The Intermediary – January 2025

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The expert view on 2025 DIG I TA L E DI T ION

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A

t the risk of joining the thousands of people who have likely said this to each of our readers so far this year – Happy New Year from The Intermediary.

Whether it’s dry January, the sales, Blue Monday, or New Year’s Resolutions, January gets a lot of a ention, for be er or worse. This is the month when people start looking around for something new – job, house, healthy behaviours.

While this can be disruptive and negative for some, like those employers that lose staff a empting to shake off the winter cobwebs and find greener grass elsewhere, it can also be the start of good things.

With the 1st April Stamp Duty deadline coming up fast, Q1 will likely see a flurry of activity in this market. Hopefully, this time around, the impending end to Stamp Duty relief won’t have quite the same effect as it did in the Covid-19 years, forcing an already overworked market into a time-crunch tailspin before a big drop off.

Speaking of new starts, as 2025 stretches ahead, all eyes are well and truly turned to Labour and its 1.5 million home target. There has been refreshing talk of investment in the planning system, but the expert consensus is that throwing money – or brand new staff – at the problem simply won’t cut it. Let’s hope that 2025 will see not just investment, but overhaul.

With all this talk of fresh starts and resounding change, I am, of course, here with

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The Team

a dampener. Let’s remember, the Institute of Economic Affairs didn’t even have to come up with new critique of the UK’s planning system, instead simply pointing to its landmark ‘No Room! No Room!’ analysis, the points in which were still valid the best part of 40 years on.

A new foreword from Dr Kristian Niemietz, quite rightly, said the report “felt as if it had been published last week.”

So, forgive me if the endless press releases on Gov.uk crowing about change and investment into everything from pothole AI to job creation and employment, and of course, housing supply, leaves me a li le cold. Perhaps it’s simply my own pessimism, but I for one will be waiting to see if 2025 sees all the change we’ve been promised.

Closer to home, however, things are looking bright. While we are all wary of being let down by political promises, the market is innovating and strengthening, and will continue to do so.

This month, we talk about the later life product explosion, and the growing need to cater for clients’ full financial picture, big opportunities in the evolving commercial bridging market, tech empowerment in specialist lending, and much more that there is to be positive about.

To get the real picture of the year ahead, we are delighted to have Just Mortgages back again for the much anticipated State of the Nation, ge ing you the expert view as we all prepare for the year ahead. ●

Jessica Bird @jess_jbird

@IntermediaryUK

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Contents

INTERVIEWS & PROFILES

Feature 32

MORTG AG E ADVICE BUREAU

The Interview 22

State of the Nation: Just Mortgages gathers the expert view at the start of a new year

Andrew Teeman explains the need for a holistic view of client needs at all life stages

REGULARS

Broker business 50

A look at the practical realities of being a broker, from resolutions to the monthly case clinic

Local focus 62

This month The Intermediary takes a look at the housing market in Liverpool

On the Move 66

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

Q&As 14, 40 DUDLEY BUILDING SOCIETY

Rob Oliver on growth, opportunity and challenges in 2025

SECTORS AT-A-GLANCE

Residential 6 Buy-to-let 26 Specialist Finance 38 Later Life 48 Protection 54 Second Charge 57 Technology 60

ASGF

Daniel Carter looks at the commercial bridging outlook for the year ahead

In Profile 58 FIGNUM

Andrew Lloyd discusses how tech can empower brokers in specialist lending

Meet the BDM PA R AG O N

- 28

S I M P LY A S S E T F I N A N C E -

46

James Harding and Andy Dunt on the challenges and opportunities facing business development managers

62 The Intermediary | February 2023

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RESIDENTIAL Opinion

First-time buyers need lenders’ support in 2025

B

uying your first home has never been easy. I bought my first home in my early 20s, and even then the ‘Bank of Mum and Dad’ was alive and kicking. I wouldn’t have been able to take my first steps into homeownership without their financial support.

But as tough as it was to get on the ladder back then, it’s arguably harder now than at any time in living memory.

The Stamp Duty nil-band threshold for first-time buyers is reverting to £300,000 at the end of March, down from £450,000. This will hit first-time buyers in London and the South East hardest” Ironically, when the Bank of England (BoE) started raising interest rates in December 2021, some experts thought it might be a good thing for first-time buyers.

Higher rates were expected to cool the market and, as per some estimates, knock more than 20% off house prices.

That would have levelled the playing field for first-time buyers.

That didn’t happen. While prices dipped briefly, they’ve bounced back. In fact, in November they hit a record high of more than £298,000,

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The Intermediary | January 2025

according to Halifax. This puts the average house price at 8.6-times the average household income, compared to 4.4-times in 1999, according to the Office for National Statistics (ONS).

Meanwhile, mortgage costs have soared. Since November 2021, the month before the BoE started hiking rates, the average 2-year fixed rate mortgage has jumped by more than three percentage points, according to Moneyfacts, adding hundreds of pounds a month to the average loan.

Unfortunately, it might be a li le while before the situation improves.

Savills predicts house prices will rise another 4% in 2025, and 23.4% over the next five years.

Rate drop It’s also difficult at this time to predict with any certainty whether first-time buyers will benefit from falling mortgage rates over the next 12 months.

While interest rates may drop to the 3% to 4% range in 2025, the price of fixed rate loans is determined by swap rates. As we saw in November, a base rate cut does not necessarily translate into lower mortgage costs.

Based on recent movements, you could argue that swaps have already priced in multiple cuts next year, potentially capping any reductions in mortgage rates.

Adding to the strain, the Stamp Duty nil-band threshold for first-time buyers is reverting to £300,000 at the end of March, down from £450,000.

This will hit first-time buyers in London and the South East hardest.

The good news is that, despite these headwinds, first-time buyers remain remarkably resilient. According to UK Finance first-time buyer lending was up more than 18% year-on-year in September, although admi edly from

MARIE GRUNDY is managing director of residential mortgages and second charge at West One Loans

a fairly low base. That gives me hope for the coming 12 months.

Levers to pull Lenders can play a huge role in supporting even more first-time buyers with these challenges.

While pricing is largely determined by funding costs, there are still other levers we can pull, namely criteria and fees.

At West One, for example, we have introduced a range of 95% loan-tovalue (LTV) products, without credit scoring, exclusively for first-time buyers, in addition to a range of feeassisted products designed to reduce the upfront cost of homeownership.

Competition in the low deposit market is also key. Currently just 5% of products have a LTV of 95%, according to Moneyfacts.

That leaves plenty of room for other lenders that might be eyeing this part of the market.

We have also recently widened the eligibility criteria for our Shared Ownership product range, as we believe that demand for this type of affordable housing scheme will increase now that the Right to Buy discount has been cut.

As an optimist, I’m confident that lenders will look to reinvigorate their first-time buyer offerings in 2025 if they see volumes dip. We all have lending targets to hit, a er all.

A more supportive lending environment will leave first-time buyers in a stronger position in 2025, which would be a positive development for the market. ●

RESIDENTIAL Opinion

Game on for lenders and the green agenda

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024 was an important year for green finance – we saw the Financial Conduct Authority (FCA) publish its long-awaited rules on greenwashing on 31st May, and while its remit talks predominantly to the investment industry, there are important considerations for the mortgage market, too.

Just over a year earlier, David Geale, director of retail banking at the FCA, delivered a speech at the London Institute of Banking & Finance (LIBF) mortgage conference. In it, he said that green mortgages have a growing role to play in decarbonising the UK’s housing stock, by helping borrowers to improve the energy efficiency of their homes. He called it “a systemic issue” and was very clear that every part of the housing value chain has a role to play – including mortgage lenders and brokers.

Lenders risk missing their decarbonisation targets if they don’t evolve their support for homeowners to enhance energy efficiency – one of several reasons why brokers can expect to see an increase in green mortgage products and innovation.

Geale said brokers have a “key role to play” in helping borrowers navigate a complex and nuanced landscape, and he noted “various Consumer Duty considerations for [environmental, social, and governance (ESG)] products centred around suitability.”

“The more specific a consumer is about their requirements, the more specific a broker will need to be in the advice they give to them,” he added.

A year later, the Green Finance Institute (GFI) launched its Certificate in Green Mortgages training course, accredited by LIBF and designed for those across the mortgage advice and

lending sector looking to increase their understanding of green home finance.

The UK’s 29 million homes constitute the oldest housing stock in Europe, with almost a quarter of the UK’s total carbon emissions coming from buildings. According to the Climate Change Commi ee, it will take an eyewatering £250bn of investment to upgrade the UK’s homes to meet net zero commitments by 2050.

The onus on lenders is very clear and, indeed, the market has seen significant growth over the past five years. According to the GFI, the green mortgage market has grown from four products in 2019 to 61 in 2024.

New twist Now, Halifax – part of Lloyds Banking Group and therefore the biggest mortgage lender in the country – has come out with a twist on the green mortgage. In December, the lender announced it will use a property’s Energy Performance Certificate (EPC) rating in its affordability calculations.

“We are now able to be er reflect the impact of home energy costs, and some of the financial benefits of more energy efficient homes,” it said in a note to brokers.

Amanda Bryden, head of Halifax Intermediaries, said: “We’re now factoring in property energy efficiency, to be er reflect likely annual energy costs, when looking at how much customers can borrow[...]

Customers who have a more energy efficient property, with an EPC rating of A or B, usually have lower bills.

Therefore, we’ll be able to lend more to them than if they were buying a property with a lower rating.”

It’s undoubtedly a big step forward in the march towards cu ing the

MARK BLACKWELL is COO of CoreLogic UK

UK’s residential housing stock energy emissions – and by using affordability as a carrot for borrowers who want to move up the ladder, as well as get a foot on it, the lender has potentially cracked the challenge of spurring demand for green mortgage finance.

The question now is how energy performance assessments are made on a more frequent basis. As the rules stand, it’s only necessary to renew an EPC every 10 years – making its relevance something of an unknown quantity years down the line from issue.

On 4th December, the Government announced that this issue is now under consultation as part of its Reforms to the Energy Performance of Buildings regime.

The consultation includes proposed reforms to enhance the regime in five areas: Updating what EPCs measure through additional metrics; Updating when energy certificates are required by refining the rules for obtaining EPCs and Display Energy Certificates; Managing energy certificate quality; Improving the accessibility of building performance data; Strengthening the quality of air conditioning inspection reports.

Legislative change takes time, however, and there are other ways to skin the cat in the interim – as well as to strengthen both affordability and energy efficiency risk management in future. Algorithmic analysis has to form part of lenders’ assessments, and we are already providing those to many lenders – it’s now game on. ● January 2025 | The Intermediary

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RESIDENTIAL Opinion

Heading into 2025 full of hope

D

espite the harsh winds and freezing temperatures outside, as I write my first column of 2025 and reflect on the plans ahead, I feel optimistic that this year will bring both activity and excitement to the mortgage market.

While recent years have taught me to expect the unexpected, it’s clear that things are starting to look brighter for both first-time buyers and those with existing mortgages.

I’m encouraged by the Government’s commitment to investing £5bn in development and construction in the coming years” In recent years, high house prices, rising living costs, limited housing stock, and increased interest rates have made it tough for homebuyers and those coming off fixed-rate mortgages. However, a er two base rate reductions in 2024, we can expect more economic stability than in the previous few years.

Inflation has eased, and financial markets are predicting further interest rate cuts this year. As a result, the year has started with another ‘mortgage rate war’, where lenders are vying to offer the best rates to both new and existing borrowers. In practical terms, this means that for a typical 90% loan-to-value (LTV) 2-year mortgage in January, borrowers could save over £450 annually compared to the same product from a year ago.

That said, we can’t afford to relax just yet. The first quarter of the year is

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The Intermediary | January 2025

expected to be very busy. The decision in October by the new Chancellor not to extend Stamp Duty relief for firsttime buyers is likely to drive a surge in completions over the coming weeks and months.

Starting in April, about one in five first-time buyer transactions will be affected by this change, and we will continue to do everything we can to support these buyers.

Bringing in brokers We’ve recently launched Income Plus, a range of mortgages designed for aspiring homeowners with a minimum household income of £40,000, allowing them to borrow up to 5.5-times their income. With improvements in affordability assessments, we estimate these mortgages will enable first-time buyers to borrow up to £66,000 more compared to our standard offerings.

Our intermediary partners have been integral in launching this new range. Their expertise and advice are invaluable to first-time buyers and those coming to the end of their existing fixed-rate terms.

Many aspiring homeowners are unaware of the role brokers can play, or think it’s an expensive option.

However, the support brokers provide — whether it’s improving credit scores, exploring different deposit options, or guiding borrowers through the mortgage journey — can be priceless.

We will continue to raise awareness about the essential help brokers offer.

Working closely with our intermediary partners, we’re commi ed to making homeownership more accessible. The knowledge, empathy, and professionalism of the brokers I work with fill me with confidence. There are around 18,000 mortgage brokers in the UK, and they play a crucial role in helping people navigate the complexities of purchasing and remortgaging homes.

With uncertainty around interest

MARTESE CARTON is director of mortgage distribution at Leeds Building Society

rates and the market moving quickly, expert advice remains key for customers seeking the best deals.

Making progress Looking ahead, I’m encouraged by the Government’s commitment to investing £5bn in development and construction in the coming years, alongside increased funding for affordable housing programs.

Building more homes — particularly affordable ones — is vital to addressing the national housing crisis, and the Government’s target of constructing 1.5 million homes in the next five years could significantly impact the mortgage market. I’m optimistic that we’ll see meaningful progress over the next year.

That said, we must continue advocating for planning reform to ensure that these housing goals become a reality. Local authorities and developers should be empowered to broaden community consultations on planning developments, allowing a more diverse range of voices to be heard and encouraging support for new housing.

I’m excited about the improvements we’ll be rolling out this year for our brokers and members, focusing on customer service, new products and technology.

The UK mortgage market is poised for another dynamic year, with brokers continuing to play a central role in helping clients navigate the changing landscape. I look forward to working alongside our intermediary partners in 2025. ●

RESIDENTIAL Opinion

Six months on and the market is changing again

A

s we begin 2025, I wanted to share with you a six-month update on finova’s annual Mortgage Efficiency Survey, which we carried out over the summer of last year. We spoke to more than 45 mortgage lenders, representing every type of institution, organisation type, balance sheet size, lending market and business model.

Lenders’ top concerns then were mainly focused on borrower affordability, Consumer Duty and vulnerability, and cybersecurity.

These sat alongside more businessas-usual concerns, including improving the speed and accuracy of the application process, and how to respond to pressures on household finances, particularly with reference to affordability at refinance.

Further regulatory considerations, including Basel 3.1, also featured, as well as a strong focus on improving both the use and type of tech employed to support all of these areas.

One area that had receded a bit was the relative importance of environmental considerations.

We’re now six months on from the second wave of Consumer Duty implementation. Furthermore, we have a new Government, and we’ve had a big Budget.

While we haven’t undertaken the full survey again, we have realtime insight into how lenders are responding to the current market.

Some of their focus has shi ed.

Borrower affordability Chancellor Rachel Reeves announced a controversial rise in employers' National Insurance contributions (NICs), which commentators were quick to point out could lead to

job losses. The Office for Budget Responsibility (OBR) estimated that around 50,000 jobs could go as companies recover margins by reducing headcount. Since then, various research houses have suggested this, along with higher national living wages, could spur up to 150,000 redundancies.

This poses some concern for lenders, with arrears rises likely as a result. However, in early December the Bank of England Governor Andrew Baily told the Financial Times that if its own economic forecasts are accurate, it’s likely we’ll see four 0.25% base rate cuts, taking it down to 3.75%.

Duty and vulnerability Boards are a lot further into the weeds on the Consumer Duty, with the regulator having published a number of updates on good practice, areas for improvement and its expectations.

Lenders accept that implementing the culture that the duty demands into all areas of their businesses and distribution chains needs ongoing assessment. Developing processes to identify vulnerable borrowers earlier is also an area where focus is growing.

Cybersecurity Six months ago, lenders viewed cyber security as a priority risk management area – how they were addressing this varied largely according to size.

As we head into 2025, we expect to see a considerable increase in investment among lenders of all sizes in defence mechanisms to protect customers from data breaches, and tackle the rising cost of authorised push payment fraud.

Green agenda A couple of years ago, improving homes’ energy efficiency sat at the

STEVE CARRUTHERS is business development director at MSO

heart of many lenders’ plans. A er the Conservatives wound back on policies designed to push retrofi ing standards through in the social and private rented sectors, that impetus slowed.

Last summer, lenders also reported that consumers have li le appetite for investing in retrofi ing. The cost-ofliving crisis has played a significant part in hastening dwindling interest.

In September Labour announced a “commitment to consult by the end of the year on boosting minimum energy efficiency standards for private and social rented homes by 2030.” This includes proposals for private and social rented homes to achieve Energy Performance Certificate (EPC) Band C or equivalent by 2030.

The Government also announced a new Warm Homes: Local Grant to help low-income homeowners and private tenants with energy performance upgrades and cleaner heating, and confirmed the continuation of the Public Sector Decarbonisation Scheme, as well as the Warm Homes: Social Housing Fund. In November, the Green Finance Institute (GFI) published a report suggesting the UK adopt a Government-coordinated national programme similar to Ireland’s Home Energy Upgrade Loan Scheme – an unsecured green home loan that could fund retrofi ing up to 675,000 homes a year.

The green agenda is firmly back on radars as lenders like Halifax begin to use EPC ratings to influence their approach to affordability.

We are already seeing movement from six months ago, and we should expect to see more. ● January 2025 | The Intermediary

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RESIDENTIAL Opinion

Legacy practices in desperate need of investment

H

owever you feel about social media, sometimes it can be a really good litmus test for how people are really feeling about things. Reddit is particularly good for this, being an online community where peers can ask each other questions. It’s not so much like a forum focused on a specific community of people – it’s anyone and everyone.

Understanding sentiment At Ohpen, we recently published some research to try to get more into the minds of those going through the mortgage application process and the results were unfla ering.

More than one in 10 (13%) people who have applied for a mortgage said they’d “rather be stuck in a li for 12 hours straight than go through the process again.”

Revealingly, this jumps almost one in four of those under 25 – those far more likely to be totally unprepared for what they need to do.

While all age groups had some level of stress regarding the application

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The Intermediary | January 2025

process, nearly three-times as many Gen Zs (28%) found it more stressful than moving house compared with 11% of Baby Boomers.

Three in 10 people (30%) said that a be er understanding of the process would have relieved some of the stress they experienced during their mortgage application.

These feelings are very real. It’s important to conduct public sentiment surveys and to carry out polls like this, to help businesses in all industries get a handle on what their customers want and need.

While communicating how people feel in percentages helps it resonate in a general way, it’s also worth listening to individuals expressing their personal responses.

Back to Reddit. One post I found sums up just how meaningfully the stress of buying a home and going through the mortgage application process really is.

They say: “So myself and my partner have applied for a mortgage through a broker and the broker is great, really on the ball. I’m just finding this whole thing really stressful, I’m selfemployed and had some issues with

my SA302, managed to get it fixed but it was such a stressful experience… “…And now the valuation has come back and the lender said ‘the house is too small’ and that’s it…it’s a three-bed semi-detached (through an affordable housing scheme)…The broker is enquiring further and we needed to provide yet more documents… “…I just wonder how everyone deals with the stress of it all, as I’m finding my anxiety is through the roof and I’m making myself a bit poorly with worry.”

Some of the responses are just as enlightening.

One says: “Is this the first time for you? First time is always the most stressful. Next time, you will have a be er understanding of the process and probably have most of the documents ready. So, it gets easier, you know what to expect and just know it’s mostly about process.”

Another: “It’s horrible, and it is for everyone so you’re not alone. I have been where you are three times, and it doesn’t get any less stressful! I decided to be fatalistic; anything in my control I will do straight away (providing docs etc) and what will be will be with

RESIDENTIAL Opinion

JERRY MULLE is UK managing director at Ohpen

everything else. It’s not a long time in the greater scheme of things, and trust me when I say this, the sense of relief when you have that offer … then exchange … then complete is like no other sense of relief. Then you swear never to do it again … but you will.”

Buying a first home, moving into a bigger one, or downsizing into somewhere perfect for when you’ve hung up your work boots, is one of the most empowering things a person can do. A er the whole application and purchase is complete, that is.

Can you imagine it being that stressful to buy a car?

The sad thing is that this amount of stress, worry and the impact that has

on people’s mental and physical health is just not necessary either.

Be er financial education has a role to play in reducing stress – knowing what to expect, even if it’s an awful lot of paperwork, sets us up to deal with what’s to come.

A duty of care This is probably why the older borrowers we surveyed were less likely to suffer from anxiety – they’ve done it all before.

However, it’s not good enough that we as an industry rely on the customer to simply get used to stressful application processes – especially under the Consumer Duty.

By these measures, nearly everyone is vulnerable!

Lenders can alleviate this now. More efficient decision-making and the use of be er, more easily adaptable and deployable systems will mean consumers, especially younger firsttime buyers, feel more supported and comfortable throughout their homebuying journey.

While this industry has made significant steps forward, these survey results and pieces of online commentary tell us that we have not shi ed the dial when it comes to legacy practices, which are too o en supported by legacy technology. We must all do be er. ● January 2025 | The Intermediary

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RESIDENTIAL Opinion

Side hustles are shaping the future of homeownership

T

Homebuyers are boosting affordability with a side hustle

he world of work is changing. From those who are selfemployed to small business owners and those juggling multiple income streams, more people than ever are breaking away from the traditional nine-to-five ‘job for life’.

Yet in conversations with brokers, customers and the wider sector in recent years, the picture o en painted is one where the mortgage market hasn’t necessarily kept up. As a result, outdated lending criteria means that, for large parts of the population, securing a mortgage can feel like an uphill ba le.

This challenge is only going to grow as more people become multiple income earners and adopt different working pa erns.

Changing income streams We recently carried out some research with adults across the UK, and one of the areas we explored was the lengths people are going to improve their chances of buying a home.

One of the most striking findings we uncovered was that one in five people (22%) have started a side hustle alongside their main job to boost their mortgage chances, rising to

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The Intermediary | January 2025

30% for under-35s, highlighting the importance of side hustles in financial planning. Younger people feel the pressure to increase their income to help with mortgage applications.

More than eight in 10 under-35s said they would either consider (55%) or have already started (30%) a side hustle to improve their chances of ge ing approved.

For many, this isn’t just about the money – it’s a reflection of the barriers they have either faced already or anticipate that they will come up against in the future.

Skewed system Our study reinforced what we increasingly hear from brokers and customers ourselves.

Nearly half (45%) of people believe not having a standard full-time job makes it harder to buy a home, while 47% think current mortgage criteria favour those in regular employment.

It appears these concerns are reflected in real life experiences, with one in five people (21%) telling us they have been struggling to get a mortgage because of their career choice. For those not working traditional hours, 38% had to take extra steps to prove their financial stability, and even then, 19% were still rejected.

PRAVEN SUBBRAMONEY is chief lending officer at Nottingham Building Society

These statistics highlight how traditional lending practices are falling short of meeting modern needs, and how hard it can be for people with self-employed or portfolio careers to buy a home.

However, the reality is that these non-traditional paths to homeownership are becoming the norm. As such, we recognise that brokers are calling for more flexible lending solutions to support clients with different income sources.

We’re acutely aware of this challenge, and the shi in the UK’s working pa erns, and it’s why we’re commi ed to evolving into a specialist lender – one which develops innovative solutions that meet the needs of today’s borrowers, regardless of how or where they earn their income.

Modern lives It’s clear the wider mortgage sector has a real challenge on its hands to keep up with the modern workforce. Lenders must adjust their criteria to recognise that freelance work, side hustles, and diverse income streams needn’t necessarily be viewed as risky.

By evolving how this is assessed, the market can be er support borrowers in these sorts of careers, helping more people achieve their dream of homeownership. Supporting a broader range of incomes and career paths will not only help individual borrowers but also strengthen the housing market, making it more accessible for future generations.

I hope that 2025 is the year when we can support more people from a variety of financial backgrounds achieve their homeownership dreams. ●

RESIDENTIAL Opinion

The importance of home condition surveys for FTBs

A

s the UK housing market braces for the upcoming Stamp Duty deadline on 1st April 2025, the first-time buyer (FTB) market is witnessing both challenges and opportunities.

Modest house price inflation, coupled with strong wage growth, has marginally improved affordability.

However, changes in Stamp Duty thresholds are set to exert significant pressure on buyers, lenders, surveyors, and conveyancers, particularly in higher-priced regions of England.

For those in the mortgage intermediary sector, these developments demand a heightened focus on education, support, and timely advice.

Trends and variances Recent data from Halifax highlights modest house price inflation of 3.8% over the past year, with average prices now at £292,508. Concurrently, annual full-time earnings have risen by 5% to £44,667. This has reduced the house price-to-income ratio to 6.55, down from a peak of 7.24 in 2022.

While these figures are encouraging, regional disparities persist. Higher-priced areas like London, the South East and the East of England face unique challenges, with fewer properties falling under the revised £300,000 Stamp Duty threshold for FTBs. For example, only 8% of homes in London and 24% in the South East will remain Stamp Duty-free for first-time buyers a er April 2025.

Rightmove data indicates a rush among FTBs in these regions to complete purchases before the deadline. Demand among first-time

buyers in London is now reported to be 31% higher than the same period last year, compared to 28% before the Autumn Budget.

However, in regions with more affordable housing stock, like the North East, demand has stabilised, reflecting the reduced impact of Stamp Duty changes there.

The role of surveys The Stamp Duty deadline is exacerbating existing bo lenecks in the homebuying process. With the average transaction now taking 151 days, FTBs hoping to avoid higher charges must act quickly, creating stress across the ecosystem.

Amid the time-sensitive rush to complete transactions, the importance of home condition surveys cannot be overstated. However, despite the undeniable benefits, many buyers are still skipping this vital step.

Recent data from the Q3 2024 Countrywide Surveying Services (CSS) Home Survey Trends Index shows only 16% of buyers commissioned a home condition survey.

While this is an improvement from the previous quarter’s 10.6%, it still means that the majority of buyers are potentially exposing themselves to significant risks.

For many buyers, a property can look perfect on the surface.

However, hidden defects – whether it’s structural issues, damp, or faulty wiring – can go unnoticed without professional inspection. These issues can result in significant and unexpected repair bills.

A professional survey highlights potential problems early, providing homebuyers with the insight they need to make informed decisions, negotiate on price, or budget for repairs.

MATTHEW CUMBER is managing director at Countrywide Surveying Services

These insights highlight the surveyor’s role, not only in providing detailed assessments, but also in fostering transparency and trust.

As demand grows, the industry must balance urgency with the need to deliver thorough and accessible reports.

A pressured market Supporting first-time buyers requires proactive communication and education. Here are four key strategies: Promote the value of surveys: Emphasise how professional assessments safeguard buyers from unexpected costs and provide negotiating leverage.

Leverage technology: Investing in user-friendly platforms for report delivery can enhance the client experience.

Streamline processes: Collaborate across the homebuying chain to identify and address bo lenecks, ensuring smoother transactions.

Raise awareness: Bridge the knowledge gap by educating buyers about the differences between mortgage valuations and home condition surveys.

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In a fast-moving market, maintaining high standards of service and transparency while not holding up the service remains essential, not just to help borrowers meet the impeding Stamp Duty deadline, but to build lasting trust with first-time buyers embarking on one of life’s most significant financial decisions. ● January 2025 | The Intermediary

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Q&A

Dudley Building Society

The Intermediary speaks with Rob Oliver, director of distribution at Dudley Building Society, about growth, opportunity and challenges in 2025 What were some highlights for Dudley Building Society in 2024?

The standout moment of 2024 has to be winning the Best Smaller Lender (up to £100m in lending) award at the Legal & General 2024 Mortgage Club Awards. Being shortlisted through a broker vote was rewarding in itself, and an incredible recognition of the effort we’ve put into growing and developing the business, but winning made it even more special.

We also saw a boost in our lending volumes throughout the year compared to 2023. For the financial year 2023-24, our mortgage book grew by 9.3%, increasing from £436.1m to £476.8m.

We also grew our unique broker registrations by over 20% and expanded our panel size. It’s been fantastic to see this growth and the new relationships we’ve built, enabling us to help even more brokers find solutions for their clients.

A lot of this success has been down to us growing our mortgage team. In 2024, we brought in more underwriters, key account managers, telephone business development managers (TBDMs) and support staff, which has really strengthened our operations. These additions have helped us manage growth effectively while maintaining our service standards.

It’s been an incredible year, and we’re excited to see what 2025 holds.

What were some of the challenges in the mortgage market last year?

One of the challenges for us – and I’m sure other lenders – is the loan-to-income (LTI) cap, which limits lending to no more than 15% of our book at over 4.5-times income. Realistically, we don’t push it all the way to 15%, you reach about 13% and put the brakes on. It can definitely be a constraint, especially when it comes to looking at moving into new markets.

Affordability in general has also been a challenge. Unfortunately, incomes haven’t kept 14

The Intermediary | January 2025

pace with rising costs. When you look at some of the cost-of-living numbers from the Office for National Statistics (ONS), it’s clear this has been tough for a lot of people.

On top of that, there’s been a lack of housing stock, both for first-time buyers (FTBs) and for those who want to move up the housing ladder.

One big issue affecting the housing stock is the lack of incentives for people in larger homes to downsize. If there were better incentives, it would free up housing stock and allow others to move up, creating more flow in the market.

Of course, we can’t ignore the uncertainty caused by the change in Government this year. It’s been a difficult market for some, with a number of brokers reporting a drop in activity over the past 12 months.

That said, we’ve managed to buck the trend.

We’ve lent more this year, and that’s something we’re proud of. A big part of that, I feel, comes down to offering what you might call a ‘good oldfashioned’ service.

We’re not always the fastest, but it’s about maintaining a solid, reliable service proposition.

You can pick up the phone, talk to someone, get things in front of the right people, and ultimately find solutions for brokers’ clients.

Are borrowers’ mortgage needs becoming more complex?

I think some aspects which were once considered complex are becoming more common.

We are seeing a rise in self-employment, for example, and an increase in seasonal employment, borrowers with ROB OLIVER

Q&A

multiple income streams, and those working later in life. These factors add layers of complexity that are, in some ways, no longer unusual.

Building societies have a distinct advantage in these cases due to their personalised underwriting processes, which allow for a more flexible and detailed assessment of individual circumstances.

Many larger mainstream lenders are not structured to manage more complex cases. While their systems work well for straightforward applications, it can create challenges for scenarios that require greater flexibility.

We can assess cases that others might overlook – often due to the limitations of volume-driven models. For example, we do a lot of expat lending, and we occasionally come across cases where clients have credit blips that aren’t reflective of their actual financial behaviour.

This might be something as simple as a parking ticket left unpaid before moving abroad, which can escalate into a County Court Judgment (CCJ). It’s not always a pattern of bad payments – it’s a oneoff that needs context. In situations like that, we can step in and look at the ‘why’ and understand the situation.

We’ve recognised the need to invest in our capacity to handle these cases. This year alone, we added three underwriters to the team to ensure brokers feel supported, have someone to talk to and can get clear answers.

Complex cases aren’t going away, and I believe this sector will continue to thrive. Some refer to it as ‘specialist,’ which is fine, but I think that term can sometimes carry connotations linked to the adverse market.

At Dudley, we refer to these as ‘complex cases’ rather than ‘specialist lending.’ Based on our experience working with specialist lenders, we view ourselves as providers of flexible solutions

What are some growth areas in the mortgage market for 2025?

I think we will see more of a focus on technology.

While artificial intelligence (AI) certainly has its place and is fantastic for automating certain aspects of the application process, it won’t replace the need for human interaction.

There are some fundamentals that will always underpin the market, and communication is a big one. People still want to speak to other people, especially brokers who might be handling more complex transactions or areas they’re not familiar with. I think this personal touch will be a key factor in how the building society sector continues to grow its market share in 2025.

Another growth area will be later life lending.

People are working longer, not just for income but also as a lifestyle choice – 65 isn’t what it used to be. With more office-based roles now allowing for working later into life, borrowing later in life is becoming much more common, and we expect demand in this space to carry on growing.

Then there’s the Government push on housebuilding, which could also have a positive impact. The commitment to double the size of the mutual sector is also a great sign.

Historically, building societies may not have always been the go-to option, but that’s changing.

In the two years I’ve worked at Dudley, brokers have shown an increasing interest. They know what the mainstream lenders offer, but we provide something different – whether it’s our flexibility, ability to handle complex cases, or the fact that we can offer real support and have a conversation, rather than simply relying on algorithms.

Building societies are seeing strong growth in lending. Figures from the Building Societies Association (BSA) show that balances at building societies grew by £11.7bn, accounting for 72% of the mortgage market growth, in the six months to September. Brokers increasingly understand the value we bring, opening the door for us when looking for solutions for their clients.

What is Dudley’s focus in 2025?

2025 is about staying strong in our core markets while continuing to innovate with criteria and branching out into new areas, so watch this space.

Older borrowers will continue to be a significant market for us. Many of the older borrowers we work with aren’t relying on pensions for income. Instead, they’re deferring their pensions, continuing to work, or running their own businesses. A bricklayer working until the age of 70 might raise questions, but a 70-year-old business owner who still generates income? That’s different, and it’s about understanding the overall picture.

Interest-only mortgages also have their place in this market, but they’re for the right borrower and need the right advice.

The key is having a clear, plausible exit strategy, and for older borrowers, downsizing can be a solution. The older borrower market also ties into the ‘Bank of Mum and Dad.’ We’ve seen cases where parents take out interest-only loans to gift a large deposit. With a solid exit plan, it can work perfectly, and we expect this market to remain strong.

We’re also exploring technology solutions to enhance our processes in 2025.

We’ve set ambitious targets for 2025, and we’re confident in our ability to achieve them while staying true to what we do best. ● January 2025 | The Intermediary

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RESIDENTIAL Opinion

The homebuying process is failing customers’ needs

R

egre ably, our recent survey’s findings on the time taken to complete transactions confirms what we have long asserted, that homebuying is not the customer-centric experience it should be.

We quizzed more than 5,000 people from across the UK who had bought or sold a property in the past five years.

This revealed that homebuying is taking over three-times longer than buyers and sellers expect.

More than half of those surveyed (57%) thought that the homebuying process would take less than two months from when the offer was accepted to exchanging contracts. But in reality, 46% discovered that it took between three and six months. For a further unlucky 16%, their completion took more than six months.

Despite most respondents not being first-time buyers and having some previous experience of the process, 62% of people took well over three months to exchange.

Our survey revealed that the most popular reason for buying was a first home (38%), followed by upsizing to a larger home (27%).

Meeting expectations Buying a home, especially your first, should be a cause for celebration.

Instead, it is too frequently leaving buyers open to heartbreak and unfulfilled expectations.

Customers’ expectations are not being met and the homebuying process continues to be susceptible to unexpected events, delays, and the stress that can be caused when it does go horribly wrong.

The current process delivers an appallingly slow, unpredictable, and

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The Intermediary | January 2025

disappointing experience for the majority of home buyers and sellers. It is clearly not fit for purpose Our large-scale survey is part of our new research into how homebuying can be radically improved through access to safe, shareable and trustable digital data. The time taken to buy a home is just one of the issues covered by the survey. We will reveal more of our results shortly and publish our research in full at an official launch before spring.

MARIA HARRIS is chair of the Open Property Data Association (OPDA)

Mission critical

Customers’ expectations are not being met and the homebuying process continues to be susceptible to unexpected events”

The research is part of our mission for every company, in every part of the mortgage and property transaction, to access and share open data in a digital, standardised, and trusted format.

Since the Open Property Data Association (OPDA) launched in June 2023, we have delivered open property data standards and models for trustable and shareable data, securing collaboration and support from major lenders and industry firms, including Lloyds Banking Group, Nationwide, and OnTheMarket.

Those using our data standards for digital property packs have seen offer to exchange time reduced from an average of 22 weeks on home purchase to within 15 days, according to Rightmove, showing that the tools and approach to collectively deliver a be er customer experience already exist.

Our members, who cover every part of the industry all the way up to major lenders, are commi ed to achieving this and to overhauling the homebuying and mortgage process.

I am very proud of the progress OPDA has made in such a short space of time.

We’ve also met regularly with the Government to flag the challenges consumers and the industry face, and

outline the barriers in the way our property market works.

Last May, I gave evidence to the Select Commi ee’s ‘Improving the home buying and selling process’ inquiry. I called for legislation and development of the trust frameworks which already exists to enable the entire home buying and selling process to be digitised within three years.

The Government’s new Data Use and Access Bill offers cause for optimism that this will now finally happen. Our work too shows what can be achieved.

Together with the Government, we can bring in the wholesale reform that the housing market so urgently needs. This will mean a faster, more efficient, and more transparent homebuying journey.

In the meantime, our survey shows that customers are being severely let down by the current homebuying experience. A fair and streamlined homebuying process, fit for the 21st Century, should be within everyone’s reach.

Clearly, reform is urgently needed, and our research will include key recommendations to Government. ●

RESIDENTIAL Opinion

Reading between the lies

I

n 2024, fraud prevention service Cifas published research which revealed that one in six (16%) UK adults have admi ed they, or someone they know, have misled mortgage lenders about their annual salary to purchase their home.

Surveying 2,000 UK adults, the research revealed 14% of respondents did not think it was illegal to provide mortgage lenders with misleading information, with nearly one in 10 (9%) believing it was ‘reasonable’ to exaggerate their income.

The most likely age group to commit this type of fraud were between 25 and 34 (16%). It is no great surprise to see what is predominantly the first-time buyer age group being the most likely to commit mortgage fraud, particularly given the affordability issues which can hold this demographic back from achieving homeownership, something the generations before them took for granted, and which is an opportunity that many of the current generation feel denied.

However, regardless of any feelings of injustice, commi ing mortgage fraud is a criminal offence. If found guilty, the impact can be profound, with damaged credit scores and closed bank accounts the lighter of the consequences for actions that could potentially lead to a criminal record and prison sentence.

Of course, the Government has made clear its aim to introduce more affordable housing into the UK housing stock, with its other stated aim, that of raising landlord’s taxes to free up housing for first-time buyers, appearing to have an impact already.

A recent article in The Times highlighted how 35% of British properties sold by landlords were bought by first-time buyers in 2024 – an increase from 16% in 2016 – with London seeing higher figures, 56% up from 24%.

In addition, Halifax research revealed that 49% of British properties were bought by first-time buyers in 2024, one of the highest proportions ever, with this trend having regional hotspots; for example, the figure increased to 75% in Manchester.

While the ‘Bank of Mum & Dad’ has played its part in these figures by helping with the affordability factor, not everyone has access to this source of funding. It therefore raises the question: given the research, how many mortgage applications made to support these purchases may have had some aspect of mortgage fraud – such as falsely inflated salaries, or forged payslips?

Switch on Of course, mortgage advisers do a great job at being industry gatekeepers in this situation, but given the pressure on finances currently, it is more important than ever that they are constantly and consistently switched on to the possibility of suspicious activity and the supply of false data.

This not only protects their customers, but also protects their business from possible panel removal or regulatory censure, as well as protecting the lenders and financial institutions they conduct business with. Interrogation of the facts and documentation provided by customers is crucial.

To help with this, Paradigm has produced a free eBook to assist firms in raising awareness of this important topic with their staff. It is designed to help advisers in identifying the different types of mortgage fraud customers can commit, identifying typical characteristics of clients that may commit fraud, focusing on what to look for on documentation which customers provide as part of an application – such as payslips and bank statements – while highlighting other areas of mortgage fraud

DAVID RYDER is head of proposition at Paradigm

prevalent within the industry. Plus, it outlines suggested tools for mortgage fraud prevention.

Paradigm also provides a dedicated Mortgage Fraud File Review Service.

When used as a preventative tool, the service looks at selected files your firm may consider to be at risk or may wish to select at random, with the review focused on conducting a comprehensive review of supporting documents and case details.

Taking this type of preventative approach can help firms demonstrate to lenders and the Financial Conduct Authority (FCA) that they take the ma er of mortgage fraud seriously.

It clearly demonstrates that the firm takes a proactive approach to dealing with comba ing financial crime.

The service can also be beneficial in more serious circumstances. For example, a firm may have received a decline le er from a lender due to inconsistencies in an application and its supporting documents. In this situation, any inconsistencies that might be present on the file can be identified via the review, and we can then subsequently assist the firm in dealing and communicating with the client and lender.

This service can play a big part in helping firms appeal against any possible removal from a lender panel.

The importance of mortgage fraud awareness cannot be underestimated, and as we move into 2025, it is important senior managers ensure all relevant staff are alert at all times to the different ways in which their business could be used as a vehicle for mortgage fraud. ● January 2025 | The Intermediary

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RESIDENTIAL Opinion

ousing was always going to be paramount for the Labour Government – it formed one of its core election pledges and it’s been one of the areas in which the party has worked fastest to get policy down on paper.

Early on in Labour’s first Parliament in almost 15 years, Prime Minister Sir Keir Starmer announced the Government’s commitment to build 1.5 million new homes over five years. In December, just as the country headed towards the end of the autumn term and going home for the Christmas break, the Government outlined further how to deliver.

Under this latest version of the National Planning Policy Framework (NPPF), councils are to be given new “immediate mandatory housing targets” to ramp up housebuilding.

One of those targets is a strict 12-week timeframe to commit to a timetable for providing new homes in their area.

In the past five years, fewer than a third of councils managed to approve a plan for housebuilding. Now, if they don’t, the Government will do it for them. Annually, this means building an extra 370,000 homes across England. Places facing the most acute housing affordability challenges will be given even higher mandatory targets than the average.

As with most central housing policy, the headline intentions are

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The Intermediary | January 2025

usually good. The challenges come further down the delivery chain, and most o en they are logistical, practical, and have to be resolved in time and through experience.

In the days that followed the publication of the “refined” National Planning Policy Framework, a number of building firms raised concerns relating to just this.

The Home Builders Federation (HBF) told the BBC that the country “does not have a sufficient talent pipeline” of skilled builders, electricians, plumbers, roofers and the rest of the tradespeople it would take to meet the new mandatory targets.

and despite a package of central Government spending on a range of programmes intended to support building, the bulk of new homes are built by the private sector.

There’s a tension that is very hard to resolve here: housebuilding is a commercial decision. Funding the purchase of new homes takes money, the vast majority of which comes through mortgage lending.

Lenders have shareholders and mutuals have members to consider – they have mandatory responsibilities

Practical and profitable

Pu ing aside the practicality of delivering all 370,000 new homes each year, there are other relevant considerations. Builders will build homes when and where it is viable and profitable to do so. Lenders do not approve mortgages against homes in developments where buyer demand does not meet housing supply – the capital risk is too great.

Yet the fact that we have an acute housing crisis is absolutely undeniable. It is horrifying to see the Government’s own statistics – 1.3 million households are on social housing waiting lists and a record number of households, including 160,000 children, are living in temporary accommodation.

There are not enough homes in the right tenures to meet this need,

to deliver value and make sensible commercial decisions. The Financial Conduct Authority (FCA) rules require that they lend only where the mortgage is affordable and no reasonably foreseeable harm will come to the borrower.

This is really not easy to reconcile, however much we all agree on the need to solve the bigger problem.

Mortgage affordability for new homes bought by owner-occupiers, private landlords, housing associations and other social housing providers is one side of the equation.

RESIDENTIAL Opinion

The impact of changing supply and demand dynamics in certain localised areas is just as critical.

Many factors The risks around new-build from a lending point of view will not abate – understanding them in a more granular way is likely to become even more important.

This covers a multitude of considerations – energy efficiency, condition, modern methods of construction, location and environmental risk associated with that, the availability of employment, public transport, schools and health and retail amenities are all relevant.

Where valuations are completed for second hand housing stock, assessing comparables is o en a more straightforward undertaking, with statistical data volumes for previous transactions sufficient to provide an assessment of market value.

Where homes are part of large, new and o en multi-phased developments with differing types of ownership models, meaningful comparables in the immediate locale can be more difficult to identify and assess.

This is nothing new. It is an area that we as an industry, and lenders in particular, are going to have to get more into the weeds on as the makeup of new developments continues to evolve. We’re already on this journey.

Understanding the risks and exposures for lenders on new-build sites is becoming sharper as we employ

data and new modelling techniques to understand the risks for our clients.

As part of this, we have our remote valuation for new-build proposition, which delivers insight and analysis to a level not previously a ainable remotely – it’s already in use for some current clients.

It brings a data-led methodology to the market and offers lenders a range of benefits, including delivering an accurate valuation four days sooner than a physical valuation on average.

For lenders mindful of their scope three emissions, reducing the number of site visits to those identified as higher risk is another benefit. The service is tailored to every lender’s individual risk appetite.

If approved by our team following a physical inspection, we digitally triage all incoming new-build instructions and collect information such as the UK Finance Disclosure Form, site and floor plans from developers. A local surveyor will carry out the remote valuation on receipt of the requested documents. The output is then forma ed into the lender’s mortgage valuation report.

Ultimately, we need new processes, methodologies and insights if we are to deliver the volume of new housing we really need to aspire to build over the coming years.

Our remote valuation model is part of the change that is urgently needed to safely speed up the delivery of newbuilds in the UK. ●

STEVE GOODALL is managing director at e.surv

January 2025 | The Intermediary

19

RESIDENTIAL Opinion

Unlocking homeownership for the next generation

T

he UK's mortgage market is one of the most consumer unfriendly markets in Europe, perhaps even globally. This sentiment has been echoed by industry experts and consumers alike, who have faced a market that is resistant to change and innovation.

As the Government focuses on stimulating growth, it is imperative that regulatory frameworks are reassessed to restore the UK to a nation of homeowners.

Our recent analysis of data from the Office for National Statistics (ONS) paints a stark picture: there are approximately 641,000 fewer homeowners than there would have been if the homeownership rates had continued at the levels seen before 2010.

Product picks This shortfall is largely a ributed to the lack of innovative and dynamic mortgage products that align with the needs of today's market. Even when such products are developed, they o en remain inaccessible to consumers at scale, due to stringent regulations that o en exist simply because they have endured.

One such example is the Bank of England's cap on higher loanto-income (LTI) mortgages. This cap limits lending above 4.5-times a borrower’s income to 15% of a lender’s book.

The Bank of England applies a blanket cap to all lenders and all regulated mortgages, regardless of whether the risk they are concerned about is mitigated. The Bank of England should look abroad to understand how others have approached managing the risk of

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The Intermediary | January 2025

leverage, like in Canada, where the LTI limit is applied on a ‘lender by lender’ basis. As a result of the bank’s approach, innovative products are restrained, impacting growth and frustrating prospective buyers.

For example, long-term fixed rate mortgages (LTFRM), which are common in many European countries, allow buyers to secure a larger mortgage responsibly, compared with traditional 2-year or 5-year fixed rate products. However, it is also subject to the LTI cap, constraining its ability to scale, even though the main risk that the Bank of England is worried about is mitigated.

Affordability concerns Contrary to the perception of high risk, independent research from the Tony Blair Institute highlights that under LTFRM there is no risk that the mortgage will become unaffordable to the borrower, and as such, there is no rationale for the LTI cap when the

ARJAN VERBEEK is CEO at Perenna

mortgage rate is fixed for the whole term. The focus of the regulators should be on affordability.

The Chancellor's challenge to regulators comes at a critical time.

Despite the continuous rise in average house prices and the widening gap between average earnings and property prices, as revealed by the latest quarterly house price to income ratio data, Perenna’s analysis of UK Finance data shows that the value of gross lending and remortgaging in the UK is shrinking.

This suggests that the mortgage industry is simply unable to meet the demands of future homeowners.

The current regulation is a relic of the past, ill-suited for the future housing market. Its persistence only hampers responsible innovation in a sector that desperately needs it.

The upcoming meeting with the UK's largest regulators presents a pivotal moment to reconsider this rule and rekindle growth. It is an opportunity to align the mortgage market with the needs of the population, and in doing so deliver necessary growth. ●

Perenna’s analysis of UK Finance data shows that the value of gross lending and remortgaging in the UK is shrinking”

RESIDENTIAL Opinion

Overcoming barriers to green improvements

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ith the colder months now upon us, electricity and gas bills are expected to rise as people use more energy to stay warm. With energy prices still elevated, according to Government data, it will be a challenging period for homeowners, who will be looking to reduce costs as much as possible.

Making eco-friendly home improvements may not be at the top of the list for consumers, as there’s a pervading view that upgrades involve a high cost and may not gain worthwhile returns in the short-term.

Equally, many homeowners won’t be aware of how to even start making these modifications.

Si ing at the centre of the mortgage journey, brokers can play a role in challenging common misconceptions around green home improvements and breaking down these barriers.

In this piece, we’re arming brokers with the knowledge they need to help homeowners on this issue by outlining what these challenges are and how brokers can overcome them.

Affordable options Energy efficient upgrades can play a crucial role in reducing carbon emissions and easing the burden of higher energy costs by lowering usage, and consequently energy bills.

According to our report, ‘Beyond the Bricks: What Does a Green Housing Market Look Like?’, 40% of homeowners are motivated to make eco-friendly changes if it helps reduce their energy bills.

However, despite 91% of homeowners reporting that energy efficiency is important to them, uncertainty around what upgrades

they can make o en acts as a barrier.

Whether it’s fi ing double-glazed windows or installing solar panels on a roof, brokers can step in to demystify this process, helping clients discover a range of green improvements from small, incremental changes to larger installation projects based on their available budget.

There are a number of tools that can help homeowners to do this.

For example, our Home Energy Efficiency Tool can help clients develop a sustainable action plan.

This shows the current and potential Energy Performance Certificate (EPC) ratings of a property, highlighting which improvements will have the most significant impact based on the client’s budget.

Homeowners with smaller budgets might consider simple changes like fi ing their hot water cylinder with an insulating jacket, for instance.

This costs around £20, but can lower annual carbon emissions and could save you up to £45 each year, according to GreenMatch.

Long-term benefits It’s the long-term rewards of green changes which are so o en unclear to clients, making the initial costs seem unjustified. Double-glazing, for example, typically starts at around £450, according to GreenMatch.

While they help keep properties warmer, they also contribute to longterm savings, offering a substantial return on investment.

The Energy Saving Trust estimates that by installing A-rated doubleglazing in a semi-detached gas heated property, you could save £140 and 380kg of carbon dioxide a year. Similarly, a typical solar panel installation could save around £140 a year in Great Britain.

JONATHAN STINTON is head of intermediary relationships at Coventry for intermediaries

The benefits in savings are not just in cu ing bills, either – energy efficiency improvements could even increase a property’s value. According to Rightmove, improving an EPC rating from Band F to C could see an average home value increase of 15%.

By helping clients understand these financial advantages, brokers can make the initial investment in green improvements more appealing.

The installation of energy efficiency improvements such as double-glazing, solar panels and heat pumps can be expensive. However, there are also green financing options available in the market, providing brokers with solutions to make retrofi ing projects more affordable for homeowners.

Coventry for intermediaries’ Green Further Advance, for example, rewards clients who retrofit their property with eco-friendly features.

It offers a lower interest rate if at least 50% of the borrowing, up to £25,000, is used for energy-efficiency improvements.

Brokers can be the crucial link in helping clients overcome the barriers to making green home improvements, being well-positioned to provide the right information and access to helpful lending products.

Those who can effectively educate clients on the longer-term benefits of green changes could play a significant role in encouraging sustainable living and help their clients bring their energy bills down. ● January 2025 | The Intermediary

21

The Interview.

Mortgage Advice Bureau

Jessica Bird speaks with Andrew Teeman, business principal and adviser at Mortgage Advice Bureau, about the need for a holistic view on client needs at all life stages

M

ortgage Advice Bureau (MAB) is a wellestablished name in mortgages and protection, generating an estimated 20,000 applications per month across around 2,000 advisers, and well-placed to take a view on an increasingly complex and innovative market.

The Intermediary sat down with Andrew Teeman, business principal and adviser at MAB, to take a deep dive into an area that has seen particular change in recent years and understand the importance of seeing clients as a whole picture.

Looking back at later life

Teeman says that following a “fantastic” year of growth in 2022 on the tail end of low rates, the several years following felt almost like “the earth had moved.”

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The Intermediary | January 2025

From geopolitical turmoil to the ongoing ramifications of Covid-19, disrupted supply chains, elections and more, “people didn’t know what was going on, even down to whether they could buy a sofa or book a holiday.”

In the residential mortgage and later life market, where people are likely to be committing to financial vehicles for longer, Teeman says people were “paralysed around making decisions” during 2024.

One upshot of this environment for the later life market, however, was an increase in innovation around products in 2024.

“As firms have contracted or struggled to get a foothold on where the market is moving to, we saw more innovation in products than we’ve seen in the past 10 or 12 years,” Teeman explains. “Why would lenders innovate products when they were lending at 2% before?

There was nothing broken to fix.”

One of the important innovations was the emergence of products with no early repayment charges (ERCs) in the lifetime mortgage space.

“It was so refreshing to see a lender that had listened to brokers,” Teeman says.

“We sat in all these strategy meetings, hearing them say ‘we accept the fact that people need money now, but they might sell their house in six months, or give their children money – there might be a genuine reason why people want to be able to pay these loans off in the near future. Others might be thinking that interest rates are going to reduce, and don’t want to commit to 12 years at 7%. They’ve got the option of paying it off without any penalty.

“It’s been an unbelievable success, where it feels like innovation has previously been lacking in that retirement lending space.”

Budget impact

If necessity – or challenge – is the mother of invention, then 2025 looks set for more of the same. Chancellor Rachel Reeves’ announcements about Inheritance Tax (IHT) in the Budget certainly put a cat among the pigeons. IHT affecting inherited pensions from 2027 was significant, but so were reforms to Business Property Relief, and perhaps most surprisingly, Agricultural Property Relief.

“Inheritance Tax is the elephant in the room for everyone at the moment,” Teeman explains.

T H E I N T E RV I E W MAB

“This whole farming issue has come up, and pensions have been brought into the scope of IHT. People are outraged by the farming issue in particular, and everyone thinks it’s a personal attack on their own wealth.

“But the reality is that there is no money, and lots of people are richer than they might have ever thought they would be.”

Teeman believes that IHT was never really meant to affect the London-based middle class, for example, but as their property wealth has grown, they come under the scope of a tax that in previous years would not have had to be as significant a part of their financial plans.

Teeman says: “If you’ve owned a house in London for 30 or 40 years, you’re going to be subject to Inheritance Tax, so what people are now doing is finding other ways and means of taking money out of their property to enjoy their lives, help their children, adapt their homes and go on holidays.

“If those people have good financial advisers around them, they will be saying, ‘let’s get some money out of the estate’.”

Of course, one spanner in the works might be that interest rates are higher now than people are comfortable with. However, it is all about context. As Teeman says: “I’d rather pay 6% or 7% interest than 40% Inheritance Tax.”

such as a mortgage – work to understand what a client wants to use their wealth for.

He recommends starting with the certainties.

Most, if not all clients, will have an ultimate career goal of retiring. On a less positive, but just as important note, every client will at some point need to think about the “crude reality” of death. While every client is unique, these constants can be a productive place to start a conversation, and “work backwards.”

A further tip Teeman suggests is to think about the long-term goals behind immediate needs. For example, when arranging a mortgage, he proposes getting further into the ‘why’. Why does a client want certain terms?

Why do they plan on paying it off in a certain timeframe? What are they planning for after it is paid off?

“What we become fixated on as brokers is facilitating a client’s requirements that they tell us,” Teeman explains.

“But we never really ask why. I like to explore client behaviours, which we’re probably not focusing on enough in the mortgage market.”

A mortgage, he explains, is not simply a mortgage. It is always part of a wider life plan, even if the client has not yet thought about it.

It is, therefore, a perfect springboard for this type of wider discussion.

The whole picture

Asset interplay

Within the past few years, MAB has emphasised expansion into broader areas – beyond mortgages and protection – that feed into wealth planning. Considering lifestyle changes, the likelihood of living longer with more complex finances, and an increasing need for lending in later life and into retirement, this is an area of particular interest.

Teeman says: “When I joined, there was a financial planning business that MAB was keen to move under its own network principle, and drive referrals through to it from the mainstream mortgage channel.”

Teeman worked with teams across the country, including business principals and advisers, on how to look beyond their niche and understand the interplay between pensions and property wealth, for example.

He says: “I’ve pushed the idea of how we can be involved in that client journey from an earlier stage, and also through to a later stage – cradle to grave.”

To access the full picture and help clients in more areas, as well as to diversify and shore up brokers’ own businesses, Teeman says the first principle is to ask more questions, and rather than focusing just on immediate advice needs –

While this holistic approach makes sense, the fact remains that Brits are particularly set in their ways when it comes to keeping assets and types of finance separate in their minds, and in their financial plans. Whether pensions, mortgages or investments, people tend to prefer a silo.

Instead, Teeman says – whether it’s pensions, investments, insurance or more – different forms of debt, investment and assets should be seen as levers to be pulled when appropriate.

He says: “They may all be held in different places, but the reality is that if you pass away tomorrow, you’ll be seen as the sum of these parts. It’s odd that these things aren’t more joined up, because the reality is that they have such a significant bearing on each other.”

To this, end, he explains, financial advice should factor in the points at which it makes sense to deploy the money made through certain investments, property included.

“Why would you not be interested in the value of your house as much as the value of your pension? It’s about understanding when’s the optimal time to take money out of your property, versus the optimal time to take money out of your investments.” → January 2025 | The Intermediary

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T H E I N T E RV I E W MAB

He explains that this is not necessarily as complex as it might seem, saying: “The primary question is about the tax efficiency of the different choices. For example, you can sell your primary residence and not be subject to Income Tax or Capital Gains Tax [CGT], but you wouldn’t want to cash in all of your pension and incur a higher rate tax charge for doing it all at the same time.”

Teeman adds: “What I would say to clients is that you want to take money out of your fixed property assets when interest rates are low, particularly via something like a lifetime mortgage or mortgage in retirement, which gives you the opportunity to fix at lower longterm rates. Then, you want investments to be outperforming the debt, so that your journey into retirement – and life in retirement – can be exceptional.

“The idea that these things are not linked together is something that has baffled me for a long time.”

This might sound like a lot of added work and complexity, which Teeman says is where technology can come into play. Brokers should deploy tech to streamline their processes enough to allow them to ask more questions and have those all-important conversations.

It is not simple, though, he concedes, particularly in an increasingly restrictive regulatory environment, which itself adds to the siloed nature of the market and encourages advisers to situate themselves within a narrow tranche of products. This can make it feel like “yo-yoing around” when getting a client in front of each person with the various areas of expertise they need for a full financial life plan.

Make it matter

In order to facilitate meaningful conversations, Teeman says that advisers should be ready to tap into the emotional and aspirational side.

For many, the financial planning conversation focuses on accumulation, or “climbing the mountain” as Teeman puts it, but never the “journey back down” once the peak has been reached. He says: “The number of clients I speak to who have reached peak wealth, and I ask ‘What do you want to do with it? What have you done it for? What excites you?’ And people are quite bemused and baffled by it.”

Buying a house is an inherently emotional part of the financial journey. However, Teeman says, “nobody thinks like that about their pension,” which is where brokers can come in with emotive conversations and storytelling around the value of pulling those wealth levers to gain the right life in retirement.

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The Intermediary | January 2025

“The emotional part of the house buying process is quite easy to tap into,” he continues.

“But what we’re not doing is educating clients around the cost of retirement, the cost of delaying, why it’s important to save less but for longer, compound interest.”

To cater for a client’s broader and longterm needs – which even they might not have formulated thoughts around – brokers should be looking to join all these different points.

Technology can also come into play here, helping to engage and inform both brokers and their clients via video content and webinars, which Teeman notes have far higher success rates in terms of getting people to remember and connect with financial concepts than written text or an explanation from their broker.

These conversations can also be made more relevant by timing them correctly throughout the year – such as using Q1 to discuss a client’s tax allowance.

Brokers also have to handle the fact that later life, retirement and pensions is often an area in which people are less trusting, remembering misselling scandals in pensions in particular.

Advice gap

In an ideal world, the basics of some of these concepts should be covered at a young age in schools, Teeman says, so that people emerge into adulthood with some level of familiarity.

Until this kind of shift happens, however, it is imperative that this market fills the advice gap.

“It’s all coming from different directions, and nobody’s doing it particularly effectively,” Teeman says. “People are so busy, plus there’s the cost of advice, and how much it costs to even do business – the advice gap is just growing and growing.

“The people that need advice the most are also the ones that can’t afford to get it.”

There is also, he adds, a misconception among some people that they are “not rich enough for financial advice,” but Teeman emphasises that it is often only with advice on the various vehicles available that people can protect and build long-term wealth.

However, one area in which advice is the norm regardless of wealth, of course, is mortgages. The Intermediary Mortgage Lenders Association (IMLA) predicted that the proportion of mortgages that were intermediated would rise to 90% in 2025. While this does not solve the advice gap for those unable or unwilling to purchase property, it is an opportunity for advisers to get a foot in the door and start having the kind of conversations that can lead to better financial planning.

T H E I N T E RV I E W MAB

No more silos

Teeman sees the siloed nature of this market as an “unfortunate byproduct of regulation,” and therefore something it is not altogether simple to combat, considering the benefit of regulations to protect and enhance the quality of service provided to clients.

“Every Government tries to simplify a process, and by simplifying it, makes it more complicated, and more expensive to transact business,” he says. “We’ve seen banks decide they don’t want the risk of providing advice, where it was part of their model 15 or 20 years ago. But we’re still not teaching our children about money, about the ebbs and flows in life – most people are just so busy trying to stay afloat there’s no opportunity to look into these things, which are unfortunately quite complicated.”

Part of the solution, then, is out of brokers’ hands, and needs to be centred in the education system. In fact, Teeman says, brokers and other industry experts would likely be happy to get involved with an initiative to take these conversations into schools, or financial mentoring programmes.

Another change needs to come in the form of a perception shift. He says: “We have to be aware that other products exist. Pension tax-free cash, retirement lending mortgages, lifetime mortgages or a version of equity release – all of those things become available to people at age 55.

“So, even if the only thing you are aware of about a mortgage client is that they or their partner is over 55, brokers should be setting up a meeting with somebody who can shed light on some of the other products and services available to them.”

Teeman has helped some clients with “blended solutions,” such as using 10% of their pension fund as tax-free cash to help with mortgage payments, reduce the balance or get a better rate.

He says: “How much advice in financial services is really holistic? I would say it’s a single digit percentage.”

Ready to refer

It sounds like an insurmountable task to truly provide holistic advice, while maintaining regulatory compliance and spending the amount of time and money needed to keep an advisory business running.

“No one can be an expert in everything,” Teeman says. “There are two types of people who refer business – one wants to do the absolute best by their client in every different

scenario, and the other just wants to make as much money as possible.

“It’s about the combination of both of those things, though – doing the best job possible for the most money.”

One way of doing this might be by providing a complimentary review around pensions, wills, and power of attorney as part of the package for clients.

Teeman says: “That’s saying to the client, ‘I want to ensure that after I’ve done my job, the bits that we’re not talking about are still being looked at by someone I think is worth speaking to, and who has regulatory approval to do that’.

It means that client is more likely to go on and recommend you to others.”

For those looking to do the best for their clients, the referral process can be tricky, Teeman explains: “Making a referral means lending your trust to someone else. Someone might have a negative experience of being let down by a referral partner, and therefore simply stopped referring that business.”

Nevertheless, brokers should not overlook the opportunity. “It’s worth noting that brokers will get paid for referrals, but ultimately it’s about providing the right level of advice to clients,” Teeman says. “I don’t think the regulator really wants people to be advising a little bit on a lot of different things.”

Looking ahead

Teeman looks ahead with a sense of optimism that the market will continue to find its feet, hopefully with the help of a couple of base rate reductions. During a period of turbulence, Teeman reports having seen disruption in the later life market in the form of increased numbers of down-valuations, but feels that the sector should be starting to settle.

“We’ll probably see a flurry of first-time buyer activity, which will restart the engine,” he says. This stability cannot come soon enough, as “people underestimate just how important the property market is for everyone’s wealth.”

“If a house goes up in value, people spend more because they feel richer, but if your mortgage payments are squeezed and money feels tight, that’s where we see a greater possibility of recession.”

He concludes: “The trauma of the Budget showed us that what change facilitates is advice. What people thought was set in stone has shown it can change. The value of advice has never been greater, and our job is to latch onto those opportunities, building the referral network that’s needed to give more advice to more people.” ● January 2025 | The Intermediary

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B U Y - TO - L E T Opinion

Stamp Duty reform could hurt the most vulnerable

T

he recent Budget saw Chancellor Rachel Reeves announce an increase in the Stamp Duty surcharge for buyers who already own a home. First introduced in 2016 by the Conservative Government as a 3% flat rate surcharge on top of existing Stamp Duty rates, Reeves increased the higher rate for additional properties to 5% in the Budget, effective immediately.

Across England, the Stamp Duty for a second homeowner, based on the current average house price of £309,572, rose from £12,266 to £18,457 – an increase of £6,191. In London, where the average house price is £531,212, Stamp Duty rose by £10,624 to £40,621, according to analysis by Inventory Base.

But this increase in taxes is likely to impact renters as much as those providing housing to them.

In the short-term, the move could prevent additional supply to the rental market. This is because the profitability of expanding rental portfolios has fallen due to taxation changes, soaring mortgage interest rates and the need to make energyefficiency improvements.

There is more legislation on the way which will make it even harder to provide rental accommodation to the market. With a ‘good rental yield’ now regarded as around 6%, according to NatWest, investors looking for a home for their money might decide that an alternative investment vehicle is preferable, resulting in less supply to the rental market and driving up prices for renters.

In theory, this is good news for firsttime buyers – if homes aren’t being purchased by landlords, then there will be more on the market for them,

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The Intermediary | January 2025

and when it’s a buyers’ market, prices will fall.

However, the Government’s temporary increases to the Stamp Duty thresholds that were put in place in September 2022 are due to come to an end from April 2025. This means, while there may be more stock available for first-time buyers, the total price they pay upfront will be higher.

This also means that there is a strong chance that large corporations will swoop in instead, especially as a couple of percent increase in Stamp Duty is easier for them to afford than homebuyers and small landlords.

In effect, rental property ownership will become more concentrated.

Companies such as Aviva and M&G have announced that they will be investing in rental properties in the coming year, while US funds PGIM and Blackstone are also keen for UK real estate.

Act now These companies concentrate on new-builds, o en buying up whole blocks, which means where house prices do fall, it is likely to be on properties they regard as less desirable – those with poor energy efficiency or requiring repairs. In other words, the older properties with high Energy Performance Certificates (EPCs) and heating and maintenance costs.

Would-be buyers may then find it difficult to secure finance for a rundown ‘bargain’, even if they have the stomach for living in a building site.

If first-time buyers do want to make the most of a price dip, they should act quickly to make use of the current, more favourable tax terms.

The current Stamp Duty regime for first-time buyers, which means that on the portion of a home up to

MATT JOY is chief growth officer at eConveyancer

£425,000 there is no Stamp Duty at all – provided the total cost is under £675,000 – will end on 31st March 2025. A er that, first-time buyers will only be exempt from paying Stamp Duty on the portion of a property up to £300,000, with the relief only available on properties valued up to £500,000. In practice, that means firsttime buyers completing on a £425,000 property in March 2025 will pay zero Stamp Duty, but in April it will cost them £6,250, while those buying a £550,000 home will see their tax liability jump from £6,250 in March to £17,500 in April.

Other buyers will see increases too, with the nil rate band reducing from £250,000 to £125,000 at the same time.

This, of course, will drive a short-term spike in demand, and as we have seen in the past, put the conveyancing industry under significant pressure as the deadline looms.

But the main concern about these changes is that, in the end, it is those on fixed or lower incomes – who rent their homes and are not in a position to buy – who will suffer the most.

If corporate investors start monopolising the market, rents will increase due to a lack of nimble competition. If private landlords cannot viably buy further properties, while others are actively reducing their portfolios, supply of rental homes will diminish, and by the law of supply and demand, rents will inevitably increase.

That said, if Housing Secretary Angela Rayner is able to deliver on her promise of “the biggest wave of council housing in a generation,” prices may come down for both first-time buyers and long-term renters. This, however, remains to be seen. ●

B U Y - TO - L E T Opinion

Buy-to-let lending in 2025 will outshine 2024

R

obert Metcalfe, coinventor of Ethernet, famously predicted that the internet would collapse by 1996. Confident in his forecast, he promised to – quite literally – eat his words if proven wrong. When the internet thrived instead, Metcalfe kept his promise, blending the article containing his prediction and drinking the mixture in front of a packed conference hall.

This story has striking parallels with the buy-to-let (BTL) market, in that for years so-called experts have lined up to predict the sector’s demise.

Yet, it’s still standing.

In fact, far from fading, it is also now growing again. Yes, buy-to-let lending fell sharply between 2022 and 2023, but 2024 has marked a turnaround.

The market looks set to have achieved £32bn of lending in 2024, according to UK Finance’s ‘Mortgage Market Forecasts 2025-2026’ – £6bn more than the trade body’s initial forecast a year ago.

If BTL were truly a dying market, we’d have seen another year of contraction. Could it be that the sector’s resilience has been underestimated?

Looking ahead UK Finance predicts circa £33bn in lending for 2025, which would suggest a fla er rate of growth across BTL, and that’s an estimate I anticipate

will prove conservative. UK Finance also points to a likely contraction of purchase activity as the extra 2% Stamp Duty Land Tax (SDLT) discourages some activity.

Beyond the total lending figure, I believe we will see more borrowers opting to remortgage rather than opt for a product transfer (PT).

PTs have dominated in recent years, driven by rising interest rates. In Q3 2024, PTs accounted for 63% of all refinance lending. A year earlier, that figure was more like 73%.

The reason they became so popular was because higher rates made stress tests more challenging for many landlords.

That made PTs, which don’t typically require landlords to pass a lender’s stress test, more appealing.

But now, with rates falling – albeit slowly – and rents still rising, affordability pressures are easing, and landlords will likely want to shop around for a be er deal.

Additionally, many loans maturing in 2025 were taken out five years ago, leaving landlords si ing on substantial equity and rental growth.

With borrowing costs set to continue falling, many landlords are likely to want to release capital to expand their portfolios.

Switching lenders is o en the only option for these landlords, as only two providers – currently Keystone and one other – offer further advances alongside PTs.

DAVID WHITTAKER is CEO at Keystone Property Finance

This shi will benefit landlords and brokers alike, as remortgages offer borrowers the potential to bag a cheaper rate while brokers earn more for their services. That’s a good thing all around.

Landlord confidence That doesn’t mean 2025 is going to be easy. The buy-to-let market faces headwinds, not least the Renters’ Rights Bill mid-year, but things are improving.

Interest rates and landlord confidence remain critical variables, but we can confidently say the market is past its lowest ebb.

While it may be some time before we see £40bn-plus of lending again, there’s no reason why we can’t realistically be er the predicted £33bn next year. At the very least, I might be so bold as to look to a number closer to £38bn. That would mark continued progress.

Perhaps when presented with this evidence, we’ll hear less from the naysayers next year. If not, a few people can expect a blender from me for Christmas 2025. ●

January 2025 | The Intermediary

27

Meet The BDM

Paragon Bank

The Intermediary speaks with James Harding, business development manager (BDM) – Scotland at Paragon Bank How and why did you become a BDM?

business and solving problems. No two days are the same as a BDM.

My journey into BDM work at Paragon wasn’t without a few steps along the way, as I first needed to build some experience in the industry. Having initially joined the completions team, over two years I went on to work in underwriting and retentions, where I developed a more rounded understanding of the mortgage lifecycle.

While I had a great time across the three departments, I felt I needed to be more in the thick of it, and sales was the way forward. I feel I’m best speaking directly with brokers – building relationships, winning

What brought you to Paragon?

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The Intermediary | January 2025

I was a postgraduate looking into a range of graduate schemes across multiple markets, when a friend of mine highlighted Paragon as a great place to work – particularly its approach to employee development.

After a few conversations, a month later I was a part of the company.

Finance was a field of business that always sparked my interest during university, the complexities and scale of things were always very alluring.

Fast-forward two and a half years, I still learn a few things each week and it was very much the right decision.

What makes Paragon stand out?

Paragon has been around since buyto-let (BTL) started, and during that time has become an expert in the more complex side of BTL lending.

Our focused underwriting and in-house surveying team helps us to understand the property and the landlord’s business more broadly. This means that – whether it’s sizeable houses in multiple occupation (HMOs) and multi-unit

MEET THE BDM

blocks (MUBs), complex limited company structures or massive portfolios – there’s a good chance we will be able to make the deal work.

Alongside our new business, we have a razor-sharp focus on retention – retaining 80% of customers who were maturing over the recent financial year. Competitively priced product transfers and further advances with no application or valuation fees make placing repeat business more attractive, and a dedicated retentions team makes the process easier.

We’re soon to launch the first phase of our digital transformation programme. More than two years in the making, the programme is an overhaul of our systems, leveraging technology in a way that few, if any, others in the industry have done. It will make us easier to work with, so we’re excited to share it with brokers.

What are the challenges facing BDMs right now?

Landlords have had to contend with increasing taxation since midway through the last decade, and more recently in the Budget.

In England, the Stamp Duty surcharge on second homes was increased from 3% to 5% while in Scotland, the region I cover, the Additional Dwelling Supplement (ADS) has increased from 6% to 8%.

Alongside this, the regulatory landscape is also complex, and I think some see this as making it more difficult for good landlords to operate due to the actions of a relative minority of bad landlords.

Recent economic instability means the market is much more changeable than it has been in years gone by.

Lenders must therefore be agile and respond to these changes to protect margins.

Almost every day we’re reading about product or criteria changes, which is something that BDMs have to stay on top of so that we can support intermediaries.

What are the opportunities for BDMs? While it has been a tough time for investors, we’re seeing confidence return to the market, translating into investment – our recently published full-year results highlight £1.49bn in new lending and a 48% increase in our new business pipeline.

This shows that there is business out there, and you only have to speak to clients to learn that there is a lot more money set aside for when rates come down, as they have been doing recently. I’m confident that there will be some exciting times ahead.

I’ve also mentioned maturities, an area that offers opportunities for the market, with industry figures showing that almost 200,000 mortgages are set to mature in the next year.

I know it’s a bit of a buzzword at the moment, but developments in artificial intelligence (AI) – and technology more broadly – will help improve both products and services.

Building relationships is so central to the BDM and broker role that I don’t think that tech will take our jobs anytime soon; instead, it will help the industry be more efficient and ultimately grow, and as it does, so do the opportunities.

communicate the reason. I feel this builds confidence in me and Paragon as the lender, ensuring we are all on the same page.

What advice would you give potential borrowers in the current climate?

The most important thing is to do your research and speak with others who are experienced in this space.

We sometimes see cases where the property is not in a lettable condition, or the client will go for a bargain without realising there are underlying issues.

It’s important to get a good understanding of the property you’re planning on purchasing, as well as the market more broadly, thinking about what tenants are looking for.

Sometimes it is better to lose some time sourcing a property than it is to place an application that never sees through to completion.

Second, it is just to source and place trust in the right experts, such as your brokers and accountants.

It pays to work with top professionals who can help to resolve any issues that may arise down the road – they make a living from you making a living, so you all have the same end goal. ●

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

My experience has shown me that communication and speed are key.

Whether you are the broker or the borrower, the most important thing is getting cases through as efficiently as possible.

I place value in ensuring I can respond to enquiries the same day they arrive, with a ‘yes’ or a ‘no’, steering clear of any ‘maybes’ because it just leads to uncertainty and that doesn’t help anyone.

If it is a no, I like to explain why, and if there are any further questions asked or behind the scenes delays, I

Paragon Bank

Established in 1985, launched BTL 1996 Products ◆ Buy-to-let ◆ Refurb-to-let ◆ Product switch ◆ Further advance Contact details 0345 849 4020 bdenquiries@paragonbank.co.uk

January 2025 | The Intermediary

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B U Y - TO - L E T Opinion

The evolving landscape of expat mortgages

I

n the ever-evolving landscape of the mortgage industry, the importance of catering for the unique needs of expatriates has become paramount. For many individuals who live and work abroad, maintaining ties to the UK property market is not just a strategic financial move; it’s also a way to secure a foundation for a potential return or eventual retirement.

This is where expat mortgages play a valuable role, serving as a critical link between overseas opportunities and the enduring appeal of owning property in the UK. This approach to financial planning aligns perfectly with the dynamic lifestyles of expats. The flexibility and strategic foresight this offers make it an a ractive option for those navigating the complexities of living abroad while investing in the UK property market.

One of the significant advantages of expat buy-to-let (BTL) mortgages is the opportunity they provide for investment in the UK’s robust property market.

However, these mortgages come with their own set of unique challenges for applicants, brokers, and lenders.

One such challenge is gathering the necessary documentation for a successful credit assessment.

Diverging from traditional methods, we have tailored our approach to suit the diverse financial backgrounds of expatriates.

Unlike many lenders, we do not require applicants to have three active credit lines in the UK. This flexibility in our credit assessment criteria simplifies the application process, making property investment more accessible to those seeking to invest in the UK from afar.

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The Intermediary | January 2025

We do, however, require the applicant to hold a UK bank account to receive the rental income and make the contractual monthly mortgage repayments. We encourage brokers to secure UK bank statements early in the process. This step, though o en overlooked, is crucial for efficient and swi processing of mortgage applications. I believe it’s common practice across most lenders, and informing applicants early on can streamline the application process significantly.

Another challenge is the proof of address, especially when expatriates use PO box addresses, which is common in many overseas situations.

At Buckinghamshire Building Society, we adopt a flexible approach by accepting a simple le er from an employer to verify the actual residential address. This method fosters a collaborative and less cumbersome application process.

Worth the challenge Beyond these challenges lie unique opportunities for expatriates in the buy-to-let mortgage market. For example, we actively support expat holiday let mortgages, opening new investment avenues for potential overseas buyers interested in properties along the British coastline.

Moreover, we welcome applications for consumer buy-to-let mortgages from expats who have previously resided in the property. This nuanced offering broadens the investment possibilities for those exploring opportunities from abroad, allowing them to leverage their previous residences as investment properties.

When discussing the ins and outs of expat buy-to-let mortgages, it’s crucial to address common misconceptions.

A regular misunderstanding we

CLAIRE ASKHAM is head of mortgage sales at Buckinghamshire Building Society

encounter in our interactions with brokers, both over the phone and at face-to-face events, is the assumption that all lenders have identical criteria for expat mortgages. This assumption is far from reality.

Lenders’ criteria vary significantly, considering factors such as the length of time an applicant has lived outside the UK, their current country of residence, and many other aspects. Therefore, it’s important for brokers to familiarise themselves with each lender’s specific criteria and build strong relationships with their local business development managers (BDMs).

These relationships are key to preventing delays and ensuring applications align with the lender’s policies, ultimately smoothing the customer journey.

In conclusion, the expat mortgage market presents a landscape filled with unique opportunities, but also numerous challenges. Understanding these intricacies and adapting to the diverse needs of expatriates are crucial for both lenders and brokers.

By offering tailored solutions, flexibility in criteria, and a deep understanding of the expat lifestyle, the mortgage industry can effectively bridge the gap for those seeking to maintain a foothold in the UK property market from abroad. This approach not only benefits applicants, but also enriches the mortgage industry by embracing the diversity and dynamics of global living. ●

B U Y - TO - L E T Opinion

Cautious landlords, ambitious investors

T

he property market is at a fascinating crossroads.

Demand for rental property continues to exceed supply and rents are rising.

However, many existing landlords are downsizing their portfolios with some exiting the market altogether.

The latest ‘English Private Landlord Survey 2024’ reveals that 31% of landlords are planning to reduce the size of their portfolios in the next two years, with 16% intending to sell up entirely. Compare that to 2021, when only 22% planned to downsize. At the same time, just 7% are looking to grow their portfolios, a significant drop from 11% in 2021 and 12% in 2018.

While some see this as a signal to retreat, others will recognise it as a golden opportunity. Warren Buffe ’s advice to “be greedy when others are fearful” couldn’t be more relevant.

Fewer landlords in the market mean less competition for savvy investors.

What’s driving this shi ? Part of it is financial pressures – rising costs,

regulatory changes, and uncertainty in the mortgage market have all played their part. But there’s also a broader trend at play. In a falling rate environment, we know there’s always a tipping point when the appeal of property investment rises. As rates stabilise and potentially decline, the numbers start to work in favour of those who choose property over cash savings. For investors ready to take the plunge, that tipping point could be fast approaching.

Brokers tell us they are seeing a lot of interest from first-time landlords, who aren’t phased by doom-andgloom headlines and are keen to make their first move. It’s encouraging that, even when some are retreating, there’s a new wave of ambitious investors stepping forward.

Helping investors make the most of opportunities in the current market is all about offering the right tools and solutions at the right time.

Bridging should be in the toolbox of any broker working with investor clients. Quick, flexible, and perfect

ANNA LEWIS is commercial director at Castle Trust Bank

for investors who need to move fast – to snap up a bargain, fund refurbishment, or reposition a property for long-term growth.

For first-time landlords, it’s also a fantastic way to build up their track record and refinance onto a longerterm deal later.

Simply put, the market is there for those with the appetite to grow.

There has never been higher demand for rental properties, so this is the moment to think creatively, act decisively, and embrace the opportunities that others might be too hesitant to take.

At Castle Trust Bank, we’ve always believed in helping brokers and their clients turn challenges into opportunities. Whether fast, flexible finance or tailored solutions for more complex deals, we’ll help make 2025 a year of growth and success. ●

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S TAT E O F T H E NAT I O N Feature

State of the NatioN JUST MORTGAGES GATHERS THE EXPERT VIEW FROM ADVISERS AS WE MOVE INTO 2025 Introduction by John Phillips, joint CEO of Just Mortgages and Spicerhaart

In this piece last year,

we described 2023 as ‘tumultuous’ and ‘challenging’. 2024, in comparison, was much better, results were up on 2023, with most of our brokers reporting a year of growth even if a modest one.

It was, however, a game of two halves; a good and busy first half, but the second was flatter and more fragile.

The election caused the change of mood, with many putting housing transactions on pause as they waited to see what would happen.

The added wait of more than three months for the Budget compounded this.

On a positive note, the start to 2025 has been very strong. Both our brokers and clients seem upbeat, which is a

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The Intermediary | January 2025

good indicator of what’s to come. With a constant stream of negative news in the mainstream media, it is easy to be worried, but fundamentally, the mortgage market is in a positive place.

Lots of people want to buy and move house, and there are still more buyers than there are houses, which will keep house prices buoyant.

Many lenders have started the year by cutting rates, which is good news for both brokers and borrowers – including the many people set to remortgage as they come to the end of their 5-year fixed rate.

We all need to be careful to be positive and not to talk the market down, as consumer

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confidence makes the difference between and good and not-so-good year. While the National Insurance (NI) changes will affect employers, it won’t affect most people buying a home, and there will be enough demand out there for everyone to have a good 2025. It won’t be the best year on record, but it also won’t be dreadful.

The fundamental piece for brokers is making sure they and their team do everything as they should, in the way that is right for the customer.

This means providing every customer with holistic advice, including protection.

One solution at Just Mortgages is the beefing up of our client services division, focused purely on the needs of existing customers.

We are taking the advice up a level this year, with dedicated advisers who contact clients at least once a year to carry out a fact-find and full financial review, including looking at any wealth and investment needs. It is part of the Just Mortgages’ culture and training that none of our advisers will just do a product transfer without a full review. Not only is this compliant with Consumer Duty, it provides real benefits to clients and often identifies additional needs.

While it would be useful to have more Government help, particularly around Shared Ownership and the house buying process, the Government has bigger fish to fry at the moment.

Apart from driving the new houses agenda, it is likely to let the housing market look after itself.

The biggest challenge for the mortgage industry is how we bring enough new brokers in.

The average age of brokers in many firms is over 50. There will be more brokers retiring and there is not enough new talent. This is happening at a time when up to 90% of mortgage transactions go through intermediaries.

While this is good news for brokers in the short-term, as there will be more demand for their services, it is concerning for the long-term health of the industry. Many brokers used to start as a mortgage adviser in a bank, but as many banks no longer employ advisers, this has almost disappeared as a source of new blood. Just Mortgages runs academies many times a year – bringing in about 50 new advisers annually – but we need more firms to do the same thing.

We all need to work together – with the Association of Mortgage Intermediaries (AMI) – to help encourage mortgage firms across the board to attract people into the industry, and encourage younger people to join. Without this it may mean more lenders reverting to direct-toconsumer models – perhaps with the help of AI.

Neil Waller

Executive new-build mortgage and protection adviser Division: New-build Location: Norwich

2024 was busy, particularly as Shared Ownership gained momentum since the end of Help to Buy. It’s now one of the only schemes available to help first-time buyers and those with lower incomes.

One of the biggest challenges is the rigidity in how lenders assess income. Many clients now have more complex income streams, and a black-and-white approach doesn’t always fit.

That said, there are plenty of opportunities, especially with clients who already have good equity in their homes and are open to taking on bigger mortgages. Shared Ownership in London, particularly flats priced at £500,000 with 25% shares, has also been strong for younger couples.

Looking ahead, I expect continued growth, especially with new housing associations coming on board and developments adapting to market needs. Falling interest rates will also improve affordability, opening doors for more clients.

Staircasing and remortgaging are exciting untapped areas we’ll be focusing on.

The key to success will be managing expectations, persevering, and working closely with clients.

Andrew Shaduwa

Divisional sales director Division: Employed Location: Leeds

Protecting our customers and families will continue to be our main driver, along with ensuring we help as many people as possible to achieve homeownership.

There are always challenges in the mortgage market. In 2024 it was higher and fluctuating interest rates, changing mortgage lending criteria, the high cost of living and then the Stamp Duty changes that knocked the wind out of the investor market in the Autumn Budget.

We have delivered some fantastic customer objectives in 2024 and seen our size of the pie

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January 2025 | The Intermediary

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S TAT E O F T H E NAT I O N Feature

grow. 2025 will bring even bigger opportunities, with reduced interest rates making mortgages more affordable. The residential lending market will continue to outperform the buy-to-let (BTL) investor market as investors continue to offload properties rather than acquire them.

As customer pockets get deeper, people will be more willing to save and do more with their money. We plan to dramatically grow our wealth business around pensions, savings and investment advice, recruiting more excellent advisers to support this.

Greg Smith

Senior trainer, employed division Division: Learning and development (L&D) Location: Wolverhampton

2024 was busy for the L&D team with our new operating and customer relationship management (CRM) systems.

Advisers can now stay much closer to clients and offer an increased and more bespoke service. As longer fixes become more common, relationship management becomes a real priority as advisers look beyond remortgage business and towards annual reviews and more holistic advice.

The L&D team continues to support advisers in educating clients about the importance of protection. With the cost-of-living crisis, we also need to provide guidance around budgeting to ensure the advice is appropriate.

With the rise of artificial intelligene (AI), we have to be alive to the threat of clients not opting for traditional advice, and how to reach those who don’t intend to speak with an adviser.

We continue to challenge and educate our advisers on how to market themselves, and the importance of building a social media presence and a clear referral pipeline.

Sonam Kanabar

Mortgage and protection adviser Division: Employed Location: Leicester 2025 will be a busy year with more clients looking to buy as interest rates and mortgage rates improve. Lenders remain open and have improved access to underwriters to discuss those quirky cases or affordability challenges, and they are willing to share alternative criteria to help a case move

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forward. We have noticed a lot of support for first-time buyers from the ‘Bank of Family’, which is likely to continue.

The biggest challenge will be those coming off their rate early and getting back in contact to discuss their remortgage. It’s all about educating clients and taking that time out to focus on what will benefit them.

Broker competition will remain a challenge too, so a big focus for me is making sure my customer service skills are top notch and we go above and beyond. In 2025, I want to get involved with networking and continue outreach within my local community. The ability to speak Gujarati is really valuable here in Leicester and means I can continue to tap into this market.

The willingness to speak to a broker will only increase, especially as appointments with banks become even harder to get. The ability to sit down and talk through their finances is hugely valuable and as more clients see that value, there’s a greater willingness to pay a fee.

Matt Tilbury

Senior mortgage and protection adviser Division: Employed Location: Bury St. Edmunds

The biggest challenge for 2025 is uncertainty, particularly with changes to NI and Stamp Duty. House prices continue to creep up, which squeezes the bottom end of the market and creates a knock-on effect.

Affordable housing remains incredibly busy as many first-time buyers find themselves priced out.

The Government must come up with a new affordable housing scheme, rather than just leaving things the way they are. There isn’t enough Shared Ownership housing to go around, and what is available is not always in the areas that need it. It’s great the Government is banging the drum for housebuilding, but it must be houses people can afford.

Affordable housing will be a massive growth area this year, and I’ve strengthened my relationships with housing associations and providers to be that go-to person. You have to look at your local market, identify the niche and make yourself the expert. Lenders are seeing the challenges for all borrowers and are continuing to innovate, while more are looking at enhanced borrowing schemes and Shared Ownership as the next growth area.

I’m expecting Q1 to be a ‘suck it and see’ period, while everyone works out how the tax

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changes impact them. It will remain stable before picking up again in the middle of the year.

Richard Spiers

Principal mortgage adviser Division: Self-employed Location: West Midlands

Last year was great for us, especially in the first-time buyer market. It’s great to see that homeowning remains a priority for young people.

Interestingly, many people ignored the media doom and gloom and opted to make the move, just as when interest rates were lower.

Higher rates can be a challenge, but they are also creating more opportunities for brokers. It was easier for customers when every lender had 1% to 2% rates. But in the current market every penny counts, so getting expert advice is more important than ever, and people realise this.

While traditional BTL has declined in the face of higher taxes and stricter regulations, shortterm lets and houses in multiple occupation (HMOs) are thriving. This sector offers much more favourable margins. We do need more specialist lenders to come on board though.

I am very positive about 2025. With strong employment and lower inflation, there’s no reason why interest rates shouldn’t come down.

whether through online meetings or tailored services. While external factors like interest rates will always influence the market, I don’t foresee significant increases next year.

Ben Oliver

Senior mortgage and protection adviser Division: Employed Location: Doncaster Low property prices in Doncaster mean we see quite of lot of traffic. This will continue, and while likely to push up prices, it will still remain comfortable and we’ll see more people from Sheffield and Leeds choosing Doncaster.

The first-time-buyer market remains key. The 2000s generation are not focused on rate – it’s all about monthly figure and how it fits into the budget plan we create.

A challenge is clients waiting until they think they’re ready, rather than reaching out earlier. In reality, some may be ready, or could at least leave with a set of goals. My plan this year includes some first-time-buyer drop-in sessions to help break this stigma around interest rates.

I’m quite positive about 2025 and expect mortgage business through advisers to only increase. AI will be a real focus, though, as it influences broker searches and marketing efforts.

Tara Catnott

Joe Childes

Area director Division: Self-employed Location: Sheffield

Senior mortgage and protection adviser Division: Self-employed Location: Rotherham

I’m optimistic about the opportunities ahead. I believe the market will stabilise further, making it easier to afford homes. Stability will encourage more activity, particularly buying.

I aim to expand my team to 30 experienced mortgage and protection advisers, focusing on strengthening our presence in the North.

Supporting my team and helping them succeed is at the heart of my plans for the year.

Protection is both a challenge and an opportunity. We’re planning to tackle this by taking part in even more trade shows, which will allow us to underline its importance.

Adaptability has been key since the pandemic, and we continue to evolve to meet client needs,

2024 was probably our best year yet. In South Yorkshire, first-time buyer business is booming. We haven’t experienced any drop-off.

Commercial enquiries escalated so much in 2024 that we opened a commercial arm for mortgages.

One of our key goals is to provide clients with more financial education. Last year, clients struggled to understand why interest rates were fluctuating so much, and why lenders were raising rates when the Bank of England had dropped the base rate. Brokers are responsible for helping clients understand. So in 2025, we are increasing our networking and social media presence, creating more educational videos and explaining how we can help.

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Clients feel a lot of uncertainty in the market, with the impact of global affairs and Trump.

Brokers will be more important than ever.

Rochelle Dilkantha

Mortgage and protection adviser Division: Employed Location: Essex 2025 should see the freeing up of housing stock in favour of first-time buyers. With Stamp Duty hikes on second and subsequent properties, the average BTL amateur is no longer buying.

This decline will broaden the choice for firsttime buyers, many of whom will be working hard to get their purchase over the line before March’s reduction in the Stamp Duty threshold.

Vendor enquiries have shot through the roof.

I think this will continue as the year progresses.

Unfortunately, the cost of moving is prohibitively expensive for many, who are being forced to stay put. There are solicitor, estate agent and broker fees, with Stamp Duty on top of that, plus the move itself. This is a particular problem for people with little equity in their property.

For others, 2025 will be a favourable time to buy, as interest rates should stay settled.

Nick Savage

Area director Division: Self-employed Location: South East London 2024 was a year of distractions.

Even so, many firms I work with still saw an uplift as they focused on their proposition and improved how they interact with customers. This is still key in 2025, where there’s some cautious optimism and positivity for the year ahead – even with geopolitical issues still in play.

Rates are improving and lenders are helping with affordability. An uptick in property prices will encourage the less proactive to feel like they need to get in soon, which will help fuel activity.

Stamp Duty changes are likely to create an uplift in first-time buyers and will really help stimulate the market for a great Q1 and beyond.

Alongside purchases, we’ll see a big spike in the remortgaging book as Covid-19 buyers come off fixed rates and require extra support.

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The focus for many will be driving business forward. One answer is diversifying, taking advantage of training and support. A range of other business referrals will be key, too.

Derek Smith

Senior compliance manager Division: Compliance Location: Exeter

Experienced advisers will always be busy thanks to their client bank. It’s a challenge for newer advisers, but with the right support and marketing, they can certainly do well.

Social media remains a huge opportunity, with many advisers using it as their only lead source. There are compliance risks, of course – we have to make sure advisers don’t stray into unapproved financial promotions.

Another focus is supporting self-employed advisers using their own trading style. It’s a popular option and we work to ensure that everything is correct and above board, allowing us to catch any potential issues nice and early.

2025 could be challenging, with last year’s Budget impacting recruitment and investment.

Subsequent rate changes have also impacted positivity. While we’re unlikely to see a recession, it could take some heat out of the market.

This brings pressures around affordability and will certainly tempt some customers to squeeze the truth. It’s a danger for advisers and something they have to be aware of, making use of fraud referrals and the compliance team to mitigate this challenge.

Changes to regulation or new guidance will also be something to consider.

Anthony McQuilliam

Mortgage and protection adviser Division: Self-employed Location: Essex

We’ve had a lot of growth this year, despite challenges in the market. By investing in our people with training and building relationships with introducers – particularly estate agents – we’ve protected ourselves from the slowdowns many others have faced. A key part of our strategy has been niching further into the BTL market, which accounts for 25% of our business, alongside first-time buyers

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and home movers. In BTL, opportunities are growing in areas like HMOs and the North. We’ve also trained our team extensively in protection, leading to a significant rise in clients taking out vital cover.

Looking ahead, our aim is ambitious: 50% growth in 2025, partnering with one estate agent per quarter and expanding our administration team to help and assist our brokers. With economists predicting further rate reductions, affordability should improve for first-time buyers.

Ashley Edwards

Financial services director Division: Self-employed Location: Stoke-on-Trent 2024 offered more opportunities than challenges and was more productive than many expected. In 2025, I feel the mortgage market will stay reasonably consistent – it would be nice to have a year with no drama! There will be challenges, especially around remortgages, with a lot of people coming off really low rates.

As brokers get busier, our focus is ensuring protection is a priority. I’ve certainly seen an uplift in the number of brokers appointing protection-only advisers to make sure they are delivering this. I expect to see more of this.

Overall, I don’t expect things to go through the roof in 2025, but I don’t expect a downturn either. We all need to think differently, though, and think of new ways of doing things. Ultimately, that’s where we come in.

Daniel McCumesky Divisional sales director Division: Employed Location: Manchester

Client appetite has shifted due to rising rates and political uncertainty, with the ‘rate shock’ being a significant hurdle. However, the remortgage market has grown considerably and will continue to be a key focus in 2025. Residential mortgages remain robust, outperforming BTL due to changes in Stamp Duty and Capital Gains Tax (CGT). These surprise changes showed us why brokers have to constantly educate themselves.

We had less than one day to adapt to Stamp Duty

changes. As inflation and interest rates fall, we anticipate greater market stability and improved consumer confidence.

Looking ahead, I see exciting green opportunities. Consumers are increasingly eco-conscious, and lenders now offer fantastic incentives for capital-raising projects.

Ravneet Sokhi

Senior new-build mortgage and protection adviser Division: New-build Location: Leicester

While the General Election and the Budget caused some movement, the market will continue to recover. Clients are certainly not feeling as uneasy as they did after the mini-Budget, and there’s still a real appetite to buy. The biggest challenge is affordability and low deposits – we’ve seen some innovation, but choice is still limited.

Without Help to Buy, we’ve seen Shared Ownership play a bigger role, although misconceptions are a big issue. A key element for us is helping clients understand the benefits.

We expect rates to continue downward. I’m hopeful that more lenders will join the 95% loanto-value (LTV) bracket and support affordable housing schemes. It’s good to see the new Government really push housebuilding. I expect we’ll see more developers offering their own affordable housing or equity loan schemes.

James Hoskins

Area director Division: Self-employed Location: Bristol A big growth area for 2025 will be licence options, as brokers look to offer a broader service.

Equity release is a key area that we expect to grow. Many brokers in my area are posting great results from business protection, which is still so underserved.

Those willing to adapt will do well in any market. Self-employed brokers are able to pivot and provide the services their customers want or need, all while broadening their own horizons.

There’s a real feeling of positivity around 2025. We expect rates to improve, with plenty of opportunities for brokers. ● January 2025 | The Intermediary

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

The future of bridging in 2025

2

024 shaped up to be an exceptional year for the bridging loan market, and Greenfield Bridging has echoed this with a record year.

As the market demand increases, so does the need for more bridging experts. It’s great to see that a growing number of brokers are submi ing bridging loan applications, viewing short-term finance as a vital tool in their arsenal as advisers.

In general, competitive rates across the market are now closing the gap between traditional mortgage rates and the cost of short-term borrowing, making bridging a more viable option.

Broader bridging needs At Greenfield Bridging, the main reason for short-term loans is still chain-breaks; however, downsizing is also a close second. Moving house or even purchasing property can be extremely protracted, costly, and stressful – making the costs of a bridging loan to save a sale in a chain break situation relative.

Likewise, downsizing isn’t always a retirement choice; it can be due to economic conditions squeezing people’s purses and higher mortgage rates following previously recordlow rates.

As larger properties can sometimes take longer to sell and cash is king in negotiation, short-term finance – as long as an exit strategy is in place – is sometimes a solution for securing a cheaper property.

The third, fourth, and fi h places are auction purchases, property refurbishment, and cash for business purposes.

Bridging finance is a fast way to secure property, so it naturally lends itself to a situation where an investor needs to move quickly in the auction process. When it comes to refurbishment, it’s o en a situation where the developer has a clear

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strategy to sell the property and requires funding to get a project over the line and ready for sale.

Finally, there is also a growing request for cash for business purposes, where funds are needed quickly to secure an opportunity.

What does 2025 hold?

Although it’s challenging to predict the future, it’s a sure bet that the specialist market will continue to grow in 2025, particularly the bridging sector.

Some market commentators have put a percentage figure of 25% on this growth, and Greenfield Bridging has indeed seen a sharp increase in engagement from brokers enquiring about bridging.

The reputation of bridging loans has grown exponentially in recent years due to regulation and training, and the fact that the gap between traditional mortgage rates and bridging finance rates has closed.

As bridging continues on this path, and brokers become more comfortable discussing it as an option with clients, it will snowball.

Behind underwriting Ultimately, brokers are well-placed in the first stage to understand their clients' needs and circumstances, as it’s similar to a mortgage application.

The most significant difference is that there needs to be a viable exit strategy within 12 months, and loan-to-value (LTV) percentages play a larger part in short-term funding applications when assessing risk, especially if the client’s credit history isn’t squeaky clean.

One of the biggest advantages of bridging is that some lenders have business development managers (BDMs) who are also trained underwriters. This allows preapplication questions to be answered and a decision made quickly. It makes the process much smoother

RICHARD KEEN is national sales manager at Greenfield Bridging

for brokers and delivers be er client service.

Brokers o en have a close relationship with regular clients who depend on them to support investment opportunities or in a crisis where a sale might fall through – it’s at this time that bridging loans are now an important tool in their arsenal.

In summary, bridging is going from strength to strength and is a vital tool in a broker’s belt to support clients, who o en need money fast to save or purchase a property. ●

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

Underwriter appointments belong in the past

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n specialist lending, no two deals are ever the same – each presents its own set of challenges, and complexity is the norm, not the exception.

This is what makes the market dynamic, and frankly, challenging for brokers.

Whether it’s the property type – think houses in multiple occupation (HMOs) or semi-commercial units – or the sheer scale of the transaction – a dozen properties across the country – each deal demands careful a ention to detail. For brokers, this means diving into the complexities, juggling variables, and navigating uncharted waters.

It’s a tough job at the best of times, let alone when lenders create unnecessary roadblocks.

The complexity conundrum When you’re dealing with intricate cases, access to decision-makers isn’t just a nice-to-have, it’s essential.

Sometimes, a deal teeters on the edge because of one thorny issue that could easily be resolved if the broker and underwriter could hash it out. But here’s the catch: if that conversation is delayed, the entire transaction risks falling apart.

Picture this: a broker has a red-hot client eager to invest in a standout property. Everything’s lined up, but one detail throws a spanner in the works. The broker needs answers fast. If they’re forced to wait in line, schedule an appointment, or jump through hoops just to speak to an underwriter, that delay can torpedo the deal.

The client misses out, the broker faces an unhappy customer and lost income, and the lender loses the opportunity to build trust and

ALEX UPTON is managing director, specialist mortgages and bridging at Hampshire Trust Bank

secure repeat business. This isn’t just frustrating – it’s something we can easily fix, and we’re ready to do it.

Embracing accessibility In a market as fast-paced as specialist lending, accessibility isn’t optional, it’s a necessity. Lenders must open their doors wide. Brokers should have direct, immediate access to underwriters, lending managers, and senior team members – no appointments, no bo lenecks, just real-time collaboration.

Brokers shouldn’t have to ‘request’ access to decision-makers; they should have it by default. Whether it’s a straightforward enquiry or a complex case spanning multiple properties, brokers should know they can reach out directly.

Why does this ma er so much?

In specialist lending, time is of the essence. Deals involving complex portfolios, intricate ownership structures, or unconventional properties can’t afford delays.

If brokers have to sit waiting while an underwriter is unavailable, they’ll struggle to close deals.

Partnerships, not transactions Here’s the thing: broker-lender relationships shouldn’t feel transactional. They should feel like partnerships. True partnerships are built on trust, collaboration, and a willingness to roll up your sleeves and get the job done together.

An open-door policy is just the start.

Lenders must bring flexibility to the table, too. If a case doesn’t fit neatly into a predefined box, lenders should adapt – not force brokers and clients to try to make it work. A one-size-fits-all approach just doesn’t cut it anymore.

When lenders tailor their solutions to

meet the unique needs of a deal, they do more than just keep the wheels turning – they build trust and loyalty.

Brokers want to work with lenders that make their lives easier, not harder. The more seamless the process, the more likely it is that they’ll return with their next client in tow.

It’s good to talk Complexity isn’t going anywhere.

Whether it’s residential mortgages or specialist investments, the challenges are only ge ing tougher. Brokers have already adapted to this reality, but some lenders are still playing catch-up.

The idea of making an appointment to speak to an underwriter might have made sense 10 years ago, but today it feels archaic. Modern brokers need modern solutions.

They need immediate access, clear communication, and a lender who’s ready to roll up their sleeves and get stuck in – no delays, no excuses.

Lenders who prioritise accessibility and flexibility will remain competitive, fostering relationships that brokers value and trust. Words like ‘flexibility’ and ‘accessibility’ can’t just be marketing jargon – they need to show up in every single transaction, every single time. Because if they don’t, brokers and their clients will take their business elsewhere – to lenders that truly get it.

Let’s leave underwriter appointments where they belong – in the past. The future of specialist lending is open, collaborative, and most importantly, accessible. ● January 2025 | The Intermediary

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Q&A

ASGF

The Intermediary speaks with Daniel Carter, relationship director at ASGF, about the commercial bridging outlook What were some of the highlights for you at ASGF in 2024?

On a personal level, I completed on two deals in December, worth £3.45m, one for a performing arts space and the second was a bridge for a mixed industrial portfolio.

The second deal was a hugely educational piece for the customer because they had sought planning permission twice and failed to get it before coming to the end of the term.

The properties also had a raft of legalities – from fire safety to asbestos – to set up before they could look for a long-term exit. We sorted all that out and created a legitimate exit with plans for the development funding to be attached to the longerterm deal instead of the bridging stage.

As a lender, it’s very important to us to visit the sites of any possible deals and walk through the development plans with each client. You can only really understand the potential of a deal when you see it and walk around it.

What were some of the biggest challenges in the mortgage and bridging markets in 2024?

The biggest challenge was yield versus rate. Clients were often approaching for deals at around 70% market value loan-to-value (LTV) on a property, but where the yield doesn’t stack up against the rates, lenders were offering closer to 60% or 65%.

Some of the fixed rates, which many had taken as rates started to rise, were coming to an end, and the affordability test was very different to two years ago, creating real stress on portfolios.

Investors tend to divide into two types. There are the more conservative investors who never gear themselves above 55% to 60% and are able to ride out the yield versus rate challenges. Then, you’ve got the other type who want to gear everything to the max because they’re using it as cashflow to ‘buy, buy, churn, churn’, and pressure 40

The Intermediary | January 2025

was building for those investors when rates started with a seven instead of a three or four.

With the two rate drops, we’ve seen deals and restrictions ease a bit, with lenders able to edge back into higher LTVs and taking more of a view on certain sectors.

How did the bridging market evolve last year?

Growth of opportunity. It really is about being in the right place at the right time. The commercial bridging market has probably become one of the most saturated markets in our industry.

What are ASGF’s unique selling points in this evolving market?

It’s our interest in the weird and the wonderful. It’s also our flexibility to tailor deals for clients who need leverage over rate, for example, and we also don’t have any limitations on sector or borrower types. We’ll lend to charities and LLP partnerships.

We launched a 0.6% stepper product in November, offering additional cost savings if the loan is repaid within the first six months.

One trend to watch is the increasing interest in semi-commercial and commercial assets from landlords traditionally focused on residential properties. These clients are chasing higher yields and longer-term tenant strategies.

We also see significant opportunities in restructuring and enhancing commercial properties – whether it’s upgrading leases, improving let ability, or making properties more saleable. Brokers can add real value by presenting these options to their clients and working with lenders like us to bring them to fruition.

What’s next for ASGF? Growth is our primary focus. We’re deploying our own capital while preparing to bring in additional

Q&A

During Covid-19 most banks didn’t want to lend on retail. The high street was dying and it was a very difficult time, especially for retail...But I feel like things are starting to brighten up a bit.

would rather have bottoms on seats than at home.

There was a time when a company would lease a 20,000 square foot office and then you’d have, say, 10% of your office staff in every single day.

So, then you sit there and say, well actually, do we need this much space? All of a sudden you realise you need a smaller space.

Then, a lease is coming up, and a co-working space would actually probably be beneficial to that company. It’s going to be cheaper, and it means that you can utilise 100% of your space, because you could take up 10 desks rather than 50 somewhere in London.

Also, if a customer were to walk into an office and it was 80% empty, you’d be saying, ‘well, what’s going on here?’ Whereas if you walk into an office which is co-working, you have the buzz, the atmosphere and with 10 companies, you also have a healthy networking situation.

This is a cultural shift, and I think that that sector will still continue to do very well.

In another societal shift, during Covid-19 most banks didn’t want to lend on retail. The high street was dying and it was a very difficult time, especially for retail.

People were forced to close and hospitality and leisure suffered massively, and some still haven’t recovered.

But I feel like things are starting to brighten up a bit. Industrial and warehouse type investments remain strong, and that is another interesting sector as a result.

We’ve also had those couple of base rate reductions. Hopefully we’ll see one, maybe two more this year, and then perhaps also an easing around some of the lending restrictions we’ve seen in the market in recent years.

So, I feel like 2025 will DANIEL CARTER offer plenty of opportunity. ●

Industrial and warehouse type investments remain strong” funding lines from recognised sources. However, we’re taking a measured approach, ensuring our internal processes are robust before further scaling up.

In 2025, we plan to grow our team and strengthen our relationships with brokers, all while continuing to create innovative lending solutions that cater for the varied needs of the commercial market.

Where are some of the biggest opportunities in commercial bridging in 2025?

Purpose built student accommodation, houses in multiple occupation (HMO), or converting buy-to-let (BTL) properties or commercial into higher yielding properties.

So that then starts to counter the whole ‘yield versus rate’ issue.

Also, co-working spaces, which started to take off in the past two years while I was at the bank. Covid-19 accelerated this market forward in terms of people working from home, adapting and being flexible.

You remember the old stigma that ‘if you’re not in the office, you’re not working’.

I get why, because obviously those businesses have got leases which are a cost to them so they

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

Why we need to back the little guy SPENCER FORD is regional business development manager at Atom bank

T

It can be difficult for SMEs, such as care home providers, to secure funding for purchases

he care home sector is likely to become more important in the years ahead. Our population is ageing significantly – according to figures from the Centre for Ageing Be er, over the last 40 years the number of people in England aged over 65 has jumped by 52%. This growth means that now one in five people in England is aged 65 or over, with a similar situation in the other countries that make up the UK. Yet at the same time, capacity in the specialist care sector is falling. Data from Public Health England shows that the total number of beds in nursing and residential care homes fell from 11.3 per 100 people to just 9.3 between 2012 and 2023.

To have demand rising and capacity falling is greatly troubling. So too is the fact that would-be care home providers are finding it unnecessarily difficult to access the funding needed for their businesses.

Understanding smaller businesses An aspect that, in my view, is holding back the care home sector is how difficult it can be for small to medium enterprises (SMEs) to secure funding for purchases.

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The Intermediary | January 2025

From conversations with brokers and borrowers, it seems that some high street lenders tend to be more comfortable working with larger facilities and bigger care home providers. As a result, smaller firms – including new entrants to the sector – can find it incredibly challenging to raise the funding needed.

That’s despite the fact that they o en have great ideas and plans for delivering the high-quality care homes that the nation needs.

Atom bank understands be er than most how a fresh approach from a new entrant to a market can shake things up and deliver a be er experience, which is why we ensure that our care home funding caters to smaller businesses. We simply cannot meet the growing need for care homes if we look solely to the large players.

Taking the first step We had a case recently which demonstrates why a new a itude is needed. A client was brought to Atom bank by a broker, a er being rejected by a series of high street lenders. This was a first-time buyer, which served to put some off, while their ambitions to invest in underperforming care homes and turn them around appeared to act as a further hurdle.

However, if those lenders had been able to look beyond the surface, they would have recognised why the client was such an excellent prospect.

For example, they had worked closely with the Care Quality Commission in turning around underperforming care homes and has a lengthy history in the industry. They wanted to set up their own business, raising the standard of care homes precisely because they understood how to make a success of a new business in this area.

What’s more, that experience in the sector acted as a counterbalance to the fact that they were a first-time buyer.

Indeed, even if they were completely new to the sector, they could still have something valuable to add to the care home market – lenders must have adequate metrics in place to help identify excellent first-time prospects.

Louder than words It’s easy to talk about wanting to support the care home sector. It’s no secret that our population is ge ing older, and so this service will be required by greater numbers of us.

However, we will only see the situation improve if would-be providers are able to access funding support from lenders, with the abandonment of the tick-box approach currently employed by some that excludes so many quality prospects.

Sadly, it’s not an issue limited to care homes, either. There are many other business sectors being held back by lenders that are overly prescriptive.

That’s why it’s so important for brokers to work closely with lenders that are more open and flexible, and can help smaller businesses meet their goals. ●

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

Reviving UK housebuilding in 2025

A

er years of fluctuating activity and economic uncertainty, 2025 is poised to mark a significant resurgence in UK housebuilding. Bolstered by Government initiatives to address housing shortages, improved planning reforms, and a focus on sustainable construction, the sector is gearing up for a substantial uptick.

Developers are optimistic about opportunities to meet pent-up demand, particularly as demographic shi s and renewed confidence in the property market fuel growth.

This year could be a turning point for achieving long-term housing targets and advancing innovation across the industry.

Government driving growth The UK Government’s renewed focus on boosting housebuilding has set the stage for recovery. Initiatives such as expanded planning reform and the £500m increase to the existing Affordable Homes Programme aim to streamline the development process and promote construction.

Programs such as the proposed Supercharge Housing scheme seek to address longstanding bo lenecks in planning permissions and site readiness, creating a more efficient path for developers.

Moreover, regional investment strategies targeting areas outside London and the South East are expected to play a crucial role.

Levelling-up initiatives are channelling resources into regions with significant housing demand but historically low delivery rates, enabling broader geographical participation in the housing boom.

While over the past four years the UK housing market has faced challenges due to political instability, rising interest rates and inflationary pressures, 2025 brings signs of stability. Mortgage rates have shown signs of plateauing, providing a more stable environment for prospective homebuyers and those looking to remortgage.

A er a period of sharp increases, the average 2-year fixed mortgage rate has decreased from 5.93% in January 2024 to 5.48% at the start of 2025. Capital Economics expects that mortgage rates will gradually decline to approximately 4% by the end of 2025.

Additionally, an easing in construction material costs, which surged during the pandemic, is helping developers manage budgets more effectively. The Building Cost Information Service (BCIS) reports that construction materials prices for all work fell by 0.8% last October, marking the 18th consecutive decrease.

Furthermore, pent-up demand remains strong, driven by population growth and an undersupply of housing in previous years.

Demographic shi s, including a growing preference for suburban and rural living post-pandemic, has resulted in faster demand growth in rural areas.

For instance, over the past five years, house prices in predominantly rural areas have risen by 29%, compared to an 18% increase in predominantly urban areas. As a result, developers are well-positioned to address changing buyer preferences.

Sustainability will be a defining feature of UK housebuilding in 2025.

Developers are increasingly adopting green building practices to align

YANN MURCIANO is CEO at BLEND

with Government net zero targets and consumer demand for ecofriendly homes.

Innovations in modular construction, energy-efficient designs, and the integration of renewable energy sources are not only reducing carbon footprints, but also a racting environmentally conscious buyers.

Challenges to navigate Despite the positive outlook, challenges remain. The construction industry continues to grapple with labour shortages, which could hinder the pace of development.

Furthermore, navigating the complex landscape of planning permissions and regulatory compliance remains a persistent hurdle for developers.

Financial accessibility also remains a concern, with many first-time buyers still struggling to afford homes, despite Government-backed support schemes.

Ensuring a balance between affordability and profitability will be key to sustaining growth in the sector.

As 2025 unfolds, the UK housebuilding industry stands at the threshold of a potential revival. With favourable market conditions, Government support, and a commitment to sustainability, the sector is well-positioned to meet the housing needs of a growing population.

By addressing challenges headon and continuing to innovate, housebuilders can not only capitalise on the opportunities ahead but also contribute to shaping a more sustainable and inclusive housing market for the future. ● January 2025 | The Intermediary

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

Britain must back its SME builders

W

hen Chancellor Rachel Reeves announced a series of planning reforms to "fix the foundations" of Britain’s economy in her first speech as Chancellor back in July, it marked a positive step for the housebuilding industry. However, the question that looms over us is how the Government will maintain this momentum through policy changes and truly "back the builders."

For too long, housebuilding has been dominated by the PLCs. If we are to stand a chance of delivering the housing stock that is needed in this country, small and medium enterprise (SME) housebuilders need to play a much bigger role. However, they have been disproportionately impacted by issues such as chronic delays in the planning system and land availability, not to mention cost pressures.

Challenges and opportunities Close Brothers Property Finance, along with the Home Builders Federation (HBF) and Travis Perkins, wanted to shine a spotlight on the challenges that SME housebuilders face, which led to the creation of ‘State of Play: Challenges and Opportunities facing SME Home Builders’.

Since we started producing this report five years ago, housebuilders have had to contend with a global pandemic, eight housing ministers and 14 consecutive interest rate rises.

It’s li le surprise, then, that twothirds of respondents say it is harder to be an SME housebuilder now than it was half a decade ago. They point to delays in the planning process, the previous Conservative Government’s anti-development approach to housing and planning policy, and difficult economic conditions as key reasons.

Planning continues to be the largest obstacle to delivery with delays in the

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system and under-resourced local authority teams cited as the biggest major barrier by 94% and 90% of respondents, respectively.

The Government’s plan to launch a Housing Accelerator Taskforce, recruiting 300 new planning officers to unblock stalled housing, has been welcomed by housebuilders. However, to stand any chance of achieving its ambitious target of 1.5 million new homes over the next five years, the Government must maintain the impetus to make the planning system fit for purpose.

New challenges have also emerged in 2024, specifically around biodiversity net gain (BNG) requirements. The regime came into force earlier this year and stipulates that development has a measurably important impact (‘net gain’) on biodiversity on a site compared to how it was before building commenced. Housebuilders are now required to achieve a minimum of 10% biodiversity net gain on new residential sites.

The impact of this is already being felt by SME housebuilders, with 47% of respondents identifying biodiversity net gain as a major barrier, with a further 43% identifying it as a minor barrier.

While there is no denying that action must be taken to protect wildlife habitats given that the UK has lost 60% of its biodiversity in the past five decades, SMEs are struggling under the new requirements.

The property industry desperately needs safeguards from the Government, such as developing a Quality Mark for off-site BNG credits and ensuring the statutory credits system can deliver BNG benefits Affordability of housing is another issue that has held SMEs back, particularly following the end of the low interest rate era.

The average first-time buyer would have to save half of their earnings for

PHIL HOOPER is chief executive officer at Close Brothers Property Finance

almost a decade to afford a mortgage budget, according to research from the HBF. Couple this with the current economic environment and it’s abundantly clear that Government intervention is needed.

Yet, it’s the first time in 60 years that there is no effective Government support for homeownership. This has hit the nation’s SMEs hard, with one in three stating they would like the Government to prioritise support for first-time buyers (33%).

The labour shortage problem also needs to be addressed if new homes are to be delivered at the scale the Government is aiming for. The Construction Industry Trading Board estimates that the UK will need more than 250,000 additional construction workers by 2028 to meet current demand.

To future-proof the property industry and safeguard the supply of new homes, we must tap into a younger and more diverse pool of talent.

At Close Brothers Property Finance, we’re proud to encourage greater diversity through initiatives such as Tomorrow’s Developer network, targeting the next generation of housebuilders, as well as our Women in Property network.

SME housebuilders play such an important role in housing delivery and in the local communities in which they operate.

The pro-building rhetoric from Westminster is reassuring, but continued widescale reform of the planning system is vital in helping SMEs get spades in the ground and deliver the homes this country so desperately needs. ●

A DV E RTO R I A L

Iconic mortgage event attracts lenders and brokers in droves

T

he highly anticipated UK Mortgage Convention 2025 is almost here, and is set to be the must-attend event for the mortgage industry!

The highly anticipated event is set to take place in London on 6th March 2025, bringing together industry leaders, innovators, and advisers from the mortgage and finance sectors.

This groundbreaking event aims to share vital and innovative industry updates and navigate the evolving economic landscape.

Mark your calendars for 6th March in London, where industry leaders, innovators, and advisers will come together for an unforgettable day of insight, networking, and opportunity.

As the mortgage industry continues to adapt to challenging market conditions, this event offers a unique opportunity for the UK's brokers, especially directly authorised (DA) and remote working brokers, to be part of an extraordinary day featuring a lineup of the mortgage industry’s most respected speakers, who will share their expertise on topics ranging

from the ever changing economy to products and opportunities that will impact the mortgage lending of the future.

Revered industry icons Roger Morris, Rob Barnard and Louisa Sedgewick have already been confirmed in what is becoming an unrivalled speaker lineup, with more to be confirmed over the coming weeks.

The event will also host a who’s who of lenders and providers, all showcasing in the convention expo-style sponsor hall.

The biggest names – from the high street to complex and specialist finance –will be on-hand to give attendees the opportunity to engage and discuss industry challenges directly with them.

"We are excited to host this inaugural event in the heart of London, a city known for its dynamic financial landscape," said Ivan Vizor, who’s been honing this event for the past 18 months.

"The UK Mortgage Convention aims to unite and empower those brokers who don’t ordinarily work in larger office communities and lack access to the latest developments and discussions within our vibrant industry."

This event offers a unique opportunity for the UK's brokers, especially directly authorised (DA)

Key highlights: • Premier Speaker Line-Up: Mortgage and finance experts bringing economic and market updates and highlighting opportunities for all brokers in the new mortgage world.

• Knowledge Panels: Industry leaders bringing their knowledge of emerging trends and best practices.

• Networking Opportunities: Connect with peers, potential partners, and industry thought-leaders.

• Exhibition Area: Leading mortgage and product providers across all sectors, prepared for open chats and to show off their latest cutting-edge products and services.

Whether you’re a mortgage broker, a paraplanner, or simply interested in the future of the UK’s financial outlook, the UK Mortgage Convention promises a truly exciting day.

Registration is now open! Secure your spot by holding your mobile phone camera to the QR Code and clicking the registration link.

You can also email Ivan Vizor on Ivan@brilliant-group.co.uk

6th March 2025, Science Museum, London

Register here

and remote working brokers, to come together"

January 2025 | The Intermediary

45

Meet The BDM

Simply Asset Finance

The Intermediary speaks with Andy Dunt, senior broker development manager at Simply Asset Finance How and why did you become a BDM? I’ve always had a customer-centred career path, starting out in roles where direct customer interaction was essential. My first job was as a trainee butcher and fishmonger, which gave me hands-on experience in understanding and meeting customer needs. Later, I transitioned to selling travel insurance, before moving into a customer service role in the asset finance sphere.

From the start, I was eager to get into sales, as it offered a direct path to helping clients achieve their goals. I began my sales journey with Aldermore in an internal sales role, 46

The Intermediary | January 2025

eventually progressing to business development manager (BDM).

Now, with over 11 years as a BDM and 20 years in finance, I’m pleased to be able to use my experience every day to support businesses at Simply Asset Finance.

What brought you to Simply?

What drew me to Simply Asset Finance was its innovative and disruptive approach as a challenger lender. The business offered something different to traditional banks.

I joined when the business was about a year old, and what

struck me from the outset was its fresh approach to engaging with customers as humans, being the arm around their shoulder, while also having an efficient technology-driven approach.

This unique blend of human touch and technological innovation, combined with its commitment to doing things differently, really resonated with me.

What makes Simply stand out?

At Simply, we pride ourselves in forging partnerships with clients and the intermediary community that go far beyond the transactional.

MEET THE BDM

We’ve always taken a collaborative approach to our relationships with brokers, evolving our processes and technology with their needs and feedback in mind. This has enabled them to be part of our ecosystem, and not just a simple ‘bolt-on’, allowing us to deliver better outcomes for the businesses that need it most.

Unlike traditional banks, we don’t just look at numbers on a page.

We take the time to listen to each businesses’ story and to appreciate the world in which they operate.

This depth of knowledge helps us adapt our solutions to the current circumstances so that borrowers can realise their long-term ambitions, whatever the economic weather.

From flexible development loans to smart arrears management solutions, the Simply team is always on hand to provide personalised support just when it’s needed most.

Thanks to Simply Connect, our market leading digital platform means that the loan process is always easy, efficient, and above all, swift. We appreciate that time costs money, and thanks to our proprietary technology and team of experts, we can give businesses a turnaround from proposal to payout in as little as a few hours. Ultimately, this means that we can help more businesses succeed, guiding our clients on every step of the journey.

More than a financial provider, we want to be a partner in growth.

move beyond the blueprint. This is where the BDM role comes into its own. Our doors are always open, so we can help brokers and customers navigate challenging periods and keep their growth plans on track.

For many SMEs, guidance on restructuring debts, moving to tailored flexible repayment plans, or arrears management, can make all the difference, giving them the much-needed confidence to move forward with purpose.

What are the challenges facing BDMs right now?

Building strong relationships with brokers is so important, and for me, nothing beats face-to-face.

Whenever possible, I like to hotdesk in brokers’ offices – being there in person helps me connect with their teams and really understand their needs. Even small gestures like sharing a coffee can go a long way in building genuine rapport.

We work hard to make sure our office support and broker teams are in sync, creating a smooth, collaborative experience for borrowers. In Simply’s case, our BDMs and operational teams in both

The current economic climate presents significant challenges, especially for small and mediumsized enterprises (SMEs).

SMEs are still hesitant about investing in their business thanks to economic uncertainty and concerns about the impact of the Budget.

But that doesn’t mean SMEs have abandoned their ambitious plans for the future – they just need additional support and flexibility to

What are the opportunities for BDMs? One of the biggest opportunities is building strong, collaborative relationships with our broker partners. By working closely together, we can tap into real potential and find ways to streamline processes with new technologies that make brokers’ jobs easier and give them more control.

Strengthening these partnerships isn’t just about improving our service; it’s about creating new growth opportunities for both brokers and lenders, allowing us to support our clients more effectively and make a lasting impact. It’s a real win-win.

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

London and Liverpool work closely together to provide consistent support, so every borrower feels valued and well-served.

What advice would you give potential borrowers in the current climate?

Given the current economic uncertainty, whether the aim is expansion or just trying to minimise debt, I’d urge all businesses to keep talking to their funding partners.

At Simply, we see ourselves as a trusted partner come rain or shine.

This means we can flex our offer to ensure our clients always have the necessary support to meet challenges head on.

Funding needs vary so, in today’s volatile environment, I’d encourage businesses to consider options like Sale & Hire Purchase on unencumbered assets, which can provide a valuable cash injection.

Another smart move could be to restructure existing finance to make things more efficient, or to adapt payment schedules to acknowledge recurrent peaks and troughs in the sales cycle.

For many businesses facing tight cashflow, flexible finance options like these can be a lifeline, helping them stay fleet of foot, resilient, and forward looking even during challenging times. ●

Simply Asset Finance Established in 2017

Products ◆ Hire purchase ◆ Sale and hire purchase (asset refinance) ◆ Finance lease Contact details 07415 298 348 andrew.dunt@simply.finance

January 2025 | The Intermediary

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L AT E R L I F E L E N D I NG Opinion

Unlocking the later life lending opportunity

W

A broader adviser base is needed to engage with the market and meet demand

e recently published our bi-annual Mortgage Lender Benchmark – the industry’s largest broker feedback survey. In our 13th edition, we found that across the four sectors we report on – banks, building societies, lifetime and over-£4bn lenders – overall satisfaction slightly dipped from H1 2024, to 83.4%. With regards to lifetime lenders specifically, the average satisfaction rating was down 1.7%, now 83.8%.

Knowledge gaps As part of this study, we also asked brokers about the broader later life market. They identified several key barriers to entry, with knowledge gaps and compliance challenges leading the way.

Nearly half (49.7%) of brokers identified a lack of product knowledge and training as a key issue, highlighting the need for increased expertise in this area.

Regulatory and compliance hurdles

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The Intermediary | January 2025

were reported by 48.0% of brokers, suggesting that navigating Financial Conduct Authority (FCA) demands is a significant challenge.

Additionally, 31.4% expressed concerns about customer vulnerability, while 30.3% pointed to low consumer demand or reputational issues.

These findings suggest that brokers remain cautious about both the ethical implications and general market appeal of lifetime mortgages.

Other noted barriers included the costs and complexities with additional qualifications and permissions (22.9%), limited access to lifetime mortgage products (18.5%), and concerns about reputation impacts from entering this market (19.7%). A smaller portion of brokers (7.6%) mentioned other miscellaneous reasons.

The opportunity Overall, the results show that while interest in lifetime mortgages exists, substantial barriers prevent more widespread participation. According to the Equity Release Council (ERC),

JESS TRUEMAN is head of business development at Smart Money People

78% of the average property’s value is owned outright, with over-55 homeowners holding an average of £321,213 in home equity. Collectively, this group accounts for £3.4tn of property wealth.

The points raised above echo comments from Ben Waugh, manufacturing director at more2Life, who noted: “The demand for specialist later life lending products will rise.

But in order to meet that higher level of demand, we need a broader adviser base to engage with the market.”

He also said: “There is huge untapped potential here, with a later life market that could, and frankly should, be much bigger. Let’s be clear, the older homeowner cohort is only going to grow in size, courtesy of our ageing population.

“Many are going to want to tap into their housing equity at some point, whether to top up their existing pension income, carry out home improvements to meet their changing needs, or to supply loved ones with an early inheritance.

“As a result, the demand for specialist later life lending products will rise. But in order to meet that higher level of demand, we need a broader adviser base to engage with the market.”

I couldn’t agree more. It’s clear that now is the time to work on removing these barriers, enabling more customers to unlock the wealth in their homes and increasing the number of brokers who are both able and willing to offer advice on later life lending products. ●

L AT E R L I F E L E N D I NG Opinion

Looking abroad for later life inspiration

H

olidays are great, especially at Christmas time when you get to experience a foreign culture, its food and get a glimpse of how people in that country celebrate different traditions.

Having travelled recently, what I find fascinating is that while there are certainly differences, there is quite o en a huge amount of commonality.

Financial services is no different. A significant number of countries are dealing with a lack of pension savings, people needing to work longer to sustain themselves though a longer period of economic inactivity, and the wider homeownership conundrum.

Homeownership rate is tracked as the percentage of owner-occupier units to total residential units within a country. Romania boasts a 95.6% rate, which falls to 65.2% in the UK and 47.6% in Germany – which is the anomaly in Europe due to the propensity for ‘lifelong’ renting.

When you contrast these figures against the median population age, we start to see some interesting opportunities.

In Romania, the median population age is 45.1 years old, while in the UK it is 40.6 and in Germany it is 46.7 years. This is significantly higher than the global average of 31 years, and highlights the longer life expectancy of these nations. A boon to the ordinary citizen, but something of a headache for individual Governments.

In the UK – and many other western countries – the State pension is largely funded by the contributions of those who are currently working.

Yes, people have paid into the fund their entire lives, but these contributions were used to pay their parents’ pensions.

Therefore, for the system to balance, you need a working population who can contribute enough to ensure that current retirees are provided for – a

challenge when you have an older demographic.

Tapping into wealth Now, there are brilliant minds trying to consider how to make the jigsaw pieces on this particular puzzle fit, but it was interesting to note that the UK is not the only country which sees housing wealth as part of the solution.

As a membership body, the Equity Release Council (ERC) hosts various forums which allow our members to discuss challenges facing the market, and collaborate to ensure that we can deliver good outcomes to customers.

As part of this, we are currently working with firms from across Europe and Northern America to share knowledge.

Interestingly, at a meeting in December, we found that while each market has its own unique approach, there is more commonality of thought than you may think.

The need to educate consumers as to their options, and to encourage people to start thinking about their homes as more than simply an inheritance, was in fact a bugbear for the majority of markets.

KELLY MELVILLE-KELLY is director of risk, policy and compliance at the Equity Release Council

A significant number of countries are dealing with a lack of pension savings [and] people needing to work longer to sustain themselves" The UK, which boasts one of the most developed equity release markets, has not yet cracked this nut, but – if the feedback from our Summit in November is anything to go by – we are moving in the right direction.

There is more work needed, but we are hopeful that by helping other markets to flourish, and learning from their challenges, we will reach a situation whereby property is simply another consideration at retirement. ●

Romania has a 95.6% homeowner rate and the median population age is 45.1 years old

January 2025 | The Intermediary

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B RO K E R B U S I N E S S Opinion

New Year goal?

Live the full life

B

y now, many of the hastily made New Year's resolutions will have gone to the wall. Why? Well you didn’t really mean them in the first place. ‘I’ll never drink again, eat chocolate, have a row with my siblings, eat turkey three days in a row.’

Punitive announcements made out of a surfeit of remorse, guilt and overindulgence just don’t stick.

I could advise you on making sound, constructive behavioural goals, building in rewards and reinforcement at each stage, but instead I want to exhort you to live the best and fullest life in 2025. Aim for happiness, joy, achievement and success because they delight you, not because of a sense of duty and what you think you ought to be doing.

I am steeped in positive psychology, one of the very first to be trained by the famous Martin Seligman in the UK. So, with that in mind, here are the secrets to making this year a fantastic one.

Positive emotions Positive emotions give an evolutionary advantage and expanded thoughtaction repertoire. Joy, interest, love all make us try harder. Happiness correlates with health. It undoes lingering negative emotion and fuels psychological resilience, enhancing emotional wellbeing.

There are specific benefits from gratitude that stem from affirming goodness and recognising sources of good outside of self.

Exercise: At the end of every day, contemplate and record what you are grateful for, from the trivial – warm gloves on a cold day – to the more complex – a network event that led to a piece of business. Once a week, look back over your list. Your optimism is likely to increase week by week.

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The Intermediary | January 2025

AVERIL LEIMON is co-founder of White Water Group

Engagement Engagement happens when you get the opportunity to play to your strengths. Many people – and their line managers – are poor at knowing what those strengths are, though we are o en clear on our weaknesses!

When your strengths are matched with your challenges you lose track of time, even get into flow, because the task exactly matches our strengths.

You are fully engaged.

Exercise: Think of a time when you were performing absolutely at your best. Go over the story and analyse the strengths you were using. Find new ways every day to exercise those strengths in whatever you do.

Relationships Loneliness is disabling, and there’s a lot of it about. Positive relationships inoculate against depression. Having a good friend at work makes you seven-times more likely to be engaged, according to Gallup. Kindness reliably increases wellbeing and is an antidote for anger and irritation, so fostering good relations is critical for both performance and wellbeing.

Exercise: Challenge yourself to build relations at work by showing a genuine interest in the people around you. When you ask ‘how was your weekend?’ listen carefully and follow up with questions, rather than just using it as a springboard to talk about your own experiences.

Meaning Put everything into perspective by becoming part of something bigger than yourself. Find a way of making your mark in the world. Contemplate what legacy you want to leave.

Exercise: Ask yourself 'what ma ers most to me? Where could I make a

Kindness reliably increases wellbeing and is an antidote for anger and irritation” difference to the world? What will I want to be remembered for?'

Accomplishment Challenge yourself to build your competence. Work on gaining a skill, mastering a task, or simply try to understand something be er. Notice what happens as you practice, make mistakes, make adjustments, and eventually do be er. As you tackle this goal, practise le ing go of the outcome, embracing your mistakes, and identifying the processes and efforts you can build upon.

Exercise: Write down the three biggest mistakes or errors you’ve made at work in the last year. Next to each one, list the lessons or insights you gained from making these mistakes. Assess how you have grown.

Health Cultivation of your health by eating well, moving regularly, and sleeping deeply is one of the hygiene factors of wellbeing. Everything just gets easier when this is present.

Exercise: Eat, move, sleep – assess each of these and aim to nurture yourself just a li le bit more. You will be rewarded with a be er ability to think, concentrate and deal with pressure. ●

B RO K E R B U S I N E S S Opinion

Brokers must adapt in 2025

J

ust over 50 years ago, Pong was released. A simple, two-dimensional game where you try to score past the other player’s paddle. Today, artificial intelligence (AI) is creating hyperrealistic, almost ready-for-the-silverscreen footage. The future is now, and this industry, along with most others, is seeing the effects first-hand.

Embracing tech Advances in technology are being rolled out quicker than I’ve ever seen before. We truly are in the digital age.

Many prefer to listen to an audiobook than read something physical, and worryingly, many get their news sources from misleading social media.

What’s the relevance of this in our industry? We can’t deny that tech is going to continue to evolve. How we source products for clients now is different from before. How we submit applications is different than before. I want the human element to remain, but we also need to get ready.

We hear it constantly from lenders – AI is being pushed more and more.

Underwriting. Valuations. Nearly every facet of lending decisions is being geared up to be AI-ready. We’re seeing technology adapt faster than ever before. We see some lenders notifying clients of mortgage offers before we can – the offer gets issued at 23.59pm on a Sunday evening, as the automated technology doesn’t rest.

We’re either with it, or against it.

Personal branding This all funnels into a big focus for our brokerage for 2025 and beyond. I actively want our team to build their own personal brands. Now more than ever, is it paramount to have a strong online presence. Not just as a firm, but as individuals.

Word of mouth has a different meaning to what it used to. Yes, people talk and word spreads – which

is great and is always a big focus, but now, a social media reel can be shared immediately to thousands.

It’s part of many clients’ research, now. We hear it o en – if someone phones us and asks us to assist them with their mortgage going forwards, they’ve already looked at our Google reviews and associated articles we might have shared or published.

As soon as you search Fowler Smith Mortgages & Protection online, above the link to the Financial Conduct Authority (FCA) Register, you’ll find our Instagram. Are clients doing the same with the individual broker?

Absolutely.

LinkedIn is the most obvious way in the industry to get your name out there, and add credibility to your professional portfolio. But further than that – clients will likely look for video content or photo content.

A personal brand has never been more important in the field. LinkedIn adds credibility to peers, but being likeable, relatable and sharing your successes elsewhere is now equally as important.

Get recognised Networking has always been a huge advantage to this industry – and every industry, in fact. But now, those who demonstrate that they’ve been networking are the ones who will get recognised. Recognition now, especially among the tech-savvy generations, is likely to a ract clients.

It’s an interesting prospect, in my opinion, and something that many will struggle to adapt to – but a strong and credible online presence is now absolutely paramount.

What everyone needs to consider, however, is the online footprint. It’s great to be thought-provoking to a ract a ention, but it must remain professional. We all know that online footprints can come back and haunt in the future – so if you’re out there knocking a lender or a peer, it won’t

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

go away! Brokers have to think about what is going to continue to a ract business, not fend it off.

Keep evolving Even though tech has advanced as much as it has, individuals shouldn’t be lazy. Don’t jump on ChatGPT and ask it to write you a good bit of content. Sincerity and originality will make the difference between individuals and firms that are adopting the fast-changes, and the public will be able to spot the difference.

There’s a statistic that says viewers retain 95% of a video’s message, whereas when reading text, it’s just 10%. It doesn’t bode well for me writing this article, but it’s true. Those consumers who are interested in industry-related content are also likely to want information in bite-sized chunks. We are all guilty of a quick scroll through Instagram now and then. Bite-sized is easy to digest – and the information is retained.

So, for me, I want our team members to build their personal brands in 2025. I want them to portray themselves in a genuine, professional way. I feel it’ll benefit them, it’ll add to their credibility, and pushing them out of their comfort-zone may prompt bigger and be er things.

I couldn’t think of anything be er than to see one of our team giving a talk at a seminar, or being invited to a lender event to speak on a panel.

The industry is evolving, and those who are not adapting might well be le behind. ● January 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

CASE ONE Mortgage during divorce proceedings

UNITED TRUST BANK

A

UTB would be somewhat concerned over the uncertainty surrounding future financial obligations. We would expect matters to be finalised in the form of a separation or divorce agreement from the applicant’s appointed solicitor before considering an application. We would still welcome a pre-submission decision in principle (DIP) on our portal based on expected outcomes.

These can always be updated prior to submission.

TOGETHER

The society would only able to help if confirmation is provided of financial obligations. Legal confirmation would be needed to ensure the expartner could not make a claim for further moneys.

client earning £45,000 annually is in the middle of a divorce and wants to purchase a new home at £250,000. There are ongoing disputes over the division of shared assets, including the marital home, a jointly held investment portfolio, and a pension fund.

Discussions around alimony and child support are yet to be finalised. The marital home, valued at £360,000, has not yet been sold or transferred.

While we will need to assess commitments such as mortgage payments and child costs while the disputes are ongoing. Together can assess affordability based on stated expenditure if the automated affordability fails for the customer.

We calculate the maximum loan based on affordability, and do not have debt to income ratio limits. Providing the investment portfolio is selffunded with appropriate evidence, these will not be factored into the affordability assessment.

We will also need to need to factor in any potential additional future expenditure as outlined in the divorce proceedings.

WEST ONE LOANS

There are many aspects that would ideally need resolving. The borrower is likely to meet affordability expectations based on income and property value, but depending on alimony and child support, this could change. We would also need a clear understanding on the situation 52

regarding the property. We would prioritise assessing whether the borrower can meet affordability based on the income, then work through additional factors.

The Intermediary | January 2025

BUCKINGHAMSHIRE BS

CASE TWO Right to Buy with credit challenges

A

couple earning £30,000 and £15,000 annually want to purchase their home through Right to Buy, but one applicant was recently discharged from a Debt Relief Order (DRO). The credit file also revealed other historical missed payments. They rely on benefit income, including child benefit and personal independence payments, and lack personal savings.

B RO K E R B U S I N E S S Case clinic

BUCKINGHAMSHIRE BS

The society cannot currently support Right to Buy. We can look at DROs, but some of the income would not be acceptable at 100%, so it may be a reduced percentage that could be used.

WEST ONE LOANS

Our Right to Buy scheme offers flexible criteria – unsecured arrears are accepted if up to date, as are secured arrears between zero to 12 months.

However, any missed payments would need to meet our requirements, and the most notable obstacle here would be the timing of the DRO. How long ago this occurred would be a key consideration, as we require zero instances within the past 72 months to offer lending.

TOGETHER

Together can consider lending after two years have passed since the discharge of the DRO. Missed payments over 12 months are not factored into assessment on which products are available; however, we would need to understand the circumstances.

We do not have a minimum earned income policy and can utilise benefit income. We will just need to understand the plausibility of making up any payments linked to the children’s benefits once they are no longer in receipt of this.

We can lend up to 100% of the discounted purchase price of the Right to Buy, providing this doesn’t exceed maximum loan-to-values (LTVs).

HARPENDEN BS

We do not lend on Right to Buy properties. On a standard case, we would also require the Debt Relief Order to have been settled for a minimum of three years with minimal credit issues since. We’re also unable to consider benefit income towards affordability.

CASE THREE Declined by a high street bank

A

couple, earning £27,000 and £20,000 annually, applied for a mortgage with a high street bank after securing an offer on their first home. Although they passed the agreement in principle (AIP), their application was

unexpectedly declined after submitting payslips and bank statements. One applicant’s income comes from a zero-hours contract, leading to fluctuating earnings that did not meet the criteria.

HARPENDEN BS

We can accept income from zero-hours contracts as long as the applicant has a minimum two years’ income evidence and has been with their current employer for at least 12 months.

TOGETHER

Together can accept earned income for zero-hour contracts providing they have been employed for at least six months. We require copies of the last six months’ payslips, and if the applicant is paid weekly, we will need to assess the hours worked and income earned. We can also consider a monthly average providing this is in line with the year-to-date figures. Unless stated on the packaging requirements, we do not request full bank statements to be submitted with the application as standard.

BUCKINGHAMSHIRE BS

The society can consider zero-hour contracts.

We would look for the other applicant to be on a employed on a permanent basis. We would look at how long the applicant has been on a zero-hour contract to consider the percentage of income we could consider.

The society needs to be comfortable that any income used is sustainable moving forward, so a long track record of being on a zero-hour contract would help.

WEST ONE LOANS

The couple meet the minimum income expectations we set (£15,000 a year by the primary earner), provided that the applicant on zero hours has held the position for a minimum of 12 months.

As first-time buyers they could be eligible for our 95% LTV product.

UNITED TRUST BANK

UTB is happy to consider applicants with zerohours contracts. They should have been in their contract for at least 12 months – a sufficient period to average out and account for fluctuations.

We appreciate that zero-hours contracts can be unpredictable, but there still needs to be a relatively consistent working pattern. The applicant’s credit report will also indicate their ability to repay commitments with this type of employment contract structure. ● January 2025 | The Intermediary

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P RO T E C T I O N Opinion

High net worth, high stakes

Y

our high net worth (HNW) clients have taken a big hit recently; the Labour Government Budget in October delivered a significant blow for many.

A range of measures collectively served to increase their tax burden, impacting not only their businesses and lifestyles right now, but also future financial planning and protection strategies.

Trying times ahead The increase in Employers’ National Insurance contributions (NICs) – which come into force in April – will impact many businesses, including those owned by your HNW clients.

Furthermore, the Capital Gains Tax (CGT) rise to 24% for higher rate taxpayers, freeze on income tax thresholds, reduction in personal allowances for incomes over £100,000, and adjustment to the taxation of pensions upon death, all impact HNWs. That’s before we even mention that private school fees are now subject to the standard 20% VAT. In this complex and evolving landscape, HNW individuals need the assistance of specialist intermediaries more than ever. Trusted advisers like you can help them not only navigate these challenges effectively, but ensure comprehensive protection for their assets, lifestyles, families, businesses and other financial interests.

Underinsurance rise While HNW clients might feel more insulated from the continued economic uncertainty, they’re not completely immune to the cost-ofliving crisis, and will no doubt start to feel the pinch as these new fiscal measures come into force. In fact, research suggests the pinch started well before the Budget.

Research by insurer Ecclesiastical points to increasing concerns about

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The Intermediary | January 2025

high net worth underinsurance.

According to its survey of 100 brokers conducted in October this year, a quarter of HNW clients have reduced cover during the past year, with findings suggesting that 29% of brokers believe HNW clients are underinsured across a range of areas, including buildings (66%), jewellery (62%), contents (59%) and watches (53%).

The research also pinpointed the top reasons for this underinsurance being out-of-date valuations (76%) and lack of awareness by HNW individuals of the value of their property and possessions (74%).

These are two things we’ve been shouting about for a while here at Berkeley Alexander.

You may not think these clients need you as much as those on lower incomes, but individuals with so much on the line right now need professional advice to make sure they’re protected. You are well placed to provide this advice and give access to the right insurance.

HNW clients have high expectations when it comes to the service they receive, and they appreciate a proactive approach to emerging challenges – protecting their business and assets, as well as their family and lifestyle, with the right cover for them and all their exposures.

If you’re an intermediary with a high net worth book but don’t offer them HNW home insurance, then take action to provide a rounded service, especially in light of the new risks they face.

If you don’t deliver when it comes to protection, someone else will – and as a result, you could lose your relationship.

Need more convincing?

Three top reasons you need to focus on HNW: Client relationship enhancement: You can strengthen your

GEOFF HALL is chairman at Berkeley Alexander

relationship with these important clients by providing HNW insurance, reducing the likelihood that they’ll seek advice elsewhere.

Revenue growth: The HNW insurance sector is typically characterised by high retention rates. Get the service and advice right and you can build a sustainable income stream through commissions on both new policies and renewals.

Unique selling point: Access to comprehensive HNW insurance solutions designed to cover a wide range of needs – buildings, high value contents, prestige cars, holiday homes, jewellery, watches, works of art and collectables – could help differentiate your business from the competition.

Your HNW clients may be purchasing insurance cover through another intermediary.They typically won’t be using comparison websites, as there is a need for an advised service to offer the bespoke covers needed. If they are seeking to talk to a broker – why not make that you.

Get in touch with your general insurance provider to discuss the needs of high net worth clients and obtain tailored quotations for the responsive and comprehensive cover they need in today’s market.

Alternatively, refer your clients to a member of their specialist team and protect your relationship, while earning valuable referral income. ●

P RO T E C T I O N Opinion

Don’t guess, get advice!

STEPHANIE DUNKLEY is development director at Safe&Secure

O

One in five UK homes is estimated to be underinsured

ne of the most common questions people ask us at Safe & Secure Home Insurance is ‘how do I calculate the amount of buildings insurance I need?’

Ge ing this figure right is critical, because underinsurance can leave homeowners out of pocket in the event of a major disaster such as fire, flood, lightning, explosion or earthquake.

Buildings insurance is a type of cover that protects the structure of the home, including walls, roof, and permanent fixtures within kitchens and bathrooms. It ensures financial cover for the cost of repairs or rebuilding a property if it’s damaged or destroyed by the main perils.

Currently, one in five UK homes is estimated to be underinsured, according to a 2023 study by the Association of British Insurers (ABI), and 40% of homeowners are unsure of the rebuild cost.

For most homes, the rebuild cost is significantly lower than the market value. For example, a house with a market value of £400,000 may have a rebuild cost of only £250,000.

Ensuring a correct calculation of the rebuild cost will prevent paying unnecessarily high premiums while ensuring sufficient coverage.

Not only this, but there is a significant risk that if the buildings cover amount is underestimated, then

an insurer could decide to only pay a portion of a claim. For example, if a property’s rebuild cost is £300,000, but it’s insured it for only £200,000, the insurer may apply what’s known as a ‘proportional se lement’. This means they may potentially only pay twothirds of a claim.

Many homeowners don’t realise that the amount of coverage they need is not based on the market value of their home but on rebuild cost – the cost to reconstruct a property from scratch.

Matching value A common misconception is that the amount of buildings insurance needed should match the market value of a home. However, this is incorrect.

The market value of a home reflects what it would sell for on the property market. This figure includes the land value and factors such as location and local demand.

The rebuild cost, in contrast, is the cost of reconstructing the physical structure of a home. It includes materials, labour, and associated fees like architects and surveyors, but excludes the land value.

Calculating a home’s rebuild cost doesn’t have to be complicated, unless you have a more unusual property – such as older homes, listed buildings, and non-standard properties like those with unconventional building materials – and then it may need a professional survey.

For standard homes, brokers such as Safe & Secure Home Insurance can be useful and safe. Otherwise, online rebuild cost calculators are another alternative. The ABI offers a tool that uses data to estimate rebuild costs.

A recently purchased property will also have a mortgage valuation report, which may include an estimated rebuild cost. While this figure might not account for recent changes to construction costs, it can serve as a helpful starting point.

If there have been significant improvements to a property, such as extensions or lo conversions, it’s important to update a rebuild cost on the property insurance cover.

Renovations can add tens of thousands of pounds to the rebuild value of a home, and the home insurance would need to reflect this to be effective in the event of a claim.

Furthermore, rebuild costs are not static. The price of building materials rose by approximately 25% in 2022, with additional increases in 2023.

Unsurprisingly, ABI figures show that approximately 30% of homeowners haven’t updated their insurance in more than five years, leaving them vulnerable to underinsurance.

Finally, some additional tips are to combine buildings and contents insurance in one policy, as this can save up to an average of £60 annually.

Also, garages, sheds, and other outbuildings need to be included in a policy. These types of handy hints can help your clients immeasurably.

Calculating the correct rebuild cost is essential for ensuring your clients have adequate buildings insurance without overpaying. By regularly reviewing their policy and accounting for changes, they can protect their home and finances effectively. ● January 2025 | The Intermediary

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P RO T E C T I O N Opinion

How will 2025 shape up for advisers?

2

024 will have felt like a whirlwind for many advisers. While August saw the first reduction to the Bank of England’s base rate in 12 months, inflationary pressures continued to cause trouble, combined with the ripples from the first Labour Budget in 14 years, which initially appears to have knocked consumer confidence.

With this in mind, how will 2025 play out for advisers? While we will hopefully start to see more stability in the market than in the previous few years, there will inevitably still be a lot of reactionary movement as lenders adjust to base rate changes. Just how much fluctuation we see depends on the pace at which these changes arrive.

In addition, changes to the Stamp Duty threshold at the beginning of Q2 will be causing many first-time buyers to reevaluate their purchasing plans. Big lenders like Nationwide and Halifax seem bullish that this will ‘motivate’ first-time buyers to purchase a property.

This activity will extend into the wider market, too. Recent figures from UK Finance indicate that 1.8 million mortgages will come to the end of their fixed rates in the next 12 months. As a consequence, UK Finance expects remortgaging to grow by 30%, as well as product transfer to increase by 13%.

2024 saw product transfers explode in popularity, thanks to inflation, the impact of financial pressures on affordability checks and people wanting to quickly lock in rates ahead of potential increases.

The Bank of England has initially said it will take a cautious approach to rate reductions in 2025, to avoid “stoking further inflation or financial pressure,” but there is a lot of optimism that affordability pressures will ease, and this should open up new remortgaging opportunities for borrowers. A recent report

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The Intermediary | January 2025

from the Intermediary Mortgage Lenders Association (IMLA) predicts that remortgaging will rise to £88bn in 2025.

It’s important that advisers plan ahead on how they’ll engage with those whose rates are coming to an end. Clients benefit from advisers helping them weigh up their options, particularly in times of economic uncertainty. These conversations also provide a huge opportunity to checkin with clients and see where they can add value.

General insurance Advisers should be prepared to treat fixed-rate deal terminations as an opportunity to discuss general insurance (GI) needs. If the past few years have taught us anything, it’s that GI presents a brilliant opportunity to add further value to the client relationship and diversify income streams for advisers.

Yet, our most recent Adviser Survey found that one in five advisers say still ‘rarely’ or ‘never’ discuss GI with their remortgage or product transfer clients. If this is going to become a bigger slice of the mortgage market this year, advisers cannot afford to focus their GI efforts on first-time buyers and home movers alone.

Historically, advisers have found it more challenging to fit GI into their conversations with remortgage or product transfer clients, as the process doesn’t afford as many opportunities, and the client likely already has an existing policy in place.

However, we’ve been working hard to simplify the general insurance process, pu ing in place a range of tools and support to help ensure every home is properly protected.

It might be something as simple as training around asking incisive questions at the right time – to open up a meaningful conversation about whether their current policy still works – right the way through to

EMMA GREEN is director of distribution at Paymentshield

utilising the breadth of functionality in our Adviser Hub platform to manage clients and track performance.

Support services For advisers who quite simply don’t have the time to discuss GI when juggling their other commitments, referral services can provide support.

Demand from advisers for our referral services grew in 2024, and we expect that to continue into 2025 as advisers increasingly recognise the support and flexibility it offers.

Referral services have developed massively in the past 12 months alone, with the tech capabilities that support the process now being much more sophisticated. It means that, in addition to ensuring customers can receive a quote in whichever way they prefer, there is no stage at which the adviser is out of the loop. Our Adviser Hub platform presents advisers with an at-a-glance view of where their customer is in the journey.

Embracing these services can support advisers in ensuring that all their clients are looked a er when it comes to home insurance, including those cohorts regarded as trickier to engage.

Crucially, this adds value to the adviser-client relationship in every instance, and also creates additional opportunities for advisers to earn commission by placing their clients on the right path to protection.

Initial signs are looking promising for this year, and we’ll all be kept busy no ma er what. But fundamentally, advisers are there to nurture clients through a stressful period. Be prepared for all circumstances, and make sure that you understand the breadth of support on offer. ●

S E C O N D C H A RG E Opinion

Enhanced options for foreign income earners

M

eeting the everchanging needs of mortgage borrowers is a challenge that those working in the specialist lending industry continually strive to overcome.

Whether through the introduction of new products, evolving criteria or personalised and flexible underwriting, this area of the mortgage market has always focused on meeting the needs of those borrowers who fall outside the remit of mainstream lending.

As a key player in the specialist lending industry, Norton Home Loans prides itself on being at the forefront of these ongoing market developments and continually seeks out ways to adapt its mortgage offerings to meet the needs of this growing demographic of customers.

Our recent decision to accept nonsterling income on first and second charge mortgages is testament to this, and illustrates the growing need and demand for increased flexibility in modern day lending.

Over the course of the past few months, and indeed much of the past year, brokers have continually expressed the difficulties faced when trying to secure lending for borrowers earning income from overseas.

While there are already a handful of small building societies and high street banks that do accept foreign income on straightforward mortgage applications, they are, in fact, few and far between.

Even worse, until Norton’s recent announcement, foreign income was not accepted by any lender operating in the second charge mortgage space.

This le borrowers earning foreign income with a limited choice of

DAVID BINNEY is head of sales at Norton Home Loans

products, and reduced the pool of capital raising solutions brokers could offer their non-sterling earning clients.

Non-sterling solutions Since announcing our decision to accept applications from borrowers earning US dollars or euros at the end of November, we have seen a significant upli in enquiries from brokers looking to secure a first or second charge mortgage for their clients.

Many of these borrowers work overseas for extended periods of time but still have a primary residence in the UK. Some are looking to remortgage or buy a property for the first time, while others are looking to capital raise to carry out home renovations.

As the only lender to accept nonsterling income within the criteria of its second charge mortgages, Norton Home Loans is in a unique position to help brokers provide capital raising solutions for their non-sterling earning clients.

Gross income is calculated at a 20% haircut to allow for currency fluctuations and we request that brokers run this income through a UK tax calculator prior to application, even if the client pays tax in another country.

It is also worth noting that foreign currency earners do not need to be PAYE earners to apply for either

a second charge or purchase or remortgage product. While payslips showing income in either US dollars or euros is certainly acceptable, selfemployed earners with an SA302 will also be considered for borrowing.

Given the fact that Norton has already secured it first completion with a client earning non-sterling income, it is clear that there is demand in the market for second charge products that accept foreign income for affordability purposes.

Better for brokers This opens up another potential avenue for brokers to generate more business and secure funding for those clients who they may have previously had to turn away because they could not place the business.

Not only that, as the only specialist lender in the market accepting foreign income for both first and second charge mortgages, it also broadens the range of options available to clients with a history of adverse credit, or who have complex borrowing requirements.

This expands the opportunities available to brokers even further, and again demonstrates the importance of evolving products and adapting criteria to meet the shi ing and ever-changing needs of modernday mortgage customers. ●

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In Profile.

Fignum

Jessica O’Connor speaks with Andrew Lloyd, CEO of Fignum, about how tech can empower brokers in specialist lending

W

ith increasing demand for specialist lending and a post-pandemic appetite for efficiency, brokers are embracing automation more and more in order to simplify their dayto-day processes. At the forefront of this shift, Fignum promises to streamline broker workflows and revolutionise the lending landscape.

To kick off the new year, The Intermediary sat down with Andrew Lloyd, CEO of Fignum, to discuss the ongoing evolution of the mortgage sector, the role of tech in empowering brokers, and what 2025 might hold for specialist lending.

Smarter lending

Fignum, the technology arm of the Bluestone Group, was established in 2019 with a clear mission to make “specialist lending smarter.”

According to Lloyd, this ethos remains at the heart of everything it does.

Originally focused on servicing Bluestone Group companies, Fignum has since broadened its horizons, collaborating with others across the market to tackle the challenges unique to specialist lending.

However, this sector, Lloyd notes, has long lagged behind its residential counterpart when it comes to technological innovation.

Even as the wider industry has embraced streamlined mortgage technology over the years, the added intricacy of the specialist market has continued to present significant hurdles.

With a focus on simplifying processes and driving smarter solutions, Fignum is determined to close this technology gap, making strides to support this vital corner of the mortgage industry.

Lloyd says: “How do we take modern technology, modern intelligence, and really embed it into that specialist lending journey to make it quicker, faster, better than it has been historically? We’re really looking to address that and bring our technology to support that sector of the market.”

A digital revolution

The mortgage industry has come a long way in its adoption of technology over the years, but for brokers, the goal remains unchanged: deliver exceptional, customer-centric outcomes.

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Lloyd notes: “You can have all the best tech in the world, but if you’re not delivering great customer outcomes to borrowers, you’re just not going to be successful.

“So absolutely that has to be front and centre – and what we need to do is figure out how we use technology to best support that.”

Artificial intelligence (AI) is also increasingly making its mark, enabling brokers to streamline workflows and make smarter decisions.

While there is a learning curve, Lloyd encourages a “growth mindset” to overcome these hurdles. “Run small pilots, try it out, see what works, see what doesn’t,” he advises.

“The barriers to entry are becoming less and less by the day. And yes, the learning curve is there, but the best way to do it is just to get started.”

The three Fs

At the heart of Fignum’s software lies a philosophy known as “the three Fs” – fast, flexible, and futureproof. According to Lloyd, this guiding principle is central to how the company’s technology reshapes the broker experience.

“When you think about a broker and what they’re looking for fundamentally, it’s three things,” he explains. “One, they want to deliver an exceptional customer experience. Two, they need efficiency. And three, they need robust risk management and compliance.”

Fignum’s platform tackles these needs head-on.

Brokers, Lloyd emphasises, are tired of wasting time on clunky processes, like re-keying data across multiple systems or waiting endlessly for decisions.

With Fignum’s automation capabilities, realtime and continuous decisioning ensure brokers are informed promptly – whether an application has been unsuccessful, or it has been referred to an underwriter – saving time and effort at every stage.

The software also streamlines compliance and risk management, a growing concern in the age of Consumer Duty and tighter regulatory scrutiny.

By embedding a “technology-driven lens” into these processes, Fignum supports brokers and lenders alike in navigating their obligations with confidence and ease.

ANDREW LLOYD

I N P RO F I L E

Lloyd says: “As we see more and more coming through with Consumer Duty and the regulatory agendas, we are focused on supporting the brokers and the lenders in that journey. It’s about making sure that we support them in having the right conversations and the right level of service.”

Working as a team

However, as the market becomes saturated with tech solutions, choosing the right platform can feel overwhelming.

Lloyd notes: “Some of the barriers that we are hearing about in the market are that there’s so many different solutions now, brokers and lenders don’t know which to pick. Brokers don’t want to train on one system only to flip to another.”

With plenty of options out there, what is it that truly sets Fignum apart in a crowded market? According to Lloyd, the answer boils down to innovative technology, expertise, and a collaborative approach.

“Everyone will say their technology is better,” Lloyd says. “But we think ours is different.”

“Being based in Cambridge, and having that that Cambridge ecosystem on our doorstep, means that the way we’ve built it has been really innovative and cutting edge.”

But technology alone is not the full story.

“Coming from that specialist lending background, we really think that specialist lending is in our DNA,” Lloyd says.

He notes that this shapes every aspect of the offering, ensuring the technology is finely tuned to meet the real-world needs of brokers and lenders.

With a value of “win as a team,” the firm also aims to foster a strong mindset, treating clients not as buyers, but as partners.

Lloyd explains: “It’s about creating win-win environments where everyone can be successful.

It’s not buyer and supplier, it is actually a single team delivering the right outcomes for our intermediaries, our lenders and eventually end customers.”

Built to adapt

In a mortgage market that seems to evolve faster than ever, Fignum’s platform has been designed with adaptability at its core.

“It’s not a big single monolithic platform that you might have thought of 10 to 15 years ago, where trying to move it is like moving a super tanker,” Lloyd explains. “It is small discrete modules with a single core platform that sits underneath it with a configuration layer that allows for rapid changes.”

This means that when clients need to launch products, target emerging segments, or respond to regulatory shifts, they are not waiting months.

“In terms of actually building those new products and getting them live into the market and supporting our clients in doing that – we’re talking about turnaround times in a short number of weeks,” Lloyd notes.

Brokers and lenders alike benefit from this agility, gaining the ability to pivot quickly in response to market changes.

Beyond the tech itself, Fignum’s approach includes proactive collaboration with clients.

According to Lloyd, strategic dialogues ensure that everyone is prepared for what is ahead. By planning early and pre-emptively adapting to industry shifts, Fignum aims to ensure users can respond to change without being left behind.

He explains: “We really engage our clients in those strategic dialogues to say, ‘How are you thinking about the market? How are you seeing it change? How are you thinking about this? What are your options around it?’

“It’s about trying as much as we can to take early decisions, so that that they are not left to scramble when the market has moved, and we can be much more preemptive.”

A year of change

Stepping into 2025, the economic landscape is riddled with unpredictability, making it difficult to forecast what lies ahead.

Lloyd notes: “Everyone says, ‘Oh, it’ll be a 2019-style year with 1.1 million transactions.’ But part of me thinks, look at what’s happening with the economy. We’re tiptoeing toward a recession, and there are so many dynamics at play.”

He suggests that volatility may define the year, requiring brokers and lenders to stay agile and ready to adapt to shifting market conditions.

“Being able to manage and respond to changing dynamics is essential,” Lloyd emphasises, noting that tools like real-time decisioning and AI integration are becoming indispensable.

2025 will also be a transformative year for Fignum itself, which plans to launch its new servicing platform in Q2, a development Lloyd describes as “a massive step forward.”

Additionally, the team is delving deeper into AI, building on the proofs of concept explored in 2024.

“It’s really about thinking how we embed AI further – how we manage the risks and leverage the opportunities,” Lloyd says.

“Operating this kind of blackbox AI does have its challenges, and we’re seeing that the regulator really takes steps around that. We’re looking at how we make it so it’s really beneficial, and do it in a smart and trusted way.”

“2025 will be a year of change,” Lloyd concludes.

“That’s something we’ll definitely be working on as a team as we get through the year.” ● January 2025 | The Intermediary

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T E C H NO L O GY Opinion

How even the smallest lenders can go digital

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n an era when digital transformation is no longer optional but essential, even the smallest building societies face the challenge of modernising their operations.

Traditional ‘bricks and mortar’ retail banking is rapidly being supplanted by digital services offering convenience, speed and accessibility.

Where once a decent website or app were ‘nice to haves’, they’re increasingly a customer prerequisite.

But digital banking operations don’t come cheap. Indeed, for many small building societies, they’re prohibitively expensive. The country needs lenders like this to thrive, and the sector needs the competition.

One way to square this circle is through the use of ‘bank in a box’ technology. This is a pre-configured set of banking so ware solutions that can be deployed to meet the specific needs of a financial institution.

A ‘bank in a box’ includes everything from core banking systems to mobile banking apps, customer relationship management (CRM) tools – which will help lenders understand their customers be er, providing personalised services and improving customer satisfaction – compliance modules, and more.

At the heart is the core banking system. This manages all fundamental banking operations, such as account management, transaction processing, and interest calculations.

While it’s a very promising solution to the problem, it’s not a new concept. A decade ago, the Office for Fair Trading was looking at IT barriers to se ing up new banks.

Then Business Secretary Vince Cable was convinced that not only was the sector’s “out-of-date” tech le ing down customers, it was holding

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back competition, too expensive for challengers and new entrants.

Cable said in a speech at the London Stock Exchange: “In America there are companies providing ‘bank in a box’ IT solutions that make it much easier to set up a new bank. We need something like that in Britain.” He added that a lack of competition to the big banks – whether from challengers banks or alternative lenders – was creating a “drag on our economic growth.”

Fortunately, lenders in the UK have access to these solutions now, too.

Benefits for SME lenders A ‘bank in a box’ and its associated digital transformation can significantly enhance the customer experience. Customers today expect seamless, 24/7 access to their accounts and services. By providing internet and mobile banking options, small building societies can meet these expectations, improving customer satisfaction and loyalty. If they don’t, of course, they’re barely competing at all.

A ‘bank in a box’ can also be rolledout quickly. The pre-configured nature of a solution can be deployed much faster than custom-built systems. Lenders can start offering digital services within a ma er of months, rather than over the course of, say, three years. This rapid deployment helps them keep pace with larger competitors and quickly meet customer demands for digital services.

Another benefit is how costeffective it is. Traditional digital transformation projects require significant investments in infrastructure, so ware development, and IT staff. In contrast, this is a ready-made solution that can be deployed at a fraction of the cost.

TIM BOWEN is CEO at Mutual Vision

This makes it accessible. Lenders don’t have to build a new, bespoke banking platform from scratch to offer digital services.

Pooling investment in technology and deployment of efficient cloud native technologies like this keeps costs down.

As lenders are now able to onboard new business without having to rely on their traditional branch network, suddenly they can increase their geographical reach.

‘Bank in a box’ solutions are also designed to scale. As an institution expands, the technology can accommodate increased demand.

Navigating the complex landscape of banking regulations can pose significant challenges to smaller building societies, and ‘bank in a box’ solutions come with built-in compliance tools that help ensure all operations meet regulatory standards.

A final advantage of ‘bank in a box’ solutions is that they are equipped with advanced security features that protect against cyber threats, ensuring that customer data remains safe. This includes encryption, multi-factor authentication, and regular security updates. That protects lenders against the incalculable damage they can suffer when security is compromised.

By adopting the latest technology, small building societies can improve their customer experience, ensure regulatory compliance, enhance security, and remain competitive in the rapidly evolving financial landscape. It offers a path for even the smallest building societies to embrace digital transformation. ●

T E C H NO L O GY Opinion

Pushing through the automation plateau

W

hen new technology emerges, it’s met with enthusiasm, but also uncertainty. Before satnavs became commonplace, drivers relied on paper maps, signage, and personal experience. The shi to digital navigation required more than just the technology; it also demanded a mindset change.

Drivers initially distrusted automated guidance, much like we see today with other technologies.

Gradually, however, the benefits became clear, and we set aside our A to Zs and embraced the digital tools.

This journey mirrors the mortgage industry’s transition toward automated property valuations. While some lenders use digital tools for straightforward cases, others remain cautious, still relying on manual methods for simple decisions.

So, what needs to change for broader confidence in automated valuations?

The advantages are clear: increased automation speeds up decisions, saving costs for lenders and creating operational efficiencies. Automation also benefits mortgage brokers, who value speed and certainty.

Furthermore, automating routine valuations allows property risk experts to focus on complex cases, leading to be er outcomes for both lenders and consumers.

Despite these benefits, only about 30% of lenders’ property risk decisions rely on automated valuations today.

A gap is emerging between those pushing forward and those taking slower steps. This gap mainly stems from technological integration challenges, which have slowed industry-wide adoption.

The digital leaders in the field are now moving to 60% automation by using optimisation strategies and additional risk data to avoid riskier cases. But is 60% the plateau?

The truth is, we don’t know the automation limit. However, Hometrack does see a credible and safe route through to more than doubling the current average rate of automation to over 60% by increasing automation at higher loan-to-value (LTV) brackets and tackling more complex properties using richer property risk data and models.

Lender protection Testing shows that Hometrack’s automated valuations can support safe decision-making at higher LTVs, even above 85%, and for more complex segments, such as flats.

If the model provides high confidence and supports property suitability with data, it can protect lenders from undue risks.

Hometrack is addressing these challenges by focusing on data quality and model transparency. We aim to bolster lender confidence and address

THEO BREWER is director of analytics and consulting at Hometrack

concerns around property suitability, property risk, and regulatory compliance. By incorporating trusted data at critical decision points, we can verify and learn from each evaluation, ensuring safety and accuracy.

Our efforts also include developing data-led capabilities to identify why valuers might assign a nil valuation to a property or require additional information.

We’re continuously testing data to be er identify safer or riskier properties and neighbourhoods, creating a more accurate and reliable automation process.

The future of property risk lies in digitising, collecting, and analysing all relevant data for valuation and risk assessment.

For Hometrack, the goal is not only to speed up or cut costs, but to enhance decision-making quality and safety.

This approach is essential to achieving safe, scalable automation – aligning with both Hometrack’s and the mortgage industry’s aspirations. ●

increased automation speeds up decisions, saves costs for lenders, and creates operational efficiencies

January 2025 | The Intermediary

61

L O C A L FO C U S Liverpool

Each month, The Intermediary takes a close-up look at the housing market in a specific region and speaks to the experts supporting the area to find out what makes their territory unique

Focus on ...

JESSICA O’CONNOR is senior reporter at The Intermediary

Liverpool

A

s we step into the New Year, Liverpool’s housing and mortgage market stands at a pivotal moment, influenced by both local dynamics and national policy changes.

Among the key factors shaping the landscape is the upcoming April deadline for the temporary Stamp Duty relief for first-time buyers – a crucial incentive that has driven activity in recent years.

While Liverpool remains one of the UK’s more affordable cities, the combined pressures of rising interest rates, shifting investor strategies, and Government measures like the increased Stamp Duty on second homes, are prompting significant adjustments across the market.

For first-time buyers, the looming deadline adds urgency to the already competitive search for homes, while investors and landlords navigate new taxation challenges amid strong rental demand.

Despite these headwinds, Liverpool’s property market continues to show resilience. The city’s cultural vitality, expanding infrastructure, and ongoing regeneration projects make it a hub of opportunity for buyers and investors alike.

The average property price in the Liverpool postcode area currently stands at £201,000, with the median price at £167,000. Over the past year,

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The Intermediary | January 2025

the market has experienced a decline, with average prices dropping by £3,900 – a 2% decrease.

Sales activity has also slowed significantly, with 7,800 properties sold over the past 12 months, representing a sharp 30.4% decline, or 3,700 fewer transactions than the previous year.

Most transactions occurred in the £100,000 to £150,000 price range, accounting for 1,949 sales (24.8%), followed by the £150,000 to £200,000 range, which saw 1,482 properties sold (18.9%).

The most affordable area in Liverpool is ‘L5 5,’ with an average price of just £47,500, while the priciest area is ‘L38 3,’ where properties average £740,000.

A unique market According to Alex Leppert, director and mortgage adviser at AL Mortgage Solutions LTD, “Liverpool is a little bit of a bubble.”

He adds: “Being one of the most affordable major cities, the demand typically remains constant irrespective of external factors.”

This affordability has made Liverpool a stronghold for owneroccupiers, while simultaneously attracting investors from across the UK and overseas. The city’s rich cultural heritage, renowned universities, and lively bar and music scene further serve to enhance its appeal.

However, like many parts of the country, Liverpool has faced challenges with limited housing stock and demand often outpacing supply.

High interest rates in 2024 contributed to a market slowdown, with properties lingering longer than in previous years.

Leppert notes that while the market shifted during this period, “there was still plenty of demand and prices remained constant.”

The appetite for residential mortgages mirrored the market’s fluctuating conditions.

Martin Green of J&M Green Mortgage Services Ltd notes the “ebb and flow” of Liverpool’s housing

market, with optimism tempered by delays in base rate reductions and inflation concerns.

He says: “Coupled with the impending Stamp Duty holiday ending on 1st April, it may lead to a slower start than expected in 2025.

“However, the rush to complete transactions might provide an uplift in the figures, and we anticipate a growing market throughout the year overall.”

Tom Wright of Liverpool Mortgages LTD agrees: “The Liverpool housing market remains vibrant, despite ongoing challenges in the broader UK property landscape. You’ll spot us in the top 10 of any list of best places to live or invest in the UK year-on-year.

“Property prices have shown steady growth, though the pace has moderated in response to higher interest rates and economic uncertainty. With a mix of affordable housing options, strong rental demand, and a growing population, the city continues to attract both firsttime buyers and investors.”

Phil Downey of Mortgage Solutions Merseyside notes.

Green adds: “We deal with a wide range of client types and ages, but we are certainly seeing more first-time buyers. [They’re] looking to take advantage of these opportunities to get on the property ladder after a difficult two years for them.”

Diverse demographics Despite this surge in demand from younger applicants, Downey says: “I deal with clients from all age ranges and income levels, and I don’t expect this to change in the future.”

There has been an increase in remortgage applications as homeowners seek to secure deals amid interest rate volatility.

Jennifer Highton of The Mortgage Lady UK says: “The appetite for residential mortgages has been ferocious. The market doesn’t seem to be dipping.”

A strong and stable outlook

First-time demand With a population of more than 903,000 residents as of 2022 and an average age of 39.8 years, Liverpool boasts a younger demographic that contributes to a vibrant first-time buyer market.

According to Wright, “although the rise in interest rates has cooled some of the enthusiasm, many buyers are still active in the market.”

He adds: “First-time buyers, in particular, remain keen to get on the property ladder, spurred on by Liverpool’s relatively affordable property prices compared to other UK cities.”

This affordability, combined with rising private rents, has encouraged more young buyers to enter the market, often with financial support from their parents for deposits,

She also notes a rise in adverse cases being approved, adding: “[I have] seen a lot more adverse cases coming through, the lenders are more understanding of late.

“There have been a few more firsttime buyers with adverse that are passing for the higher loan-to-values [LTVs] than previous years.”

Lifestyle preferences post-pandemic have further shaped demand, with buyers prioritising properties with more space, gardens, and access to good school catchments.

Wright says that, since Covid-19 “blended working models mean it really matters what’s on your doorstep.

Over the past year, we’ve seen more interest from professionals relocating to Liverpool for work, as well as a growing number of self-employed individuals seeking bespoke solutions.

“The student population and graduates choosing to stay in the city are also a consistent source of activity.” →

PHIL DOWNEY mortgage broker at Mortgage Solutions Merseyside

A

s private rents continue to rise and there is less property supply in Liverpool, more first-time buyers are now entering the market, since it is more affordable for them to buy than pay higher rents.

Some of the medium to larger landlords are selling off some of their portfolio properties to the tenants currently renting their properties, in order to balance the higher interest rates they are currently facing and also giving them surplus funds to comply with regulations.

There is a worry that some flats in the city centre region may currently be un-mortgageable due to cladding, health and safety or issues over their current leasehold or service, maintenance or management charges.

Some un-mortgageable flats are being sold to cash buyers for as low as £10,000 to £35,000.

The requirements of the Renters’ Rights Bill and higher Stamp Duty charges, as well as high interest rates and EPC requirements, may force some of the smaller portfolio and older landlords to withdraw. The Government must be careful how it approaches EPC requirements.

January 2025 | The Intermediary

→

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L O C A L FO C U S Liverpool

Fast-paced and ferocious JENNIFER HIGHTON mortgage director and protection adviser at The Mortgage Lady UK

T

he market doesn’t seem to be dipping. From my experience the demand is still very much there. The appetite for residential mortgages has been ferocious, and I have had more enquiries day by day.

First-time buyers have always been there, and with the lenders’ stress levels easing a little and rates reducing, we are pretty busy.

I have seen a lot more adverse cases coming through, and the lenders seem to be more understanding of late. What I would say is that the products are moving quickly and the lenders are pretty competitive!

There has been a few more first-time buyers with adverse that are passing for the higher LTVs than previous years, but other than that it’s your standard first-time buyers, movers, capital raises, BTL and limited company BTL with portfolios.

The BTL market is booming! Even with the 5% second property tax, it doesn’t seem to have made much of a difference. I am doing more from personal names into limited company mortgages though.

To cater for this mix of borrower types, brokers in Liverpool rely on a mix of high street and specialist lenders, including major names like Halifax, TSB, NatWest, and HSBC, as well as specialist providers such as Aldermore and Accord.

Wright also notes the prevalence of one particular lender, adding: “Nationwide has a strong presence in Liverpool and is often a go-to for firsttime buyers, winning multiple awards every year, and rightly so.”

In buy-to-let (BTL), Wright further observes that Nationwide’s brand, The Mortgage Works (TMW), is a dominant force, followed

by BM Solutions (Lloyds Bank), with specialist lenders catering to niches such as holiday lets, student lets, and houses in multiple occupation (HMOs).

In addition, Leppert notes that the majority of first-time buyers in the area tend to have smaller deposits, often in the range of 5% to 10%, which are frequently gifted, adding: “High street lenders like Nationwide, NatWest, Halifax, who price well and have more relaxed deposit requirements, pick up most of the business here.”

Highton says: “I use a mix of high street and specialist lenders daily.

What I would say is that the products

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The Intermediary | January 2025

are moving quickly, and the lenders are pretty competitive!”

New-builds Liverpool’s development landscape is thriving, bolstered by a strong appetite for modern properties and regeneration projects.

With the average price of an established property at £199,000 compared to £256,000 for new-build homes, there is clear demand for such projects among buyers and investors alike.

Green says: “There are multiple new exciting developments in the city centre, and a plethora of new-build sites around the suburbs and outskirts of the city.

“The new-build market remains strong for first-time buyers, home movers and investors in the city, so there are continuing opportunities for all manner of potential buyers.”

Wright points in particular to transformative developments like Liverpool Waters, a 60-hectare waterfront regeneration project aiming to revitalise the historic docklands.

He also highlights the Knowledge Quarter and the Baltic Triangle as hubs for tech and innovation, while the expansion of Liverpool FC’s Anfield Road Stand and Everton’s new

stadium at Bramley-Moore Dock add to the city’s growth momentum.

Beyond the city centre, key suburban developments are underway in areas like Halewood, Prescot, and Formby.

Liverpool’s broader infrastructure and tourism appeal further bolster the market. Wright highlights the city’s increasing demand for hotels due to year-round tourism and its status as a destination for global music acts.

Upcoming projects, such as the proposed £100m train station at Baltic Triangle and Liverpool Airport’s ambitious expansion plan, are also set to enhance connectivity and capacity.

While international investment has historically supported Liverpool’s growth, shifts in global economics may prompt developers to diversify funding sources.

Downey notes: “Due to the current economic situation in China and worldwide, there may be less Chinese investment and a fall in the number of Chinese students attending university courses in the city going forward.

“Therefore, development firms are looking for other sources of foreign investment, and the Liverpool universities are looking for foreign students from other countries to compensate for any shortfall of Chinese students.”

While development is progressing, supported by the recent push from Government to reach ambitious housing targets, the city has to balance growth with demand to avoid overdevelopment.

Downey says: “There are a lot of other developments planned in Liverpool in the coming years – 19 huge new developments that are set to change the face of Liverpool.

“According to the BBC, at the moment 78% of all planning applications for new-build properties are passed in Liverpool compared to a national average of 71%.

“Liverpool has increased its new property builds over the last year in line with Government expectations, but needs to be careful with its future planned developments making sure there is continued demand and need for the developments that are being built and not overdevelop too quickly.”

Buy-to-let appetite While there are some mixed views on its health, the buy-to-let market

L O C A L FO C U S Liverpool

does seem to be continuing apace – bolstered by high rental yields and strong demand from diverse tenant groups, including students, young professionals, and families.

With private rental stock (PRS) accounting for 25.2% of Liverpool’s housing market, surpassing the national average of 23.6%, the city remains an attractive location for property investors.

Highton highlights the robustness of the sector, despite current challenges, saying: “Even with the 5% second property tax, it doesn’t seem to have made much of a difference.”

She also notes a trend toward landlords transitioning from personal ownership to limited company structures when seeking out mortgages, a move increasingly common among professional landlords.

Wright says: “There’s been a shift toward professional landlords and those investing for the long term.

“You can’t go wrong in our city but areas like Anfield, Kensington, Wavertree, Walton, Toxteth, Dingle, Bootle, and the City Centre continue to be hotspots for investors, offering excellent rental returns and growth potential.”

However, despite its resilience, the rental market still faces some strong headwinds that are unlikely to abate.

Green points out that Stamp Duty changes and rising costs are leading some landlords to offload properties, creating more opportunities for firsttime buyers.

He says: “The buy-to-let market in Liverpool has remained resilient, however the Stamp Duty changes will leave potential investors saddled with higher upfront costs.

“With landlords still looking to offload properties due to rising costs as their low fixed rate deals end, this is leading to greater housing stock for first-time buyers.”

Higher interest rates and recent tax reforms are prompting landlords to reassess their portfolios.

Downey highlights the impact of these pressures, noting that high-rate taxpayers are increasingly building purpose-built, limited company property portfolios to mitigate their growing tax liabilities.

He notes: “There is a very high demand for rental property in the Liverpool region, reflected by the rise of rents by 9.1% over the last year, since the high demand for rental accommodation exceeds supply at this time.

“Landlords are continuously reviewing their portfolios on a regular basis to factor in what could affect them going forward, and more highrate taxpayers are now looking to

A thriving market all round TOM WRIGHT mortgage broker at Liverpool Mortgages LTD

W

ith a mix of affordable housing options, strong rental demand, and a growing population, the city continues to attract both first-time buyers and investors. Property prices have shown steady growth, though the pace has moderated. Our rich cultural heritage, music and bar scene, world famous docks, cathedrals and thriving universities make it a desirable place to live and invest. I’m biased but we also have the best football team in the world!

We’ve seen a cautious but steady demand for residential mortgages.

Although the rise in interest rates has cooled some of the enthusiasm, first-time buyers, in particular, remain keen to get on the property ladder.

For BTL, we’ve seen other parts of the country struggle with stress tests and properties simply not earning enough rent to cover the mortgage payments, while Liverpool boasts some of the strongest yields you’ll see in this country.

Liverpool Residents

903k Average age

39.8

Residents per household

2.31

Liverpool postcode area. Source: www.plumplot.co.uk

purchase property in a purpose built, limited company buy-to-let property portfolio.”

No slowing down While challenges such as rising interest rates, taxation changes, and the end of the Stamp Duty relief loom large, Liverpool’s unique blend of affordability, cultural vibrancy, and ongoing regeneration projects ensures it remains an attractive destination for buyers and investors alike.

First-time buyers face an urgent but opportunistic moment as they race against the April Stamp Duty deadline, supported by competitive lending options and the city’s relatively low property prices.

Meanwhile, the buy-to-let market is fuelled by strong rental demand and strategic adjustments by landlords to navigate evolving regulations, despite the challenges facing this sector.

As Wright puts it: “In Liverpool, ‘the affordable city,’ people have always championed common sense and community over anything else. No one is slowing down here!”

Looking ahead to 2025, Liverpool’s market is poised for gradual growth, supported by infrastructure developments, a diversifying demographic landscape, and demand from domestic and international investors.

Green concludes: “With more house price growth predicted, and the gradual reduction of interest rates, we should see more growth in activity as we get further into the year, and hopefully beyond into 2026.” ● January 2025 | The Intermediary

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On the move...

Target Group strengthens senior team

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arget Group has appointed a company built on innovative Sco Hill as chief information technology and fantastic talent. officer (CIO).

“I’m excited to be helping Hill has over 25 years deliver the change that will of experience in IT, beginning enable Target to achieve its through IBM’s graduate clear ambitions and provide programme. He then worked an even greater service to its at Accenture, managing key broad range of clients.” projects in the UK and Europe.

CEO Peter O’Connor said: Most recently, Hill was “The addition of Sco is another SCOTT HILL global head of website strategic appointment that transformation for Diageo. strengthens our senior team Hill said: “Target presents a and is a real statement of intent as we tremendous opportunity to join continue to drive the business forward.”

MAB makes two appointments to support growth

M

ortgage Advice Bureau to-day challenges firms and brokers (MAB) has made two senior encounter, so I can ensure the right appointments to support solutions are delivered to MAB partners its growth and broker and advisers.” network. Rachel Geddes was named Barne , who will report to Geddes, strategic partnerships director, while joins with over 20 years of industry Felicity Barne takes on the role of experience, having held roles at lending operations manager.

Nationwide, Skipton Building Society, Geddes, who brings 20 years of and The Mortgage Brain. financial services experience – including She will focus on supporting lending at Santander and Countrywide – initiatives and further enhancing has spent the last decade running MAB’s presence in the new build her own brokerage within MAB. sector.

Reporting to distribution Barne said: “This is a journey director Gareth Herbert, she I’m eager to be part of, and I’m will work with lenders and most looking forward to the appointed representatives to opportunity of working with drive business growth. the MAB team to shape the Geddes said: “The future. experience I’ve gained “MAB’s forwardrunning a brokerage thinking approach and means that I totally use of technology make it understand the daya leader in the market.”

RACHEL GEDDES

Daniel Hobbs named CEO of New Leaf Distribution

T

he Financial Conduct Authority (FCA) has approved the appointment of Daniel Hobbs as CEO of New Leaf Distribution.

Hobbs joined New Leaf in 2012 as director of compliance, a position he held for five years before becoming managing director.

Former CEO Mark Hobbs has become chair and will continue to provide strategic direction and support to the management team.

Sam Wallis, previously investment director, is now managing director.

Mark Hobbs said: “Daniel becoming CEO marks a new chapter for New Leaf and I am confident that he and Sam will lead us to even greater success in 2025 and beyond."

Daniel Hobbs added: “Upskilling brokers to become IFAs and ge ing more people into this fantastic industry via our academy are two of our biggest priorities in 2025.

As always, we remain commi ed to being known as the network that knows your name."

DANIEL HOBBS JANET POPE

Close Brothers Property Finance appoints managing director of structured finance

C

lose Brothers Property Finance has appointed Chiara Caldwell to the newly created role of managing director of structured finance, to spearhead business growth across purpose built student accommodation (PBSA) and Build to Rent (BTR).

Caldwell brings over 20 years of banking experience, most recently from global real estate advisor CBRE, where she was head of residential debt advisory.

Phil Hooper, CEO of Close Brothers Property Finance, said: “We have been lending to the development marketplace for 50 years and have a first-class, relationship-led proposition, so it feels like a natural evolution to diversify our lending offering.

“I am also pleased that [Caldwell] will bring some fresh perspectives around the leadership of the business.”

CHIARA CALDWELL

Caldwell added: “Both BTR and PBSA continue to flourish as asset classes in the UK, a racting largescale institutional investment.

“While supply has been restricted over the last year, demand has continued to increase, pushing up rental growth and creating considerable sector growth potential[...]Expanding into these markets will further strengthen the value proposition.”

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