opportunities to the later life lending market, which has needed to adapt quickly over the last few years as the lifestyles and financial needs of those over the age of 50 have evolved.

Demand in this area of the mortgage market is expected to remain high, with data from UK Finance showing the number of mortgages taken out by older borrowers tracking upwards, rising 28.2% year-on-year in Q4 2024.

Similarly, data from specialist mortgage lender Tembo has shown that the number of first-time buyers over the age of 50 has increased by 30% over the past five years, with rising house prices cited as the driving force for people waiting longer to buy their first home.

These figures reinforce how the concept of retirement – and indeed, homeownership – has changed dramatically since the first known building society was established in 1775, when the landlord of the Golden Cross Inn in Birmingham devised a plan for customers to pool their savings until they had enough money for everyone to build a house.

While the building society sector has grown significantly since these humble beginnings 250 years ago, it’s fair to say that it has never lost sight of its original purpose: to help its members buy a home.

Today, building societies like Loughborough Building Society continue to focus on the needs of their

customer base, many of whom are over the age of 50, and actively seek out their local branch to discuss their needs with staff.

This enables us to gain insight into their lives, while continuing to focus on niche markets, including the later life lending sector, as we look for ways to develop and enhance products that meet the housing needs of these older generations.

Changes to lending criteria, such as removing the upper age limit on our retirement proposition and allowing borrowers taking a mortgage past the age of 80 to have their income assessed at 4.5-times up to retirement age, have all been made to help improve affordability among this demographic.

Other changes, such as allowing borrowers to remortgage in order to raise capital to bolster their savings pot, were also made in response to customer needs and demands.

By enhancing our criteria to enable older borrowers to boost their savings pot, they can now be er plan for their retirement and use the money for a combination of purposes including home improvements, debt consolidation, care home fees or even to buy a new car.

Greater reach Broadening the reach of flexible later life lending solutions is imperative in the current economic climate, and every new product and policy enhancement has been made in response to the uptick in enquiries from borrowers about their later life lending options.

Meeting this demand is what building societies were created to do. It is also one of the reasons why The Loughborough entered the intermediary market in the first place.

Extending our reach by providing

ASHLEY PEARSON is head of intermediaries at Loughborough Building Society

Meeting this demand is what building societies were created to do” brokers with more opportunity to grow their client base and increase their income stream is crucial in today’s mortgage market.

Many older borrowers are facing difficult decisions when it comes to financing their retirement. Whether this means continuing to work, choosing to downsize, move closer to their children or grandchildren or explore options to fund their care or general retirement, all these decisions are highly emotive and carry a lot of weight.

The later life lending sector now has the solutions needed to help these borrowers navigate major life stages and empower them to make the most of their later years.

Given the affordability challenges currently facing all borrowers, this presents brokers with an enormous opportunity to think more broadly and discuss later life lending options with their older clients.

This may be unfamiliar territory for some, but referring clients and developing relationships with lenders – and other specialists – that are well-versed in this area will not only provider brokers with the information and support they need, it will also ensure they achieve the best and most suitable outcomes for their older clients. ● April 2025 | The Intermediary

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S E C O N D C H A RG E Opinion

Increasing figures demonstrate second charge popularity

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n February, the Finance & Leasing Association (FLA) announced that new business volumes were up by 17% in 2024, reaching almost 36,000 new agreements. There were two particular points to take from this news. First, this was the highest annual total since 2009, and second, every month of 2024 showed an increase in business volumes.

Given that the FLA figures rely on feedback from members, it does not account for other producers. So, the actual figures are probably a lot higher. What is significant is the yearon-year improvement in the volumes of business.

I have said before that judging the second charge market against its first charge sibling purely on volume does not give an accurate like-for-like comparison – and let’s face it, why should it? The mainstream mortgage market has an average loan size of approximately £190,000, while the average second charge loan size is approximately £45,000. Enough said.

Growing acceptance The increase in second charge mortgages comes down to a number of factors. Primarily, there has been a significant shi in intermediary focus from a predominantly remortgage answer to capital raising, and in turn, a wider acceptance that second charge has role to play.

Greater advocacy of the second charge market by providers, both lenders and packagers has seen greater interest from the broker community along with a genuine desire to try and understand something new, in many cases.

As the sector came under the regulatory purview of the Financial Conduct Authority (FCA), rather than

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Greater advocacy of the second charge market by providers, both lenders and packagers, has seen greater interest from the broker community”

the Consumer Credit Act, there were the first stirrings of greater interest in second charge.

The FCA’s insistence that brokers must inform capital raising clients of all product options, including second charge, was a not insignificant moment in shi ing the narrative of more general acceptance.

While the FCA’s position did not ask advisers to show direct comparisons between remortgaging and a second charge option, just the simple request that clients are informed of all their options was another important step along the road to greater acceptance that has helped legitimise the sector.

However, the introduction of Consumer Duty has also been a major factor in the re-evaluation of second charge, and has given the sector a welcome boost that is reflected in its growth.

Consumer Duty is clear on the overriding need to seek the best outcomes for clients, and that means advisers have needed to become be er informed, especially in the way they interact with clients who might need more consideration than just seeking to arrange another mortgage, regardless of the situation.

LAURA THOMAS is regional sales manager at Equifinance

Advisers are now, more than ever, in the business of giving unbiased advice first and foremost.

If a remortgage or loan is the right outcome for a particular client, then so be it.

Due to Consumer Duty’s insistence on the primacy of customer outcomes there is now an implicit understanding that there will be retrospective action taken by the regulator when and if it is discovered that the advice given has not been sufficiently researched.

Increasing technology Personally, I revel in the technology revolution and what it has done for the lending industry. But as an enthusiastic advocate, I still have to make sure that our enthusiasm for technology does not blind us to its limitations.

We all welcome the ability that comes with technology to streamline processes, and to a large extent it would be fair to say that today’s mortgage market could not operate without the assistance of the electronic wizardry that modern technology brings to the customer journey.

However, it would be foolish to lose sight of the continued importance of individual case assessment by experienced underwriters.

Any lender, especially in the specialist lending sector, which believes that an algorithm is the only answer to assessing cases, is going to lose market share and the confidence of its introducers. ●

S E C O N D C H A RG E Opinion

How smart tech is powering second charge growth

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here’s no denying that momentum continues to build across the second charge mortgage market. For lenders and brokers, this represents both a commercial opportunity and a reminder of the growing importance of having the right tech infrastructure in place to effectively meet this rising demand.

The latest figures from the Finance & Leasing Association (FLA) demonstrate this consistent growth. In January 2025, new business volumes increased by 24% compared to January 2024, with 2,907 new agreements totalling £146m, a 29% upli .

Over the 12 months to January 2025, 36,267 plans were taken out, marking a 19% increase in volume. In addition, according to analysis from Pepper Money, more than 42,000 households are expected to take out a second charge loan this year alone, a 39% hike in just two years.

However, as demand rises, so does the scrutiny on this sector. Under the Financial Conduct Authority’s (FCA) Consumer Duty, advisers are under mounting pressure to ensure that customers understand the long-term impact and suitability of secured borrowing.

This is where the role of the intermediary market becomes even more critical, and where technology can support be er advice.

Historically, second charge applications have been labour intensive, o en involving manual data entry, rekeying, and lengthy processing times. In today’s market, that’s no longer sustainable, nor acceptable, to customers who expect a slicker experience.

A key development within this is the introduction of instant sourcing

tools tailored specifically for second charge lending. For example, our SecondsSourcing platform, which is being piloted by forward-thinking lenders – Pepper, Interbridge, and Selina – gives brokers real-time access to multiple quotes without the need to complete a decision in principle (DIP).

It allows quick comparisons based on actual lending criteria, which can be a game-changer in complex or timesensitive cases.

Streamlining The recent rollout of application programming interface (API) integrations and specialist platforms is also starting to remove friction. For instance, full two-way API links with a growing number of second charge lenders now allow brokers to go from sourcing to application submission without switching systems. This ensures quicker, more accurate decisions, streamlined processes and smoother case tracking.

This sort of innovation is not just about convenience. It’s about helping brokers demonstrate value, meet compliance expectations, and provide be er outcomes for customers.

The rise in second charge lending isn’t just a passing trend. It signals a real shi in borrower behaviour

NEAL JANNELS is managing director at One Mortgage System

and a be er understanding of the options available.

New lenders entering the market with specific product ranges and flexible pricing suggest competition will only grow. That means more choice, but also more complexity.

Brokers who want to stay ahead should look at how technology can cut admin time, improve accuracy, and help drive be er client conversations.

Whether it’s customer relationship management (CRM) systems, sourcing tools or integrated document and messaging features, technology must be viewed as an essential partner for lenders and advisers, not just an option.

The second charge market is on the path to steady growth. With higher awareness, stronger product ranges and active intermediary engagement, it’s becoming part of the mainstream.

However, growth also brings pressure on systems, processes and compliance.

Brokers who adopt the right tools will be in a stronger position to meet demand, offer be er service, and add real value. ●

The right technology has the power to supercharge broker processes

April 2025 | The Intermediary

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P RO T E C T I O N Opinion

Will commission survive the FCA’s review?

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ecently, the Financial Conduct Authority (FCA) published the terms of reference for its review of the pure protection market, following consultation on the review’s scope and approach.

While many of those who are tired of being ‘bundled in’ with general insurance (GI) welcome this market study, the elephant in the room is commission – or, to be more specific, commission bias.

For years, consumer groups have cited commission bias as a major cause of consumer harm. The industry’s position is that, because life insurance is not that stimulating to purchase, without commission, sales will drop and the proportion of protection provided will plummet – which is not good for the nation’s financial resilience. Fundamentally, both arguments are true.

Bad outcomes The challenge for the industry is how it can reduce bad outcomes which result from commission bias, and evidence this, so that it does not get strangled by a blunt regulation. The industry needs to demonstrate that commission bias is just a minimal cause of bad outcomes.

Consumer Duty gives the financial services industry the framework needed to measure and report on bad outcomes for all consumer types.

Ideally, firms would demonstrate the effects of commission on consumer outcomes across different distribution models – although, as most firms have a single remuneration model, this may not be possible.

Recent a ention has been on claims and claim turnaround times, and as claims are where the value of

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protection insurance is received and demonstrated, they deservedly get this a ention.

20 years ago, MorganAsh introduced tele-interviewing to the UK. The key benefits of this were to separate the medical assessment from the sales process, and to be more diligent in collecting medical information. Now, the amount of misrepresentation we see that results in paid-out claims is effectively zero – we do get some fraud by consumers, but this is quickly and easily debunked at the time of claim.

The industry chose a different route, pursuing automated systems and requiring the salesperson to undertake medical assessments – all in the pursuit of sales, which were prioritised over reducing misrepresentation and any resultant problems at claim stage.

Fair value Statistics on declined claims due to misrepresentation have improved over the years – but this is due to cases being paid out rather than up-front identification. Reinsurers report misrepresentation in around 10% to 20% of cases – and they maintain that the industry could reduce its fees if misrepresentation was reduced.

Under Consumer Duty, it is difficult to justify consumers paying a premium resulting from an industry focusing on sales rather than consumer outcomes. There is a difficult fair-value argument, which says that consumers pay more because the industry is focused on sales – and indeed, this is exactly what Consumer Duty is trying to change.

We know consumers believe that pay-out rates from protection insurance are far lower than they are in practice, and despite good PR and

ANDREW GETHING is managing director at MorganAsh

marketing efforts, this has hardly changed over the last 20 years.

The industry’s focus is on sales, not consumer outcomes, and it only needs a few bad stories – justified or not – to reinforce the consumer’s view. A er all, bashing the insurance industry drives both views and clicks.

Consumer Duty’s main thrust is for firms to focus on good consumer outcomes or, at the least, reducing bad outcomes, as this will improve consumers’ trust over the long term.

Improving trust over the long term should improve consumer take-up and sales, so it is in both the consumer’s and the industry’s interest.

When remunerating by commission to an individual, and requiring them to undertake the medical assessment, it is difficult to even suggest that bias does not exist.

In addition, undertaking medical assessments and selling or advising on products typically requires radically different skill-sets, and is generally an inefficient use of advisers’ time.

Using techniques like teleinterviewing to separate sales and medical assessments not only removes bias, but provides the evidence of having removed bias.

It seems to me that carrying on denying there is an issue with commission bias, without any evidence, is not going to wash. Firms must prove to the regulator that there is no commission bias – and demonstrate the removal of bias to win back consumers’ trust. ●

P RO T E C T I O N Opinion

Eggs aren’t the only thing at risk at Easter

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uring the Easter and Spring holidays, there is an increased risk of accidental damage as families and friends spend more time at home or together, and this increase in household activity can result in a higher incidence of home insurance potential claims.

Interestingly, the latest Which? analysis found that most policies don’t include accidental damage cover as standard – only 22 of the 78 policies looked at included it as standard for buildings and 23 for contents. At Safe&Secure Home Insurance, we only offer policies that have Standard Accidental Damage included, and additional cover for spillages and breakages or DIY accidents can be included, too.

Now that the sun is out and temperatures are rising, we are all out in our gardens sprucing things up, and in our homes doing DIY projects.

The Easter break is a popular time for home improvement projects, but mishaps can lead to unexpected claims and costs. AXA reported that accidental damage claims on Easter Monday have soared by up to 29% over the annual average in previous years, with an average claim nearing £500.

Many insurers offer special events cover which extends contents insurance during significant occasions like Easter. This additional coverage protects extra items in your home such as food, decorations, and gi s – during the lead-up to and duration of the celebration.

Here’s an Easter home insurance checklist for your clients:

1. Review the policy cover Make sure accidental damage is included, especially if doing DIY.

Check the limits of contents insurance – are they enough for valuables or gi s?

Have you got home emergency cover, and if not, do you want to add it on?

Some insurers boost your contents cover temporarily around holidays like Easter, with the addition of special events cover.

2. Prep for DIY projects Avoid complex tasks, like anything involving plumbing or electricals. People o en take on DIY tasks they might not be qualified for.

Take photos before and a er projects – this is useful in the event of a claim.

3. Safety Big family meals, roasts, and baking Easter treats means more time in the kitchen, so don’t leave cooking una ended.

Check smoke alarms.

Avoid overloading sockets with appliances – slow cookers, air fryers, coffee machines – all at once.

Remind family and guests to be cautious – for example, no candles near curtains.

4. Security Lock all doors and windows if you go out, even for a short walk.

Keep valuables out of sight, especially from front windows.

5. Home emergency cover Make sure your policy has emergency cover, especially for boiler or heating breakdowns, plumbing and drains, and lost keys or security issues.

Save your insurer’s emergency helpline number to your phone.

STEPH DUNKLEY is development director at Safe&Secure

6. Keep up to date records Use your phone to take photos or videos of valuable items or general room setups.

Update your inventory if you’ve bought anything expensive recently, such as tech and jewellery.

7. Increased pressure With more people using the home, especially bathrooms and showers, you may see: blocked drains or toilets, boiler or water system overloads, and pipe issues due to fluctuating spring temperatures.

8. Valuables and gifts People o en buy gi s – especially for kids – or host parties with extra valuables around.

The claims can increase if people leave doors or windows open or go out and forget to secure the home.

Items like electronics or jewellery might not be fully covered unless the policy has valuables specified if over a certain individual value.

So, during Easter claims have been shown to spike, with Easter Monday seeing a particular increase.

Homeowners should be encouraged to review their policies to ensure they include accidental damage, home emergency, and special events cover.

With more valuables, guests, and time spent in kitchens or gardens, it’s vital to stay safe, secure the home properly, and keep records updated.

Brokers such as Safe&Secure Home Insurance want all their clients to have a safe and happy Easter, and so emphasise the need for reviewing buildings and contents cover and always ge ing advice on the possible optional extras. ● April 2025 | The Intermediary

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P RO T E C T I O N Opinion

Prioritising changing protection

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s with most financial products, home insurance should not be a ‘secure once, forget about it’ type of purchase. While advisers know this well, customers sometimes need reminding to reflect at regular intervals throughout their mortgage lifecycle to make sure their home insurance is still tailored to their needs.

It’s all too easy at renewal stage for customers to creep into auto-pilot, simply renewing their policy without considering any changes to their circumstances.

While the policy a customer purchases as a first-time buyer may still offer adequate cover five or even 10 years later – particularly given that many policies offer blanket cover limits which allow for growth in possessions over time – their risk profile is likely to be impacted by life events, such as moving house, having kids, or home renovation.

Advisers are in the best position to support customers in understanding how their general insurance (GI) requirements could have changed.

This changing risk profile serves as an opportunity for advisers to contact the customer throughout their life,

introducing additional touchpoints that go beyond the mortgage cycle.

By using revisiting their GI needs as a legitimate reason to get in touch, it creates opportunities for a conversation about customers’ wider financial needs – opening doors to add value to the relationship and providing holistic support to help ensure good financial outcomes for the customer over the long term.

Stepping up A changing risk profile starts with a customer’s initial step onto the property ladder. While buildings insurance will be new to first-time buyers, some will have had contents insurance if they were renting – and we’ve been working hard over the years with our lettings distribution partners to increase awareness of the benefits of such insurance.

Nonetheless, the world of GI might be new to many, so there’s a real opportunity for advisers to step in, make sure they have insurance that meets their needs as a homeowner, and fill any knowledge gaps.

LOUISE PENGELLY is proposition director at Paymentshield

Many first-time buyers and home movers may also be planning to undertake renovations. With this in mind, it’s worth advisers pointing out from the get-go – and checking in periodically – that there might be implications for home insurance as

P RO T E C T I O N Opinion

needs in the home life-cycle and when their home is having work done to it.

While some providers might require notification if their property is undergoing renovation works, Paymentshield does not – as long as the property is not unoccupied for more than 60 days.

However, there might be things that fundamentally alter the risk profile of the property that require notifying the insurer – for example, adding bathrooms or bedrooms. This provides another opportunity for advisers to point out the differences between products and add value with their advice, to make sure customers don’t get caught out.

The profile of your customer is likely to continue changing as they get older. Growing families might make optional extras – like accidental damage or home emergency cover – more of a priority.

In addition, they will naturally acquire more contents over time – including ‘big ticket’ items that may need specifying on their policy.

Middle age might bring with it more household movement. Elderly parents might move into the home, adding another household’s belongings and valuables to their own. Children might move out and go to university, so clients might need reminding that policies may also include cover for contents removed from the home and taken to student accommodation.

For advisers, identifying these emerging needs is where they can really add value.

Finding touchpoints Since home insurance renews annually, it enables advisers to maintain more regular customer contact than the mortgage cycle alone.

However, the mortgage cycle does, in turn, also offer some natural ‘GI review’ touchpoints.

The remortgage stage, for example, provides the perfect opportunity to remind clients about the benefits

of their policy and to check if any changes need to be made to make sure it continues to fully meet their needs.

Moreover, ensuring your clients have the right home insurance for their needs has never been easier – advisers can be reassured that tracking this over a lifetime is really not as resource-intensive as some might think.

Our optimised quote journey means quotes can be generated in less than one minute, and there are multiple options for advisers looking to make GI a core component of their business – from bespoke integrations to the creation of embedded insurance journeys that eliminate the need to rekey information. There’s always the option of referring, too, enabling your client to still have an advised conversation when they’re purchasing a new policy.

We’re all guilty of putting ‘life admin’ on the back-burner, and for some homeowners, home insurance can be in danger of falling into this category. Advisers are an essential guard against this. After all, when you buy a home insurance policy, you’re really buying peace of mind – and too often, customers only realise the value of ensuring they have a fit-for-purpose policy when it’s too late. ●

B RO K E R B U S I N E S S Opinion

Together we can combat stress

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pril can be a cheerful month, with days lengthening, flowers blooming and Spring finally in the air. But it is also a stressful time for many, with the end of the tax year focusing a ention on financial ma ers. This year, we have the added fiscal burden of higher energy prices and water bills and a rise in National Insurance (NI), not to mention concerns around US tariffs and the wider economy. So, it feels particularly fi ing that April 2025 is Stress Awareness Month.

Working in the mortgage market comes with plenty of stress all year round, which we may not always acknowledge, let alone seek to counterbalance.

Ours is a wonderful, sociable industry, full of positive, can-do people, and the work we do is very valuable to our customers. It can be highly rewarding. Nevertheless, mortgage lenders and brokers operate in an environment of constant pressure. We need to make decisions and meet deadlines on an hourly basis.

Can we or can’t we make an offer on this case? Will I be able to close this deal? The impact of our actions may not be life or death, but they do affect people’s lives in a very real way.

Moving house is one of the top three most stressful experiences most people go through, right up there with divorce and bereavement. But securing any kind of property finance, from bridging to buy-to-let, is not without tension for the borrower. Mortgage brokers routinely experience some transference of this stress, adding to the pressure of the job.

We also have to work through additional pressures, such as periods of volatile interest rates and subsequent product withdrawals, which can be particularly stressful for brokers who may have to explain complex financial concepts to

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disappointed customers – and then arrange their cases again.

We all deal with spikes in business when rates or taxes are cut. Healthy activity is very welcome, but occasionally the workload can be overwhelming. The rush to beat the recent Stamp Duty deadline was a case in point.

Long working hours are endemic in the mortgage industry. Our MIMHC Mental Health and Wellbeing Survey, carried out last summer, revealed that 49% of respondents were working between 45 and 60 hours a week, 10% between 60 and 75 hours a week and 3% more than 75 hours.

Stress wreaks havoc on physical and mental health

I’m willing to bet those figures would have looked a lot higher in March this year. A er all that effort, around 70,000 mortgage cases failed to complete on time, leaving those borrowers with bigger Stamp Duty bills and their brokers and lenders with an added layer of stress.

All of this adds up to a significant stress burden, carried by many thousands of people in our industry.

Stress can play havoc with our mental and physical health, our ability to function at work and home, our ability to cope.

Stress makes it hard for us to concentrate. It causes headaches and upset stomachs and keeps us from sleeping. Stress can cause or exacerbate existing anxiety and

JASON BERRY is co-founder of the Mortgage Industry Mental Health Charter (MIMHC)

depression. Chronic stress can worsen pre-existing health conditions and lead us to use more alcohol, tobacco or other substances.There is no way to remove stress entirely from our working lives, but we can combat the worst of it using simple techniques.

Talking is absolutely crucial – honest communication with a colleague, friend or partner makes a huge difference. The old saying that ‘a problem shared is a problem halved’ does carry some water.

Ge ing adequate sleep helps, and meditation is said to be a great antidote to stress, though I must confess I have not mastered it myself!

Exercising – whether that is cold water swimming or simply going for a walk – boosts the production of neurotransmi ers in the brain, alleviating stress. Eating well, limiting screen time, these are all basic measures, but they can really make a difference to our mental health.

The challenge for us as individuals is making the time in our lives to incorporate these behaviours.

The challenge to us as an industry is to encourage and enable these behaviours and prioritise the wellness of every individual working in mortgages. ● More than 200 signatories to the Mortgage Industry Mental Health Charter have pledged to place mental health on their radar.

Visit the website to sign up.

B RO K E R B U S I N E S S Opinion

Increasing the attractiveness of the AR model

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t’s a decision that every mortgage broking entrepreneur must make at some point: whether to gain regulatory permissions via the appointed representative (AR) or directly authorised (DA) route.

There is no wrong answer, and the route you take ultimately rests on how you want to operate as a firm.

That said, with the Financial Conduct Authority (FCA) looking to increase its supervision of mortgage brokers over the next two years, it is extremely likely that the AR model will become more a ractive.

The regulator’s recent ‘Dear CEO’ le er outlines its plans to scrutinise advice quality, high-pressure selling, fees and fair value and financial promotions over the next two years.

Quite right, of course.

Quality of advice The regulator is placing renewed emphasis on ensuring that brokers deliver tailored, high-quality advice rather than simply ticking boxes to meet lender criteria. Advisers must prove they recommend products that truly suit their clients’ needs.

Networks are well-equipped to meet this challenge through robust training and business standards control measures. Many networks also offer centralised training programmes designed to keep advisers updated on the latest regulatory expectations and industry best practices.

In addition, many provide guidance on how to conduct thorough suitability assessments and construct advice journeys that clearly serve the client’s best interests. Not to mention dedicated tech solutions which support the optimal advice journey.

Regular internal audits and peer reviews further reinforce these

practices by ensuring that advice is consistently aligned with FCA guidelines. This integrated support structure minimises the risk of recommending unsuitable products and helps firms maintain high standards in client service.

High pressure selling The FCA also plans to investigate highpressure selling tactics, particularly in relation to sales incentives that may drive misselling or product bias.

The risk, as the regulator sees it, is that such practices could prioritise commissions over client needs, leading to a culture where aggressive selling overshadows best advice.

Networks handle these risks via clear, ethical guidelines and processes. For example, Stonebridge has rigorous standards that focus on consumer outcomes, and which seek to prevent high-pressure tactics.

This approach is supported by investment in advanced technology, which continuously monitors advice processes to detect and eliminate any conflicts of interest.

By ensuring that a broker’s practices remain ethical and client-focused, networks help advisers build trust and credibility with their clients, while staying on the right side of regulatory requirements.

Fair value Another critical pillar of the FCA’s strategy is ensuring that the fees charged by advisers represent fair value, as per the Consumer Duty.

While it isn’t the role of a network to dictate fee levels, good networks offer essential guidance that helps member firms develop transparent pricing models that are fair value. By sharing market insights and industry benchmarks, networks enable

ROB CLIFFORD is chief executive at Stonebridge

advisers to set fees that are both fair and reflective of the service provided.

Financial promotions Producing balanced, accurate and regulatory-compliant marketing materials can be complex and timeconsuming for many advisers. This is another area where networks can offer support and guidance.

Many networks streamline this process by offering access to proven, off-the-shelf templates and detailed guidelines that align with regulation.

Some networks also conduct regular reviews of promotional content, ensuring that any marketing material remains effective yet compliant.

This proactive approach helps advisers avoid costly regulatory pitfalls, while freeing up advisers to focus on what they do best – delivering quality advice to their clients.

Appeal of AR As Joanna Legg, head of consumer policy and outcomes at the FCA, noted at Stonebridge’s annual conference recently, the AR regime “offers a proportionate and cost-effective way to comply with regulations” and gives a more accessible route to market.

That’s always been the case.

But with the FCA enhancing its supervision of the sector, we believe more brokers will come to value those benefits as well as the safety net that networks provide.

In an evolving market where compliance requirements are continuously tightening, the AR model offers a proven path to achieving both regulatory compliance and sustainable business growth. ● April 2025 | The Intermediary

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B RO K E R B U S I N E S S Opinion

Mortgage clubs: Best of all worlds

F

or many advisers, going directly authorised (DA) is a big business decision.

It offers much more freedom to run your firm in a way that works for you and your clients, a more flexible commission model, and access to the whole lender market. But it also comes with considerable responsibilities.

Most mortgage brokers will begin their careers as an appointed representative (AR), operating under a network or principal firm that takes the burden of regulatory compliance, administrative and technology systems off their plates.

Ultimately, it is the network which is directly authorised by the Financial Conduct Authority (FCA); as such, it offers compliance support, training, and business guidance within a structure that all members must adhere to. That includes strict limits on the types of advice they allow members to give.

There are many upsides. The network handles FCA reporting and compliance requirements, and many support lead generation, marketing and provide fully managed customer relationship management (CRM) systems.

There is a cost a ached, with the network and adviser operating on a commission split model. Other networks have a fee model based on turnover, either in addition to the commission split or as an alternative.

Control and independence In contrast, DAs have full control and independence over which lenders to work with, what types of advice to offer and which clubs to access product ranges through.

It comes with higher costs, with advisers responsible for their own professional indemnity insurance, compliance and CRM systems. But then, DA firms also get to keep more of their commission.

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The Intermediary | April 2025

There is no one-size-fits-all approach when it comes to choosing between the AR and DA routes, it is all about finding the path that best suits a broker and their business.

In March this year, the regulator launched its market study into how well the distribution of pure protection insurance products is working for consumers.

The study will examine whether the structure of commission encourages advisers to suggest switching that may not be beneficial for consumers, if premiums are being raised by insurers to pay a higher commission to an intermediary, if the products provide fair value and whether the market supports innovation and growth.

This is just the latest FCA review that touches on standards, and goes to show how broad the responsibility of being a DA is.

Alternative options While some firms will want the clear division of being a DA or AR, there is a third way that can offer the best of both worlds. This is a middle ground between the two options, where DA brokers can still enjoy support and expertise by becoming a member of a club, such as TMA. DAs can access compliance support options such as file checking, compliance newsle ers, firm T&C visits along with continuing professional development knowledge and skills, training events and other business development options.

The FCA’s focus is now firmly on the ability of firms to demonstrate and evidence how they are ensuring good consumer outcomes, both today and ongoing. This requires meaningful data records, intelligent analysis and informative reporting. That takes increasingly advanced technology and systems that are fit for purpose postConsumer Duty.

All this while still generating and writing enough business.

ROB MCCOY is senior product and business manager at TMA

Structured support Few DAs are keen to unwind their firms to return to a network. Yet in this environment, structured support services are becoming a necessity.

Tech systems are a big part of this, but they’re expensive to invest in and keep at the forefront of a constantly developing market. Not only are good systems crucial to time efficiency, but the right tech can improve the mortgage application process, reduce the time to close and help minimise manual data input.

They offer flexibility whether in or out of the office and help firms to manage caseloads and streamline processes. Mortgage clubs can also use their wealth of knowledge and agnostic approach to systems to support DA firms when choosing the right tech options for their business.

AR or DA, and with or without independent compliance support services, the mortgage market today is a complex place to operate.

Every adviser I know would say that all this is secondary to the job they actually do day in, day out. They care about their clients, giving them the best advice and support they can and ensuring that they have the best experience possible.

Being a mortgage adviser is ultimately about doing a good job for clients. That takes an enormous amount of time and work in the background, when most advisers would rather be dealing with their client’s needs.

Adopting a hybrid approach that allows DA brokers to focus on the bit of the job they’re here to do can take a huge weight off their shoulders, all in the knowledge that they have the support of a big firm behind them. ●

B RO K E R B U S I N E S S Opinion

Meaning of life, the universe and everything

S

enior people classically assume those lower down the line are motivated by material rewards, whereas they, themselves tend towards a search for meaning. This is probably due to the gross misunderstanding of Maslow’s hierarchy of needs as a hierarchy, rather than a collection of a ributes desired by all. A good leader must understand how much people need meaning in their life and work.

In one experiment, researchers put people into two groups, to pursue either pleasure or meaning over 10 days. The pleasure group took long lie-ins, went shopping or played games. The meaning group forgave friends, helped people, studied, thought about values. The pleasure group immediately reported increased positive emotions, but these faded a er three months. The meaning group was not as happy right a er the experiment, but rated their lives as more meaningful, and three months later felt enriched and inspired.

Meaningful leaders recognise the desire people possess to be part of that bigger picture, knowing what purpose their role fulfils rather than always looking down at the minutiae of business. Engaging with employees, seeking their insights, listening to their ideas with appreciation and minimal judgment, are all habits that facilitate a sense of meaning in others.

Rhetoric can go part of the way, but the impact dissipates if not followed up in the day-to-day. Truly meaningful leaders demonstrate their values through behaviour, not just words.

Understanding your values, recognising that others may not automatically share them, and finding ways to encourage shared values is critical to great leadership.

AVERIL LEIMON is co-founder of White Water Group

Exploring values As ever, starting from the inside, in coaching I would first explore with my clients their own values, asking them to complete phrases like these – adapted from The Positive Psychology Toolkit: Finance: Regarding money, my family taught me to be…; The best thing about money is…; My biggest challenge in managing my money is…; If I found £100 on the ground, I would…

Career: The main thing I want from a career is…; I expect my superiors to…; I would like to earn enough money to…; The thing I look forward to most about working is…; The most difficult part about work is…

Relationships: I respect friends or partners who…; For my friends or partner, I aim to be…; One thing I wish my friends or partner would do more o en is…; One thing I should do differently or more of is…; My biggest challenge in connecting with others is…

Health: The healthiest thing I do for myself is…; The least healthy thing I do for myself is…; I keep physically active because…; Being healthy is important to me because…; My biggest challenge in keeping physically active is…

Fun and leisure: One thing I like to do to relax is…; My favourite thing to do for fun is…; I could bring more leisure into my life by…; To me, leisure means…

Development: Growth and learning is important to me because…; I love to learn new things because…; If I could learn more about something, it would be…; My a itude towards growth and learning came from…; My biggest challenge in pursuing growth and learning in my life is…

Community: To me, community means…; Community is important to me because…; I feel connected to my community when I…; Being part of my community makes me feel…; My biggest challenge in keeping connected with my community is…; My a itude towards community came from…

Considering all the above, ask yourself: What common themes emerge? What values can you identify within your responses? What meaning can you make from your responses?

Bear in mind that even the people you appointed will not share your values. They didn’t grow up in your life, so how could they espouse your business values if you don’t find effective ways of demonstrating them?

An important question remains around how to cultivate meaning at work. Key areas to focus on include: 1. Belonging – being recognised and affirmed, knowing your strengths and having them recognised by colleagues makes you feel alive.

2. Purpose – really understanding the context of the goals you are working towards. Recognising your skills and talents give you confidence.

3. Storytelling – stories and legends help you make sense of the world around you and the ‘way we do things round here’. Tapping into people’s passions raises energy.

4.Values – aligning with values builds motivation.

Deep Thought took 7.5 million years of processing to get to 42. Hopefully, finding your own sense of meaning won’t take quite as long! ● April 2025 | The Intermediary

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B RO K E R B U S I N E S S Case clinic

Case Clinic Want to gain insight into one of your own cases in the next issue?

Get in touch with details at editorial@theintermediary.co.uk

comments to decide whether to go ahead after ensuring we understood all the relevant factors.

CASE ONE Property near a mine shaft

A

couple earning a combined annual income of £65,000 (£40,000 and £25,000) face significant complications when attempting to purchase a property priced at £225,000.

During the conveyancing process, their solicitor’s searches revealed the presence of a mine shaft in the neighbouring garden. As a result, their initial mortgage application was declined, and their previous broker classified the property as un-lendable.

The mining report highlighted potential structural risks and a reduced resale value, which deterred many lenders.

With their deposit of £22,500 at risk, the couple has been left uncertain about how to proceed, and face the possibility of losing their dream home.

WEST ONE LOANS

Judging by the couple’s income and the property’s value, they would be looking at a 90% loan-tovalue (LTV) deal. They satisfy our criteria, and if they were first-time buyers, we could even look at 95% LTV. In this scenario, we would not decline based on location, or due to them being rejected elsewhere.

The couple’s affordability looks promising, but ultimately, we would rely on the valuer’s 68

The Intermediary | April 2025

TOGETHER

While we would need a structural report to confirm the property is safe and any remedial work potentially needed, Together could lend on such a property, providing an option for the applicants in order to not lose their deposit.

The broker could highlight to the valuer that Together would be able to lend on this property, thus making it mortgageable, and we could then look to work our LTV based on this value.

If their deposit was not quite enough, Together could look to utilise cross-charging options, as well as allowing up to four applicants to help support additional affordability if required.

HARPENDEN BS

Unfortunately, this would not be one for the society. Due to the proximity of the mine shaft it is unlikely our valuer would deem it fit for lending purposes.

Also, the reduced re-sale value may exclude it from our minimum of an advance of £150,000 at 80% LTV.

UNITED TRUST BANK

The presence of a mine shaft in close proximity to the intended security would be a major concern for most lenders, including UTB. The coal mining report will detail any risk the lender should consider, and a decision will be made based on that risk. If the report shows little to no risk of future structural movement we will often proceed to offer.

B RO K E R B U S I N E S S Case clinic

However, in these circumstances, where the report clearly states a potential structural risk, we would usually decline, and the purchaser should be advised as to whether to proceed with their purchase.

Their deposit should be safe as their solicitor should not have allowed them to exchange contracts without a mortgage offer or relevant searches and reports being received.

The vendor of the property can seek advice and compensation from the Mining Remediation Authority, which manages the UK’s long-term legacy of mining activity.

BUCKINGHAMSHIRE BS

The society would need to engage with our surveyors that we use to help to understand if the property would be suitable security.

It could be that further surveys could be obtained to see if it would be possible however the society is guided by the valuers and their experience.

The property would need to be assessed as suitable security for the society to consider to be able to lend.

SUFFOLK BS

We would be unlikely to lend on this case due to the severely limited mortgageability of the property. That said, we would rely on our valuer’s opinion of the property and may advise that the couple obtain an interpretive mine shaft report.

This would give a risk assessment and advice on whether the mine is capped – and if so, when this occurred – which may help the buyers judge whether to proceed with the purchase and what potential options they have.

CASE TWO Expat mortgage for UK investment property

A

n expat client living in the Middle East with an annual salary equivalent to £150,000 seeks to purchase a £400,000 buy-to-let (BTL) property in Manchester.

They plan to use the rental income to supplement their long-term savings, but have encountered obstacles due to their non-resident status.

The client’s income is paid in a foreign currency, and they lack any UK-based financial history or assets.

Many lenders have been hesitant due to concerns about currency fluctuations, as well as the complexity of verifying overseas tax returns and payslips.

Further complicating the situation, the client requires a mortgage with minimal upfront costs, as they are only able to put down a 20% deposit.

Despite providing detailed documentation, the client has struggled to find a lender willing to approve the mortgage.

BUCKINGHAMSHIRE BS

The society can consider expat lending for buyto-let. The applicant has to be a British citizen residing in an acceptable county for the society.

As this would be a buy-to-let, no income would be used as it would be based on interest coverage ratio (ICR) so the foreign income would not be considered or required.

The society does not require a footprint of credit in the UK; however, they would need to be able to provide their National Insurance (NI) number, last UK address and the mortgage payment, and the rent received must be paid from and in to an UK bank account.

The maximum LTV would be 75%, and the society would need further information to consider as it is not clear what country they are expat to.

TOGETHER

Together can lend to expats and foreign nationals on our buy-to-let range, subject to the usual applicant checks, and it would be subject to the normal affordability and valuations criteria.

While Together’s max lend on standard property is 75% LTV, just below what the customer requires, we could look to utilise additional UK property to cross-charge to make up the shortfall if needed.

The applicant could save costs using our automated valuation model (AVM) online valuation criteria to possibly save further funds to put towards the purchase.

If the income to credit ratio was met against the rental income of the loan, Together could proceed as normal.

QUANTUM MORTGAGES

We’re happy to accept the client’s salary in a foreign currency, if it equates to at least the equivalent of £35,000 on the date of the application.

Most countries of residence are acceptable, as long as the BASEL AML risk score is 6.0 or below April 2025 | The Intermediary

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B RO K E R B U S I N E S S Case clinic

and the county is free from sanctions.

If the client already has a buy-to-let property in the UK, we can lend up to 75%.

If they only have buy-to-let properties in their country of residence, we could still proceed but with a 45% deposit.

UNITED TRUST BANK

Currently UTB does not offer buy-to-let mortgages for expat applicants. However, we are looking at this market so watch this space!

HARPENDEN BS

We can consider foreign currency income from a range of sources, even in cases where we need to verify this via overseas documents.

The issues we would have here are that we cannot lend to expats and our minimum deposit requirement is 25% on buy-to-let applications.

However, when it comes to keeping initial costs down, our low £995 arrangement fees can be added to the loan.

SUFFOLK BS

We’d be very happy to lend on this case. The expat has a healthy salary, well over our minimum income threshold of £25,000.

With foreign currency applications, we haircut by 20% to cover any potential future currency fluctuations.

As the expat is looking to purchase a buy-to-let property, we would need to ensure that the rental income is sufficient to satisfy the minimum ICR. If there was a shortfall, because the rent couldn’t be set at a level to meet the ICR, then top-slicing could be an option for the customer, too.

The fees can be added to the mortgage, to meet the buyer’s requirements to have minimal upfront costs (above 80% LTV).

We love lending in this space and will consider first-time landlords, and first-time buyers.

CASE THREE Recently self-employed applicant with limited trading history

A

client earning £60,000 in their previous salaried role recently transitioned to selfemployment as a freelance consultant.

They have been trading for just over a year, and are looking to purchase a £300,000 residential 70

The Intermediary | April 2025

property with a 15% deposit. Despite having a strong previous income history and a growing client base, the mortgage application has proven difficult due to a short trading history.

Most lenders he has approached require at least two years of self-employed accounts or tax returns to assess affordability, making it challenging for the client to secure approval.

BUCKINGHAMSHIRE BS

The society would require two years of selfemployed income evidence to be able to consider with just the applicant.

However, an option for Joint Borrower Sole Proprietor (JBSP) could work if the applicant has parents that are able to support the mortgage payments. The LTV would be 90%.

TOGETHER

Together would be happy to accept the income from the applicant as they have been trading for a minimum of 12 months, unlike some other lenders that require two years of trading and may choose to average this amount.

Together could look to utilise our accountant projection form to use a higher figure if this income was to increase in the coming year.

The applicant’s accountant could project the income based on information provided by the applicant, meaning potentially a higher lending amount against affordability.

While we could not quite get to the 85% LTV needed, we could look to utilise our criteria around gifted deposits from immediate family members and up to four applicants to help support additional affordability.

UNITED TRUST BANK

In most cases, UTB would also require at least two years of accounts, especially for a sole trader applicant.

However, we would consider, on referral, a limited company director with one year’s finalised accounts and strong projections.

This would need to be evidenced by way of a completed accountant’s certificate, where there has been sufficient time lapsed in the current accounting year for us to get comfortable, and this was supported by management accounts supplied by the accountant.

HARPENDEN BS

We are happy to utilise self-employment income with just one year’s trading history, and can be flexible with the evidence we receive for this including tax calculations, accounts or

B RO K E R B U S I N E S S Case clinic

even an accountant’s certificate. We would ask for a projection for year two to back up the sustainability of the first year’s earnings.

The only issue we would have here is around our max LTV of 80%, meaning we would need a 20% deposit as a minimum to proceed.

SUFFOLK BS

We would be able to consider this case once the client has two full years of accounts under their belt.

Failing this, the client would stand the best chance of getting a mortgage elsewhere if they had a chartered or certified accountant giving them a reference.

The client would also be well advised to demonstrate that they are in a similar line of work to their previous employment, if possible.

Detailing current and previous contracts since going self-employed could also help support their application.

The client would have more options available to them if they could find another 5% deposit, as this would take them out of Mortgage Indemnity Guarantee (MIG) territory, which is generally required on higher LTV lending.

CASE FOUR Large rural property with agricultural ties

A

couple earning a combined £95,000 annually (£60,000 and £35,000) are looking to purchase a £700,000 rural property with 10 acres of farmland.

This comes with an agricultural occupancy restriction (AOC).

The restriction requires at least one applicant to be employed in agriculture or forestry, but neither currently works in these fields.

However, one applicant has experience in land management and is considering part-time agricultural work, which could potentially meet the AOC requirements.

The couple plans to use the land for smallscale farming and self-sufficiency, rather than commercial agricultural income.

BUCKINGHAMSHIRE BS

The society can consider lending where there are large acres and agricultural ties.

This lending is typically restricted to 60% LTV; however, on this occasion it would not be possible due to the applicants not meeting the restriction of the occupation.

The farming part would be an issue for the society as well, even if this is small.

TOGETHER

Together would be happy to lend on the property, assuming all the AOC restrictions were adhered to.

If the land was not being used for agriculture work then this would come under our normal residential range.

UNITED TRUST BANK

Sadly this application would not be suitable for UTB Mortgages due to the agricultural occupancy restriction which would significantly limit resaleability.

HARPENDEN BS

We can consider properties with agricultural ties up to 50% LTV, as long as we can be comfortable that the restriction is met by the applicants.

We can accept properties up to 20 acres depending on the planned usage for the land – for example, not commercial farming.

SUFFOLK BS

This is a really complex case and not an area we lend in.

A lender will be looking at the farmland element of the application. The substantial acreage could also be another deterrent.

Over and above the property itself, the applicant is considering a potential change in employment to agricultural work.

However, the case doesn’t say if this is to supplement an existing part-time role or would be instead of their current employment.

If it is ‘instead of’, this could potentially impact the current income.

It’s more than likely that the applicant would need to be employed in agriculture in the surrounding area prior to purchasing the property to meet the AOC. So, they may fall at the first hurdle if their income drops substantially due to their change of career direction.

The farmland element, the size of the plot, and the AOC all restrict resaleability, which makes the case a difficult one for many lenders.

We would advise the applicants to gather the largest deposit that they can and work closely with their mortgage broker to find a suitable lender. ● April 2025 | The Intermediary

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B RO K E R B U S I N E S S Opinion

Succession planning can reshape advice

I

t is widely acknowledged – and evident in the statistics – that the independent financial adviser (IFA) population is ageing. With fewer young advisers entering the profession – and most firms not preparing for succession as early as they should be – the industry is at a crossroads.

Fewer than one in four IFAs are under 40, decreasing by over 6% in the past three years, while one in five IFAs are now over 60, up from one in seven over the same period.

The largest proportion – almost a third – fall into the 50 to 59 age bracket, meaning a significant wave of retirements is on the horizon.

Last on the list

Our research also found that more than 95% of IFAs put ‘ensuring a seamless transition for their clients’ as a top priority when they do exit their business. Unlike large financial institutions, IFAs operate on personal relationships, trust and deep client knowledge built over years – sometimes decades.

Many clients choose their adviser not because of a firm’s brand, but because of the individual they work with, and this makes succession planning within the financial advice industry even more important than in other sectors.

Indeed, without a structured transition plan that aligns with the values of the adviser, it might be a requirement for clients to be shoehorned into a restricted proposition to underwrite the capital event, and this may not be in the best interests of the client or adviser. It follows what we have seen over the years: in the absence of a robust succession plan or alternative succession options, many IFAs have needed to sell to a consolidator to achieve their exit.

While consolidation can offer a clear exit route, it’s not always the best option for clients or staff, or indeed for ensuring clients continue to receive independent financial advice.

Why? Because many large consolidators, whatever they may

Despite this, succession planning remains an a erthought for many.

At ValidPath, we recently surveyed a sample of IFAs to highlight the thinking among IFA firms.

More than a third (36%) of IFAs planning to retire in under 10 years admit they have given ‘li le’ or ‘no’ thought to their succession plans.

This lack of planning creates both risks and opportunities.

Without a clear succession strategy, retiring IFAs may not achieve the transition and exit they desire, clients and staff could face disruption, and the financial advice landscape may shi further towards Age range consolidation.

Under 25 However, for those who are more proactive in their approach 25-29 to succession and business 30-39 planning, there’s an opportunity 40-49 to maximise business value, 50-59 ensure a seamless transition for clients and staff, and achieve Over 60 the best financial outcome for Total stakeholders and their business.

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ANGUS MACNEE is managing director at ValidPath

say, will be incentivised – as will the selling advisers – to transition clients into their restricted proposition to maximise the value of their business model. This approach, and the concept of needing to transition clients away from their current solution, can be deeply unse ling for advisers that have spent their careers building a client-centric business.

Plan for the future It is for this reason that we encourage IFA firms to start planning sooner rather than later. Working with a network like ours can offer the support they need along the way.

Succession is not an ‘endgame’, it is something that should be at the core of any IFA’s business plan to maximise value and the chances of achieving both business and personal objectives.

Just as advisers work with clients to build financial plans for the future, advisers should take the same structured approach to planning their own future.

By having a clear plan and executing that as part of ‘business-as-usual’, IFAs can maximise their business value, ensure they stay true to their values and achieve the best financial outcome for themselves and their business. ●

Aug-22

Feb-24

% of all advisers 2022

% of all advisers 2024

% change

426

174

1.4%

0.6%

59%

1,989

1,641

6.4%

5.3%

17%

5,668

5,758

18.2%

18.5%

-2%

8,200

7,622

26.3%

24.4%

7%

10,037

9,777

32.2%

31.4%

3%

4,824

6,210

15.5%

19.9%

-29%

31144

31182

Source: FCA FOI request

The Intermediary | April 2025

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05/03/2025 15:58

In Profile.

PRIMIS

The Intermediary speaks with Richard Howells, group managing director for financial services at LSL, about the changes made to consolidate PRIMIS’ success, and his vision for the future of its members

R

ichard Howells, group managing director for financial services at LSL, is steering PRIMIS through a significant phase of growth and innovation, with an ambitious roadmap for the future.

Considering the company’s strong performance over the past year, Howells says: “It’s very obvious that many elements of the business have gone very well. By most conventional measures, the business has seen solid growth. Gross revenue has grown 8%, underlying profit is up 17%, operating margin is up 25%, and operating profit up 17%.”

For Howells, there are two messages to be taken from this financial success. “First, it shows we are a significant force in UK financial services with the financial strength to invest,” he explains. “Second, while we are proud of [the figures] in their own right, they are not a basis for complacency.”

The financial landscape is rapidly evolving, presenting both opportunities and challenges in the housing, mortgage, and protection markets.

This environment means that the organisation must be proactive in addressing potential risks to UK borrowers and the businesses of brokers.

Central to this proactive approach is a commitment to fostering a supportive environment for brokers, Howells says: “We have spent – and are continuing to spend – a lot of time shaping our business to support brokers’ growth, defend what they have and support them as they diversify to grow.”

This commitment is reflected in significant strategic appointments. Recent hires, such as Emma Hollingworth as chief distribution officer and Martin Taphouse as chief operating officer, are key figures in executing the group’s vision, with Howells describing the team as “laser-focused on delivering new improved propositions and creating a culture of transparency.”

Broker-network relationship

A major component of PRIMIS’ strategy is reshaping the broker-network relationship, which Howells believes is crucial as brokers face increasing demands.

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The Intermediary | April 2025

He says: “I believe brokers will require a great deal of assistance in the upcoming years. Any successful long-term business arrangement requires trust, and we have started with pricing transparency. We have promised not to take advantage of our role between brokers and product suppliers.”

Howells adds: “We are quite clear that any compensation received from product providers should be paid to our brokers. Taking two bites of the broker’s hard earned income might make your numbers look good, but we don’t believe that fosters a sense of partnership in the way our model does.”

Diversification

Late last year, PRIMIS conducted a survey of hundreds of specialist protection appointed representatives (ARs) across the UK, and the findings were encouraging.

“Our brokers have already reported positive growth in demand over the previous 12 months,” Howells notes.

Interestingly, just over half (52%) of those surveyed expected the protection market to grow throughout 2025. Howells sees protection as increasingly important, with clients coming off fixed-rate mortgages and needing comprehensive advice that includes protection options.

He says: “Talking to clients about protection is vital. The new mortgage term, whether it be longer or shorter, must be reflected in the term assurance.”

Howells also highlights a pressing need to offer income protection to borrowers, which often gets overlooked. He says factoring income protection or family protection into affordability calculations at the point of refinance is critical.

“Many brokers worry protection is a ‘hard sell,’ but, frankly, no mortgage advice should come without it,” he asserts.

This advice reflects a broader market shift, where securing one’s financial future amid economic uncertainties is becoming more widely recognised as an essential part of financial planning.

I N P RO F I L E

Customer experience

Enhancing the overall customer experience remains a top priority. Howells envisions delivering this through the integration of new technology, aimed at making broker firms more efficient.

He explains: “How we support our broker firms to become better and more robust businesses involves a combination of technology, education, and training.”

PRIMIS has chosen Mortgage Brain as its primary strategic partner to develop and implement upcoming broker technology, which is set to be unveiled in 2025. This new platform has been designed to revolutionise how brokers manage customer relations and leverage new business opportunities, essentially streamlining processes and providing bespoke options for PRIMIS members.

Howells says: “Our new system takes the very best elements of Mortgage Brain’s customer relationship management (CRM) platform and introduces bespoke capabilities for PRIMIS members, such as the referral platform, where broker firms can refer clients to other firms both within and outside of the network.

“This will create more opportunities to serve clients while generating new business opportunities for broker firms.”

Howells understands the damage that standing still can mean in a market, saying: “We are acutely aware that other sectors are examining the UK mortgage and property market with a view to disrupting the current model.

“For our brokers to provide the guidance that homeowners and buyers depend on to select the best products, we must ensure that they are best placed to take on that challenge.”

PRIMIS is also extending its support beyond its network members by rolling out Novium, its protection platform, to a broader market. This is expected to benefit non-members, who will gain access to a wider range of protection products.

As digitalisation gains traction across the finance sector, striking the right balance between digital efficiency and human interaction is crucial.

Howells believes that “the demand for quality advice around complex circumstances means consumers would rather talk to brokers when they need guidance than engage with an artificial intelligence (AI) system.”

Growth, success, scrutiny

Howells believes both organic growth and acquisitions remain valid, saying: “You will see an increasing amount of acquisition activity in 2025 as companies seek growth and scale, and we should not rule that out for PRIMIS, but equally we know there are many brokers out there who

would benefit from the kind of transparent and innovative thinking we are putting into the market. We want to grow our network to include over 3,000 advisors.”

Howells believes this is an achievable target given the transparent and innovative thinking PRIMIS is bringing to the market.

These ambitions are set in the context of growing regulatory scrutiny. Reviews of protection, equity release and second charge, not to mention ongoing evolution of Consumer Duty, mean that compliance is a bigger issue than ever.

He says: “Regulatory expectations are a real business issue, and what we see happening in one market usually rolls out in others. We will see more focus and scrutiny on customer outcomes, and that will necessitate greater alignment through product manufacture and distribution on strategy and target market.”

PRIMIS has prepared for this by investing time and resources in understanding regulatory expectations, striving to remain at the forefront of product governance in the protection market.

Howells says: “Our brokers will need our support to navigate regulation. I find it frankly dangerous for networks to downplay the requirements of the regulator and put their members at risk by not doing things properly.”

Reasons to be cheerful

Howells remains optimistic about the future, both for PRIMIS and for brokers, saying: “Brokers have heard time and again that change is coming, and have been often let down by promises that have been made. Our culture of transparency, desire to improve the operating environment for brokers, and drive to deliver propositions that produce better customer outcomes, mean our goals should be tightly aligned.”

PRIMIS is pushing forward with a refreshed corporate identity and a focus on transparency, professionalism, and support for brokers.

Education, training, and compliance services remain central.

Howells concludes: “Everything we do will go some way to support what brokers do best – give market-leading advice to people who value it.” ● RICHARD HOWELLS April 2025 | The Intermediary

T E C H NO L O GY Opinion

Change now, or wait until it’s too late?

A

t what point do lenders call crunch time on legacy systems? It’s a hard question to answer, particularly for our largest players, which have almost always grown through a series of mergers and amalgamations of smaller lenders going back decades.

Santander, Lloyds Banking Group, the Royal Bank of Scotland – to name just three – have all grown through acquisitions. It’s a familiar story across the market.

The burst of activity changing building societies into banks that happened through the 1980s and 1990s drove a huge amount of brand integration, but less technology integration. Followed by the Global Financial Crisis in 2008, another spurt of amalgamations were forced on both banks and building societies that would otherwise gone to the wall.

It might sound farfetched, but with back-end technology really starting to replace back-office staff for many of the more easily automated processes from the 1980s, the industry’s reliance on legacy technology platforms can go back 30 to 40 years.

Ongoing reluctance There are lots of good reasons for this, not least because moving customers’ deposit accounts from one platform to another is fraught with risk. Just look at the absolute chaos caused when TSB divested from Lloyds Bank systems following its acquisition by Spanish bank Sabadell in 2015. It took until December 2018 for TSB to return to business-as-usual. TSB has paid £32.7m in redress to customers who suffered detriment.

You can see why others are reluctant to a empt a complete transfer to new, modern and more cloud-based platforms. Yet this leaves them facing a real conundrum. There is enormous risk if they do move to be er equipped

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technology. There is enormous – and growing – risk if they don’t.

Outdated legacy technology poses serious risks to data security, efficiency, compliance and customer experience. Outdated so ware is more vulnerable to cybera acks.

Weak security patches leave systems exposed. Hackers target old systems that lack modern encryption and multi-factor authentication.

Dangerous implications The costs that result when a company suffers a data breach or cybera ack can be eyewatering, and cover anything from external IT and data security consultants, legal advice, customer redress, loss of revenue and ransomware payments.

There are operational implications too, both internally and as a consequence of third-party integrations. The Crowdstrike outage last year highlighted just how severe that can prove to be.

A statement issued by the Financial Conduct Authority (FCA) in October last year noted that between 2022 and 2023, third-party related issues were the leading cause of operational incidents reported to the regulator.

Following a review of the incident, the FCA found that some regulated firms affected by the outage also provided services that supported other regulated firms’ important business services, increasing the impact of the disruption. Firms which had existing relationships and pathways to share information with third-party providers were able to respond quicker during the outage.

The reality was that many firms did not. Consequently, the regulator told firms to identify single points of potential failure within their infrastructure and technology stack and make the changes needed to ensure future resilience.

Platforms and operating systems are only part the issue. For some, the

AHMED MICHLA is head of business development at Cotality UK

The regulator told firms to identify single points of potential failure [...] and make the changes needed” very pipework that supports some of those older systems is unable to cope with the volumes of data that would indeed make for be er risk management – if only the information could be delivered through the old infrastructure!

Part of this process has uncovered the critical need for business continuity plans that address the scenario where a third-party infrastructure and systems may fail.

We’ve seen lenders tighten their grip on third-party service providers, mainly opting to work with fewer, larger firms. Many are now deciding to have key partners that can deliver a gamut of data solutions from net zero to survey and valuation data.

We’ve also seen lenders keen to procure systems on different builds and devices, with different operating systems, while some have considered updating change management processes for third-parties with deeplevel system access.

Lenders were told to get their houses in order by March this year. It hasn’t proven to be crunch time for phasing out legacy systems, but it has woken many up to the fact that the balance of risk may now be tipping the other way.

The question for organisations is, do they change now, wait to be told, or wait until it’s too late? ●

T E C H NO L O GY Opinion

Whatever comes next, adapting is key to opportunity

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f there was a watchword for 2025, I think it would have to be ‘volatility’. Nothing is ever certain in life, but the first quarter of this year has really blown uncertainty out of the ballpark.

The Trump Presidency has triggered huge swings in market confidence globally. The economic impact cannot be underestimated. On 10th March, according to Reuters, Trump’s tariffs spooked investors, with fears of an economic downturn driving a stock market sell-off that wiped off $4tn from the S&P 500’s peak last month.

US inflation forecasts have soared 33% in less than three months, with the Organisation for Economic Cooperation and Development (OECD) upping its US inflation forecast for 2025 to 2.8% in March, up from its December 2024 estimate of 2.1%.

This stuff is very real – for Americans in particular, but the ripple effects are being felt widely.

There are those who argue this could actually be positive for Europe, which has taken a more balanced position on Russia and Ukraine and looks set for marginally less aggressive US trade tariffs. We hope.

European markets are currently bearing this out. An article in Morningstar quoted Will James, portfolio manager of the Guinness European Equity Income Fund, as saying: “Whether he meant to or not, [Trump] has probably engineered a period of European revival.”

The big US tech stocks, including Tesla, have seen eyewatering falls in value, while European stocks – traditionally unloved – have seen a rebound. In the UK, banking stocks have performed particularly strongly, supported by the Bank of England’s dovish position on interest rates.

Perhaps driven by competition to secure as big a chunk of the purchase mortgage surge ahead of the Stamp Duty rise in April, the biggest lenders have been slashing fixed rates – a significant number were offering rates more than 0.5% below the base rate.

This is indicative of several things.

UK property is seen as a relatively safe haven for investors here and abroad.

Money has poured into the asset class over the past decade led, interestingly, by some of the largest US-based private equity houses. Money is also flooding in from the Middle East, China and others. This presents a challenge for lenders that must get funding out of the door, pushing them to use pre y much the only lever they have to retain – let alone gain – market share: pricing.

This sounds great, but the market is only too aware that things can turn at any moment. We are about to see a major hike in taxes across the board in the UK, affecting both individuals and businesses. There have been tens of thousands of job cuts already, and more are likely to follow.

For households whose income remains steady, there is the threat of contracted discretionary spending, and that has a tangible impact on borrower affordability. While lower rates are easing pressure on that front, there’s always a flipside that lenders are mindful of.

Second-guessing In terms of pricing, it’s pre y wild out there at the moment. I suspect some of this is to do with the fact that lenders still relying on legacy platforms are forced to price in steeper cuts ahead of price competition actually requiring it. Why? Because those systems make product refreshes a big ask. They take time to implement. They’re based on

JERRY MULLE is UK managing director at Ohpen

algorithms that must second-guess risk appetite from competitor lenders.

While most of the largest lenders have patched on slicker front-end systems, it’s likely they are still having to feed in to platforms that are decades old in some cases. It’s clunky. It’s slow.

It’s forcing lenders to rely on data that’s out of date. Don’t get me going on the implications for mistakes, fraud and cybersecurity.

Investing in a wholesale replacement of back-end lending technology platforms can seem like a huge job, but the reality is that every day lenders delay moving to cloudbased technology is a step further down the competition curve.

Most lenders will tell you their top priority is to lend. They want money out the door to pay for retail deposits and cover funding lines already agreed. They want to serve their customers well and that means having appropriately priced products available at the right time.

This should be the biggest driver for the case to move to new tech systems.

As more lenders do, the worse it will get for those that don’t. Trying to compete sensibly and responsibly with others that are using real-time data, are plugged into opensource data from other parts of the homebuying markets, and can design really tight products and get them out to market before the commercial opportunity has gone – it’s going to get harder and harder for legacy systems to keep up.

In a world where volatility is the new norm, brokers and borrowers need agility, connectivity and security if we are all to have a hope of maintaining a meaningful competitive advantage long-term. ● April 2025 | The Intermediary

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T E C H NO L O GY Opinion

T

he UK mortgage and residential property market is o en accused of being behind the curve when it comes to digitalisation.

In some parts it is. Yet, there are good reasons for keeping some elements of the house purchase process analogue. The key to good business decisions is knowledge, and that comes in various formats, all of which have their own value.

A report from the Home Builders Federation (HBF) shows that the UK has among the oldest housing in Europe, in part a consequence of historically low levels of new house building. On average, homes are likely to be less energy efficient, less resilient to extreme weather conditions, and generally in a poorer state of repair than newer homes.

The UK has the highest proportion in Europe of housing built before 1946, at 38%. This is more than double the EU average of 18%, and higher than France (29%), Germany (24%), Italy (21%) and the Netherlands (19%).

Looking at more recently built homes, the UK still has many older houses than its EU neighbours. A majority (78%) of homes in the UK were built before 1980, compared with an EU average of 66%. One in five houses in the UK (21%) were built prior to 1919, the second highest proportion in Europe. Only Belgium has more.

According to Historic England, there are more than 370,000 entries for listed buildings on the National Heritage List for England, making refurbishment and upkeep tricky in the face of strict preservation rules.

The UK’s net zero targets and its housing stock’s readiness to meet them is just one challenge for lenders considering where and how much to lend. Broader environmental risks exist and are increasing in ways that

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are not always predictable. Flood risk, coastal erosion and subsidence are all significant factors in a property’s valuation and mortgageability.

Risk and value The legal title regime in the UK also presents a scale of risk for lenders, with factors such as onerous leasehold terms, cladding and fire safety a reasonably recent but significant factor in determining a home’s value.

Accurately assessing valuation risk in new housing developments has long required considerable care and analysis – both in terms of an individual unit’s value, and also in terms of the cause and effect influences at play in the locale.

In answer to the hugely varied demands of assessing UK homes’ values, the modern surveying and valuation firm now provides alternative methods of assessment.

The gold standard remains the professional surveyor’s physical

STEVE GOODALL is managing director at e.surv

valuation, but property data and technology have advanced to the point where digital valuation and property risk assessments are now real-life solutions. Firms like ours embed digital valuation methodologies in addition to surveyor-led physical valuations and combine these to deliver a comprehensive suite of

T E C H NO L O GY Opinion

solutions for accurate and quick mortgage lender grade property risk assessments and valuations, enabling lenders to remain competitive in a rapidly evolving lending market.

In answer to the hugely varied demands of assessing UK homes’ values, the modern surveying and valuation firm now provides a hybrid offering. It’s not sufficient simply to rely on digital, nor is it sensible to rely solely on the experience –and biases –of an individual who assesses a property. What is needed today is a combination of both.

Definition of insanity The UK’s housing stock is too varied to allow an algorithm to determine value. For a start, the available data which feeds into valuations is still growing and developing in scope. The output is as good as the input, and as such, judgement based on an actual, physical inspection of a property allows for an accurate interpretation

of the information in front of us.

To borrow a quote generally a ributed to Albert Einstein: “The definition of insanity is doing the same thing over and over again, but expecting different results.”

That’s the danger if you overlook experience. As human beings, what we have seen in the past informs how we interpret what we see in the future.

Basic as it sounds, assuming that the valuation pa ern in one new housing development will repeat in another, in a different location, is madness.

There are so many variables that affect the desirability of a home, not least employment prospects, schools, transportation links, what housing stock is in the surrounding environs, crime rates, environmental risks. The list goes on.

But – and it’s a big but – expertise and experience only take you so far.

By their very nature, both come down to individuals and teams. Experience is of huge value in a relatively small

By accumulating the right data and the right expertise, we are now saving lenders time, money and risk by offering solutions that deal with new-build, cladding and non-conventional build – to mention just three areas” locale. Experience is at its most valuable when it is shared collectively and with discernment.

The third piece of the puzzle is data.

Alone, running statistical models will give you probabilities and averages and likelihoods. Alone, experience and expertise will give you nuance, detail and accuracy. Together, that’s a powerful combination.

By accumulating the right data and the right expertise, we are now saving lenders time, money and risk by offering solutions that deal with newbuild, cladding and non-conventional build – to mention just three areas.

Our new-build database allows us to monitor exposures to sites and build types.

Data means we can extend our reach into alternative market segments while our expertise on a physical inspection level means we can benchmark and validate the data sources we have.

Why does this ma er? Because, as the years pass, our UK housing stock becomes more nuanced and its value is perceived differently.

Take energy data. It is shaping consumer and industry a itudes.

New-build is also changing beyond recognition, and impacting the value of surrounding housing. To understand all this, you need partners who can help make homebuying a quick decisive business. ● April 2025 | The Intermediary

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T E C H NO L O GY Opinion

Mortgage lenders must embrace AI and innovation

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conomic volatility, higher interest rates, imposed tariffs creating market uncertainty, and the recent changes to Stamp Duty have created an increasingly difficult financial environment for prospective homeowners.

Those hoping to access a mortgage today face challenges that previous generations did not, due in part to the fact that mortgage lending processes have not kept up with the realities of modern life.

We recognise that technology must play a bigger role in modern lending.

Our latest research reveals that 45% of mortgage brokers believe lenders have not moved quickly enough to address the evolving needs of borrowers. With that in mind, brokers want to see a greater role for artificial intelligence (AI) in the sector.

Complex borrowing landscape Homeownership remains a fundamental aspiration for millions of people across the UK. Despite striving towards the same end goal, our research reveals that the variation of financial circumstances is greater now than ever before.

A third of brokers have seen an increase in buyers with fluctuating incomes – such as self-employed workers or those with multiple income streams.

Furthermore, more than half (55%) of brokers agree that customer criteria and incomes are changing, making traditional lending models increasingly outdated.

Many borrowers now rely on alternative financial support to step onto the property ladder. A third of brokers say they have observed a rise

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GREG WENT is interim chief lending officer at Nottingham Building Society

in multi-generational buyers pooling resources to afford a home. A further 31% have noticed more borrowers leveraging Government schemes like Help to Buy and Shared Ownership.

Time to catch up Despite these changes in borrower behaviour, lending practices have remained largely stagnant. Our research found that only one in five Brits believe banks and building societies have evolved to meet the needs of modern working Britain.

This disconnect between lenders and borrowers is a significant concern.

One area where the industry must evolve is technology, particularly AI. Our findings reveal that 58% of brokers support the idea of AI playing a greater role in mortgage applications, with 30% in favour of its use if properly regulated, and a further 28% believing it could streamline the process. However, 20% of brokers remain sceptical, citing concerns about safety and regulation.

AI-driven affordability models could change this by assessing applications with greater nuance, moving beyond outdated ‘one-size-fits-all’ calculations.

There are platforms such as MQube, Lending Metrics, and Smoove, which have introduced more streamlined services, demonstrating that innovation can enhance both efficiency and accessibility. Yet, the mortgage industry as a whole has been slow to embrace these advancements.

The case for innovation Brokers are clear in their call for lenders to take a more proactive approach. More than half (57%) believe lenders must develop new products that address the financial realities of today’s homebuyers.

Meanwhile, 26% of brokers want to

see a more flexible lending process, and 27% are calling for mortgage applications to be quicker and less cumbersome. Nearly a quarter (23%) believe lenders should embrace technology and innovation to improve the overall customer experience.

By integrating AI and other technological advancements, lenders can provide more accurate affordability assessments, reduce processing times, and enhance decision-making processes. However, underpinning all of this must be the assurance that necessary regulatory safeguards are in place.

Call to action At No ingham Building Society, we are commi ed to this evolution, recognising that the future of mortgage lending is one where technology and human expertise work hand in hand.

There is a pressing need for lenders to rethink their approach to affordability and mortgage accessibility. Borrowers today are navigating increasingly difficult financial situations, and many are frustrated by the hurdles they face when securing a mortgage.

Lenders must act now to integrate AI in ways that enhance both efficiency and fairness.

Those that fail to innovate risk being le behind. It is only by listening to the concerns of brokers and borrowers alike that we can create meaningful change. ●

T E C H NO L O GY Opinion

Turning feedback into a competitive advantage

I

n financial services, trust is everything. Customers want to know they’re ge ing fair value, great service, and products that genuinely meet their needs. And with Consumer Duty, the Financial Conduct Authority (FCA) requires companies to prove they’re delivering good customer outcomes – not just claim it.

That’s where independent customer review data comes in. In the FCA’s recent vulnerability review, it praised a mortgage intermediary who used customer review data scores and comments to monitor customer outcomes.

The right data Customer reviews are an essential source of feedback in every industry.

But in financial services, they need to go beyond star ratings and general sentiment. A five-star rating on a generalist review site doesn’t tell a bank whether customers believe they’re receiving fair value or experiencing good customer service.

For example, we don’t just collect reviews – we capture insights specifically tailored to the industry.

Unlike generalist review sites, which cater to a broad range of sectors, our question set is designed exclusively for financial services. This means that our 13-plus datapoints – such as overall score, customer service, understood product details, and value for money rating – are extremely useful for evidencing Consumer Duty outcomes and tracking performance.

benchmarking, companies could overestimate their performance or fail to identify weaknesses before they impact retention and reputation.

In our view, it’s important to enable companies to directly benchmark their performance against competitors and the wider financial services market.

For example, if a mortgage lender sees a decline in its value for money scores compared to the sector average, it can take proactive steps to review pricing, improve communication, or enhance service quality – all of which align with Consumer Duty expectations.

Tracking outcomes Customer expectations are constantly evolving. Financial services companies need historical data tracking, rather than relying on oneoff feedback snapshots.

For example, we hold over 10 years’ worth of data, enabling companies to monitor changes in customer sentiment over time. This makes it easier to spot emerging trends, measure the impact of strategy decisions on customer

Performance benchmarks A key challenge for financial services companies is understanding how they compare to competitors.

Without reliable industry-specific

Firms must be proactive and strategic

JESS TRUEMAN is head of business development at Smart Money People

satisfaction, and provide boards with clear, independent data to support governance and compliance.

Evidencing outcomes At its heart, Consumer Duty requires financial services companies to evidence that they’re delivering fair value, clear communication, and good customer outcomes.

Our tailored review data is designed to provide this proof. Robust board reporting is paramount to offer transparent, third-party data that adds credibility to internal assessments.

Additionally, our data highlights areas where customers may not be receiving fair treatment, allowing companies to take proactive action before any issues escalate further.

With FCA scrutiny increasing, companies must not only demonstrate that they’re compliant but actively monitor and improve customer outcomes. Using independent data from a specialist financial services platform makes this process a whole lot easier.

With Consumer Duty pu ing the spotlight firmly on good customer outcomes, and with consumers becoming more selective about who they trust, financial services companies need to be proactive.

We’re proud to help companies turn customer reviews into a competitive advantage. By taking advantage of the right insights, companies can not only meet FCA expectations – but stay ahead of the curve. ● April 2025 | The Intermediary

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On the move...

Nottingham Building Society completes restructuring with national account manager

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o ingham has bolstered its intermediary sales team with the appointment of Beckie Morton as national account manager. This completes the restructuring under the direction of sales director Ma Kingston, who replaced Alison Palle .

Morton will manage strategic partnerships with clubs and networks, drawing on 25 years of experience, including at Bank of Ireland, Finova, and Dojo.

Morton said: “The No ingham is a well-respected mutual with a proud heritage and a clear vision for the future – one that I’m incredibly passionate about.

“The society’s commitment to making homeownership more accessible aligns perfectly with my own values, and I’m excited to be part of this next chapter.”

Kingston said: “Beckie is an outstanding addition to our team, and I’m delighted to be working with her once again."

BECKIE MORTON

UnderwriteMe appoints Andrew Doran as CEO

U

nderwriteMe has appointed Andrew Doran as its new chief executive officer (CEO).

Doran joins from Pacific Life Re where he was the global chief underwriting officer.

He takes over as CEO of UnderwriteMe from James Tait, who has le the business to pursue new opportunities.

Andrew Gill, EVP, global protection Pacific Life Re and chair of UnderwriteMe, said: “We are delighted to welcome Andrew to UnderwriteMe. “His extensive experience and proven track record in the insurance industry, combined with his deep understanding of our company’s technology and strategic goals, make him the ideal

leader to deliver UnderwriteMe’s growth ambitions.”

Doran added: “I look forward to working with the talented team at UnderwriteMe to continue driving innovation and excellence across our offering for both insurers and independent financial advisers globally, and to further strengthen our position as a leader in underwriting and claims automation and AI ANDREW DORAN solutions.”

Redwood Bank appoints nonexecutive director

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edwood Bank has appointed Tina Kokkinos as non-executive director and incoming chair of its risk commi ee.

With more than 20 years of experience, Kokkinos brings knowledge in strategy, operations, risk and governance.

She said: “Redwood has established itself as a specialist business bank, and in particular supporting property investors TINA KOKKINOS and landlords with finance to grow their businesses. I look forward to working with the board and executive team to help Redwood continue growing profitably.”

Chairman Mark Winlow said: “Tina is a strong non-executive with a broad range of experience [...] Her expertise in risk and operational strategy will further strengthen our governance framework as we continue to grow the bank.”

Gary Wilkinson, CEO and cofounder, added: “Tina’s passion for governance, risk, diversity and social impact aligns perfectly with our values.”

Mortgage Brain appoints David Louw as team leader for intermediary

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ortgage Brain has building key relationships, helping appointed David brokers to get the most from the Louw as its team company’s range of modules. leader for Neil Wya , sales and intermediary success. marketing director at Louw started his Mortgage Brain, said: mortgage career in estate “David’s experience as a agency and later moved broker, coupled with his into fintech, working passion for technology with online broker and and customer service, is a lender, Habito. great addition to the team More recently, Louw worked DAVID LOUW we have built over the last in mortgage operations at few years.

Be er.co.uk.

“As with most things in life, At Mortgage Brain, he will lead timing is everything. We have the intermediary success team, recently launched our new Mortgage

FRANK PENNAL

Brain Hub and are now actively migrating customers onto our latest technology solutions.

“David and his team will play a pivotal role in supporting new and existing customers on that journey.”

Louw added: “I am all too familiar with the hurdles that today’s mortgage brokers face.

“In my new role, I’m really looking forward to nurturing our intermediary relationships and helping brokers get the most out of Mortgage Brain’s technology to help their businesses thrive.”

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