So in terms of myself, I actually studied engineering at university, believe it or not. was a bit of a science geek and did a year out in industry. And during that time, there was a bit of litigation surrounding one of the products. So we went to a bit of a legal fair and just was really taken in by it. It seemed really interesting whilst...
the medical and science side interest me, it was too slow. So to get medical product out to market, takes years and years, whereas actually the legal side seemed really on it and fast pace, which is what I love. Not quite as fast pace sometimes as we always want it, correctly. So I then decided I was going to convert from engineering to law and I did that.
Yeah.
Is that an easy process?
It was hard, but I was always somebody that didn't mind to study. I kind of didn't mind the academics because I did have the goal in mind.
How many years did that add on to the...
So it was four years because I did a masters in engineering. Wow. And then I converted into law, which was the PGDL and then I did the LPC. Then I got offered. I actually went for interviews at lots of places and I was interviewed and invited because I got a first in my degree and people in London were inviting me there and different things, but I went down.
And it was very clear to me that at that time I was not, you know, didn't talk the legal language, didn't talk the finance language. I was very much a scientist. So I kind of then went away and applied myself. And in the end I did actually get offered three training contracts and went forward with Halliwells, which is a whole other conversation itself. My boss had seen what was coming and he actually put me
in a, on secondment at a lender called Davenham finance, Davenham trust. And they, like many lenders at that time were having a lot of issues with back book problems, shortfalls, negligence. And he put me in there on a secondment. So as a newly qualified lawyer, I had my own client. I was then headhunted by DWF, which is another large law firm.
And they said to me, we are going to replicate what has happened for you at Halliwell. So you can come to us under our umbrella, but basically you're going to be seconded in to the client. Went to DWF and then we did the same thing at Davenham. And then I was then called by Henry Moser to get the money. And he called me direct and just said, have you heard of me?
And how did he come across you, do know?
Yeah, I do actually. It's quite a funny story. So basically what had happened, a team, let's say a team had sold a recovery element for a lender into Henry. So we're going to come into your business. We're going to help you with all the problems, which every lender was suffering at the time because of the climate.
And this is our recovery team and the recovery team is X hundred thousand. Henry being Henry obviously knows what he's doing thought who is actually doing this recovery? Who's the person doing it? Right. It's the lawyer behind this. So he just reached out to me direct. So unbeknown to me, somebody had packaged me up as a team to sell me into Henry and I didn't know.
This person then got earshot that Henry had contacted me direct and then wanted to bring me in. Come, come and have a look. Come and have look at the spreadsheet. Yeah, it was amazing. So I went in to Henry, had a couple of interviews, met with Mark Goldberg and came out and spoke to my dad and said, I literally feel like I've been on X Factor because yeah, he just blew every...
single offer I had at the time. I the law firm I was with at the time, they were kind of saying, can, you know, we can develop you. We're going to send you on these insolvency courses. We're going to do this. We're going to do that.
incredible.
This was just quick.
yeah. he, but you know, the law firm, unfortunately, law firms work, the big traditional law firms very much now work on formulas. Everything is so rigid. What can people earn? They don't look at the actual individual and see, what has that girl actually brought in? What are her connections? What are her client bases? How is she performing against her peers? I was just told, well, you're already ahead of your peers.
You know, we can't go any further. We can't, you know, offer or increase your package. We can just develop you. didn't, you know, for me, I just thought, no, this is too rigid.
your own worth. so we went to together and had a great time there, work directly with the top directors, had great experience. it, we built a recoveries team there, recovered a lot of problems, but also I was involved in front end transactions. You know, when a deal came in that maybe didn't fit the box, you know, we'd speak about different ways around.
So just for the benefit of anyone listening, so your initial experience in the property law side was on the back end as opposed to helping deals to complete and get over line and doing the conveyancing. Yeah. So you worked with lenders if a loan went wrong. So if a lender had had to take possession of a property and they were trying to recover their money, if it got complicated, you would get involved. Right. So then
the value then that you would add at the front end was the almost like the benefit of hindsight in advance because, okay, it's a different loan and it's a different scenario, but they're saying this has come up at the front end. If that becomes a problem, do you foresee that being an issue at recoveries at the end? Is that what you're saying? Is that?
And I've just seen the time that I, so my start was together in maybe 2010. And obviously I've been part of the lending world very closely and worked with a lot of lenders. The development I've seen, obviously not just from what I've seen when things go wrong, but just through like improving processes and procedures and tweaking the documents and
It, you know, I am a very commercial individual and I think I've got both sides because of working with lenders. So even though you would probably think, this girl's going to be a deal stopper. She's, you know, seen it when it all goes wrong. It's not about that. It's about like, how can we get this right? So yes, that might be a problem, but actually we can mitigate it by X, Y, Z.
And what I would say there is sometimes when people don't understand or people think you're being difficult or obstructive with the borrower solicitor and we're actually all on the same team here. You know, we want to protect the lender's interest, but actually it also works for the borrower purchaser because if they get stuck with a piece of land that's landlocked or has some encumbrance.
Perhaps the lawyer acting on their side hasn't spotted it. So sometimes, you know, two heads are better than one. And this is definitely something that I want to come back to your experience and what you see go wrong and how you can mitigate it. But will you just take us to today? How did you get the point?
So, sorry, so I got to, so we're together, amazing experience. And I was offered to head up the law firm that does all the work for Together. And I said to myself, if I'm going to do this, and obviously setting up a law firm is a lot of responsibility. You really have to know the people that you're in business with. I'm going to do this myself.
which was huge, you I remember.
didn't want to be tied to anyone. You wanted to be able to be free and...
Yeah. So what was really the universe looking after me or, you know, me just being very, very lucky was, whilst I was together, Henry and the team would also recommend me. So they'd say, you know, to a client or somebody who was having trouble, use Kerry on that case, like he'll sort it for you. And we had some gentlemen who had invested
four million, let's say, with their accountants. They'd worked with their accountants for 15 years, trusted them implicitly, and they'd been told that they were going to earn something like 9 % a month on this investment.
Which was this into loans or what was the underlying investment?
They had just put the cash, put their cash in to the accountants who were
so they'd invested in the farm.
They'd invested in, you know, I actually don't think they even had that detail. I think it was kind of a bit.
A lot of money to invest blinds.
And they were going to give them a 9 % return on their money a month. Just mad figures. So they brought this to me and I said, this is ringing massive alarm bells. We'll send a demand. If they don't pay by this date, we need to go for it. And they were like, no, no, trust these people. I was like, we really have to go. Anyway, in the end, they did push the button after I made it very, very clear.
that they were going to be at the back of the queue if they didn't. We ended up getting judgment against them and we actually got a worldwide freezing order and we got restrictions and charges, sorry, charging orders on all their homes. So they had all homes. I think they had one in the wife's name and one in their name. And when it came out,
They had done this to circa a hundred million pounds worth of clients. So the fraud was huge. And my clients were the only ones that got paid out. It was such a sad story because you had wives who had trusted these accountants. They were widows and the husband's money had been invested with them and they'd lost everything. But by the time...
Amazing.
the official receivers office got onto it. So the insolvency service, obviously it had all gone and it had all been dissipated. Whereas we had these tangible property assets, which let's all face it, that's the best way to secure anything. So I was paid, they were paid. And I was in a situation where I set up to go back to my journey where
Obviously I didn't know what was going to happen with me. I did take around 170 cases when I left from together in terms of their litigation work, which was amazing. But having this huge case that I did meant that, well, the first day Lauren and I raised our first bill in the practice, which was, we sent a bill out for 20,000.
which for me back in 2014 was a lot of money.
No overheads, guess, really, because you were a small business, you didn't really have anything.
Lauren and I, small office in Winslow and within an hour or two hours it was paid.
Such a nice feeling is that you log into the bank and you see it there and you think, this is mine, I've this.
It was amazing. then I just thought, because up until that point, and that was very early, I just remember every morning getting ready to go into the office thinking, right, if I don't make a single fee, I can carry Lauren and I for a year. And, know, I had a bigger team at the time and there was a girl that worked for me who's fantastic. And I said, Han, commit to you, you know, so you've got this job offer. was DLA.
And I said, you know, just go do that, get your experience. said, you know, hopefully this thing will thrive and then you can come back. And she did come back. But at the time, it's such a massive pressure. Is this actually going to work? And I remember just thinking of my bank account doing that. That situation happened. And it just meant from there on in that...
The type of work I do, and I think the reason how I've distinguished myself is people don't like paying when they can't see results. And a lot of the stuff I do, they're already out, they're already, you it was a bad loan or there's a contract that's gone wrong or they've lost money somehow. So to keep spending on it when they're not seeing results, it just really pains them. So
I've always come up with a way, you know, depending on the deal, right, let's see how we can work this out between us. but just having that case that went so well with the clients from London, meant that I wasn't desperate to anybody paying a bill and nobody could kind of look at what I was doing as a start-up and think, we know she's just died up. She's going to be desperate for this fee to pay.
You actually started with a pipeline, didn't you, which is a fantastic position to be in because most people don't start with that and they have to go and find it. So it sounds like it all segwayed really nicely. Yeah.
Um, and then we gradually built the team, got busier and busier. Different lenders would come to us when they heard what we were doing. Um, and had various proposals to kind of be bought out at different times, but I just really didn't want to go back into the big law firm situation. Um, maybe in 2017, there was six of us and now
2025, I think there's 28. So yeah, the more we had these relationships with lenders and they could trust us and could see how proactive we were and our communication, which is just key in what we do. We then started to win the front end work and that has just...
you
So now as a business, do you do more front end than you do back end? Yeah. You do? Okay. That's really interesting. Yeah. And how have you found that transition? Have you personally enjoyed it? Is that something that now you're pleased to be on the other side of the fence?
Well, we still do the litigation recovery work because obviously with all the front end work that we do for lenders, the lenders trust us with the back end. And I think they do like you were discussing earlier, they like the fact that we can see the front and the back end deal. So for instance, one of my girls that's worked with me for about 12 years, she had years of experience with me at the back end and saw all the issues come up.
court in front of judges, how they looked at things, you know, different rates and renewal fees and everything, how it was worded in the documents. Now she's front end transactional work and she's doing phenomenally well at that. for me personally, yeah, it's, it's, you know, I think the front end work is very positive. Everybody is really focused about getting a development off the ground and
You know, it's very positive part of the transaction, isn't it? Whereas the backend, it's things have gone wrong and we're looking at all the different ways of recovery. I'm lucky that the lenders I work with do adopt a really sensible, fair approach. Basically, if you work with us and make some effort to cooperate, we'll work with you. But it's when people just bury the head.
keep living their life and their lifestyle and don't think they owe the lender. And I think, you know, the whole, the media didn't really help, you know, when we've had past media about bankers and all the rest of it and banks are baddies and all this type of thing. It's like, actually, no, you've had that cash in your bank and you've used.
Yeah.
I suppose the foundation of it all is there's a contract, right? Yeah. So if you sign a contract and you agree to something, then the lender has every right to enforce the contract as for what's written in there. And I think it's then clear for everyone. No one's trying to vary that presumably.
And that's really, for me, I do feel quite spoiled with the work I do because exactly what you say is a contract and it's very clear. know, sometimes people approach me with litigation and it's oral agreements or, you know, emails going back and forth and uncertainty. And actually I think in a lot of situations, a lot of friendships, a lot of...
Sometimes they don't actually govern it with a contract thinking, we all trust each other, all friends. Like, you're not friends. When money's involved, it goes wrong unless everybody's clear on how it
Yeah, yeah, I think it's very easy for people to fall into that trap, but you've seen it go wrong too many times, I guess. And one thing I'm keen to understand is then so you predominantly do lender work. So you you have you do client work on the front end as well, or does it tend to be lender only? The clients, so, OK, fine. So you've got quite a global view then of all of it. You've sort of acted across the whole triangle. So when
When a borrower is entering into a loan, obviously in most scenarios, they have their own solicitor as well. And sometimes it can become quite fraught, can't it? And it can be really challenging. Why do you think that goes wrong? What do you think we can do to try and make that whole process just a little bit more amicable and joined up? Because ultimately the outcome that we're all trying to achieve is successful completion for client and lender.
and then a successful journey thereafter. So are there any like bits of those components that you think that we need to really address?
For me, I've always, when I've ever picked up a new case, obviously it's back end, but when it goes wrong, but picking up the phone, you know, I think we rely too much now on email. I think actually having an initial call, well, we're both working on this together. I want to ensure this is a good, this is good security for the loan, for my client.
They know.
Building a bit of rapport.
You want to ensure your client can develop this land and use it how they want. We're actually doing the same thing. Because if my due diligence and I don't check off my boxes, the reality is that your client's going to come unstuck because they're not going to be able to exit when they want. And it's going to be costly for them. And I think having that conversation at the outset, because I do feel I'm very lucky with my team. We have a number of people that have worked
actually in-house with lenders. They understand lenders. I've also got all the back-end people who have kind of got the multifaceted with the skillset. But sometimes you come across property solicitors who are property solicitors and they don't quite, they're dabbling. They don't quite get how it works in lending. So when we're asking for things, they think we're being difficult or just too onerous or, you know, I mean,
We're dealing with a situation at the moment where there's been a fraud on a case where actually a solicitor was embedded in both the borrower's firm and the seller's firm. And he had an interest in both. We were taking warranties and undertakings from the borrower's firm. We were asking for vendors certificates on the identity of the vendor. But you get a lot of pushback.
You know, people, law firms are like, why are we giving you this? You know, we'll carry out our own checks, we're solicitors, you should take our word. And you should be able to. If this protects all of us, why wouldn't we just do it? Because unfortunately, there are people out there who will look to commit fraud. And actually it's not, it's not really about us getting one up on each other. It's...
It's like...
just about us trying to do the best to make this transaction safe for everybody. So I do think at the outset, you know, a call, trying to build up a bit of a rapport. It's always, I mean, you'll hear this, oh, it's with their solicitor. Oh, it's with their solicitor. And it's just like, guys, just get on the phone, find out what's missing and let's just pull this deal together.
Yeah. And actually as an intermediary, what we find is we get really involved in the legal process and not all brokers do. Some just sort of leave it to tick along. But whenever I get the call, which is 50 % of the time, say the lender's lawyers are asking for ridiculous things and they're making the process really slow. and I say, okay, no problem. Can we break that down? So I can't, I can't make a call and say,
you're asking for too much, you need to ask for less because where do you, what do you even do with that? But what, what is it that's being asked for? Why is it problematic? If it's something that you can answer and solve in two seconds flat, then just do it and humor them and let's not talk about it anymore. But if it's something, I mean, one thing that will come up time and time again is where they have to request information, which is outside of their control. So it might be like ground rent.
service charge and they're relying on a third party and it's slow. Sometimes there's other ways to deal with it. And I think for you guys, I guess you're always asking, you want to protect your clients. So you're asking for what you need to see in an ideal world, but there might be something that just suffices that sits below that. So rather than just being frustrated with the process, we always say to people, tell us what's causing you a problem.
let us see if we can then find a solution that makes the lender comfortable enough that you can provide within the time scales. And I think that's the bit that almost is missing. You get the, why do you need this? And rather than trying to find a solution, people are very quick to just point out the problem, which doesn't really do anyone any favours
No, and we'll have, we've had so many situations when it's gone wrong in litigation and nobody would ever have foreseen that what we asked for, what we now ask for, we could have asked for them, but we didn't. So, especially the lenders, especially working with brokers like yourself, we all want the deal to happen.
you know, the quicker my guys get the deal through and completed, the better for me. everybody's on the same team. And I do think that's why we are different because of our experience. Unfortunately, sometimes it is, I feel sometimes we do get pushback when we have maybe solicitors that are a bit defensive. They don't quite understand why we're asking.
Do you think that's experience thing? Yeah. Cause we, that's one of the problems that we come across time and time again, where a borrower has a solicitor and you're looking at their credentials and their experience. And you think this is a solicitor they've known a long time and they might be a really good family generic solicitor, but actually if they haven't got experience in the niches of the market that they're operating in, can really slow the transaction down. And I think.
Choosing the right solicitor is actually key for borrowers and how to make that journey smoother. Is there any advice that you would give on how a customer can make that selection? How do they find those people in the market?
I mean, I was thinking about this myself the other day because obviously it's all about independent advice, isn't it? That there not be a conflict. But I don't think there would be any issue with there being a list of, that we generated between us of solicitors that we have worked with and we've just smashed that deal out. You know, we've worked as a team.
everybody's cooperated. Yes, there's been issues, which, you know, there are those solicitors out there and when we get one, fantastic. And actually, obviously you say there's no obligation, but one of these guys, if you use them, we will probably get this deal done very quick with Graphene. but yeah, for us, it can be really tricky when you have people that, they are defensive.
Yep.
because of experience sometimes. And my guys, you know, they will go above and beyond to explain and go through things and explain why. But again, it's, if they don't have the confidence in it themselves, it does slow down the transaction.
Yeah. And what advice would you give to a customer when entering into a loan agreement? mean, let's sort of hone in on short-term finance, so bridging development funding. What advice would you give to customers to look out for? Obviously having seen things go wrong at the back end. What, like, what are there, is there any pieces of advice that you could offer to a customer to really make sure that they've checked their facts or been diligent on?
So, obviously actually go to the site, walk around it. Have we got any problem? Neighbors? Is there anything going on there? You know, you wouldn't believe some of the nuisance or I had a client once who was developing a site and he had a lady who would lay down in front of the bulldozers when they were trying to do the right of way to the
think there was six beautiful houses been built. You know, I mean, it's just, is really extreme stuff. And usually the stuff is extreme that I deal with.
unusual
And actually in some scenarios, things like that, you probably can't legislate for that because it's a unique.
No, but in this situation, there were other...
The easement, the right of way was going through their garden, which they'd bought. So I do think maybe if some conversations had been had with the neighbours, which then actually gave us witness evidence that we took to court in the end, they told us this woman was an interesting lady. So, you know, obviously that is a very extreme case planning. You know, don't underestimate
how long planning can take because I don't see it as much now, but I'd say maybe 2010, 11, 12, the amount of people that were taking out finance and not understanding that planning was not going to come in six, seven months. That really hurt a lot of people. Cashflow.
really good advice.
You know, don't underestimate how much things cost with builds. When you go into the ground, when building a property, you discover all different types of issues that crop up that you were not aware of. You know, you might have done the investigations and all the rest of it at the start, but always put in a contingency because it will always take longer.
If you're developing, always use a project manager, quantity surveyor. You know, sometimes I think people come along and the market is so much more sophisticated now. The lending is so much more sophisticated now. But back in the day when these roles didn't really play a part, it was catastrophic. And the amount of times I would see drawdowns happen and actually what
Yeah.
what works happened, you know, what we're drawing down against. But for the developers themselves, it actually saves them money in the long run. If they go in default one or two months, obviously they need to factor in the cost of interest and look at their loan, the bridging loan as an employee. Look at it as a cost of the project.
Don't look at it as negative. If you want that plot of land and you can see the profit in that plot of land and you want that plot of land tomorrow, and you've got the relationship with the lender that you can make that work. Well, go, but be realistic and factor in the cost as a cost of the project. And sometimes I don't think people really do that. They kind of see it, obviously it's a burden, it's an obligation, but it's
put the whole thing into context, but unbelievably that's when you see deals fall over when they haven't, they try and save money at the start, but they come unstuck at the end.
Yeah, and I suppose a great deal of what you see actually happens to good people, right? Not everybody's not everyone's out there to cause a problem or, you know, obstruct the lender. Sometimes things just happen. And I suppose from our perspective, good advice all around is crucial to make sure that people make these decisions properly at the outset, because it can shape the whole future, can't it?
I mean, it's really sad when you see the things go wrong. But as I say, I think that was, I do think everybody has become more sophisticated in how we do things. I do think everything is a lot better, a lot more thorough. know, since and after COVID, feel like valuations are a lot more accurate.
You know, we've learned a lot of lessons, I'd say in the last 10 years. And I think that as it always should be, as it always should have been, you are dealing now with the sophisticated property investor or developer. Whereas before I do think we had a lot of people not taking it seriously. And you know, it is.
It's an amazing way to make a lot of profit and it always will be, but it has to be done diligently and properly.
Yeah, like anything, those that the most professional end of the market will usually prevail. One thing actually that I wanted to cover today was looking back on your career, obviously, you've had a really interesting career and you've had some twists and turns. What advice would you give to young lawyers that might be interested in the property sector specifically?
Yeah, 100%.
So they need to stand out now more than ever. So solicitors generationally, feel that kind of our generation, I'm older than you, our generation, we were in the crowd that we'd be in the office for seven. I'd the office till one o'clock. I'd be working all weekend.
Yeah.
My boss emailed me on a weekend, it'd be on my laptop.
It's almost become a little bit unpopular that, hasn't it? I think the work life balance movement, if you like, where people are focused much more on like lifestyle and health and mental health and things like that, has definitely made a lot of the younger people coming into the market a bit dubious about that way of working.
And you cannot sugar-coat it. As a lawyer coming in as a junior, if you want to get on and learn and develop, it takes a lot of time because when we work for you or lenders, you expect speed. So the reality is that one of my highly trained people would take 10 minutes to do it. But a junior who wants to have a go,
It might take them five hours. You know, I say to everybody in my business, you you want to become a lawyer, you need to understand.
Knowledge is power, isn't it? Yeah.
understand it, read about it, why are we doing what we're doing? Don't just fill in a form or copy somebody else's. No, you don't.
still see that grip. you have young, do you have.
Yeah, I do. And, you know, for instance, one of my girls who's a trainee solicitor, just a weekend gone, we had a lady who was filing injunctions left, right and centre. A loan had gone wrong. We obtained a judgment and were selling properties in auction. And we've tried to...
deal with this guy for well over a year. We've entered into settlement agreements. He's not honoured anything. I think now the guy's just thrown 20 grand at a solicitor and said, stop, make their life hell. So, you know, literally going to court over the weekend and, you know, my girl with me was working on it all weekend to the point where I had to say, now because
could tell this solicitor was not going to get anywhere with the judge because it was all ridiculous. But the point was she just had such fire and passion and that's what I look for. So in terms of, know, it's, if you're asking a more senior person within the business to train and develop you, when they give you a job to do, that is work for them because
what she was doing.
you know, nine out of 10, you're not going to get it right. So that works going to then have to, you're to have to train them and develop them. And if you've just made a 20 % effort at it and not 110, the person won't use you again. Your development will stun. So when people come to work for me and you know, I do take people on at the junior level a lot. And I do say, if you impress and if you work hard, there is not
for a training contract and to qualify.
And, know, some people come in and don't and that's fine. And they'll do their job that they want to do. And lots of businesses need all different types of jobs, but the lawyers or the trainee lawyers who are going to come in and, you know, give me that 110%. They do really, really well with us. I'm really, you know, really proud of the team, but now because of AI and all these different systems that are coming into play.
they've really, really got to get moving and take on as much information, as much skillset, as much commerciality, because the reality is, I don't think AI is going to take over, you know, people like myself that have got all the experience, all the knowledge and the actual practical hands-on experience. Whereas for those juniors coming up through,
A lot of the jobs in five, 10 years, I think they'll be gone. I do.
Really? Yeah. Yes. That's one of the things I wanted to cover today on the AI front. How are you implementing that if at all? And what do you think it can do for your business?
We're doing loads of it. So we probably maybe a year, 18 months ago, maybe a year actually, I investigated what was out there for kind of law firms. And I did find an AI package, which has been constructed by top property lawyers. And it will help us generate reports.
now the way that it works, not yourself, but say if I went and asked, I don't know, someone off the street, highly intelligent person, but somebody off the street to do a report on title for a lender, they could not do it because they don't know what to put into it to get the answers out. so you do have to be,
knowledgeable and experienced. what it does is for instance, when you've got a 200 page lease to read, which we would have to read that cover to cover, it will do that. It's basically like having a really good second year trainee.
And can you fully trust it? Like, can it make mistakes that you rely on? That's what I worry
It makes mistakes. So it, that's what I mean by a second year trainee. So you would always check it. And one of the tools that
So where's the benefit then? If someone, it does the work for you, it summarises it, but then you have to check it anyway. So where's the time saving?
So the time saving is because we will have key issues within a lease that we have to look at and we can click on the answer that the lender will have asked. We can click on the answer and it will take us to the exact part of the lease that says. And so it will go and then within seconds we're at the relevant part of the lease. Yeah.
just a bit quicker.
But sometimes when we read it, we're like, interpretation just isn't quite right. But I'd say 70 % it is correct. So it will definitely be saving time, totally it's a first draft. isn't a five-year qualified lawyer. We're also looking to develop
Mm-hmm.
within our case management system. Obviously we're really lucky with the lenders we work with like West One that despite the dips in interest rates and all the volatility and the rise in interest rates, we have really had great performance constantly because we just, you know, the lender is constantly being super innovative with the
products that they're putting out there. So for instance, now we have just probably in the last nine months started doing a lot of the residential work, which obviously historically we're a backdoor recoveries litigation firm. Then we've kind of done the front end securitization bridging development. And now we're developing on the resi side and the resi work is completely different.
because of the types of people that are buying property.
That's more box sticky, isn't it?
It is, but I think people think it's a lot more straightforward than it is. And because of the extra like regulation and all the rest of it. you know, these people want their hand holding, they're buying the first property. It's their main family asset. You know, it's very personal and emotional to them. So as a business, it's all about managing the communication. And so we are investing a lot in how we can.
make that communication slicker and better. And these systems now, these AI systems, I mean, it blows my mind. leave it to it, but they can literally pull and look within your case management system. Look at what the last email was sent, what was said, what we're waiting on. can review a contract and like answer questions.
Very different.
On the residential work, because it is a lot more, the fees aren't there on the resi work. So I need to come up with a way that makes that type of work more efficient. Cause at the moment can't employ 10 people to pick up the phone constantly to people on a deal where we're 500 pounds plus back.
Yeah. And that's obviously just the pressure from fees because you're dealing with end users and that it's not a transaction to make money. It's a, it's their home and therefore there's more sensitivity. Yeah. Yeah. Yeah.
And my, you know, the team that I have, and you know, it's head up by one of my fantastic girls that worked for me, Danielle, who just works tirelessly and she's so passionate about it. You know, she will do everything to make sure that person has their house when they want it. And so she's very personally invested in it and she brings that out throughout her team. So my hope is that...
If I can get the AI side of it and as well, know, automation of documents, which is a bit boring compared to all the rest of the sophisticated AI stuff. If we can get that side slicker, then they'll have more time to kind of have more contact with Danielle or Emma or all the different people in the team. Whereas at the moment, obviously it's, it's a lot of work on these transactions, which isn't really justifiable.
Kerry, thank you. That has been really interesting. I think we could talk all day, but we're going to have to call it a day for now because I think people might get fed up of listening to us. But thank you so much. Honestly, it's really interesting to see your story and how you've come through the industry and created this amazing law firm. Thank you for sharing it with us today. And for everybody that's listening, thank you for listening to the specialist scoop and we look forward to seeing you next time. Thanks.
Welcome back to the Aria Finance Specialist Scoop podcast. I'm here joined this time with Colin Horton from Project and Co. surveyors, a leading surveying brand in the business and valuation is such a hot topic at the moment for borrowers, lenders and brokers alike. Really good to get your insight. Thanks for coming, Colin. Colin, for those that don't know you, maybe don't know your business or don't know sort of your standing in the market, tell us about you. How have you got into this? Why valuation?
Okay, I'll try and condense it or bullet point it as much as I can. I fell into valuation, fell into asset management and grew my career in that space, predominantly specialising in lease-line enfranchisement, which is very niche and very boring. Government got involved and that market just went completely quiet. So I had to evolve and there was an opportunity in lending that I just thought, you know what?
it could be done better. I decided, know what, I'm going to give this a go. Obviously I don't look like you're typical surveyor. I don't talk like one, that's for sure. And you know, I'm not from, you know, London, I'm from Essex and there was, there's a little gap and we basically just went guns blazing the marketing, absolutely smashed LinkedIn and just delivered really good service really quickly, really efficiently and just focused on communication. Fast forward to now
We won the Bridging and Commercial Best Surveyor which was absolutely huge for us in our first year of doing this. I've gotten the Bridging and Commercial Power List, which is also amazing. And they gave me a great photo, which was even better. And we're just really trying, mate, to really kind of make headway in what is a really difficult sector to infiltrate as in a sector where there is so much risk.
Yeah, and also so established people can be really stuck in their ways. I see that from a finance perspective too. How quick was the learning curve then in a sort of first full year of trading? How, if you look back from month one to month twelve how different are you guys?
So the actual business itself has been going for six years and we hadn't done valuation. We were just focusing on building pathology and everything that comes with that. I thought initially we actually originally jumped into it probably about two years ago. And I thought I can do secure lending. It's just Redbook valuations, easy peasy. Got enough kind of capital in the company to invest in some good people. And I'm very blessed, I'm very good at selling myself and...
We have to get people from your big kind of corporates. That's what I told myself. And we cherry picked some really good people who I trust wholeheartedly. And that was it. We just went to town, mate. And we just started like meeting people. Brokers were a big thing for us because brokers, my fiancé is a broker. You guys go through a hell of a lot and it's difficult. you know, I think brokers have cried out for years for valuers who are there for them as much as the lenders, you know, it's not.
you guys ultimately choose us on the panels, you know.
Let me bring it back. One thing that was really interesting is you're talking about from the outside, you've looked at valuers maybe not being able to be held to account on their figures and justifying it. How do you, how are you doing that differently? What's the, what's the tone of Project and co?
So my tagline, which I have, think I've tagged now for nearly two years consistently is every single day is surveying with personality. And that's been a big thing for me. I think having the ability to communicate with brokers and lenders and you know, a deal comes through. What a lot of time we do with our broker clients or say clients and referrers is they'll come to us initially and say, Col, I've got this deal. Can you have a look at it? And I'll have a look at it. And if I think it's crap, I'll tell them, I was like, don't do it. This deal is rubbish. And I want to help make a difference in the set. So I want lenders to lend well.
and I want you guy brokers to earn a lot of money. And I think we are such an important cog in our ecosystem that I think us as value is forget that. And that's why I was so passionate about just trying to change it.
Always looked at the whole specialist lending proposition is a puzzle. There's a jigsaw and you don't solve it with one element and one arm. And that includes I'm reticent use to use the power term phrase cause I don't love it, but it's not just about having good tax advisor and good legal team behind you, but
You're lending, valuing, broking services have to align, have to fall into place correctly to make a deal work. And it's not just about getting the numbers, right. It's about the pace, about the delivery and the execution of that. And, you know, that does take beyond all else. What it takes is good communication because I do agree with you that the down valuation term is funny. I've not thought of it. You're right. A valuation is a valuation The downfall is in the eyes of the beholder. Correct.
With good communication early and justification of why does a borrower think it's worth X? Can they justify it? Have they got some comparables? Can they value or immediately go, no, I can tell that's wrong. Well, that sounds okay. Let me go and look at it properly with my expertise. Can brokers catch that early? Can lenders say, no, that's a nonsense. And can we make that journey more painless? And it does take everybody. It's not just one person, right? So you have to work with a lot of different people in the system. How do you manage the balance between managing borrower broker lender expectations.
So, you know, as percentage, my day is mainly spent talking to brokers wanting everything urgent. Urgent has really lost its power as a word, you know, and I think valuers in nature aren't combative, you know, in their personality types. They're generally, they're not trying to stereotype, but valuers aren't necessarily the most outgoing people as a profession.
so, you know, having the confidence to be able to stand by your valuation and to tell a broker ain't going to be like that or to tell a lender it's, you know, it's not a great deal. Don't do it. Or actually I'm actually really struggling on the comps, but I actually generally do think this is worth what they're in a pan. And, you know, it is, it's, it's really difficult. I mean, applicants, luckily we don't have too much interaction with them. Luckily, you know, and when, when we do have interaction with them, you know, it's on site doing the inspection.
But a lot of time it'd be agents and stuff there. you know, but lenders, you know, from my experience with lenders and underwriting teams, you know, the BDMs are great, but it's the underwriters that have all the power. You know, and you have to get on side with the underwriters. Underwriters will make a call pretty quick based on the quality of your reports and the style. And every lender has a different risk profile. So there are certain lenders that actually really want to lend money, you know, and they're a little bit more risky. I don't say risky, just a bit more, you know, commercially minded if want to.
It is funny how quickly, you know, firms get a reputation for, for misvaluations, right? Even if they're not down, that they're misvaluations, you get some of your high street types and I won't name names, but people attached to more vanilla lending will go out and come back with no values on great performing buy-to-lets or HMOs or assets that maybe have a slight flying freehold or something unusual. And they go, no, not suitable for mortgage lending. Whereas a huge part of the market might be okay with that. You just have to pay for the right valuation, the right red book, proper report, nod
I've driven past and I don't love it type of
These guys, mate, they're doing six, seven valuations a day. It's smugging all the term stuff. Bridging, is bloody off. They're doing seven a day, like on the high room. And they don't care. They're emotionless. There's no... The reason I've got so passionate about it is because I was set in a property once, my own personal residence that I lived in. It was quite an obscure property in terms of that it was a converted post office. And it was like three-floor flat. And there was no real comps for it apart from the flat next door it sold.
Hang on exactly the same. Anyway, value came out and they knocked it by like 50 grand and it sold it on the first day to the first person at the right price. And I had to like, I just cannot understand that you're, this is 50 grand, know, to someone to save 50,000 pounds. Yeah. You're talking a couple of years or whatever to do that. Yeah. Like they don't, I think a lot of them just take their emotionless and I think there is more to this game than just that, you know, and
Maybe I'll shoot myself in the foot when I say stuff like that, but you know, for me, it's...
What are people's misconceptions about the role a valuer plays? What do people assume you do that you don't where, where they maybe come at you for, if you can impact things.
I think they just assume that like, think they generally think that we actively either, depends how they view us naturally, but I think we're to down value stuff and just so the bank can lend less money or better a better term or whatever, or other brokers out there just see us as people that they can manipulate and try and get decent figures out of. And you know,
Over the last year or so, I've become so much more aware of that. I'll help and give advice where I can, but I just don't take the mic. There are a lot that will call you outside of hours, call you at 7, 8, 9 p.m. at night. I'm fine for that. But don't take the mic. Don't ever ask me to put my career and my firm on the line.
Yeah, yeah.
And I guess that's the, in terms of, you know, for people watching, what, can you do to give yourself a best chance of good valuations? guess it's being selective and honest with the pressure you're applying then if it's urgent, say it's urgent. If it's not, let's get it done. Right. Not rushed. I presume that helps you anyway.
Correct. For me, the biggest thing I hate is when we get instruction on the matter. And I've gone through the valuation before with said broker or whatever. I said, look, based on what you've told me, You know, initially, I think you've got a good chance of this stacking up. I can't guarantee it, but I think you've got a good chance of it stacking up. You end up going to the property and it ain't what they've told you it is. You know, you've got like 22 people in one bedroom, you know, and I'm just like.
And again, ethically, how I grew up, it's a matter close to my heart, and I was like, I don't like people taking the mick out of the system, you know? And it's just having that transparency with me at the start. You know, and how realistic is this? Do you honestly think it is actually worth it?
That impartiality, how, how do you maintain that? Just staying honest to the numbers, just finding a way of justifying it.
Yeah, you have to remember that everything you do, it can get ordered, you know, ultimately. know, if everything, anything got, God forbid was ever to go wrong. Luckily we've never had anything go wrong, but if it was, you know, there's going be paper trials, there's going to be everything. So you have to, you have to make sure that you're, you're treating both sides fairly. You know, that is the, obviously the applicant and and the broker or three sides the applicant, the broker and the lender, you know, all I can say to, to people listening is with your value of treatment, respect, you know, and if you do get a down val there probably is good reason.
for it, but obviously speak to other brokers, have communication, see where you're having success. There are some really good firms, not just my firms, there are some really good firms out there, valuation ones. There's some ones I don't necessarily like as well, but it's just having that communication, those relationships. And I always recommend having relationships with maybe three or 4 different firms, just that by all means message me and I'll tell you who. And it just gives you the best chance of getting the best deal for your client.
Communication is such a big one. Actually, on previous episodes, one thing we've talked about with others is the benefits of communicating well with your lender when you're in the debt. If something's going wrong, if you're growing your portfolio, if you're thinking about changing stuff, the same with your company structures, liaising and communicating with good tax advisor, your accountant, making sure you're on the right track. And it's no different, right? I think sometimes the valuation process is seen as a necessary evil. I want this money and to do this, I have to part with this cash and they have to give me a number.
And hate it. And actually, if we communicate honestly and transparently, then we're more likely to get a fair outcome that we've got eyes on early,
100 % authentic and transparency in this game is absolutely paramount to getting the results that you want. And for us as, like, I'd love to think that as a broker, will you speak to me on the deal? You can honestly tell me what we're actually looking at here. So when I do go there, I've got no shocks and no surprises. Cause the last thing I want to be doing is delivering you bad news and it hasn't stacked up on what, you know, I think it is. you know,
I'm fortunate at the moment, nine out of 10 times, it isn't the number that the applicants put in. I've got quite used to delivering that bad news, but it's the way you handle it and giving them a heads up. There's been times where I've started valuations up, we've actually taken the fee, I've actually inspected, and I can quickly see like that, that it's not gonna start and I've stopped. And I've just called up the broker and said, look, I'll refund you, because this isn't gonna work. And I think that goes a long way, it doesn't necessarily help the bank balance for us, but.
you know, ethically for me, that's how it should be done.
Yeah. And it matters to the borrower, right? Cause ultimately the end of all of this, there is somebody trying to buy or remortgage property who's spending money on the professional services around it. And you want to make sure it's the right process, right? Yeah. That's a good thing. Taking a step away from some of those challenges. What are some things that if I was a borrower tomorrow,
needing to remortgage, I'm confident I've got a good asset. What can I do to my property to make it attractive in the eyes of a valuer or in terms of that'd be good for resale that would go quickly? What are some of the bits you look for that stand out as?
So for me personally, the kitchen is always the biggest, the biggest room for me. It's always the biggest draw. It's the most expensive room in the house. Obviously if you haven't done your kitchen, you know, it's just obviously very obvious things that can tidy up, cover any imperfections. I mean, I shouldn't say that.
before you go on with that, how often is that not the case? I mean, tidying up feels like a really basic bit for me, but I've had to tell clients before, make sure it's clean.
It seems obvious, doesn't it? I'm not expecting like, know, sparkling, but just make it smell nice. Smells a big thing.
saying that because some people are going, look past that, look at the numbers, but that's what a buyer would think. Right. That's the human instinct of you walking in. That's what a potential buyer would think. Correct. The reason a lender gets a valuation is in case they have to take the property on and if the case they have to sell it. Exactly. That matters.
So that gardening, like just keep your front, you know, just keep it externally. As soon as the valuer walks in, they're to be looking at it and they're going to say, this is maintained or not. So it's all about like the psychology of how much someone values something. And it is, it's a very good point is how much, you know, if you're going to buy it, what would you be looking for? What would put you off? And that is the best way to do it. You know, there's no kind of rocket science per se. We often get asked about valuation packs and stuff like that. I like them personally.
It's nice to understand where the applicants come from in terms of their valuation. Yep. Sometimes if I'm in the mind of the applicant, sometimes it helps me with this. Sometimes it's a little tricky kind of, and don't make the mistake of just pulling right move comps that are on the market.
What people giving to you there. that's a good thing because people not some borrowers might be new to this or might not understand. You're talking about somebody presenting you with a pack of their rationale as to why they think it's worth this before you look and make your views. So what in there is useful?
So for me, obviously I know full well that nine out of 10 lay people will just go on Rightmove up for sale, high to low, pick the ones that cherry pick that suit their case. I don't, unfortunately for them as a valuer and for RICs we don't really care about what's on the market for sale. We'll use it as maybe a secondary or kind of third resource if we're not sure on a value.
But we look for sole comparables, ideally within the last 12 months, ideally within kind of a kilometer. It's again, the way I twitch it back to everyone is if, I value it as if I was gonna buy the property and that's how applicants should look at it. Try and take the emotion out of it and say, look, if they were gonna buy this property themselves, what would they be looking for? And that's a really simple way of doing it. But you'd be amazed that people don't do that. They always just send me.
for sale on Rightmove high to low.
the time, which you're discarding basically immediately. Correct. Yeah. Okay. That makes sense. Yeah. What, what sort of stuff have you seen recently that's particularly interesting? I mean, you must've been in some wild properties. What have you seen in the market at the minute that people are transacting on that is interesting, that is different. That's caught your eye.
I'm really enjoying the care sector at the moment. Only this morning I was working on a valuation of nine flats that are being converted into basically serviced accommodation for children with disabilities. And the yields are unreal. And it's a good cause, you're helping kids that are suffering. But I'll try and keep the numbers as rough as I can, but.
The contract over these nine flats is worth about £200k a year. And the actual rental amount, if you were to rent them was somewhere in the region of about £80k . There's a huge swing. I think, care is probably going to be the new HMO side of things.
there's a middle ground already, right? Because from our side, we probably see it maybe more than you do. Maybe you're less aware of those contracts in, the social housing sector. So they look like HMOs from the outside, but it's the contract and the strength of the lease. that's sort of that hybrid in between care and social sort of responsibility, but also private rental sector. It's an investment.
I've got one myself.
It's unreal mate and it's solid. A lot of others don't like those five-year contract, which surprises me because it's really secure. generally in the contract is to put back as was when they took the contract.
Yeah, secure tendencies as well. They're great. And actually, if you do get that, it's an interesting one for me as a broker placing these deals with lenders and getting buy in, you know, the fix and repair clauses and making sure that the, properties handed back to you in the same state you hand it to the provider is vital and gives you a level of protection that you didn't have before.
Making sure a lender can get vacant possession. They have vacant possession rights is really important. And then actually qualifying who's going into the property to make sure a lender has the appetite, but they are great. It's a great return. It's doing some good, you know, there's some panels recently housing for good. It's a really nice tag and so it's good, it's a good model and they're valued the same way, right? You're still just a property from a valuation perspective. It's an asset that someone can hold and can reinvest, can sell, can do whatever they want with, right?
100%. And what I would say is, especially the example I had today, is make sure when you are going to put in your application that you have got the lease kind of signed already if you are going into that, because a lot of lenders that we work with don't really accept kind of hope value. So the hope that it's going to get signed, you know, so what I'm good telling me that you've got 200 grand rent coming in, but unless it's signed, I can't value on that premise. So that's just one thing. Do make sure that you, if you've ever put in applications in that you
you can cross the T's and cross the I, that makes no sense. the I's and cross the T's. So yeah.
And that leads onto something that's a really hot topic at the minute because valuing yield based valuing in general, there's loads of education out there in the market at the moment. Lots of property mentors talking to willing borrowers, keen borrowers about HMOs and moving into the HMO game. And it's not just buying ready-made HMOs because a good HMO isn't on the market. People are holding them. It's converting single dwellings into HMOs. They're often taking short-term finance to do that on the promise of a
commercial valuation at the end, being able to pull all their money out. Now that model is absolutely possible, which we've covered in previous episodes and generally in the market, but you're not always guaranteed a commercial valuation on a HMO. We've talked about it with lenders before. What, from your perspective, would give you a stronger case for recommending the commercial valuation on a HMO property? What are the sort of criteria that you
Yeah, so I mean, obviously the amount of rooms obviously is paramount. I think the lowest we've done one on is five, we have done them on five and sometimes that is the right way of doing it, know, it's just, you know, but generally we're looking six, seven or above. I can never say it properly, but sue generis how ever you say it? You know, but ultimately the things that we look at for whether or not it should be applied as a yield is we look at the quality of the, you know, the conversion.
how much material change has actually gone on to the property. Because a lot of time if it's had six ensuites put in, it's quite a substantial amount of change. So take it back to a house. Bricks and mortar doesn't really apply to it. It is going to be an investment method. The quality of the operator is now getting factored in a lot more. So we are often asking our lender clients, what's the history of this applicant?
because obviously it is very hot topic, everyone's kind of jumping on it, but if you haven't managed the HMO before, how do know you're gonna be any good at it? And obviously the proximity to strong employment bases, i.e. hospitals, town centres, big kind of corporate blue chip client, that kind of stuff, doing really well. Actually where I'm from in South England Sea is a prime HMO area. It's really strong HMOs. And obviously don't expect...
generally really strong yield if you're a HMO investor and you do not take care of the rooms and the clients, like that will get factored in for us. And we are seeing that a lot, you know, and a lot of time they're over-rented and they are putting people in squalor. So I sound like some, you know, evangelical valuer here, but you know, it doesn't help. If you're putting people in decent, good living conditions, chances of you getting a better yield are gonna be stronger because the risk of obsolescence is a lot.
lower, you know, and what I mean by that for anyone who doesn't understand is, you know, with HMOs, there's a lot of people coming in and out. So naturally there's gonna be wear and tear and damage and stuff. And I think what a lot of people forget about HMOs is it's all well and good to get that really lovely, sexy refinance, which we all want. But, you know, because so many people come in and out, probably every seven to ten years, you have to redo it all again in terms of decor, new bathrooms and kitchens, etc. And it's not cheap.
You know, so just I know HMOs is really exciting, but just make sure you do research and obviously speak to great brokers like yourself and just make sure you know what you're doing, you know, because you are very much and you couldn't be... Of all the property investment opportunities, HMOs are the most dependent on the valuer on that exit. It's all about the exit.
For sure, if you've done the conversion works yourself, you're absolutely right, because everyone's hindering on the massive uplift.
They don't sell, mate. There's no, if, that is the worry for me, if I'm honest with you. I look at the market and I think, okay, it's been valued at this on an investment method. So, value is a business fundamentally, but my God, they never trade anywhere near what they're getting valued up for. And we are not the only one in the sets that's raised this. know a lot more lenders are pulling back a little bit on investment. But lenders are doing it, understand it and get it.
Cause it's interesting. Cause look, that's important to hear because if, even if your view is naturally overly negative, let's just say, let's say you're on the more pessimistic side, you're a valuer. So that matters. And the market is full of people with lots of confidence and being brave and finding ways to go into a deal going, I'm going to get an investment valve. I'm to get a commercial valve, but they need to understand the risks, right? That it can be a six bed HMO, which is not guaranteed seven bed is different because if you've got a sue generis planning, it's the it's different anyway, but
If you're a six bed HMO, it could go either way. And it sort of is on the valuer and then the lender's interpretation of the value as comments as to whether they grant you that or you're back to bricks and mortar.
Our instruction always come through bricks and mortar and or investment. And that's how it comes through. Now we do do investment method, like we do it all the time. Based on vendors, what they want us to do and if we can find the evidence we will. But it is arguably the hardest part of valuation because there's no evidence.
must be this everywhere right it's still really you must see a lot of this
Yeah, mate, I reckon at the moment, we are maybe doing one - two a day HMOs. We are doing investment, but you know, is just don't, when you're doing your calculations before you speak to yourself, like just make sure you kind of speed a bit more conservative. If you get a lower yield, great. But just be careful with it, you know, don't, because I've seen people go, you know, they spend all of their money hoping to get like a 8% yield or I don't know what, you know.
Yeah, it doesn't surprise me.
What they're expecting, but say an 8% yield, it might come out at 9 or 10. So the tip is always to speak to your broker and just find out what lenders they're having success with that are doing, know, it probably won't be us, but what lenders are doing, who are having success with the valuers that are that they're doing good yields. And he's got to kind of play the game and work it backwards. Because a lot of lenders, there are a lot of valuers that will just absolutely tank it.
Do you think, does it make a difference for you and your valuing if it's within Article 4 or outside? It does it indeed.
Indifferent. mean, more and more, mean, non article 4 is becoming rare. Yeah. Yeah. Now, the one we've done today was just outside of alien and it's got article 4 coming in December. And it does make a difference. Of course it does because it means ultimately it's going to be less HMOs, which is, know, for the HMO owners, a better thing. Of course it is. And, and given the way the UK economy is at the moment, I think HMOs are a really good investment despite my pessimism. My pessimism is purely on the exit. Yeah.
And you know, just, I just don't want people just taking out all of their money all the time, you know, and then leaving themselves.
Good model and within article 4 more chance potentially of that commercial valuations.
yeah, 100%. If it's article 4, I mean, me personally, if it's six bed, article 4, you're going to get an investment method valuation out of me. Yeah, that's how we work. you know, like said, we have done some five beds and, know, after discussion with lenders, we'll call that the lender and say, look, very limited bricks and mortar, you know, comparable to here. ensuites massive material change here. So, you know, my personal opinion, you this should be an investment method here because someone is going to come and buy this and just hold this as an asset for maybe a generational asset.
Beats.
And how are you finding lenders
I mean, lenders are so varied. I mean, like, it is nuts. Like, cannot like what you think one lender loves, you go to another one and they don't like it. you know, and it's, there is no hard and fast rule for them. We've tend to find that certain lenders will be known for doing HMO stuff and they were a lot more receptive to having the conversations.
And broker should probably be engaging with those as well, right? If everything has gone right here, the deal has already landed at the feet of the right lender, the right product, the right valuer and everyone's in the loop on what we're looking for out of this. What sort of tips would you give brokers, any brokers that are in the market to work better with the valuer?
Good question. Like I said, don't be, for me, authenticity is a real big thing. You know, and I've become friends with a lot of brokers over, know, last couple of years. And I think value is do see through that surface level facade a lot of the time. So cultivate actual proper general relationships with valuers and so much so that you can
If that valuer tells you that it's not worth that, you trust them and you don't push them and that's what it is. Cause that's the type of relationship you've got with them. You trust their opinion. And just don't, I can't swear again, but like just don't, don't bull them. Just tell them the truth. Don't lie to them. Don't let them get there and be embarrassed. Cause ultimately as well, a valuer, we don't love having to find a number. I think the valuation game would be so much better and completely different.
if we weren't told the sums. So real valuer is running blind every single time. be wild west, but I'd actually be fascinated to see where value stack. Would it be higher? Would it be lower? I have absolutely no idea. I suspect it probably would be lower, but it's...
and that'd be better.
Mm.
Yeah, broadly. It depends on the sales. If you've got obvious sales comparables, you'd like to think you're going to land on the obvious number and no one would have over egged that as well. But I think you're probably right. Yeah, it makes sense. If you could change one thing about how valuations are managed in property finance, what would that be?
It's you're always working to a number. It's weird.
So many things, I think the main thing I would say is that I think lenders generally should have a diverse panel of valuers, know, so the broker gets it. Don't get told just to use one valuer. I think there should be three or four that they're told to use. Obviously you've got Methan and Vass, which are great as well. But I think having a diverse team of professionals for lenders is huge.
You know, some might sit on the more commercially minded side. Some might be ultra cautious and there's a space for both. Yeah. And doesn't mean the ultra commercial guy can't be ultra cautious. Of course, of course they can. It doesn't mean vice versa. So what I would say is I think for managing valuations, think lenders should really take note of who the people are that giving them the work.
That makes sense. There you go. Well, that's a good one. One thing that's interesting is you talked earlier about urgency and borrowers are urgent. Everyone is urgent. Everything they did doing yesterday. Do you think across the industry that delays in surveyor availability are actually, just property access, is that still a major issue?
Access is a pain in the backside. It's really hard. I can promise the world to you. You could say, Col, can get someone tomorrow. I could go there tomorrow. And, you know, it doesn't mean be able to get in or people and a lot of time where it's HMO for arguments sake Yeah. Nightmare because there's five different people in there. Yeah. You're in. Yes, there is an issue with access and dates and times that kind of lot of that comes down to RICs requirements because you have to have you know, a chartered surveyor go and do the inspection. I have my own personal views on that. don't actually think that.
should be the case. think people are very capable of, you know, you can train someone very highly to go and do, you know, go and do a survey. But obviously we can't adhere to that. We have to do, yeah, you know, how to send chartered surveyors around, which is fine. And that's what causes the delays a lot of times. So that is the, it's just the bureaucracy that comes with, you know, not the RHS, but you know, just in terms of the Redbook requirements and stuff.
was going to ask you how do you mitigate those problems? I mean, access is one thing that's an organised borrower, right? Making sure that someone's ready to let you in. Payment. Okay. That makes sense.
A lot of lenders will be like, don't go till they pay. Don't go till they pay. And then the broker will be like, you not paying? I was like, well, they haven't paid. Yeah. They're going to pay. was like, well, it's all good to say that. But we do an evaluation, they don't like it. Yeah. They could go, you know, and the cost to actually chase debt as a business owner, as you, you know, don't know you got a broker you may carry bad debt, it's a nightmare. You know, it's not worth it after time to chase the debt. Yeah. And they're the two main ones. And some just information, tenancy schedules. Yeah. You know.
planning documents, schedule the work.
So the bit that matters here in terms of tenancy's schedules as well, I'm guessing if you've got headline numbers that, and the point for people to be aware of really and consider you might have granted access really quick. You might have let someone in, they've taken all the pictures, done the visit, but if they're trying to do numbers, algorithms, comparables, and they're not armed with all the facts, you're shooting blind and you're more likely to have an inaccurate valuation. Whereas actually if you provided all the passing information, that'd be much easier.
More information we have as well as the quicker we can get the job done. It's really simple. So again, that comes down to the brokers in my personal opinion. should be, cause they, you'd be worried if they're submitting applications and haven't got that. Having that themselves. And like I said before, applicants lie. Just be honest from the start, you know, and also other stuff like when it goes like, obviously it's a bit more of the broker side, but just, just lying about all the backend stuff like credit and stuff like that's going to cause delays. you know so just.
Bye bye.
If you're an investor or developer, just be honest. Treat brokers like lawyers. Tell them everything off the start and then you just speed everything up.
Do you think there's a rise in lenders out where there's borrower demand for this, but there's also lenders trying to get there where technology is coming into the valuation process. We're seeing a lot more AVMs, which is an automated valuation model or desktop valuations or a snapshot of a figure for somebody to then action and borrow against. How is that helping or hindering the process overall? What are your thoughts on that?
AVMs, some are good, some are bad. We're actually jumping into that space ourselves, building on one for brokers to kind of find out feasibility beforehand. So I do see a value in it, but I also see how it can muddy the water, soot the current values for arguments. You know, the simple algorithms, they tend to just work off the last sold price and then apply land registry house price data to it. You know, and it's not necessarily.
doesn't take into account the wider market
No, there might be an absolute banging comp that sold three roads away that is absolutely perfect, but it's not necessarily going to take that into account. Yeah, sure. So I do fear, not fear, fear is the wrong word. I'll be free if can do something else. But I think it is going to become more more prevalent. AI is huge now. mean, we use AI a lot for kind of dissecting information, reading reports and titles that you know can quickly. We use AI for our first stage of our
audit before we send the reports out. So we've got customer AI that will review our reports, rank it out of hundred and tell us where we need to be to get it to a hundred. So that's what we do at the moment. So we kind of trying to lean on it as much as we can. But you're going to see it more and more. I generally do think the lenders that push AVMs are going to get a lot more work. It wants to do that. And desktops have become more more important as well, I think. But then as a broker, if your client's coming to you saying I want AVM or desktop, just...
it would raise a couple of red flags for me.
Do you think we'll ever get the, the technology that's able to, cause the beauty of the AVMs now is that they work for single dwelling assets, straightforward houses, whether it's a home mover or maybe easy Buy-to-Lets much more difficult to look at the HMO market. And that's taking away from like commercial valves, just just bricks and mortar, because the work you might've done might not be factored in or refer jobs and things like that. Do we think tech is coming that can take that into account? That can help move that, that sort of arena quicker as well.
Mate, I've thought about this so many times. The issue we have with it is, valuers don't tend to love to share data. So if there was a data set of all the valuers, and then we'd happily participate in this as our firm, where your valuation of HMOs gets put into a data set and all the other firms put there, that's when you start to collate some nice real data, which would be quite easy at that point to populate an AVM. And people like your big firms, you know, knocking out, you know,
two, three thousand about a year. They could probably start doing it now. We can probably start doing one, but obviously the more data you've got, the more accurate it can be, you know, and you can look at bricks and mortar. You can look at investment methods, you know, and the way the reports are, know, especially with AI now, it picks up keywords. So can quickly see condition was poor, yield adopted 10 or, you know, so it can be done for sure, but it needs collaboration in the sector.
which is easier said than done.
chance mate. yeah. would, if anyone wants to share with us, we would do it.
Yeah, okay. Interesting. Well, you never know, right? Down the line, will innovate and they always sort of have proven that they can do stuff like that. I'll put you on the spot to sort of wrap up. What's going to happen to the property market next 12 months, next 18 months, property prices up or down? What do you think?
I, it depends on what happens with the Labour government at the moment. I won't go too much into that one. But I think commercial is going to be the big trend. I think a lot of people are going to mixed use and title split. And I think that's where the money is.
You're the second person on this podcast series to say that think commercial is. Yeah. and residential property value, think potentially stalling.
I know my stuff
Stalling, do you know what, things that are priced right will sell. Just because things don't sell doesn't mean the market slowed down. It's because agents are desperate to win work. And the easiest way to win work is to over price something. And as soon as you tell someone the price, they've got that money. And if they don't get their money, they've lost that money, but they never had it. But if you actually looked probably at the actual transactional numbers, it's probably just quite a nice steady rise.
So, people when you hear agents, market is rubbish. It's not, it's just because you've been lying to people telling you you can sell something for more than what it's worth.
Well, that's interesting. So market slowly on the up, but more conservatively than people maybe are looking at it. Correct. But you think of diversification into mixed use commercial, slightly different propositions, maybe the move forward.
Correct, mate, stuff like PD on stuff like that, know, ground floor, retail, adding in an extra flat there or not. That's what I've been doing now. I think it's time to be creative and don't necessarily believe all the trainers that you see online that are telling you you can do, buy a property with no money and stuff. Like you still need to have some money to buy something with no money generally. So just be careful.
Yeah, which is absolutely great advice. And one thing we're trying to do here is educate from good people in the market, transacting really well. So it's really interesting. It's been super helpful. It's been really good having you as well. Thank you again for watching. Thanks to Colin and Project and Co for giving up their time and giving some great advice for you guys in the market. Tune in next time to catch up with more.
But I wondered whether we should start with a bit of the background from that period of time where we rebranded, brought the businesses together, created Arya Finance. We're approaching at the time of filming our third anniversary, our third birthday. But I mean, how was that for you?
Because you walked away from a brand that you'd started on your own, right, to do this.
Yeah. Do you know what? It was definitely an emotional roller coaster because, you know, you and I had spoke about it a lot over the years. The direction the business was going to go in. Did we at some point retire the Vantage brand? And I think when you when you've started something and you feel close to it and actually it's not even just if you started it because I know that actually you were very connected to the brand as well. And I think that you put blood, sweat, and tears into something and it becomes quite emotional rather than transactional.
So we it had been something that had been kind of floated around for a long time, hadn't it? and to make that leap and then actually when you make the decision because indecision is the worst thing of all things isn't it? If you're if you actually say right that's what I'm doing all of a sudden the conviction changes and you get quite excited by it and that was very much what happened.
It was actually look at the opportunity look at the things that we can do with this new brand and we've got some different expertise and some different cultures and you know there's great opportunity here. So, we were genuinely excited by it and then we laid all the plans and we had our launch date. Um, it was September the something. I can't remember the date. It was early. It was supposedly very early September. Yeah. In theory, sit was 18 months of planning to get there.
Yeah.
And it was and it was for a Monday naturally because it'd be weird to launch any day but a Monday. And then the queen very sadly passed on was it the Friday? Was it the Thursday? The Thursday before we launched, we had the champagne on ice for our for our launch and then the country was in morning was the, Yeah. kicked us out a little bit, didn't it?
Yeah. So, we decided we decided to recede and um we thought, what could possibly go wrong now? That's about as
bad as it gets, isn't it? And then good old Liz Truss decided to do probably the most worst mini budget known to man.
Destructive. Really destructive. Particularly for our space as well, right? Yeah, absolutely. And do you know what on reflection and I'm not going to get into politics because I think that's a dangerous topic, but actually the probably what they were saying wasn't wrong, but it just created this massive bang, didn't it?
And the market changed overnight and it was the speed at which it changed which caused the disruption. So we were we were there ready to go and there was no choice at that point. You know, we were doing it and off we went. But it was a real shame because the excitement of launch and the opportunity that we had seen became a lot more about firefighting and trying to damage limit.
And there were a lot of people out there who really suffered in that time and lost money because they had they had deals pulled on them and then things didn't fit anymore.
You've got transactions going through and offers were pulled. It was it was actually looking back on it, it was aside from the financial crisis, it's one of the worst points in the industry for me.
I think it was the I mean it was a baptism of fire as a firm, right?
But I do think one of the challenges then was the lack of education for borrowers about why it was happening in the background. And very quickly, our whole industry seemed to educate themselves a bit more on the mechanics of lending and pricing and how products are created.
And it's probably one of the long-term silver linings. that we have a far more involved and educated broking space to support borrowers and give better advice as to when a rate is good or how quickly should you move or are you really in fear of or at risk of losing a product but it was really tough wasn't it? It was um it was a very uh hard time to launch.
But getting through that, how did I mean I I know sort of my thoughts on this anyway watching lenders react and the lending space. There was a lot of bad press. I talk quite a lot at some of the direct borrower road shows we go to where we meet landlords and developers. People always talk about, well, the banks were greedy. The banks did this. The banks pulled my rate. The banks screwed me over. And it's probably the wrong rhetoric right? because actually banks were just trying to not go under themselves because their cost of funds had gone up. Yeah.
And I think that being balanced and knowledgeable actually really sets you apart in the sector and and you know we will have seen and I know that I certainly did lots of brokers who would support that narrative because it bought them favour with customers and I think in life there's a lot of people out there that think that if you tell
people what they want to hear that they will like you better and that you will do better from it. But actually, I believe completely the opposite. And I think you have to stand up to what's right and what's true. So perhaps there were some people that didn't enjoy the conversations that we were having over that period where we were sort of saying, "Hold on a second.
This isn't fun for anybody. They haven't pulled this rate because they want to see you in financial detriment and they want to see you pay more to their gain.
This is a case of they can't write that loan at that pricing because they will be underwater and I think that there was probably a huge education well not probably there definitely was a huge education on hedging in most lending businesses and some did it really well and some did it really badly and then there was of course everything in between and I think shaving the last what 15 years or something being in a really benign interest rate environment lenders didn't they didn't really have to worry about that and they all had their hedging policies. So by hedging for those that aren't aware it's about how they fix their money and their cost of capital and how they make sure that what they're lending their money at it they can say yeah that's what we're broadly borrowing at. Otherwise, they price something at a certain rate and then their cost of borrowing comes in much higher and all of a sudden it eradicates not only their profit margin, but in some cases their ability to meet overheads and it puts them completely underwater. So, it's just impossible.
I mean, sensibly timed hedging enables a lender to not have to move the goalpost as much, which actually when we take a step back to what do landlords, developers, property investors trying to make good decisions in the market, what do they want? They want clarity on what they're getting to make sure a deal works for them and to see that through.
Yeah.
And it was that cue for that back end of 2022 where things moved so quickly and was so volatile that nobody had security in the words on paper and the numbers on paper and I think a lot the problem is a lot of lenders they didn't know that their hedging policies weren't going to stand that test because they had never been tested in that way. And with the benefit of hindsight it's easy to see.
But there is also a flip side of that that if a lender overhears and they fix in too much and then costs go in the other direction then that can be expensive for them as well.
So there's a balance to be had and I think that it was just a very challenging time and for those who could understand that yes okay it you know it's frustrating and it in some cases cause people some huge amounts of grief but I think we all had to just work together and that was the message that I was always putting out to clients that look this isn't the lender trying to make a quick buck out of you and I actually still to this day don't believe that that was happening at all.
Um, and there were some that were sharper in terms of if interest rates went against them,
Their products were gone within the hour and you can't blame them at the end of the day, lending is uh it's a market to make money and that's what a lender shouldn't be criticized for that. So, it was it was really difficult. But then on the flip side, you know, we are we're there to support clients and over the years, we've had some clients who have been with us for a really long time and watching what they went through was really really tough and it it's kind of like it's just a product of the environment that we're in and there's not much anyone can do about it, but it's just about understanding the challenges and doing the best to support and I think our team did that exceptionally well. You know, I was about to say the one thing I look back and I reflect on that period of the I say the late nights as if that stopped, but the all the hard work that went into all that work. I'm incredibly I know you share that sentiment. Proud of the team for the care in each deal. Yes.
And it was never just a transaction and nameless faceless transaction. It was people's careers and livelihoods and personal homes as well as investment properties. So I think I think we pushed through that as many firms did as best they could.
Yeah. I don't think the guys were actually desensitized to it in any way, you know, even as it persisted.
You could see the real anguish within the team when they weren't able to honour a rate for somebody and they had given it their best and they had escalated it to me or to you and they had said, you know, can you really try and fight this case? But ultimately, if it put a lender underwater and there just was there was nowhere to go with it. A lot of hard conversations were had in a in a three six month period.
Yeah. Took the shine off a bit, didn't it?
For sure. Yeah, it did. Yeah. But we got through it and I think you know there was the borrower sentiment I think started to education spread and word spread about well this is the new normal and this is why it's happened and people started to understand and ultimately you couldn't expect lenders to sell a£10 note for eight pounds because if we lose lenders in the market we all suffer for it. So actually good lending options are important.
But moving past the doom and gloom of that particularly six months, but it was longer than that period really,
we saw a real fight back from, and it's my favourite thing about the private rental sector anyway, is landlords agility and resilience and how they find opportunity in a higher interest rate environment. And it was really interesting.
And we saw lenders react to the inception and the innovation into higher um arrangement fee products with a lower interest rate to counteract some DSCR issues. And there's still some myths around that, but we've seen lenders fight back to try and support the bro borrowing market. Right.
Yeah, absolutely. And look, the market had to evolve because with the return that a lender needed on a buy to let loan, the adjustment in rental income was never going to come quick enough.
parents are catching up and I think what we're seeing is that the demand for the really high fee lower rate is still there but it's probably not quite as severe as it was in the earlier days but that product still very much has a place in today's market and it's funny I even now we're what two and a half years probably post those first products hitting the market we still get borrowers saying love the rate don't like the arrangement fee yeah do you want to talk about I mean as an education as a base level strip it back to basics why is that not the focus on these products.
Do you know I find this conversation absolutely infuriating because it's not the borrower's fault it's what they're used to and I you explain it and you kind of do the math for them to divide the fee by the length of term and then you give them an alternative with a higher rate and I think for those who have borrowed over the years these sorts of fees are just alien and they think that it's madness and it's really difficult to educate because I think people they hear you and they nod and they go yeah but I still can't pay that fee it becomes so problematic when someone's got that mindset because ultimately you're going to pay the same because the lender has to achieve a certain hurdle to make it make sense to lend that money.
And I think a lot of borrowers think that it's just a choice that lenders are making like you know we want to just earn more and more and more but actually we obviously see on the other side where lenders are really cutting their margins quite thin to compete for volume in a really saturated market for sure. I mean that's the myth isn't it? The myth is that the higher arrangement fee means they're making more money. Actually to dispel that sort of unequivocally. It's the same amount of money. Yeah.
Just broken up into a different sort of pot. Yeah. Is sort of a fair way of describing it.
And I think that perhaps the broker community were grateful for that piece of innovation, but perhaps the borrowing community were less grateful for it because it the adjustment year their rates have still gone from say somewhere between two and 4% depending on what end of the market they were in, what type of product they were doing to kind of between five and a half seven. Yeah. Um and they see that as such a big rise as it is that then they can't get their heads around the fact that the fee has also doubled at least.
And it looks tricky. It's a it's a difficult one. But I think over time as that just becomes all people have ever known in the same way that low interest rates all people ever knew, it will start to further normalize. And I think the broker community does a very good job at explaining it overall. It's just a wholesale change to how the market structured that I don't think we were ever going to see people's mindsets adapt to that overnight.
14 I do quite a lot of banging on at a lot of the talks I do about the new normal.
Actually, you are climatized to the new normal. You find a deal that works for you in today's pricing and hope and trust that actually if the market improves, it will work for you even better in the future.
Yeah. Um there's something to be said for an acclimatization, but there was a lot of myths at the time about we would see the peak like a sharp mountain top, like a triangle, rather than the reality is more like table mountain. Yeah.
You live at the you live in the peak for a while and you get used to it and you slowly come back down.
Um borrowers have also changed sort of some of their buying habits to chase yield. We've seen a lot more newer borrowers in the last two years particularly enter the bridging space do some short-term borrowing to maximize the value in an asset buying below market value. We've seen people divert into social housing and again lenders are trying to keep up right they're actually they're really trying to help there's money in the market to be borrowed and debt remains a good option for borrowers to consider. We hear so much about angel investment, find an investor, but debt has a home still in this space, right?
Yeah. Look, the market is full of liquidity. And the I'm sort of the memory of the financial crisis where liquidity was the problem. And this is very different because there is demand, there is liquidity.
it just there's just sticking points in terms of where people expect it to be or need it to be in their mind to transact.
So that has put the brakes on to an extent but if I look back over the last few years and actually it's mad to think that we are sort of three years into this now.
It's you know it feels just like yesterday doesn't it?
If you look back that first year 23 was really tough, wasn't it? And we had another little peak in the June where swap rates went through the roof. Um, and then we've seen it eb and flow from there and we've seen a few base rate cuts which helps a little bit as well.
And I think the market is in a decent place now. I think you know we're interest rates are what they are.
They're going to go down a bit I'm sure but it's not bad. Do you know I see loads of talk there's still lots of talk online particularly on social media platforms Instagram LinkedIn and other places where people will talk down standard blet's dead and actually we haven't seen that as a brokerage right we're lucky to have quite a decent market share we transact a large volume of deals a month a year and we have a you know a particularly premium presence in the buy to let space but we're seeing purchases we're seeing purchases across the board still I think probably what that more refers to is your like, you know, middle class couple that have a fairly decent income, some savings knocking about and say, I'm going to put that into a single buy to let property.
I think that part of the market is probably all but dead. Yeah.
Um I think the accidental landlord where someone's just renting out the house that they live in and buying another one that's a bit dead as well because of the tax treatments etc. So the I don't think Buy to LET is dead at all, but I think it's what it looks like in its new capacity and one of my big concerns is what availability of sort of family home rental stock there will be because there's a huge raft of people that are going into HMO, you know, doing the more creative side that chases a higher yield, but actually we do still need buy to let landlords and there car purchases happening for sure but it's hard to make the numbers stack isn't it on a single family buy to let purchase these days with all the tax treatment and the various regulation that you have to go through it's you know it is tough and I think that side is really suffering but the more professional end I think there's a huge opportunity there and that that rise of the professional landlord again something we talk about a lot but as a firm we shout about in the market that has benefits for lending as well, right? Lenders want to work with professional landlords.
Some do and some don't. I mean, what our end of the market Yes. So, what we have exposure to that is exactly where they want to be.
Yeah.
If you go into the more like mainstream bank end of the market, a lot of them won't lend to portfolio landlords or they don't lend where it's I mean most do limited company now because it's hard to avoid and that's where the market's moved to but it wasn't that long ago that some didn't have a limited company product or they don't do HMOs and the more quirky type what they class as quirky that's probably still quite mainstream for us isn't it but the there's the there's a definite push through to the specialist space which I think again creates opportunity for us and for other businesses in the space to help people to try and resort of ren their journey and you know pick a new direction because I think just growing a single portfolio is a big challenge and I think we'll see landlords selling off that stock because it's just too hard to make money in it.
Yeah. Yeah.
So, I think it's a change, but I don't think landlords are just going to hang up their boots and say, "Well, I gave it a good go. Now, I'm going to go and do something else." You know, these this is their jobs. It's their occupations. And I think credit where credit's due, they're pretty good at weathering the storm.
Yeah. An incredibly robust market, I would say, and robust people in the space, which is a good thing. Um when
when we talk about debt, if we digress ever so slightly, you know, we as a firm, we're not necessarily sourcing people with angel investors or equity partners. We're looking at traditional debt, specialist debt, whether it's private banks, challenger banks, high street or specialist lenders, everything in between.
What are some of the mistakes that we're seeing right now that you think of note for people going into debt maybe for the first time or maybe just their expectations are wrong? What are some of the things that people may be That's a good question.
I mean, if I had to if I had to sort of summarize it, I think there's a lot of noise and smoke and mirror out there where the market's flooded. There's a lot of lenders and I've talked about this recently because there there's a lot of money. There's a lot of liquidity out there, a lot of new entrance to the market and there's a lot of headline rates and shiny products that have quite good marketing campaigns.
But the devil's in the detail with these things, isn't it? And I think that it's easy for people to get a little bit blinded by what they're seeing out there before having like a proper quality of advice and talking to people that know the market and understand the market and we as a business we make sure that people are aware of what is out there.
So if we think there's a product which suits them but there is a cheaper product we have that conversation and
I think it's important to have that level of transparency and you know we are we're completely impartial as a brokerage and it's important that people know that you know what we're suggesting ticks a number of boxes. might not be price only or it might be you know it might be the best price out there and coincidentally that might be the best product out there but I think it's very easy for people to get caught in the hype because everyone talks a good game um especially in the bridging space actually I think buy to let's slightly different particularly crowded it's a particularly saturated lending market though isn't it bridging yeah and if you get that wrong especially as a first time investor the consequences of getting that wrong are pretty severe compared with a buy to let loan.
If you take on the wrong bridging product and you've got really high cost of borrowing, but not just the cost of borrowing, but actually you don't know how that lender is going to act and behave in a scenario where you might hit a snag because look, it's the first time that you've done it.
And even if it's not, this these things happen, right? We see it happen time and time again, even for the most seasoned property people. Yeah. that a good plan sometimes doesn't come to fruition for one reason or another, whether it be sort of macro or something that's happened uniquely to their project. So, it's so important to make sure that the people that you're working with, it's not all just talk and headline rates because there's just so much more to it than that, isn't there?
I think that is the big mistake is people looking for it's a rate chase rather than a is it deliverable? Is it in my time frame? Does it still work from my yield perspective? Yeah.
And this project is riskier or it's tighter on time or it's not do I have someone that's going to look after me and partner with me throughout the life cycle of my you want a 360 loan. Yeah. Not a and bridging is a really good example of it's so easy for bridging lenders to come to market.
You meet somebody at the hotel pool high net worth from abroad with 10 million pounds to deploy and you come back a bridging lender. Yeah. Start throwing it around. Most bridging lenders can get money out the door quickly. That isn't the key selling point of bridging anymore.
No, it's how are they funded? How much control do they have? How are they going to look after you? And you're right, if something goes wrong, will you get to the end of term and you need a little bit more time? What's their policy? Do you check up front? Is it a humongous extension fee? Is it immediate repossession? Is it default?
Or will they work with you to support to pay a bit that's due but then help you get out into the right sort of product at the exit? So I think everybody taking a breath and taking sensible debt is more important than just the cheapest debt, right?
Yeah. Look, I think trust is everything and it's about the people that you deal with.
But when you're first getting into the sector, that's obviously hard because unless it's a recommendation, you are it's the first time you're dealing with anybody. So I think it's really important to check credentials and to look at how long these people have been going.
And I think there are other things like you can look at feedback and stuff like that which is mixed isn't it because quite often you get you know disgruntled people that will have an issue with a lender because they haven't performed.
So you have to be a little bit careful of that. But I think longevity in the market is a really good one. And that's not to say that newer entrance shouldn't be seen a go because actually you get some really good entrance back by really good people. But it I think having like proper advice and having somebody that you can rely on is key. Otherwise, you know, you're going into the unknown a bit, aren't you?
Very much so. You we did some content not long ago about what's the focus when delivering a product. And actually, to quote you, one of the lines I like within that was the best deal is the one that delivers.
And yeah, absolutely. That's the main thing is what's actually going to hit your bank, support you in achieving the project and whatever the outcome you're looking for is and then successfully move on to the next and the next. And it's that long-term game.
Absolutely. And sometimes when I'm talking to people and they've found something that's really cheap.
I would never go to say, "Oh, that won't deliver." Because, you know, sometimes it does work and that's great, but it's if somebody could say to you, right, if you take this product, you've got like a 90% chance of delivery. If you take that one, you've got a 25% chance of delivery. Yeah.
If you've got three or four weeks to turn it around, it's a really big risk taking the 25%. and you might be in that 25% and then you could be quite you have a lot of conviction and you say well look actually I got it done and it was cheaper and that's great. So it's not to say that it won't deliver, but it's higher risk. And I think that's always what we're trying to talk to people about that look, you have to make that decision informed, but if you want to go down that route, you are taking a bigger risk. And I think sometimes people don't want to hear that because ultimately every penny they save and the cost of borrowing drops straight to bottom line.
And I get that, you know, they're commercial people and it's the difference between whether you make a 25% or a 30% return. It, you know, it can be everything, but ultimately you have to be very careful because
sometimes it can end up being more costly in the long run. Both delays, penalties, overruns, all sorts of things.
Yeah, I agree. I um I mean the market's full of bravery and people taking risks, but I heard a great saying the other day that I liked which was fortune favours the brave but not the stupid. Yeah. So um taking that breath and considering your position is really important.
If we look ahead, if we move forward to what's coming, what's next? If what are your thoughts on I guess fronts here? What's going to happen to rates in the next sort of 12 months? Do we think the rate market is still coming down? Is it's going to come down quickly, slowly? I know my thoughts are trying to assume the same. What do you think?
Look, I we get asked this all the time and I one thing I say is that what I say today, even by time this is released, I could give a different answer. So I caveat it to it's really fluid because at the moment inflation has been stubborn and we didn't expect it to be stubborn and when we saw some positive moves in inflation and we had base rate cuts it was followed quickly by a spike.
So it's really hard to say because the market is reacting to what's happening.
We have a budget coming up a late budget which is not very welcome for the market because I think people just want to get on with it. They want to know and I think people are nervous about the budget especially as a lot of reform around stamp duty and ongoing property taxes capital gains tax on principal residents. So all those things can have a massive impact and obviously that feeds into what interest rate decisions are made because it's based on the macro. So I think as looking at it purely from today it feels
like we're in quite a steady place. So swap rates have been bouncing around but fairly stable for a little bit.
For a little bit. Yeah. And we there was an anticipation that we might have another base rate cut soon. Probably that's not going to be the case. But I wouldn't say it's unrealistic that we would see at least another one this year. Just depends on what other data comes out to support that change. I definitely don't think it's coming down fast.
And one thing that I say to people all the time, well, I might just wait and see because I think rates might come down a bit by then, and we're talking say between now and the end of the year A lot of what is expected to happen is already baked into the cost of borrowing as you know.
I wanted to smash that myth. Yeah. The base rate is not a key indicator.
And this is the for the benefit of the listeners of course because you know, you understand it. But the There's a common misconception in the market that base rate reduces cost of borrowing goes down straight away.
And obviously if you have a variable rate and you've got that product already, then your cost of borrowing does go down because it's usually linked to Bank of England base rate. However, if you're taking out new borrowing on a fixed rate, which is what the majority of the market does at the moment, it is very much a case of, as you know, what the market has predicted for the months ahead. So your swap rates are already seeing that interest rates are going to come down a little bit.
And if they think they're going to go back up, then the swap rates are going to go back up. If we see some news that is far from positive, then you see that bounce up quite substantially. Budget, a bad budget. So, so actually one of the biggest pieces of advice that I can give to anybody is don't hold off
your plans for short-term base cards. I mean, if we're talking you've got a portfolio and it's you you're not really bothered to do much, you could change it, you could not, that's slightly different.
But if you if you're looking at making acquisitions and you want to draw money out and you've got something on a high variable rate, the cost between now and the point that you think it's going to be much cheaper will probably entirely outweigh if not nearly outweigh the benefit of waiting. So you wait to see if interest rates come down and they come down 25 basis points but then you've been on a higher variable rate. It makes no sense.
And we've seen a lot of people over the years, the last three years put their plans on hold and then end up we've transacted pretty much in the same place that we would have done when we first started talking to them. And sometimes the positions got worse, sometimes it's sort of there or thereabouts, sometimes it's slightly better, but on average it's there or thereabouts.
So I think it's important to say that we have that helicopter view of the market from talking to lots of different people. And it's hard to convince people because it sounds a little bit like we we just want them to go ahead for our interest, but actually our interest is our customers getting the best possible outcome that they can because that's what makes a customer a one-time transaction to a lifelong customer.
And I think that it's important that people realize that most of the market, most brokers in the market would share that view as well. Brokerages aren't successful because they deal with a customer in one transaction. They're successful because they look after customers for a long time and sometimes generations.
Yeah, completely. And also and none of us have a crystal ball. And actually the big the big sort of secret is that um we have a fear of the unknown as well.
So dealing with what's in front of you if it looks fair and reasonable. Yeah. Is sometimes the better option. Take what you can see.
For sure.
I think so too. Yeah. What one thing that I mean people maybe do or don't know if they follow us online is that we're a little bit different from a lot of brokerages in that you and I whilst running the business write business as well we deal with borrowers we deal with transactions ourself we still have one foot to the flame you particularly have done that throughout your career and typically we're dealing with larger loans and we see a lot of high-profile borrowers and people looking to consolidate larger portfolios or begin a larger transaction. Yeah.
How is that different? How is that different for a borrower and why should they be maybe engaging with a broker in a slightly different way up front?
Um, I suppose it's horses for courses, isn't it? If you're mortgaging your house and it's a rarely sort of a straightforward transaction and it's price driven and it's, you know, your income's pretty standard, there are a ton of really fantastic brokers out there.
And then when it comes to the specialist end of the market, it's all about experience, isn't it? and what people have seen and transacted over the years. And we have a really strong team of people, don't we, that know the market inside and out. And then when it comes to the more complex in nature and the higher value transactions, I think it's really important for people to be able to talk to someone that understands it really well. And I think we can offer that whole chain of different experience levels. And you we've got people that have been doing it for 15, in our business who are absolutely fantastic.
And you've got people that cover different parts of the market as a specialism, whereas we're not generalists. you know we do have those specialisms in the exact product that people are looking for whereas I think a lot of brokerage firms they will have some connections in the specialist space for sure but it's like anything isn't it if you if you want something which is really specific you're always going to get a better outcome by going to someone who covers that part of the market rather than the whole market I think so too and I think one of The big bits of advice for me for borrowers with that is once you've found a firm that you think has the competency and the experience to deliver for you is don't share details of the transaction. Share the story.
Here's what I've done. Here's what I'm looking to do. Here's what's on the table right now. Here's my background.
And actually, because finding that, you know, you'd be surprised, I think, within the borrowing space for landlords and investors and sort of up and comingling property professionals to learn how much lenders listen to that in our world.
Actually, specialist lenders back the person as much as they do the asset. And sharing that up front with a good broker who has the ability to put that story in front of a decision maker and to position you in the best light can lead to bespoke pricing sometimes if the loan's large enough.
An exception to criteria, a slightly different process, and and ultimately strong results.
And it's all about working in partnership. And that's not just borrower to broker, broker to lender.
It's everybody involved in the ecosystem.
Yeah, absolutely. And I think that the it's when you present something to a lender,
I think that the credibility that comes with the understanding rather than just sort of post-boxing the information. A lot of a lot of borrowers will sort of think, well, why do they need my assets and liabilities? you know, this is a limited company purchase and it's being able to educate people to make sure that you extract the information that you need to get them the best deal.
And I think we do meet a lot of resistance from people about supplying certain information up front and it's about making sure that they understand why and that it's not just, you know, we haven't got a checklist and we're just ticking boxes to say we've got this document, that document. You ask for what you need and you're able to give a rationale as to why you need it.
And I think that gives you a higher chance of success. And sometimes I I say this over and over again, having difficult conversations with clients is not something that I personally shy away from because actually that leads to a much more honest, well-rounded relationship than if you're just a yes person that tells them what they want to hear.
I totally agree. leads me into sort of my final question and the final sort of sentiment I want to leave out to listeners and anyone watching and listening in. What advice do you have?
Let's just say we're at the newer end of the market. We've got people who maybe are landlords already looking to now start developing or taking debt that they've not taken before. New debt into the market. What advice do we have for borrowers entering into this market now?
What should they be looking for? What should they be considering when they're looking at debt? How should they be approaching that?
Naturally, I'm quite risk adverse and I think I take quite a conservative approach. And often when I speak to
people, they've had it drummed into them to really like push the leverage and push as much as they can and do as much as they can.
I personally believe that whilst there might be a top end of where you can get to in terms of borrowing capacity with the deposit that you've got available, the cash around you you've got for the project, you can sort of say this is the absolute maximum. If you hit a bump in the road, then you're in trouble.
So, I would always say definitely have ambition and you know, we want to see people that are ambitious and want to grow, but for the first one or two, just make sure you leave a bit around you. We see so many things go wrong because people have put every penny they've got in and they've borrowed every penny they can borrow.
And if things go against them, because it's easy to have roasted tin spectacles, isn't it? And say, "Look,
this is what I think I can achieve with this." But it doesn't always work out exactly to plan. Sometimes your return might be slightly less or you might hit some delays.
And if you haven't got the capital behind you in order to weather that storm, it can be quite a quick and not very successful journey into property. So I I think that's something that we see and it's really important
that you don't get pushed into biting off more than you can chew.
Yeah. Proper due diligence, sensible decision- making. And if I can add to that, I think my big piece of advice for any borrowers and anybody looking to get into the market that might be listening is talk to an expert in the field. I think it's a specialist world, the finance world for investment for
professional landlords. Speak to a specialist in it. Yeah,
I have a natural bias for that obviously, but there are a lot of really good firms in our space. We have some fantastic competitors. We are a market leader in ourselves, but if you're not talking to a brokerage or somebody that can advise you in who's dealing with it day in day out, then you're not necessarily going to get the most accurate advice.
Yeah, absolutely.
Yeah. So, hopefully that has been helpful. It's been really good to talk about the market. Um, as always, back to work for us. Yeah.
Now, thank you to everybody who's tuned in or listened wherever you found us.
Uh, and if you have any questions or want to engage with area finance and speak to Lucy or myself, you can find us on our socials, which I'll have all links below. Um, or you can reach out to
the team via the website or by calling the office direct. Hopefully hear from you soon.
Welcome back to the Aria Finance Specialist Scoop podcast. I'm here joined this time with Colin Horton from Project and Co. surveyors, a leading surveying brand in the business and valuation is such a hot topic at the moment for borrowers, lenders and brokers alike. Really good to get your insight. Thanks for coming, Colin. Colin, for those that don't know you, maybe don't know your business or don't know sort of your standing in the market, tell us about you. How have you got into this? Why valuation?
No worries,
Okay, I'll try and condense it or bullet point it as much as I can. I fell into valuation, fell into asset management and grew my career in that space, predominantly specialising in lease-line enfranchisement, which is very niche and very boring. Government got involved and that market just went completely quiet. So I had to evolve and there was an opportunity in lending that I just thought, you know what?
it could be done better. I decided, know what, I'm going to give this a go. Obviously I don't look like you're typical surveyor. I don't talk like one, that's for sure. And you know, I'm not from, you know, London, I'm from Essex and there was, there's a little gap and we basically just went guns blazing the marketing, absolutely smashed LinkedIn and just delivered really good service really quickly, really efficiently and just focused on communication. Fast forward to now
We won the Bridging and Commercial Best Surveyor which was absolutely huge for us in our first year of doing this. I've gotten the Bridging and Commercial Power List, which is also amazing. And they gave me a great photo, which was even better. And we're just really trying, mate, to really kind of make headway in what is a really difficult sector to infiltrate as in a sector where there is so much risk.
Yeah, and also so established people can be really stuck in their ways. I see that from a finance perspective too. How quick was the learning curve then in a sort of first full year of trading? How, if you look back from month one to month twelve how different are you guys?
So the actual business itself has been going for six years and we hadn't done valuation. We were just focusing on building pathology and everything that comes with that. I thought initially we actually originally jumped into it probably about two years ago. And I thought I can do secure lending. It's just Redbook valuations, easy peasy. Got enough kind of capital in the company to invest in some good people. And I'm very blessed, I'm very good at selling myself and...
We have to get people from your big kind of corporates. That's what I told myself. And we cherry picked some really good people who I trust wholeheartedly. And that was it. We just went to town, mate. And we just started like meeting people. Brokers were a big thing for us because brokers, my fiance is a broker. You guys go through a hell of a lot and it's difficult. you know, I think brokers have cried out for years for valuers who are there for them as much as the lenders, you know, it's not.
you guys ultimately choose us on the panels, you know.
Let me bring it back. One thing that was really interesting is you're talking about from the outside, you've looked at valuers maybe not being able to be held to account on their figures and justifying it. How do you, how are you doing that differently? What's the, what's the tone of Project and co?
So my tagline, which I have, think I've tagged now for nearly two years consistently is every single day is surveying with personality. And that's been a big thing for me. I think having the ability to communicate with brokers and lenders and you know, a deal comes through. What a lot of time we do with our broker clients or say clients and referrers is they'll come to us initially and say, Col, I've got this deal. Can you have a look at it? And I'll have a look at it. And if I think it's crap, I'll tell them, I was like, don't do it. This deal is rubbish. And I want to help make a difference in the set. So I want lenders to lend well.
and I want you guy brokers to earn a lot of money. And I think we are such an important cog in our ecosystem that I think us as value is forget that. And that's why I was so passionate about just trying to change it.
always looked at the whole specialist lending proposition is a puzzle. There's a jigsaw and you don't solve it with one element and one arm. And that includes I'm reticent use to use the power term phrase cause I don't love it, but it's not just about having good tax advisor and good legal team behind you, but
You're lending, valuing, broking services have to align, have to fall into place correctly to make a deal work. And it's not just about getting the numbers, right. It's about the pace, about the delivery and the execution of that. And, you know, that does take beyond all else. What it takes is good communication because I do agree with you that the down valuation term is funny. I've not thought of it. You're right. A valuation is a valuation The downfall is in the eyes of the beholder. Correct.
With good communication early and justification of why does a borrower think it's worth X? Can they justify it? Have they got some comparables? Can they value or immediately go, no, I can tell that's wrong. Well, that sounds okay. Let me go and look at it properly with my expertise. Can brokers catch that early? Can lenders say, no, that's a nonsense. And can we make that journey more painless? And it does take everybody. It's not just one person, right? So you have to work with a lot of different people in the system. How do you manage the balance between managing
borrower broker lender expectations.
So, you know, as percentage, my day is mainly spent talking to brokers wanting everything urgent. Urgent has really lost its power as a word, you know, and I think valuers in nature aren't combative, you know, in their personality types. They're generally, they're not trying to stereotype, but valuers aren't necessarily the most outgoing people as a profession.
So you know, having the confidence to be able to stand by your valuation and to tell a broker ain't going to be like that or to tell a lender it's, you know, it's not a great deal. Don't do it. Or actually I'm actually really struggling on the comps, but I actually generally do think this is worth what they're in a pan. And, you know, it is, it's, it's really difficult. I mean, applicants, luckily we don't have too much interaction with them. Luckily, you know, and when, when we do have interaction with them, you know, it's on site doing the inspection.
But a lot of time it'd be agents and stuff there. you know, but lenders, you know, from my experience with lenders and underwriting teams, you know, the BDMs are great, but it's the underwriters that have all the power. You know, and you have to get on side with the underwriters. Underwriters will make a call pretty quick based on the quality of your reports and the style. And every lender has a different risk profile. So there are certain lenders that actually really want to lend money, you know, and they're a little bit more risky. I don't say risky, just a bit more, you know, commercially minded if want to.
It is funny how quickly, you know, firms get a reputation for, for misvaluations, right? Even if they're not down, that they're misvaluations, you get some of your high street types and I won't name names, but people attached to more vanilla lending will go out and come back with no values on great performing buy-to-lets or HMOs or assets that maybe have a slight flying freehold or something unusual. And they go, no, not suitable for mortgage lending. Whereas a huge part of the market might be okay with that. You just have to pay for the right valuation, the right red book, proper report, nod
I've driven past and I don't love it type of
These guys, mate, they're doing six, seven valuations a day. It's smugging all the term stuff. Bridging, is bloody off. They're doing seven a day, like on the high room. And they don't care. They're emotionless. There's no... The reason I've got so passionate about it is because I was set in a property once, my own personal residence that I lived in. It was quite an obscure property in terms of that it was a converted post office. And it was like three-floor flat. And there was no real comps for it apart from the flat next door it sold.
Hang on exactly the same. Anyway, value came out and they knocked it by like 50 grand and it sold it on the first day to the first person at the right price. And I had to like, I just cannot understand that you're, this is 50 grand, know, to someone to save 50,000 pounds. Yeah. You're talking a couple of years or whatever to do that. Yeah. Like they don't, I think a lot of them just take their emotionless and I think there is more to this game than just that, you know, and
Maybe I'll shoot myself in the foot when I say stuff like that, but you know, for me, it's...
What are people's misconceptions about the role a valuer plays? What do people assume you do that you don't where, where they maybe come at you for, if you can impact things.
I think they just assume that like, think they generally think that we actively either, depends how they view us naturally, but I think we're to down value stuff and just so the bank can lend less money or better a better term or whatever, or other brokers out there just see us as people that they can manipulate and try and get decent figures out of. And you know,
Over the last year or so, I've become so much more aware of that. I'll help and give advice where I can, but I just don't take the mic. There are a lot that will call you outside of hours, call you at 7, 8, 9 p.m. at night. I'm fine for that. But don't take the mic. Don't ever ask me to put my career and my firm on the line.
Yeah, yeah.
And I guess that's the, in terms of, you know, for people watching, what, can you do to give yourself a best chance of good valuations? guess it's being selective and honest with the pressure you're applying then if it's urgent, say it's urgent. If it's not, let's get it done. Right. Not rushed. I presume that helps you anyway.
Correct. For me, the biggest thing I hate is when we get instruction on the matter. And I've gone through the valuation before with said broker or whatever. I said, look, based on what you've told me, You know, initially, I think you've got a good chance of this stacking up. I can't guarantee it, but I think you've got a good chance of it stacking up. You end up going to the property and it ain't what they've told you it is. You know, you've got like 22 people in one bedroom, you know, and I'm just like.
And again, ethically, how I grew up, it's a matter close to my heart, and I was like, I don't like people taking the mick out of the system, you know? And it's just having that transparency with me at the start. You know, and how realistic is this? Do you honestly think it is actually worth it?
That impartiality, how, how do you maintain that? Just staying honest to the numbers, just finding a way of justifying it.
Yeah, you have to remember that everything you do, it can get ordered, you know, ultimately. know, if everything, anything got, God forbid was ever to go wrong. Luckily we've never had anything go wrong, but if it was, you know, there's going be paper trials, there's going to be everything. So you have to, you have to make sure that you're, you're treating both sides fairly. You know, that is the, obviously the applicant and and the broker or three sides the applicant, the broker and the lender, you know, all I can say to, to people listening is with your value of treatment, respect, you know, and if you do get a down val there probably is good reason.
for it, but obviously speak to other brokers, have communication, see where you're having success. There are some really good firms, not just my firms, there are some really good firms out there, valuation ones. There's some ones I don't necessarily like as well, but it's just having that communication, those relationships. And I always recommend having relationships with maybe three or 4 different firms, just that by all means message me and I'll tell you who. And it just gives you the best chance of getting the best deal for your client.
Communication is such a big one. Actually, on previous episodes, one thing we've talked about with others is the benefits of communicating well with your lender when you're in the debt. If something's going wrong, if you're growing your portfolio, if you're thinking about changing stuff, the same with your company structures, liaising and communicating with good tax advisor, your accountant, making sure you're on the right track. And it's no different, right? I think sometimes the valuation process is seen as a necessary evil. I want this money and to do this, I have to part with this cash and they have to give me a number.
And hate it. And actually, if we communicate honestly and transparently, then we're more likely to get a fair outcome that we've got eyes on early,
100 % authentic and transparency in this game is absolutely paramount to getting the results that you want. And for us as, like, I'd love to think that as a broker, will you speak to me on the deal? You can honestly tell me what we're actually looking at here. So when I do go there, I've got no shocks and no surprises. Cause the last thing I want to be doing is delivering you bad news and it hasn't stacked up on what, you know, I think it is. you know,
I'm fortunate at the moment, nine out of 10 times, it isn't the number that the applicants put in. I've got quite used to delivering that bad news, but it's the way you handle it and giving them a heads up. There's been times where I've started valuations up, we've actually taken the fee, I've actually inspected, and I can quickly see like that, that it's not gonna start and I've stopped. And I've just called up the broker and said, look, I'll refund you, because this isn't gonna work. And I think that goes a long way, it doesn't necessarily help the bank balance for us, but.
you know, ethically for me, that's how it should be done.
Yeah. And it matters to the borrower, right? Cause ultimately the end of all of this, there is somebody trying to buy or remortgage property who's spending money on the professional services around it. And you want to make sure it's the right process, right? Yeah. That's a good thing. Taking a step away from some of those challenges. What are some things that if I was a borrower tomorrow,
needing to remortgage, I'm confident I've got a good asset. What can I do to my property to make it attractive in the eyes of a valuer or in terms of that'd be good for resale that would go quickly? What are some of the bits you look for that stand out as?
So for me personally, the kitchen is always the biggest, the biggest room for me. It's always the biggest draw. It's the most expensive room in the house. Obviously if you haven't done your kitchen, you know, it's just obviously very obvious things that can tidy up, cover any imperfections. I mean, I shouldn't say that.
before you go on with that, how often is that not the case? I mean, tidying up feels like a really basic bit for me, but I've had to tell clients before, make sure it's clean.
It seems obvious, doesn't it? I'm not expecting like, know, sparkling, but just make it smell nice. Smells a big thing.
saying that because some people are going, look past that, look at the numbers, but that's what a buyer would think. Right. That's the human instinct of you walking in. That's what a potential buyer would think. Correct. The reason a lender gets a valuation is in case they have to take the property on and if the case they have to sell it. Exactly. That matters.
So that gardening, like just keep your front, you know, just keep it externally. As soon as the valuer walks in, they're to be looking at it and they're going to say, this is maintained or not. So it's all about like the psychology of how much someone values something. And it is, it's a very good point is how much, you know, if you're going to buy it, what would you be looking for? What would put you off? And that is the best way to do it. You know, there's no kind of rocket science per se. We often get asked about valuation packs and stuff like that. I like them personally.
It's nice to understand where the applicants come from in terms of their valuation. Yep. Sometimes if I'm in the mind of the applicant, sometimes it helps me with this. Sometimes it's a little tricky kind of, and don't make the mistake of just pulling right move comps that are on the market.
What people giving to you there. that's a good thing because people not some borrowers might be new to this or might not understand. You're talking about somebody presenting you with a pack of their rationale as to why they think it's worth this before you look and make your views. So what in there is useful?
So for me, obviously I know full well that nine out of 10 lay people will just go on Rightmove up for sale, high to low, pick the ones that cherry pick that suit their case. I don't, unfortunately for them as a valuer and for RICs we don't really care about what's on the market for sale. We'll use it as maybe a secondary or kind of third resource if we're not sure on a value.
But we look for sole comparables, ideally within the last 12 months, ideally within kind of a kilometer. It's again, the way I twitch it back to everyone is if, I value it as if I was gonna buy the property and that's how applicants should look at it. Try and take the emotion out of it and say, look, if they were gonna buy this property themselves, what would they be looking for? And that's a really simple way of doing it. But you'd be amazed that people don't do that. They always just send me.
for sale on Rightmove high to low.
the time, which you're discarding basically immediately. Correct. Yeah. Okay. That makes sense. Yeah. What, what sort of stuff have you seen recently that's particularly interesting? I mean, you must've been in some wild properties. What have you seen in the market at the minute that people are transacting on that is interesting, that is different. That's caught your eye.
I'm really enjoying the care sector at the moment. Only this morning I was working on a valuation of nine flats that are being converted into basically serviced accommodation for children with disabilities. And the yields are unreal. And it's a good cause, you're helping kids that are suffering. But I'll try and keep the numbers as rough as I can, but.
The contract over these nine flats is worth about £200k a year. And the actual rental amount, if you were to rent them was somewhere in the region of about £80k . There's a huge swing. I think, care is probably going to be the new HMO side of things.
there's a middle ground already, right? Because from our side, we probably see it maybe more than you do. Maybe you're less aware of those contracts in, the social housing sector. So they look like HMOs from the outside, but it's the contract and the strength of the lease. that's sort of that hybrid in between care and social sort of responsibility, but also private rental sector. It's an investment.
I've got one myself.
It's unreal mate and it's solid. A lot of others don't like those five-year contract, which surprises me because it's really secure. generally in the contract is to put back as was when they took the contract.
Yeah, secure tendencies as well. They're great. And actually, if you do get that, it's an interesting one for me as a broker placing these deals with lenders and getting buy in, you know, the fix and repair clauses and making sure that the, properties handed back to you in the same state you hand it to the provider is vital and gives you a level of protection that you didn't have before.
Making sure a lender can get vacant possession. They have vacant possession rights is really important. And then actually qualifying who's going into the property to make sure a lender has the appetite, but they are great. It's a great return. It's doing some good, you know, there's some panels recently housing for good. It's a really nice tag and so it's good, it's a good model and they're valued the same way, right? You're still just a property from a valuation perspective. It's an asset that someone can hold and can reinvest, can sell, can do whatever they want with, right?
100%. And what I would say is, especially the example I had today, is make sure when you are going to put in your application that you have got the lease kind of signed already if you are going into that, because a lot of lenders that we work with don't really accept kind of hope value. So the hope that it's going to get signed, you know, so what I'm good telling me that you've got 200 grand rent coming in, but unless it's signed, I can't value on that premise. So that's just one thing. Do make sure that you, if you've ever put in applications in that you
you can cross the T's and cross the I, that makes no sense. the I's and cross the T's. So yeah.
And that leads onto something that's a really hot topic at the minute because valuing yield based valuing in general, there's loads of education out there in the market at the moment. Lots of property mentors talking to willing borrowers, keen borrowers about HMOs and moving into the HMO game. And it's not just buying ready-made HMOs because a good HMO isn't on the market. People are holding them. It's converting single dwellings into HMOs. They're often taking short-term finance to do that on the promise of a
commercial valuation at the end, being able to pull all their money out. Now that model is absolutely possible, which we've covered in previous episodes and generally in the market, but you're not always guaranteed a commercial valuation on a HMO. We've talked about it with lenders before. What, from your perspective, would give you a stronger case for recommending the commercial valuation on a HMO property? What are the sort of criteria that you
Yeah, so I mean, obviously the amount of rooms obviously is paramount. I think the lowest we've done one on is five, we have done them on five and sometimes that is the right way of doing it, know, it's just, you know, but generally we're looking six, seven or above. I can never say it properly, but sue generis how ever you say it? You know, but ultimately the things that we look at for whether or not it should be applied as a yield is we look at the quality of the, you know, the conversion.
how much material change has actually gone on to the property. Because a lot of time if it's had six ensuites put in, it's quite a substantial amount of change. So take it back to a house. Bricks and mortar doesn't really apply to it. It is going to be an investment method. The quality of the operator is now getting factored in a lot more. So we are often asking our lender clients, what's the history of this applicant?
because obviously it is very hot topic, everyone's kind of jumping on it, but if you haven't managed the HMO before, how do know you're gonna be any good at it? And obviously the proximity to strong employment bases, i.e. hospitals, town centres, big kind of corporate blue chip client, that kind of stuff, doing really well. Actually where I'm from in South England Sea is a prime HMO area. It's really strong HMOs. And obviously don't expect...
generally really strong yield if you're a HMO investor and you do not take care of the rooms and the clients, like that will get factored in for us. And we are seeing that a lot, you know, and a lot of time they're over-rented and they are putting people in squalor. So I sound like some, you know, evangelical valuer here, but you know, it doesn't help. If you're putting people in decent, good living conditions, chances of you getting a better yield are gonna be stronger because the risk of obsolescence is a lot.
lower, you know, and what I mean by that for anyone who doesn't understand is, you know, with HMOs, there's a lot of people coming in and out. So naturally there's gonna be wear and tear and damage and stuff. And I think what a lot of people forget about HMOs is it's all well and good to get that really lovely, sexy refinance, which we all want. But, you know, because so many people come in and out, probably every seven to ten years, you have to redo it all again in terms of decor, new bathrooms and kitchens, etc. And it's not cheap.
You know, so just I know HMOs is really exciting, but just make sure you do research and obviously speak to great brokers like yourself and just make sure you know what you're doing, you know, because you are very much and you couldn't be... Of all the property investment opportunities, HMOs are the most dependent on the valuer on that exit. It's all about the exit.
For sure, if you've done the conversion works yourself, you're absolutely right, because everyone's hindering on the massive uplift.
They don't sell, mate. There's no, if, that is the worry for me, if I'm honest with you. I look at the market and I think, okay, it's been valued at this on an investment method. So, value is a business fundamentally, but my God, they never trade anywhere near what they're getting valued up for. And we are not the only one in the sets that's raised this. know a lot more lenders are pulling back a little bit on investment. But lenders are doing it, understand it and get it.
Cause it's interesting. Cause look, that's important to hear because if, even if your view is naturally overly negative, let's just say, let's say you're on the more pessimistic side, you're a valuer. So that matters. And the market is full of people with lots of confidence and being brave and finding ways to go into a deal going, I'm going to get an investment valve. I'm to get a commercial valve, but they need to understand the risks, right? That it can be a six bed HMO, which is not guaranteed seven bed is different because if you've got a sue generis planning, it's the it's different anyway, but
If you're a six bed HMO, it could go either way. And it sort of is on the valuer and then the lender's interpretation of the value as comments as to whether they grant you that or you're back to bricks and mortar.
Our instruction always come through bricks and mortar and or investment. And that's how it comes through. Now we do do investment method, like we do it all the time. Based on vendors, what they want us to do and if we can find the evidence we will. But it is arguably the hardest part of valuation because there's no evidence.
must be this everywhere right it's still really you must see a lot of this
Yeah, mate, I reckon at the moment, we are maybe doing one - two a day HMOs. We are doing investment, but you know, is just don't, when you're doing your calculations before you speak to yourself, like just make sure you kind of speed a bit more conservative. If you get a lower yield, great. But just be careful with it, you know, don't, because I've seen people go, you know, they spend all of their money hoping to get like a 8% yield or I don't know what, you know.
Yeah, it doesn't surprise me.
what they're expecting, but say an 8% yield, it might come out at 9 or 10. So the tip is always to speak to your broker and just find out what lenders they're having success with that are doing, know, it probably won't be us, but what lenders are doing, who are having success with the valuers that are that they're doing good yields. And he's got to kind of play the game and work it backwards. Because a lot of lenders, there are a lot of valuers that will just absolutely tank it.
Do you think, does it make a difference for you and your valuing if it's within Article 4 or outside? It does it indeed.
Indifferent. mean, more and more, mean, non article 4 is becoming rare. Yeah. Yeah. Now, the one we've done today was just outside of alien and it's got article 4 coming in December. And it does make a difference. Of course it does because it means ultimately it's going to be less HMOs, which is, know, for the HMO owners, a better thing. Of course it is. And, and given the way the UK economy is at the moment, I think HMOs are a really good investment despite my pessimism. My pessimism is purely on the exit. Yeah.
And you know, just, I just don't want people just taking out all of their money all the time, you know, and then leaving themselves.
Good model and within article 4 more chance potentially of that commercial valuations.
yeah, 100%. If it's article 4, I mean, me personally, if it's six bed, article 4, you're going to get an investment method valuation out of me. Yeah, that's how we work. you know, like said, we have done some five beds and, know, after discussion with lenders, we'll call that the lender and say, look, very limited bricks and mortar, you know, comparable to here. ensuites massive material change here. So, you know, my personal opinion, you this should be an investment method here because someone is going to come and buy this and just hold this as an asset for maybe a generational asset.
Beats.
And how are you finding lenders
I mean, lenders are so varied. I mean, like, it is nuts. Like, cannot like what you think one lender loves, you go to another one and they don't like it. you know, and it's, there is no hard and fast rule for them. We've tend to find that certain lenders will be known for doing HMO stuff and they were a lot more receptive to having the conversations.
And broker should probably be engaging with those as well, right? If everything has gone right here, the deal has already landed at the feet of the right lender, the right product, the right valuer and everyone's in the loop on what we're looking for out of this. What sort of tips would you give brokers, any brokers that are in the market to work better with the valuer?
Good question. Like I said, don't be, for me, authenticity is a real big thing. You know, and I've become friends with a lot of brokers over, know, last couple of years. And I think value is do see through that surface level facade a lot of the time. So cultivate actual proper general relationships with valuers and so much so that you can
If that valuer tells you that it's not worth that, you trust them and you don't push them and that's what it is. Cause that's the type of relationship you've got with them. You trust their opinion. And just don't, I can't swear again, but like just don't, don't bull them. Just tell them the truth. Don't lie to them. Don't let them get there and be embarrassed. Cause ultimately as well, a valuer, we don't love having to find a number. I think the valuation game would be so much better and completely different.
if we weren't told the sums. So real valuer is running blind every single time. be wild west, but I'd actually be fascinated to see where value stack. Would it be higher? Would it be lower? I have absolutely no idea. I suspect it probably would be lower, but it's...
and that'd be better.
Mm.
Yeah, broadly. It depends on the sales. If you've got obvious sales comparables, you'd like to think you're going to land on the obvious number and no one would have over egged that as well. But I think you're probably right. Yeah, it makes sense. If you could change one thing about how valuations are managed in property finance, what would that be?
It's you're always working to a number. It's weird.
So many things, I think the main thing I would say is that I think lenders generally should have a diverse panel of valuers, know, so the broker gets it. Don't get told just to use one valuer. I think there should be three or four that they're told to use. Obviously you've got Methan and Vass, which are great as well. But I think having a diverse team of professionals for lenders is huge.
You know, some might sit on the more commercially minded side. Some might be ultra cautious and there's a space for both. Yeah. And doesn't mean the ultra commercial guy can't be ultra cautious. Of course, of course they can. It doesn't mean vice versa. So what I would say is I think for managing valuations, think lenders should really take note of who the people are that giving them the work.
That makes sense. There you go. Well, that's a good one. One thing that's interesting is you talked earlier about urgency and borrowers are urgent. Everyone is urgent. Everything they did doing yesterday. Do you think across the industry that delays in surveyor availability are actually, just property access, is that still a major issue?
Access is a pain in the backside. It's really hard. I can promise the world to you. You could say, Col, can get someone tomorrow. I could go there tomorrow. And, you know, it doesn't mean be able to get in or people and a lot of time where it's HMO for arguments sake Yeah. Nightmare because there's five different people in there. Yeah. You're in. Yes, there is an issue with access and dates and times that kind of lot of that comes down to RICs requirements because you have to have you know, a chartered surveyor go and do the inspection. I have my own personal views on that. don't actually think that.
should be the case. think people are very capable of, you know, you can train someone very highly to go and do, you know, go and do a survey. But obviously we can't adhere to that. We have to do, yeah, you know, how to send chartered surveyors around, which is fine. And that's what causes the delays a lot of times. So that is the, it's just the bureaucracy that comes with, you know, not the RHS, but you know, just in terms of the Redbook requirements and stuff.
was going to ask you how do you mitigate those problems? I mean, access is one thing that's an organised borrower, right? Making sure that someone's ready to let you in. Payment. Okay. That makes sense.
A lot of lenders will be like, don't go till they pay. Don't go till they pay. And then the broker will be like, you not paying? I was like, well, they haven't paid. Yeah. They're going to pay. was like, well, it's all good to say that. But we do an evaluation, they don't like it. Yeah. They could go, you know, and the cost to actually chase debt as a business owner, as you, you know, don't know you got a broker you may carry bad debt, it's a nightmare. You know, it's not worth it after time to chase the debt. Yeah. And they're the two main ones. And some just information, tenancy schedules. Yeah. You know.
planning documents, schedule the work.
So the bit that matters here in terms of tenancy's schedules as well, I'm guessing if you've got headline numbers that, and the point for people to be aware of really and consider you might have granted access really quick. You might have let someone in, they've taken all the pictures, done the visit, but if they're trying to do numbers, algorithms, comparables, and they're not armed with all the facts, you're shooting blind and you're more likely to have an inaccurate valuation. Whereas actually if you provided all the passing information, that'd be much easier.
More information we have as well as the quicker we can get the job done. It's really simple. So again, that comes down to the brokers in my personal opinion. should be, cause they, you'd be worried if they're submitting applications and haven't got that. Having that themselves. And like I said before, applicants lie. Just be honest from the start, you know, and also other stuff like when it goes like, obviously it's a bit more of the broker side, but just, just lying about all the backend stuff like credit and stuff like that's going to cause delays. you know so just.
Bye bye.
If you're an investor or developer, just be honest. Treat brokers like lawyers. Tell them everything off the start and then you just speed everything up.
Do you think there's a rise in lenders out where there's borrower demand for this, but there's also lenders trying to get there where technology is coming into the valuation process. We're seeing a lot more AVMs, which is an automated valuation model or desktop valuations or a snapshot of a figure for somebody to then action and borrow against. How is that helping or hindering the process overall? What are your thoughts on that?
AVMs, some are good, some are bad. We're actually jumping into that space ourselves, building on one for brokers to kind of find out feasibility beforehand. So I do see a value in it, but I also see how it can muddy the water, soot the current values for arguments. You know, the simple algorithms, they tend to just work off the last sold price and then apply land registry house price data to it. You know, and it's not necessarily.
doesn't take into account the wider market
No, there might be an absolute banging comp that sold three roads away that is absolutely perfect, but it's not necessarily going to take that into account. Yeah, sure. So I do fear, not fear, fear is the wrong word. I'll be free if can do something else. But I think it is going to become more more prevalent. AI is huge now. mean, we use AI a lot for kind of dissecting information, reading reports and titles that you know can quickly. We use AI for our first stage of our
audit before we send the reports out. So we've got customer AI that will review our reports, rank it out of hundred and tell us where we need to be to get it to a hundred. So that's what we do at the moment. So we kind of trying to lean on it as much as we can. But you're going to see it more and more. I generally do think the lenders that push AVMs are going to get a lot more work. It wants to do that. And desktops have become more more important as well, I think. But then as a broker, if your client's coming to you saying I want AVM or desktop, just...
it would raise a couple of red flags for me.
Do you think we'll ever get the, the technology that's able to, cause the beauty of the AVMs now is that they work for single dwelling assets, straightforward houses, whether it's a home mover or maybe easy Buy-to-Lets much more difficult to look at the HMO market. And that's taking away from like commercial valves, just just bricks and mortar, because the work you might've done might not be factored in or refer jobs and things like that. Do we think tech is coming that can take that into account? That can help move that, that sort of arena quicker as well.
Mate, I've thought about this so many times. The issue we have with it is, valuers don't tend to love to share data. So if there was a data set of all the valuers, and then we'd happily participate in this as our firm, where your valuation of HMOs gets put into a data set and all the other firms put there, that's when you start to collate some nice real data, which would be quite easy at that point to populate an AVM. And people like your big firms, you know, knocking out, you know,
two, three thousand about a year. They could probably start doing it now. We can probably start doing one, but obviously the more data you've got, the more accurate it can be, you know, and you can look at bricks and mortar. You can look at investment methods, you know, and the way the reports are, know, especially with AI now, it picks up keywords. So can quickly see condition was poor, yield adopted 10 or, you know, so it can be done for sure, but it needs collaboration in the sector.
which is easier said than done.
chance mate. yeah. would, if anyone wants to share with us, we would do it.
Yeah, okay. Interesting. Well, you never know, right? Down the line, will innovate and they always sort of have proven that they can do stuff like that. I'll put you on the spot to sort of wrap up. What's going to happen to the property market next 12 months, next 18 months, property prices up or down? What do you think?
I, it depends on what happens with the Labour government at the moment. I won't go too much into that one. But I think commercial is going to be the big trend. I think a lot of people are going to mixed use and title split. And I think that's where the money is.
You're the second person on this podcast series to say that think commercial is. Yeah. and residential property value, think potentially stalling.
I know my stuff
Stalling, do you know what, things that are priced right will sell. Just because things don't sell doesn't mean the market slowed down. It's because agents are desperate to win work. And the easiest way to win work is to over price something. And as soon as you tell someone the price, they've got that money. And if they don't get their money, they've lost that money, but they never had it. But if you actually looked probably at the actual transactional numbers, it's probably just quite a nice steady rise.
So,
people when you hear agents, market is rubbish. It's not, it's just because you've been lying to people telling you you can sell something for more than what it's worth.
Well, that's interesting. So market slowly on the up, but more conservatively than people maybe are looking at it. Correct. But you think of diversification into mixed use commercial, slightly different propositions, maybe the move forward.
Correct, mate, stuff like PD on stuff like that, know, ground floor, retail, adding in an extra flat there or not. That's what I've been doing now. I think it's time to be creative and don't necessarily believe all the trainers that you see online that are telling you you can do, buy a property with no money and stuff. Like you still need to have some money to buy something with no money generally. So just be careful.
Yeah, which is absolutely great advice. And one thing we're trying to do here is educate from good people in the market, transacting really well. So it's really interesting. It's been super helpful. It's been really good having you as well. Thank you again for watching. Thanks to Colin and Project and Co for giving up their time and giving some great advice for you guys in the market. Tune in next time to catch up with more.
Welcome back to the specialist scoop by Arya Finance. I am delighted to have Adrien Maloney join me today. Industry giant Adrian. Um so Adrian's with OSB.
Can you tell us a bit about your role?
What's your Yeah. So, um I'm the group intermediary director at OSB. Um I guess for those of people that don't know it because it's
not our lending brand. Um I oversee our lending channels which are kept reliance for intermediary’s precise um and interbate. Um and I sort of run all
the collective sales force that works there whether it's the people on the phones, the people you see in the field, the BDMs, um or the management team. So yeah,
quite a wide job. Yeah. Yeah. Yeah. So, it's have you been there now?
10 in December. 10 in December. Yes. So, God, where does it go? Where does it go?
No black hair left, but you know, years of fun. So, it's been good.
And you've been in the market a long time. What's Tell us a bit about your journey in your career.
Oh, blimey me. Yeah. So, um I guess it was 1996, so that's nearly 30 years. Is it nearly nearly um if I do the maths?
And almost by accident, I guess like a lot of people, um I kind of didn't really know what I wanted to do. Um uh a lot of people won't remember the brand,
but um a company called um uh Mortgage Trust opened in Epson where I live.
And I just ended up working in the call centre and sort of progressed through various roles there. Um, one that was exciting, which is uh I worked in what was the biggest broker in those
days, John Charcoal, um, looking after that account. And then I went to work for Portman, which eventually was bought by Nationwide um, and worked in the sales team there. And then 10 years ago,
um, I decided to bite the bullet and go back to working in sort of specialist lending, which was um, with OSB and Kemp Reliance at the time. And then of course
uh we bought uh precise into the family if you like and here we are today.
Yeah. I mean it's moving from mainstream to specialist. How did that feel at the time? Like obviously I think there's now
a bit in the middle which has probably become a little bit more intermingled but back then it was probably two very different
halves of the tale. I think the biggest shock was when you come from a massive organization not just in terms of
structure but in terms of the volume of business they write and day one you sit there and look at the difference when it comes in you think have I made the right
decision but actually you know it's in in the 10 years it's grown beyond all all belief but it was totally different to go from
that level of size down to to something much smaller much much more nimble and much more agile which was the fun part over the years we've seen a little bit
of a progression from the more heavy specialist end of the market into the more mainstream. There's a lot more
crossover and I think Kent Reliance is a really good example of that, isn't it?
That the appetite has grown and grown and there's more that you would take on than going back five or so years that you would have ever considered.
Yes. If I think 10 years ago, I guess Chem did a small amount of resi, a bit of shared ownership and was just a home
for limited company bylet in in the main because the high street didn't do limited company bylet. As I guess the market's evolved, you know, over 10
years, the high street's kind of come into limited companies, particularly this year with with some other lenders,
but they don't really do those large portfolios or slightly complex properties or or just where customers
have an unusual circumstance. I think that's the beauty of where Kemp Reliance sits and the relationship it has with brokers is you can pick up the phone,
talk a deal through and actually it's probably does a little bit more than some of the even some of the other middle specialist grounds.
And your new brand then rely where does that fit in?
Well, yeah, thank you. Um I mean and thank you because you guys have helped with the the the pilot and the launch.
So we're still in that phase of um bringing it to market but it will and actually the feedback from my team has been really positive and I haven't paid you to say that. I
thank you for that. No genuine it genuinely has been really good and just on on where will Reli sit rely will be
the Blet brand for for the group. So what you'll see over time is that we'll stop doing berlet in precise um and that we'll retire the Kent Reliance um brand as a whole.
I guess within the name that we we branded it there's a little bit of a throwback to the heritage there with with Rely. But I'm I'm really excited about it because not only does it bring I guess the bit we talked about there,
the bit about Kemp being a specialist still the ability to do all of that, but we've worked with brokers like yourselves to go how does this platform
work? How do we take the heavy lifting out and leave the proper underwriting to the humans? Yeah.
Um so yeah, we we'll bring that to full market um very shortly. Um but um I think it's going to be a game changer if I'm being honest in the specialist
market because um you know not we've always been hamstrung by technology but actually we haven't been able to do a lot with technology. We've built this
inhouse um and we're able to sort of react to market bits really quickly. We've had brokers involved in the build.
Um and yeah, I'm really excited to get it to market. So um yeah, it will be the big the buy select brand for the group.
Yeah. And and actually you mentioned brokers quite a few times and you have the word intermediary in your title.
Yeah. You are intermediaries through and through. You've always worked with intermediaries and that's true I think of all your brands. They're all intermediary facing, aren't they?
Yeah. I mean I am I often say to people probably OSB as a group and a collective is the largest intermediary only brand in the market. There'll be a number of
my competitors and a number of people in in in other brands going we do more business that you know but a lot of the high street brands have direct channels
direct to consumer we don't um and I look at you know we we set up a high net worth team for our larger borrowers um so we have a relationship almost I think
your colleague said outside of concierge service um for those but that's done in tandem with the intermediary so everything we do and we see brokers at
the heart of our business is focused around working with you guys.
Yeah I think we do it well. Yeah, you do do it well. And actually, it only really as I asked that question, it only struck me that really you don't have that direct presence. And
and I think we see that eb and flow a bit in the market. You see a lot of lenders, and I've seen it over the years, they chase the distribution
because they think that going direct to market is the holy grail. Um, and sometimes that means cutting out the brokers. And generally it doesn't end
well, does it? I mean, you see you see a lot of lenders come back full circle after making that decision. Let's go and make friends again, isn't it? Um, but
you know, I mean I mean you I won't speak for other other people's lenders or other lenders.
But the bit for me is about 90% I think now of all mortgages come through the intermediary channel postmr as high as 90%.
I think it is with with with with with some channels um or some lenders certainly you know for us it's it's all of it but
actually that's more of a a bit that I'm sure come clients need advice. There's so much choice even, you know, look at the specialist market. You know,
you you've worked in it a long time.
Look at the lenders you have on your panel. You know, it's easy to go that's the best rate, but actually it might not be the best deal or the best experience for the client, service criteria and
things like that. So, the market is really broker dominated. Um, and actually for me, brokers do a good job.
You know, you see people signpost in the right direction. I use a broker when I want to get my mortgage done because,
you know, I can see what's the best rate out there, but I don't know where they are in service and things like that. So I think you know and especially in specialists it's just
you know yeah I I think there's a lot of talk at the moment AI seems to be the hot topic
and there are some camps that go brokers won't exist in however many years and actually wider than that you listen to
some podcasts where they say that most jobs won't exist in 30 years 50 years or something um I probably am a little bit
more neutral on the AI front and I think that the capabilities will keep expanding and it will do more and more and the processing efficiencies will be
hugely valuable and it will make us all a lot leaner but what do you think about that where do you sit
I guess AI is only as good as what you put into it um is is the starting point I think it will I think that we should embrace technology we're doing this with
rely we're investing in our platform for the rest of the brands um and tech can make your life easier you know the the key and journey on going to rely um
application is 50% of what it is today on our existing platform. So that's tech doing that and is that have you got AI in that or is that just
that's inter APIs we've got now I'm not a tech expert but it links into different different bits um in terms of the valuation
journey the legal pathway and things like that and so that that's important but you know you can see how you know we if I look at live chat which we operate
on the websites we get every year more and more people using that for quick answers you can see how potentially AI AI might work in call centres with more
generic questions. But I think you know at the heart of what we do in specialist lending and it won't you know at the moment almost every case has a human
touch. Not every case will have a human touch going forward but for those big complex deals um and also you know we have hurdles where the borrower has to be interviewed
well we're not going to get a bot to do that. It's going to probably be an underwriter. So I think AI will have a place and it will evolve. And I think if you look at mortgage tech and the
mortgage industry, it probably hasn't evolved as fast as other other sectors.
I think we're quite poor for tech in the mortgage industry generally. And and actually, interestingly, if you go back to kind of pre-financial crisis,
we're almost just catching back up with where we are then. If you look at like GMAC, the like was it 62nd, I can't remember what they called it, but the the offer offers whatever it was. Um,
and we haven't really had anything like that since, have we?
No. But I think, you know, we're in in in terms of I think what will happen now is it will go very quickly and catch up. Now,
that's uh not to say, you know, as I said, other sectors are probably more advanced. But if you look even in things like insurance and pensions that the
platforms they use are a lot better than we have in the mortgage industry. And it's not that I actually don't think that the mortgage journey is that bad.
probably come bane in my life is often when it gets to legal because that bit hasn't come along leaps and bounds either. But um I do think you know the
evolution of tech and things like AI brokers, lenders will consider how they can use them, how they can make the
journey more frictionless. Yeah, I mean it's it's a minefield and like you say it's about what you teach it and I think
the tricky part and it's like when you're upskilling people it takes a long time to come across all the different scenarios that you can
come across and I don't know about you but I still will have something come up where I'm like I've not seen that before.
No, I've not seen it before. I have to try and work out how to navigate that.
So if if people that have been doing it for 20 plus years don't know how to navigate it there you assume would be
limitations to AI. Um but I guess your brain either has that I I'm
I I can't quite vision how AI can overtake people. But there are some people who really firmly believe that and I think perhaps perhaps the the
middle ground or where it will start to do it. may end up doing certain tasks but it doesn't replace the ultimately the the person at the end of the day. Yeah. Time will tell. Eh,
absolutely. Yeah. One thing I was keen to get your view on is just the state of the buy to let market in general because obviously it's a huge part of what we
both do and we've seen some huge changes over the years and it's been it's been getting harder and harder. Yet, despite
all of that, I think it's fair to say there's still big pockets of it that are thriving. um some that are surviving and
some that are thriving. And I'm keen to hear your view because you see it quite holistically as a lender because you've got the different channels
you know from the more mainstream right through to the heavy specialist end which is the interbate brand. So, so what are you seeing at the moment?
Well, I think BLET is really resilient like whatever way you look at it and probably the if you if you go back to financial crisis it had never been
stress tested because it had never gone through a downturn. Obviously bad luck in the last 10 years since I joined OSB predominantly a B to-let lender. What do
we have? We had regulations, we had tax changes, we've had COVID, we've had Brexit, we've had a Trussomic and it survived all of that because it actually started I think the tax thing was announced in 2016 10 years ago. I remember I just um I just decided to go and join OSB Kemp Reliance predominantly a buy select
lender and the tax changes landed and it landed in tandem with the you know uh the P rulings around additional underwriting for for professional
landlords and actually you know I always say to people not all regulation is bad not if it safeguards certain things and I think you know from a lending point of
view you know the ability to look at the wider portfolio and to look at these these deals in bigger details has made the professional part of the market
really secure from a lending point of view a safe bet. Um I think what we do see is that you know bylet as an entry point if you think
I don't see too many first-time landlords come into the market and we were talking on the way up here about you know tax changes and and navigating
that but certainly for those landlords that are in it full-time and predominantly we see in company names I'm sure from a broking point of view
that's very similar as well they're continuing to buy to invest they might have changed their strategy slightly so we certainly see uh more
people looking at multiple occupancy high-end HMOs. Yeah.
Um, you know, someone who's sending his son off to to college in a in a few days time, knowing what I'm paying for the year and seeing where he's living. I'm think that's not too bad. I don't
remember doing that when I had shared accommodation. Um, and I think it's it's it's those landlords that continue to to
to build and invest. The other bit you got to take into account in terms of the the rental sector as a whole is about only 50% of all of those properties.
It's about a fifth of the the housing stock in the UK has got a mortgage on it. So a lot of people who've got by to that sort of exempt from from some of
these bits. Um but you know and I think the other bits that we're starting to see is I guess people have gone out and the importance of tax advice um that
that you get around that and people that perhaps are disposing of um portfolios they're doing it in share purchases and I think that would be quite a big market
going forward. So you know in terms of buy to let yes it's changed um yes it's probably harder if you want to get into it but for those that are in it and know
what they're doing it's still a good viable investment. Yeah, and I suppose that probably is where all of the recent governments have been
going with it. They want to professionalize it. So, there has been a drive to get rid of accidental landlords and one-off landlords, whereas I think
people used to really like that as a little pension pot, like a controlled pension pot where they could see it and they could go and visit the property and
it wasn't someone else managing their money. But that's all but done away with really. So if I look back 10 years and and obviously the the brand
I worked for before had a buy to let lender, substantial buy to let lender. I always remember then a lot of the deals were let to buy. So people who had one property, they go actually it's really good. I can take some money out here,
buy the other one with the the the deposit and borrowing was so cheap.
Yeah. Like like you say, yeah. And then have that one as that pension or I'm going to give it to one of my kids or whatever the the planning was around that. with all the taxes I guess now on
second properties that might not have been you know if you came to do that today it might not be as viable and also you know if you're a higher rate taxpayer and it's in your personal name
all of those hurdles probably make that little bit of the market harder to do which was where a lot of the market was 10 years ago.
Yeah. And the the thing that I suppose concerns me with the market is that it's harder and harder for people to buy
their own homes. And one of the unintended consequences here is that rate that rents have just gone up.
Yeah.
Exponentially over the last couple of years because obviously borrowing costs are higher and then the more landlords that are pushed out of the market,
the less stock there is and obviously then you've got a supply demand and prices go up. So you need the professional end of the market to
outstrip that to ensure that actually people can still afford to rent and and can rent otherwise what you know what
happens to the renters's market and I think that's such a valid point and I think that's why you've seen diversification in terms of asset so you
know how do I maximize the return you're see as I said you're seeing more people convert properties I guess and we see that through bridging and through our
for our precise brand people using the the the the product to change the layout of of properties. But you're right, I mean, you know, you only have to go into
where where we are, central London, um trying to get probably there's still cues of people trying to rent waiting lists and the returns and the rents are
just just going up and up and up. And you're right, is that the unintended consequence of almost pushing landlords that way way down the line? because you
you know as well as you want first-time buyers getting on the market, you want a thriving rental sector to support those that don't want to go on the housing market at this stage.
Yeah, of course you do. And actually,
I've got some berlettes and probably the only positive thing I can say about my berlettes over the last few years is that rents have gone up. Everything else
has been an utter nightmare. And I think I'm not I'm not the professional end of the landlord spectrum because I have a day job so I don't have the time to
invest in it like a proper berlet landlord would. But it's really challenging. You know, you overcome one hurdle and then you've got new
regulation coming out that's sort of Well, yeah, you've got the Renters Reform Act, EPCs. Um I mean, it's it's going to be really interesting around
those because I think they ultimately they're going to happen. But you know,
if you just take the EPCC bit as a as an example, um, if you went with a 2030 deadline, which I think is the one for
existing tenencies would have to be EPCC. If it if it goes through, that would mean about 3,000 properties a day
needing to be upgraded. Um, pose couple of questions. Where would you get the workforce? Where would you get the materials? Where are you going to get
the money? I think though it one thing that we see and you probably got better data on this but all landlords want
maximum loan to value typically you probably have a more holistic view of that but leverage wise we often find
that there's not that much left in it in terms of rental coverage and loan to values. So depending on how substantial
those upgrades are, that could be quite challenging for people if they don't have the equity or the rental income to service the higher debt levels.
And it's going to be interesting to see if we people throw the word innovation round all the time.
I don't think it's I don't think we see much innovation, but I think people throw it all around all the time. You know, someone goes, "Oh, you know, we there's an innovative product with a 7%
fee or a 5% fee." Is it really innovative? It's just adjusting a product. But, you know, with some of those work, some of them will be minor
to get them up to upgraded to to from say a D to a to a C. But, you know, you you might have points where the property
um you have to have it vacated to do the works depending on the extent of it. You might want to do additional improvements. And it'll be interesting to see, you know, if lenders come up
with products that support those upgrades because at the moment, and you you probably see it as a broker, everyone's just targeted A to C.
Um, you know, let's take that that stuff that's already there. Well, actually,
probably the bigger challenge is how do we get the E and the D's up to a to a C and what's the product that will support
that? So, you know, as specialist lenders, I think we should be looking at that market and how we can innovate in that space. And from a broker's point of
view, it's a massive opportunity because there are so many properties. I think it's about 60% that fall outside level C as well.
Yeah. What do you think the biggest challenge for landlords is at the moment? Well, it's probably going to be in November,
isn't it? Um, which is the budget at the moment and what might what might come out come out from that. But um I think
it's you know some of it must must come down to confidence because you know if you repeatedly beat someone with a stick
inevitably you know they're going to get hurt and it does seem that landlords have had a lot levied at them in terms of regulation tax changes etc. And to
the point you made earlier is you know the unintended consequences are probably rents going up and a lack of uh stock and people coming into the into the
sector. But I think, you know, if you know what you're doing, and we certainly see that with the the the landlords we deal with, the bigger ones, they know
their market. They're still seeking out those opportunities. But I guess it's it's the level of uncertainty of what might be next down the line.
I guess it's like anything where there's uncertainty and challenge, there's opportunity.
Some people are in a position to take advantage of that and others not so much. But from our side, we are definitely seeing a lot of really active
Yeah. repeat property professionals who are quite excited by this market. Um whereas you see some people who are you
know they've just got a portfolio in the background or you know they're doing bits and pieces and actually they feel that everything's going against them. So
it probably depends a little bit on the market positioning, doesn't it?
And actually if you if you think about it, you know, debt is reasonably cheap still. you know, it's probably a bit more normal.
People don't feel like that, but you're right. It is. And I I think that's an adjustment that people haven't Yeah.
They've been so used to borrowing at ridiculous interest rates that people think that's normal.
And and and you know, there's a fair amount of people that will have hoarded cash, I guess, or taken cash out of property when rates were cheap,
depending what they've done with it, but they've made improvements. I mean also from just the broker's perspective, the amount of renewals that are coming up
over the next 12 months, fixed rate renewals coming off rates and all lenders offering PTS or perhaps properties have gone up in value in certain areas. There's definitely
opportunities for reviews. Um, and I guess refinances if that's what people want to do. Um, but I think you're right with that bit that that you said about opportunity.
Um, and we certainly see it with the a lot of the landlords we deal with. they're they're already looking going, you know, can I pick up that bargain?
What can I do work for? And you know,
you guys do a lot of the the short-term lending as well. Can I bridge that, do some work, get a return? And as I said,
actually terming it out isn't that dear at the moment when you go there's a lot of lot of lenders fighting for competition in the buylet space.
Yeah. Yeah. Absolutely. And residential market obviously you're in the specialist end of that as well. How's that performing at the moment?
Yeah, there's a lot. We we've seen a lot of demand. We made some real if if we talk about the brands at at OSB we've given real clarity there. So you know we
have our commercial brand in interbay rely will be the the biotelet brand and precise will use for residential mortgages and for for bridging. We made
a number of enhancements in terms of uh upping the loan to values in in precise to the higher LTVs but also like a number of lenders um we've adjusted the
LTI so people can borrow more. So there's definitely a demand um out there. There's definitely a demand that falls outside of the high street which
you know might be a credit blip. It might be one that you're self-employed.
Um and again a bit like what I said actually there's good value in rates out there. People are competing for business. You know that because of the amount of lenders that that you deal with.
Um and and there's opportunities you know things like shared ownership,
affordable housing. So yeah, resi's been good for us this year. We've really we've really pushed our foot on the accelerator of pushing precise to be the front runner in that specialist space.
And are you seeing you seeing purchase business? Yeah. Well, as well as refinance.
It's a mix, Lucy. Yeah. You know, um I think um probably you'd say coming out of coming out of August, it's slowed a little bit. And of course, some of the
macro headlines don't help that. But still, you know, we're we're pleased with the the numbers that are going there. And again, look, we talk about
cost of mortgages. There is some benefits that, you know, you've probably seen cooling in certain areas of house prices as well. And if you're a first-time buyer and you think, "Hey,
that's a a good bit." They can now afford those mortgages. Probably a lot of them with the help of Bank of Mum and Dad as well.
Yeah. Yeah. And and obviously getting your crystal ball out for this one, but there must be there must be quite a few people in your business that give you
forecasts and expectations around interest rates. And it's one of the things I'm always asked. So, I'm going to ask you on our viewers behalf, where
do you see interest rates going in the short to medium term?
Well, if you'd have asked me that about 3 weeks ago, I would have thought we're going to have another base rate drop.
It's this week, I think, as well, isn't it? So, but I think that that's highly unlikely. I think the base rate will probably stay where it is now into the
spring of next year, unless of course you the budget throws something else up,
but but what do I know on that? I think what you are seeing is swaps are you'd say they're still volatile. They bounce up and down, but they're not skewing high.
The swings are quite small, aren't they?
Sort of under five basis points daily generally.
So, so I think what you're seeing is the rates that you're seeing today are probably the normalized rates till the end of the year. Um, you know, you've
got in in residential, I think if you looked at Best Buy, you've probably got a couple of rates just below 4% or just above over 4%. And certainly in biotech,
you're looking, you know, five, five and a half percent, which is good enough for a functioning market. Um, but also competitive enough that if people want a deal, they're going to do it. So I I,
you know, I'm I'm cautiously optimistic.
I think it's a term I always use about how the market is because I think for brokers, there's a lot of refinances. There's a lot of opportunity in that.
And, you know, uh, with regulation coming down the the the road of what we talked in in biotech, there's opportunity there as well. Um but you
know I think a lot of it will swing in the specialist market as well.
Yeah. And and the market now I think is quite saturated probably across all of the products that we both operate in
over the years following the financial crisis which now feels like so long ago.
But you've just seen it go like that haven't you? And and the the number of new entrance coming into the market both on the intermediary side and the lender
side. And you know, you're all chasing market share, but there's also an element of just trying to do things differently.
Are there any kind of big opportunities that you guys are spotting? We've um you seen our half year results.
We've done really well in commercial and bridging this year. We set out to to do that. I think um it's always nice when a good plan comes. Well, I like to think so. Yeah. Yeah.
get pat on the back. But um I think um certainly in commercial there's a there's a real demand out there. You must see that in your brokerage
house as well. Um and again some landlords are diversifying into semi-commercial and commercial assets.
But also you know there's a lot of people that are self-employed and I say this to brokers out there, oh I don't do commercial. I said you deal do you deal with self-employed um applicants? Yeah.
About 50% of my client bank is well you've got some commercial opportunity.
Now, you might not be the expert in that, but there's there's there's people that that can help there. But yeah, I think and again goes back to the importance of the role of the
intermediary. There is so much choice for the M borrower. Um that the role of the intermediary is pivotal because there are so many different things that
sit behind I guess the experience of the rate or the criteria or the assurity that that lender is going to do the deal. The broker's the broker's kind of role is pivotal. But you could argue,
you know, you see a lot of new entrance or in the lend I see a lot of new entrance in the lending space or or or people re rebying lenders and I I kind
of look and go I'm not sure you're doing anything diff different and it's really hard to crack a market where you've got established players in there.
I think so. I think it's really difficult for new entrance and and there'll always be some who are just superstars and they take off and they
make it happen. But certainly in the brokerage space, one thing that we've seen is a huge raft of mainstream
brokers moving into the specialist market. But it's all about volume, isn't it? If you don't have the volume, then you don't have the lender relationships
in the same way and you don't have that kind of it's the traction, isn't it, with lenders to to be seeing the volume
because if you just get one here and there, perhaps you're not heard quite as well as those who are bigger players in the market. and and and you know there are different products that different
brokers get depending you know particularly as you go into bridging and commercial that the volutric brokers get because they're I guess subject matter
experts actually they get introduced bro business whether it's via broker or direct client that actually their expertise in putting
the case together if you haven't done that can be quite valuable as well everyone can say they're an expert in specialist but I do firmly believe that
it's about miles on the clock and it's about what you've seen because I made the point earlier, I still see things from time to time where I'm like, I've literally never come across that before,
but there is a lot that I have come across and I know how to navigate, but there's all, you know, everyone has to
start somewhere for sure. But there's a lot of people that call themselves experts out there that perhaps the expertise is is a bit on the light side,
but it it definitely takes for, you know, a lot of experience, doesn't it?
years years of hard work seeing the deals and and we often say particularly with those more complex deals that when you you know done some big deals with
our rea over the years is it's how the deal is presented because time makes all the difference.
Exactly. And that you get the the whole story and then you're able to to to shape the deal and and ultimately you want a smooth process for the borrower as well.
Yeah. And I think that's that first impression thing. If you if you send something over and it's not presented in the right way and you lose someone's
interest in the first go, it can be really hard to recover it.
Whereas it's all about kind of talking about the case from a rounded perspective because what we don't do is sugar-coat.
You know, if something's there, it's there and you have to talk about it. But it's talking about the problems and the mitigants in the same breathing act, isn't it?
Absolutely. Yeah. which is, you know,
comes with comes with time and I'm sure you see all sorts, but probably your bridging business, you see a lot of that
because bridging is like a a quick entry to market for some brokers, isn't it? It's everyone sees it as the holy grail.
So, you probably get some real weird and wonderful in the bridging space. Yeah. And our bridging business has has grown.
So we have seen more people people use it and I guess we play more in the regulated space which to a certain extent is probably more basic bread and butter.
What sort of percentage of your bridging business is red? Can you answer sorry if I I can't ask this in the PLC. So yeah, I can't well what I can say is the
majority aneotally yeah anecdotally the majority of our business is is is is regulate but we're growing into the non-regulated looking at the more
complex stuff and of course we do commercial bridging through through interbate but you know not everyone comes across commercial bridge every day you probably see more of them in in area
than an ordinary broker would would would do and again it's how you position that case and how you put the put the strengths of it but um I think you know
from where 10 years ago we did we didn't do bridging at OSB And obviously we did when we acquired Precise, but that market has grown phenomenally and of
course more people use it, more people do the exit. So I guess ultimately more brokers have have tried doing that, but um I guess the more complex the case
probably is when you you need to pick up the phone to people that that really know that market
Yeah. And and on the reggg side, is most of that your typical chain break or do you get people that are using their home
to borrow money to go on to do so so you get you get a bit of both. Yeah, chain break is is quite common.
You sort of, you know, um you also do get people who've got an existing asset where they want to utilize that plus the other one to bring down the LTV, bring
down the rates and the cost of if they're refurbing the other one or waiting for the other one to go there. But yeah, I think if if you sat there,
most of it is bread and butter still that that person selling their home or they want to buy that property quickly with a with a bridge for whatever reason.
Yeah. And you've done bridging across different brands. What's the what's the ambition moving forward for the bridging part of the business?
Yeah. I I mean, you know, we have a really strong brand in the precise brand in in the bridging market. Um we want to grow that. We set up um we separated the
sales team with with the commercial team and the bridging team. This year we also launched the uh specialist property team in there for those more complex cases
where you can speak um to the team there that Peter Greg heads up and you know he's a qualified surveyor so they know the kind of asset classes that we want
to do. So, um, yeah, I'd like to say to those those guys that sort of do some of the bigger bigger stuff, watch out. We we want a bit of that as well. But, you
know, there's lenders out that there that do it very well, and we're we're kind of catching into that that group.
And actually, one of the big selling points for OSB is you can do loans with not much of a cap on really, can't you,
if if the right thing comes along?
Yeah. I mean, some really large transactions.
Well, we we've done some with you and the team, Lucy, which is which is really good. And you know, I guess that comes with having a lending balance sheet of 25 billion. It's a big business. Yeah,
it does help and and a big savings balance sheet as well. Um, but I think that's where we position ourselves in the specialist market is, you know,
we're not fearful of those large transactions. You've seen some of the the press articles of some of the stuff we've done over the last 12 months. It kind of amazed me that some of the stuff we've done, but it's been good business.
Um, and having that understanding of large loans and actually having a process that works, is friendly, engage with the broker, engage with the
borrower. Um, and you know, we've made improvements to our valuation panel, our legal panels over the last 12 months to make those sort of deals easier as well.
Yeah. And you have an in-house real estate team, don't you, that will kind of look at the transactions early on to get a feel for whether it's likely to
have success at credit committee because obviously if you haven't got those guys on board then you don't do it and and and you know they're very commercially minded. Um and the other bit is of course you don't you
know if you're dealing with a borrower ultimately it's your client you don't want to spend what can be tens of thousands of pounds on a survey that comes back and we go we're no longer
going to support. So it's just often there's something in what you know before you go to valuation that will kill it with a lender if it's going to
kill it. So we always say to people you're better off frontloading the work and sometimes clients find that frustrating because you are going into a
lot of depth. A lot of the time they want to call you up and say I'm buying this property. Can you do it? And and then when you go back and ask them 5,000
questions I exaggerate but 4,999.
Exactly. you you have to kind of really get under the skin of it because otherwise you get down the line and there's something that you could have known really early on
if you miss it of course and you're the front person for it is time and money.
I think that goes back to the bit and with all of these in the specialist market like you say it's how the deal is quite often presented.
Yeah. And what do you what do you see over the next 12 months in terms of like market size and opportunity? Do you
think that we grow? Do you think that we continue to kind of be steady as we are now? It's a really good question, isn't it?
Um, well, the the potential for more volumes out there in terms of refinance,
how big the purchase market is, and whether there are any incentives that are going to help people get on the housing ladder will determine that a little bit. I
think I think as a I think like a lot of people, everyone's waiting for that November budget. Get that out of the way. See what surprises or not surprises
are in there and then you can you can move on. But I think you know rates will remain competitive unless something dramatic happens. Um house prices are
relatively stable to the point we talked about in in BLET. There are investors still looking to buy and there's still plenty of opportunity in residential,
commercial and bridging. So from a specialist point of view I think we're in we're in quite good shape.
Yeah. Often when the market's challenging the specialist end of the market does better. That's what we hope so. Right. Yeah. Absolutely. Well it's
good for us isn't it? But obviously we want a healthy market overall and really in order for that market to be healthy you need the market to be moving. You
need there to be transactions because it's what and I guess confidence conf I think confidence is everything actually isn't it and when you talk to
people you get a feel for where their head's at and that really is quite reflective in the numbers in the market and I know it obviously changes a little
bit from you know what sectors you're in but we find throughout the year this year we came out really strong yeah the first
quarter was really really strong and then obviously there was a little bit of a um stamp duty cliff again, wasn't there? Which we saw impact the market
because I think you get all that momentum and then you go off a cliff a little bit, but then it feels actually like there's some
excitement and positivity out there despite the headwinds.
I think we both said the summer was all right. You know, you kind of go, you know, August is August, people go away,
but actually we sat there both going on the way up. Actually, it was busier than we thought. And actually, you go into September, things have kicked on, people
are doing business. Um it's just about finding that make sure you're the the right one to support.
Yeah, I mean there's there's definitely been headwinds but I think there is pent up demand and I think there has been for quite some time. The expectation from
borrowers is starting to align more whereas we've spent a good couple of years where people have just gone that's so expensive I can't I'm not doing it at
that rate and you you sort of let people go off investigate the market that's right. Yeah.
Yeah. Exactly. And I think there's a lot more pressure on pricing than there was when all of the rates were, you know,
okay, you still had some that were in the Best Buy tables and some that were slightly more expensive, but it felt like clients were prepared to pay more
of a service premium previously, whereas at the moment, our experience at the front end, and I don't know whether you are as exposed to that or not, but
obviously you're, you know, you're you're fairly close to the ground just because of the relationships you hold,
but we find that there's a lot more shopping around and there's a lot more pressure on pricing that we're having to really explain it and and go back again
and again and again and sometimes you're forced actually to because we always talk to people if there's a better product out there but sometimes people
are sort of really hellbent no that is the one I want to do and and even when you're saying look I know it's got a great headline rate but I'm just not sure that's going to be the right one to
get this done and often your instinct is right and we're we're finding that faced with that challenge more and more
I think because um there's so much pre more talk and press and social media about where you can find mortgage rates in so many different channels now can't
you someone goes I want that and you're going but that's not that's not you that one's you but they they then shop around and see if someone will do it like that
and quite often you know we do see people have gone away they've gone for that rate someone's pushed them in or not pushed them they've gone with the what the client wanted it comes back
they go oh they didn't do it and you end up doing in the deal as well. So,
there's a lot to be said for trust in experience and in what your broker advises you because I think, you know,
they know a lot more than just the headline rate.
Yeah, absolutely. We've both been doing this a long time. New people, new entrance to the market. Like, what advice would you give to anyone looking
to start a career in the mortgage industry?
That's a good a good question. I mean, I said at the start of this, I probably ended up coming into it um by accident,
but there's never a dull moment. Um there's lots of different roles. Um there's that I I I I would recommend you know people mortgage finance boring.
Actually it's not. The people in this industry make it. Um and actually we're crying out probably for a new generation of people coming into the mortgage
market and you know I look at our own business um the success we've had of people that we took on on the telephone teams really basic entry jobs. Three of
them are now BDM. So, if you push yourself, um if you embrace what you can learn there, there's still really good opportunities here. And I think, you
know, um financial services, mortgages in particular, specialist mortgages because they're more interesting, right? They're not done by the machine.
Um I think it's crying out for people that want to learn, are ambitious, um and are prepared to drive and challenge themselves. So, I think it's a really good sector.
Yeah. The barriers to entry are relatively low as well, aren't they? If you look at other professions like law and accountancy and things like that,
it is relatively easy to get into the mortgage industry. I had no qualifications to manage this.
Me neither. Me neither. I think it's actually quite quite a common theme in our sector.
But um but you know I I I think it's really good and there's businesses like ourselves doing apprenticeships. There's you know paths that you can follow and
and you know within I'd choose our business within within what we do at OSB. um if you come in on the the sales team and you came in at an entry level
um and you want to progress, there's clear pathways on on on how you can do that and people that you can learn from with with bags of experience. So, you
know, I I I think um and and it's busy that, you know, it's a really great sector for people to come into.
Yeah, I agree. And we we've always tried to bring in people in entry- level positions and train them. And I think actually that's where you often get the best quality of people from, isn't it?
because they get to experience it first- hand and there's no sort of preconceived ideas about how things should be done and you know I look at people that you
know have worked for for me or worked for the business and moved on to other things and they've all progressed and you know you don't sometimes you don't want to leave lose them because they're
they're really good but also you don't want to hold them back and um you know I'm I'm really pleased to see that you know some of the young people that have have worked with us they've either gone
on to the they've actually gone to the other side and worked in broking and done really well or they've gone to other other lenders and progressed their career careers in different ways. So, um I think you know coming out of school,
coming out of college, coming out of university, if you're not sure what you want to do, it's actually a good I call it good playground to come in and and create an opportunity for yourself.
Couldn't agree more.
Thank you. Thank you very much. We really appreciate you joining us. It has, hasn't it? It's been great to talk all things mortgage industry and um yeah, thank you.
My pleasure. Thank you.
Welcome back to the ARIA Finance podcast.
It's the specialist scoop and I am delighted to be joined today by royalty in the industry, the property tax queen herself, Amy Richardson. Thank you for coming.
You're very welcome.
Uh all the way from the glorious Midlands as well, the beating heart of the country. Uh a shared sense of loyalty there. Same sort of journey in this morning. how um Amy, talk us through a little bit about you and your background and how you got into accountancy and tax advice for landlords.
Okay, so I started out in accountancy literally when I left school. So I remember going to the careers office and they said you can do this course, this course and this course and it was like hair and beauty, psychology or whatever it was social and um there was a finance bit. So I really loved math and uh business studies. So I came out with accountancy.
And is that did that literally happen at an an actual careers fair or did you sort of grow up thinking I want to be in the numbers professional sort of white collar mathematics based environment?
Yes. I think because my upbringing I always wanted a career because I wanted a job that would provide a certain lifestyle that I didn't particularly have. So I was quite driven to make sure that I had a qualification behind me in order to get what I wanted.
Um so that's how that started. So I went into loads of apprenticeships. Um literally straight out of school. Yeah. My birthday is in August. So I l went in 15,
did all the apprenticeships, got my qualification. I did AAT and then ACA. Yeah. And then was chartered by 21. Wow.
Yeah. Wow. Always with a property focus.
No. No. So I started out in small practices.
So literally I was being thrown bags of receipts and yeah that back in the day makes me sound so old but back in the day you were as a junior you were thrown the bag of receipts and told type these up into a spreadsheet and that's how it all starts and and I made loads of really bad cup of teas as well.
Yeah.
Uh I used to work for one of the largest UK accountancy firms and they put me into the tax world. Now, at the time I was only 17 and I was partway through my first set of exams and they were like, "Oh, we want you to do the chartered exams for tax. We want you to do this."
And I was like, "Hell no, tax is so boring. I want to be an accountant. I want to do this." I was really, you know, struck on that. So, it's actually hilarious that it's gone full circle and now I've ended up doing tax full-time.
But it's funny that also what's really clear for anyone that's seen you online, which will be a lot of people, you're very passionate about it. So at what point did the penny drop where all of a sudden that became a thing that you love and a thing that you you know where that passion was built from?
So actually it's when I had my second child and it wasn't really just I woke up one day and thought oh I'm going to do this tax business. I was in a position where I knew I needed to provide a bit more for my family. So I was in a job at the time quite high up in my my career but the hours were long the pay was great but it was like golden handcuffs. Yeah.
And even the thought of going on maternity, I was like, well, I'm not going to get much of a break. So, what else can I do? So, I thought about setting up my own business, um, my own accountancy practice. And I did that.
Uh, started out really small. And then I started reading loads of books and I got to the point where I was like, everyone's saying to niche from a marketing perspective. So, I literally sat there and thought, what's the hardest thing I can do? I'm gonna do that because that's probably where the gold mine is in terms of like success.
Yeah. Yeah. Um so I literally went through it all.
So I was like oh maybe I could do um tech startups cuz I always wanted a career in the tech space. A hot topic as well, right?
Yeah. So cool. Yeah, let's do that.
And then I was like h no cuz most of the money comes from funding and this this and this. So that was ruled out. Then there was another one like online content creators, you know, influencers basically. Yeah.
A little bit glamorous, but I thought they'll probably do my head in. It's not going to be worth it. You know, they don't they're not going to be very good at numbers or providing information.
You think I do a lot of handholding?
Yeah. So, I thought no, I want to be around intellectual people and do something that I've got an interest in as well. And that's how I came to to property. So that's where the property So it's actually the property stuff is a handful of years old but you've carved out a real niche for yourself already and that's grown and grown. What in terms of landlords because I guess timing wise you probably got in at a good time in that the market has got a lot more professional in recent times.
Have you felt that that there's an appetite for property professionals to take this a little bit more seriously?
Yeah, I think now we're seeing a bit more regulation around it. you have to have a serious mindset around it if you want to make it big in property. So, a lot of people will come to me now and they've already done a certain amount of research, which is great. Um, not too much research. Sometimes, you know, they they obviously still need some handholding. Yeah.
But I see a lot more people that are taking education and doing it properly. Um, I don't really come across too many accidental landlords anymore. people I tend to speak to are making that conscious choice of I want to invest my money. I want to grow my grow my wealth and I'm going to do this through property investment.
And you know what that's good to hear from my perspective as a broker. It's good to hear that people are coming to you having done a bit of research first because we get a lot of people come to us either starting the journey or on their sort of growth. Yeah.
Ambitious journey for a portfolio where they've said well I know I need to put it in limited company. You said great.
Who have you spoken to for that? No, I just know that I need to do that. You think, "Oh, right, that's not advice.
That's not real. Go and speak to a tax advisor." And we I always think there's not as much noise about it as there is other stuff. A lot of the focus is on your refurb strategies and how you make money at the end, not how you set up well at the start. Is it just that when people come to you, are they asking up front limited company or personal name or do people come with a greater depth of I don't know questions and understanding? I think it depends on the research that they've done, the people that they know. So, people are influenced by the people that they surround themselves with. Yeah.
So, I've I've literally had it where someone's like, "I have no idea, Amy. I need your help. This is what's going on."
So, they don't even know like about a limited company or they don't know about holding company or whatever. Yeah.
Um and then you got other people that come to me and they go, I know I need this. Can you just reassure me?
Yeah. Okay. And then I start asking questions and then it turns out they were wrong. Yes. Yeah. Yeah. Shock horror. Yeah.
That Well, that's an interesting point in itself. And what I was going to ask is what is what's one of the main things you see people come to you with either
an already made mistake or they were about to make a mistake. What's what's the one thing people are doing across the board wrong?
Um they take tax advice from someone who's not an adviser, i.e. potentially someone who's doing a property education course. Yeah. Yeah.
So they will just flatline say you need this structure. Sure. You need an LLP for example. So someone come to me and they go well I've set up my LLP and I just need you guys to do the accounts and the tax return. And then I sit there and go okay so why did you set up an LLP? Do you know why you did that? Yeah.
And do you know what the tax effects are? Yeah.
They're like uh because I've told them and everybody else does it.
And then you start unravelling it and um nine times out of 10 they didn't need that. It's the danger of and it's it's sort of a topic on its own really the property educator stuff and you know I'll caveat this at the start by saying there are some phenomenal educators out there who are doing it properly and responsibly and they take that as a serious career and it's based on the back of a career in property which is way easier to respect and I always think and not to be controversial I think there's such a thing as and it's meant in a positive way of staying in your lane for where your expertise lies and the best educators on the market seem at the moment to encourage this I hate the phrase but power team but they talk about line up a good tax advisor, line up a good mortgage broker, line up a good um letings agency and someone to run your portfolio if you're not ready and established yet and you sort of go up from there and that's how you scale properly. Yeah.
Are you seeing people come to you with the mistakes? Is it you're saying it's from necessarily not bad advice, lazy advice?
What are the things that they're being told to do that you disagree with on the whole? Um, so there's it's simple things like just set up a limited company,
which is fine. It's on a slideshow obviously that they've attended a course, whatever, but and nine times out of 10 that will be the right choice for people that do want to make it big in property, but not everyone's got the same circumstances. So that that's usually the thing. Um, or this Op/Co Prop/Co setup. So they're saying well you need to set two companies up but then they actually haven't thought about a holding company and then and then you know the client is unaware that a holding company is actually a company it needs a set of accounts and then you've got three companies to manage and then they're like they haven't got any properties yet it's a lot of expense to outlay at the front part of your journey.
When does that change because you you talk a lot online about layering companies when it's done properly.
Yeah. What's the sort of point in time on a growth journey that someone should start looking at that or talking about that or thinking about that?
So, if you have somebody who has a let's say a non property business, so I don't know a successful podcasting studio. Sure.
That's their cash flowing business and they have excess reserves, excess profit and they now want to put that profit profit sorry into property. So having a holding company set up would allow you to do that tax efficiently. If you're doing any JVS, that's also a good indicator that you might need a holding company specifically if you have more than one JV going on. And also if you're doing multiple strategies at one time.
So flips, buy to lets, conversions, it wouldn't be ideal to put them all in the same company. Yeah.
And it's not to say that you can't it's not to say you have to have a group structure. You don't have to you don't have to do anything, right? You could have three separate companies, but the tax advantages won't be there.
So, if we're in a group, we can pay dividends up tax- free. If we've got profits over here and losses over there, as long as the shareholding is is there where it needs to be, then you can offset those profits and losses together to pay less corporation tax.
Yeah.
And it's that side of things that people aren't aware of.
And that's at what point are they planning that? Is that ahead of execution or at the point that they're going to start? So you use the example of sort of someone looking to do JVS.
I'm a landlord. I own three or four properties. They're in a limited company which was the right setup for me and was the right advice. I'm now going to do a
JV with somebody somewhere in a new SPV. At what point do you start planning for that?
Um as soon as possible. So when I speak to clients, I would say to them, I need to know your exit. I need to actually know what you're trying to achieve here in order for me to advise you properly as a tax adviser. Yeah. So, in terms of a group structure, you can do it from day one.
That's a different process and you can do it midway through your journey. So, it's not like you have to have this structure from day one.
You can come in at a midpoint and put that together. It will just cost you more money and you have to go through jump through more hoops essentially. But, and how complex is that process? Because again, sort of one of the things I see in the market a lot is apathy from landlords, particularly on the way up where their focus is on a refurb project and all their eyes are on raising finance and sourcing that. And I think sometimes people are put off from going and getting the right advice for fear of this is going to be loads of work, which is stupid, but is a thing that happens.
How how difficult is that if people have partnered with the right tax advisor and the right help?
How challenging is it to change your company structure midway through your journey or through a project or how does that look?
Um, it shouldn't be challenging for the client because the tax advisor should be doing all the hard work. Nice.
So, the tax adviser and the lawyers are doing the graft essentially. So, I'm I'm writing to HMRC on your behalf. I'm getting the clearance. I'm speaking to the lawyers on your behalf and the lawyers are implementing the structure.
M the only bit of leg work that the client really has to do is when it comes to lending because if they've got an existing limited company that has properties in
there that that have mortgages on finance then we need consent from the from the lenders and there has been times in the past where a client has been with a certain lender and they've not approved of the group structure. Yeah.
So I always tell a client when they're thinking about doing this structure before we even sign any documentation need to check this point.
Yeah. It's very important and these are things that people don't know on their own, right? This is why people get into a mess because you have to talk to experts. Yeah. Well, that's a good advert for it. What are some of the myths around? So, we've talked about some of the mistakes people make maybe coming in with the wrong advice. What are some of the myths that you hear that people bring to you as a suggestion regularly that are wrong? There must be some consistent ones. Well, if you've been on my Instagram, you'll know that I've got my own Q&A on that.
uh the classic one of can I just give this property away for nothing and pay no capital gains tax. Yeah.
But they get confused between inheritance tax and capital gains tax because obviously with inheritance tax you can gift an asset and if you survive seven years then it's outside the realm of inheritance tax but it doesn't get away from capital gains tax. Yeah. So those two taxes go hand in hand and it's very rare to mitigate both of them at the same time. So people blur the lines in their own perception, do they?
Yeah. Interesting.
That's a classic one. Um, another one going back to holding companies, people, even though I say holding company, they don't understand that it's a limited company in its own right. Yeah. Yeah. Yeah.
I think because in their head they think, oh, it's like a shell, like nothing's really going through there, right? Okay.
So they don't think that it needs accounts, corporation, tax returns, confirmation state, all that kind of stuff. But it does. Yeah. So, um, that's another one. Yeah.
Um, what else? I mean, I've had some people come to me and that they literally think that an LLP is a company.
What's one of the weirdest and wonderful things that you've heard? Something that's properly stopped you in your tracks that you didn't believe someone could actually think.
It still baffles me selling a house for a pound.
Yeah. Yeah. Yeah. Yeah. Thinking that they can just avoid stamp duty and there'll be no ramifications. Yeah. Yeah. We see that too.
Yeah. That is like got be the number one. And is that are you seeing that when people are trying to incorporate from personal name into limited companies is that the main not so much because the people have got to that point understand understand and done some research don't see it that much but it's more like complete newbies that have maybe in a day job they've saved up some money now they want to buy a property they've heard about a limited company and they'll even say well because I'm buying in limit limited company do I have to pay stamp duty right yeah so those are like the extremes names of the questions that I get. Sure.
And then you've got the other end of the spectrum where you've got someone who's doing a title split and they're asking all these intricate questions. So yeah. Yeah. Yeah. Yeah. You get a good mix.
Yeah, that makes sense. In terms of um when people are come looking to become a landlord, so for brand new entrance to the market, what are sort of the it doesn't have to be three, but what are sort of the key three bits of advice you would give somebody before starting out? And I don't necessarily mean go and get tax advice. We'll take that as a prerequisite. What are some of the things they should be thinking about and have ready as information before they come and get that advice?
They need to know what they want.
So many people so often come to me and I ask them the question, well, what are we trying to achieve here? And how far ahead are you looking there? Because I think even when people hear this, they might think, okay, I'll come ready armed with, but I want to buy a property or I want to get to four properties.
That's great. But that's not that's still short term, really, isn't it? How far ahead are you looking for a plan there? the whole shebang like lifetime.
What are we looking to do here? Because if you think about tax, it starts from the moment you're born to the moment that when we die. So we have to think of the whole lifespan of you know inheritance tax for example. That's all unfortunately doom and gloom and about passing assets when somebody's passed away. So we need to have that conversation in terms of well what are we looking to achieve? What is our main focus? So long-term, medium-term, and in the next 12 months, and then plan out from there.
And that's nothing really to do with tax. That's just to do with do you know what you want? Because I think you can't get something that you don't know, if that makes sense. I mean that adds into the whole, you know, I'm a big advocate for and I talk about a lot in some of the sort of public speaking we do about the rise of the professional landlords and the benefits that brings and the benefits from from my point of view from lending and lenders appetite to support that type of borrower.
But it's the same thing where you don't you can't claim to be a professional landlord or ambitious or be in this journey if you don't have an eye on what does it lead to and what does it mean.
Yeah. Um, people are looking for that 10 grand a month passive income so they can quit their jobs and that's the big that's the easy blanket marketing
campaign that's gone out there, but what does that look like? What does it take?
And what are the bits and pieces you have to have in the background lined up to make that work as well?
I love asking the question, right? So people say to me, "Oh yeah, I want x amount like I want five grand a month, for example, or 10 grand a month."
And I say, "Okay, after tax." Yeah.
Okay. Right. So, have you worked out how many properties that you're going to need to get that based on the strategy that you've just told me that you're interested in? Yeah.
Oh, no. I haven't really thought about that. And then they realize if it's by that they need about 30. Yeah.
And then they go, "Oh, I might need to do something else." Yeah.
So, I think people just need to be very thorough with with what they want. Like, it doesn't have to be completely set in stone, but there needs to be there needs to be a goal that someone's going after in order for someone like me to help them. because if I don't know what you're trying to achieve, how can I plan for it from a tax perspective? Because what you end up doing will have different um tax treatments essentially.
Yeah. Yeah. Yeah, that makes sense. And you want to get it right as well. It's only it's only the people who have got these things wrong that learn the true
importance of it. It's really easy sometimes. You know, there are there are things that people hate in business.
People hate paying recruitment fees at times because you go, I could do that myself. It's only when you hire on board and it takes you hours and hours and weeks and weeks and then it goes wrong.
You think, "Oh, I wish I'd got a professional to do that." And it's the same with I think advice, mortgages, finance, tax, accountancy, all of it. Is the people who've been stung that get it, but you try and get people bought in earlier to see the benefits as well.
I think it's a mindset shift. So people at the start of their journey potentially see tax advice or other professional fees as a cost, not an investment.
And I think if you change your mindset from a cost mindset to an investment mindset, then you start to think about things a little bit differently. Yeah.
Because actually if I invest, I don't know, £2,000 into tax advice and the structure that's right for me.
Well, actually that's going to, pardon the pun, pay dividends in the future.
Yeah. when I've saved X, Y, and Z from taking that in the first place. And also having that regular contact with somebody um to make sure you're still in the right structure because life happens ,people get married, they get divorced, kids move out that you know they're doing their own thing and then all of a sudden the structure that you had 10 years ago Yeah. doesn't work as well. So you need to keep communicating with your advisers as well.
That's great advice. I mean the adaptability in the private rental sector is one of the biggest strengths of the sector. I think the agility and the way that people deal with mortgage crises and rate rises and all the other regulation changes, but not taking that for granted is is good advice is a good sort of point to make. Um, yeah,
it's interesting, isn't it? And the people who take it this more seriously for all of the new professional landlords who are who are new to the space, longevity will be with the people who have set themselves up well. If you if you're serious about it for 20 30 years of proper income with an exit plan, the setup now impacts the 20-year position.
Yeah. And I think we did see a lot of people come and go out of the in and out of the market quite quickly when we had stamp duty holidays and when the rates
the mortgage rates were so low because it actually allowed, you know, other people to enter the market and then what I've seen is those people drop out.
So then you're just left with the people that probably have a little moan every now and again, you know, they're not happy with this, this, and that, but they know that long term their goal is to have the portfolio and pass it down.
So they, you know, they take the rough of the smooth essentially.
Yeah. Well, the resilience that that will have built anyway, the dregs of 2023 and that whole year and the challenges there, you know, is uh it's character building, right? It does something to people. Yeah, for sure. the um in terms of borrowers who well landlords who have set themselves up well who are trying to take this professionally what are some of the misconceptions around things that they can claim against their company that they can use for their properties for
tax free I think you've said it online as well but I see it a lot in the tax I'm doing a business meeting in the south of France so my holiday is expensible is
that the bit that's a nonsense so what else do you see that people are getting wrong on that yeah so the reason there's so much confusion about this is because there's not a list on HMRC to say you can do this and you can't do that. It there's just a general principle rule which is the wholly and exclusively for business rule.
So basically if you buy a laptop and you use it for business, yes, it will be allowed.
If you buy an iPad that the kids are going to use, it's not really for work. Probably not. So there's just some common sense to it.
Like at the end of the day, we all know stuff that's got dual purpose, like a car, you're going to use it personally. A holiday, if you're going on a holiday to Florida with the kids, Yeah. it's probably not a business meeting. Yeah.
Um if you're going to France to go and view properties out there, maybe meet some clients there. Yeah. That sounds like a business meeting. Yeah.
So that would most likely not be challenged. Yeah.
So it's just using common sense. You know, you do get people trying to put all sorts through. Um, what have you seen? Give me an example of something ridiculous. Oh my god. I can't even say it. Oh, there's some bad stuff. Oh no. Oh no. Well, no. One for offline.
Yeah, exactly. There's people forget that the accountant can see. Yeah. On the bank statement. Yeah.
Like, oh, okay. That's what's going on there then. um hope your wife doesn't find out.
So, there's been a few scenarios like that and then also just blatantly taking the Michael like putting stuff through like designer handbags.
Okay.
Someone put through carrying around documents obviously.
Yeah. Uh a Rolex somebody put through. I mean, if it's an investment and it stays on the company balance sheet and stays in the box, it's fine.
Yeah. But, you know, they're out wearing it, so that's not going to work.
Mhm. um just just stuff they shouldn't put through like so what's the flip side of that then just in terms of if there's some good advice for people what what do people
sometimes miss that they could be actually registering against company saving some tax on and what are people maybe missing that they shouldn't be so a lot of people pay for subscriptions and they might use a personal credit card if they're doing refurb usually what I see is they'll do a refinance is spread over certain credit cards some of them might be in their personal name they'll forget to put those through when they're actually tax deductible because they relate to the business. Okay.
Um so any like obviously mastermind courses and stuff that they can go through majority of the time. Um mileage as well, that's a big one.
People just don't realize when they're traveling to sites, traveling to clients, whatever it might be that they can actually claim that back through the business if they've got a personally owned vehicle. Yeah. Um they can absolutely do that. Um, I have actually got a list somewhere which I can send out to the listeners.
People people can reach out. We'll get to that. That sounds that sounds good.
But that's the it's those little things about when again it's all circles back to this. What does it take to become a professional landlord and take it seriously?
It's thinking about all the different layers of savings and benefits that are are sort of balanced out by the challenges of being a landlord. So you have to take the benefits that are there, right? Because there's so much going against you at times with regulation changes and demands on EPC increases and renters reform bill and all the other tough stuff.
Why not set yourself up to be as profitable as possible in a legal and appropriate way?
Absolutely. And the adviser that you pick should be helping you do that.
So in my firm, we help the clients do that by telling them it's year end. Send us this. Make sure you've done this. and we start asking the questions.
The danger is when you're with an adviser that doesn't ask any questions, doesn't offer the check-ins and stuff.
That's when there's a danger of missing something because you don't know what you don't know.
So, as as much as I think yet landlords can have that layer of professionalism, they shouldn't be 100 100% reliant on themselves. They should be reliant on to a certain degree the advisers that they've got around them because that's what they're there for in the first place.
Yeah, that makes sense. I mean, if you're going to pay for the service, you expect the right advice and the right service, right? Yes.
To keep your nose clean and keep you uh keep you okay. Um, in your experience,
how does the tax planning journey differ between landlords who have had the early advice and some of later advice? Oh, it's a damn site easier. Prep is key, right? Yeah. You need to plan. Yeah.
You know, if you've got a plan, you've got some chance of making it.
If you're going to leave everything to last minute, which I see all the time as well. Yeah. Oh, this deal's completing this week. Can we sort this structure out? Well,
no, not really. So, what is the time frame? What's the appropriate time frame to come in before? So, someone's saying, I need a new limited company. I I know that I need an SPV of sorts. I've got these two, three purchases on the horizon. How far before that are you looking to set that up and put the wheels in motion? It does depend on their circumstances.
So, if we're doing a hold co situation, they've got existing businesses that need clearances, you need to be coming to me at least 6 to 8 weeks prior. Okay.
If you're brand new and you've got nothing going on in terms of you haven't got any existing businesses or anything to wrap up that side, then we can get the structure done within about a week.
Okay?
So, it just differs on the actual client and their background.
The key is sorting it before you've got the keys and you're saying, "Now, I want this in a limited company because you're going to cause all sorts of other problems for yourself." Exactly.
That makes sense. That makes sense. Um the people who have gone with you mentioned earlier the sort of mentor links and some of the cheaper education blanket advice pieces outside of LLPs.
Is there anything that people need to listen out for as red flags and things to avoid really specifically so they can think no any proper advice on that or that's not right? Um well obviously we saw it's probably about two years ago now there were quite a few tax avoidance schemes that were exposed.
Yeah.
So I would say anyone who is not if you're going to speak to an advisor and they're showing you a structure and it it seems really complicated and it seems too good to be true. Yeah.
And they can't back it up in writing and they can't give you the implications of it. Yeah. Then probably don't do it.
Sure. which feels like common sense.
It does. But you know, you think these people have just been bamboozled on this property course. They're so excited.
They're so excited. They think I'm going to make all this money. What's the next best thing? Save loads of money as well. Yeah. So like the, you know, people's brains,
oh yeah, I'm going to make 10 grand a month. Great. So how can I keep most of that 10 grand a month? Oh, I need a tax person or I need an accountant. And
that's obviously these schemes are designed to save tax, but unfortunately a lot of them are are not in a legal way. Yeah. Okay.
And the taxpayer because the UK tax system is so complicated, they don't know what they're being told.
And it's important to point out that there are real life consequences of that, right? We we did a case last year for somebody relatively high-profile who'd been caught up in a scheme who was having to offload assets like crazy because he had a retrospective I think from memory it was a couple of million pounds he owed to HMRC CGT no doubt.
Yeah. Yeah. And was in a real was in a real real pickle with it. Right. And that was someone who had wealth and had money and had people around him he trusted. Yeah.
And he got led down the wrong path. So the consequences are real. Right. You must see that as well.
Yes. Yes. So when all that blew up, I had quite a lot of people come to me and say,
"Can you help me? We've had this letter from HMRC. We didn't know at the time this, that, and the other." But from HMRC's perspective, they don't really care.
I was going to say, is it too late or is there anything you can do to help them if people find themselves having had bad advice?
So there's a couple of things really. So if you've got a HMRC letter, a spotlight letter they're called, the best thing you can do is cooperate with HMRC.
Mhm. That is the best thing you can do.
If you ignore it, they're going to come down harder on you. Yeah.
Um the other thing is you're probably going to have to get another adviser. We definitely will. Yeah.
Um to sort it all out, which is a massive job in itself and and a lot of people just don't get involved because the complexity of it.
Um and essentially you need to accept the situation.
The only saving grace, which I don't know how well this works out because the people that set up the schemes know what they're doing, would be claiming on PI insurance. But to what extent that's actually going to be useful, we don't know. Depends on the scheme. Depends if they even had insurance. A lot of these people don't even have qualifications.
It's a real shame when you see that in the market across the board. tax is an obvious one because I think some of the real world consequences are serious and and financially impactful and it's the same in our world really with mortgages because the consequences are repossession potentially and losing assets but when
it's bad advice um you really feel for people and you do want to shout a bit louder about just go and talk to an expert right it's just the number one and that doesn't necessarily mean and it's a point that I make quite often but you probably see it and back it up as well the person who did your accountant see for your kitchen business, for your cookery classes, for your hairdressers isn't necessarily the person to speak to about how to structure your property portfolio in your growing property empire because those are different disciplines.
And it's the same for us with the fantastic, lovely mortgage adviser that's looked after somebody buying their main residence for years.
That doesn't mean they can deal with a mixeduse commercial or a block of flats or a complex short-term finance product for a refurbishment. So it's dealing
with the right people in the right space is massively important. Do you see people trying to overstep feels harsh?
It feels like there's more malice. I don't mean like that. But in your space are their advisers trying to branch out into property and not really being experts. Do people fall for that? Um there probably is. I mean a lot of people come to me because their accountant a lot of the time to be fair to most of the accountants that I deal with, they know they're out of their depth.
Sure. Okay. So they will say, "I don't know the answer to that. You need to speak to somebody that does." Great.
And then I will have a conversation with them. I've got a really good friend of mine who's an accountant and we do a lot of work together because he doesn't know the property side of things. So he will just send them to me when he's got a question on it. So a lot of the people that I talk to, they do realize that they're not an expert in that area. M um and they'll tend to It's also a form of protection because if you think about it, property is really hard.
If you've got a practice that's not niched into property and you're trying to answer a question or solve something that you don't really know about, there's a massive risk on you as a business owner because if it does go wrong, it does go legal, you get a complaint or you end up having a claim on your PR insurance, it wasn't worth it.
It's never worth it. So I don't think a lot of people um Why is it so hard? You you mentioned earlier that you because clearly you're a bit of a sadistic. You like a
challenge. You went for the hardest tax environment you can to build your business and your niche. Why is property so complicated?
Because it spans all taxes.
So it's cross cross discipline. I guess it's literally everything, isn't it? So you've got income tax if you got it in your own name. Capital gains tax when you sell it in your own name. M you've got stamp duty when you buy it. You've got corporation tax if you buy it in a company and then you've got inheritance tax and you've actually got VAT if you're doing conversions or you know what whatever it might be which is all the rage now as well. Yeah, that's a question in itself for people that are the modern landlord isn't just buying buy to lets. You alluded to it earlier the return isn't as strong as it used to be. So people are either buying more complex assets or they are upscaling, refurbishing, building now and people are being a bit braver with that. If I was a landlord who had owned 10 properties for a number of years,
quite comfortable in my lane trying something new, what are the tax differences of a project like that that I might not be thinking about?
Uh VAT and CIS depending on the scale that you do it. Yeah.
So often I will see a portfolio landlord maybe try their hand at developments. Mhm.
Which is completely different. Yeah.
And then I tell them about CIS. I like you're now a property developer as well. Yeah.
So you think about construction industry industry scheme or what's that you know or why can I claim the backpack now Amy?
Well it depends depends on how we set it up. Depends what you're actually doing.
Depends on the planning that you get on on the properties. There's a whole host of different things from a tax perspective to think about when you start going down a different route. And again, it all falls back into prep is key, isn't it? Yeah. Have the conversations early.
Yeah. Have the conversations with your adviser before you go and put an offer in on a a site.
Yeah. Yeah. the the market's changed loads in the last few years anyway and people's attitudes and we've talked about that loads, but over the next like 12 months, what are some tax changes or maybe beyond? What are some things that should be on a professional landlord's radar to bear in mind that might be changing with them from a regulatory perspective in the next Yeah. year, year and a half?
Yeah. So, I would say because of the government we've got in place now, the one thing that is for certain is uncertainty. Yeah, which is as simple as I can put it. Um,
unfortunately I don't have a crystal ball and neither do any of the other advisers. So I would just urge landlords or anyone in property to go and have just a check-in with their advisor and say this is my plan. Am I still in the best position from a tax perspective?
That's that's the best bit of advice that I could give. Um because they will their advisers will know from their perspective with their goals what the answer should be.
Everyone wants to avoid getting hit by the bus you see coming, right? And that's the mistake. That's criminal if that happens.
You want to get ahead of it. You're right. There's so much volatility from a regulation perspective and lots of threatening as well whispers of capital gains increasing and you never know when that'll happen or what it'll look like or whether it'll happen. It's um a lot to think about I guess. Yeah, we we had a bit of that last year.
Um, and then I think the rates ended up dropping down to 24%.
So the people that rushed to sell, it's like, well, why? You know, I think you have to look at it from a commercial perspective as well. Like, yes, it's great to save a little bit of tax or it might be a lot of tax, but does it actually align with what you're trying to achieve?
Um, a lot of people just get tempted by, oh, well, this is changing now. I need to do this. They'll chop and change and then go, "Oh, well, that wasn't the right decision." Do you think they're falling victim to, and I'm pulling you away from tax a bit, higher level property overview, people are falling now more and more for the get-rich type of attitude in property, right?
I just think in general in the UK, that's people, it's a psychology known fact, isn't it, that if they're fed that information over and over again, they start to believe it.
Yeah. So, can you blame the person? Yeah. Yeah.
You know, really, um, I see it all the time. Like I said to you earlier, people come to me say, "I want this 10 grand a month." But they haven't thought of how. Why? How?
Why do you even want 10 grand? Like, do you even need 10 grand? Like, for your dream life, is it 10 grand? It might be 20. It might be 50. It might be five.
You know, when you start asking questions, that's usually when um the truth reveals itself. And I'm a big believer in the fact that actually with property particularly, you know, outside of the property boom where people have made a fortune because they just happen to buy in the late '9s and now they can sell for a billion times more, that's great. But property is a long game generally. And the planning all falls into that. But if a deal works for you now and rates are in a higher space, for instance, and tax is costing you a bit more, but it is making you money and you're happy with it, then stay happy with it and ride the storm and find the benefits when they come and interest rates might drop and tax advantages might open themselves up to you. And then you make more money as the year goes on and then you have the ability to sell anyway and get your equity out, assuming we don't have a huge property crash, which no one can truly predict.
So the long game is the better way of looking at this market. I always think outside of the throwing money at a project that carries loads of risk.
Yeah. I would always say with anything in life, it's probably the long game that's going to pay itself off. It, you know, if you if you look at something short term,
you might get great satisfaction out of it for now, but it doesn't last and then you want to go again. Yeah. Yeah.
So, you have all the stress of this deal and you might make I don't know, you probably make less profit than you wanted. That's the reality.
Never as good. It always costs more.
Every project costs more than someone plans for, right?
Yeah. And then, you know, you've got the hype of that and then you've got nothing else to say and then you want to do it again. It's just it's it can be a vicious cycle in my opinion. So, patience is the answer.
Yeah. I mean, I don't have much. But when it comes to business, when it comes to my business, it is different. Yeah.
Because I think my issue when I was in jobs in in the career, I used to get bored so quickly.
Thought I'm bored now. I've done this for two years. Yeah I'm done. I'm out of here. And then I jump, get pay rise, jump, get pay rise. And now I'm doing my business. It's like, oh, I haven't got a ceiling. Yeah. So, I'm never bored. Yeah. And in a moving landscape as well, rules have changed. People bring new projects to you. That must be quite exciting.
Yeah. Absolutely exciting about property tax. Yeah. Well, there it is. Um, if a landlord could pick one thing, let's presume people aren't doing it perfectly. If a landlord could pick one thing to change this year or to look at that you think they might be missing, what what would it be if we walked out of here, what would the first priority be for me as a landlord to review my tax position?
It would be structure, company structure. Structure in general, company LLP, personal portfolio structure. Yeah.
How are those properties structured from a tax perspective?
Is it the most tax efficient it can be effectively? Yeah. because the structure is the vehicle for the tax implications. So if you get the structure right, the tax implications will fall out the back of that.
Yeah. Okay, that makes sense. And in terms of people generally in the market wanting to reach out, which I think they will after hearing a lot of sound advice, what is the best way to reach you and to find you online and to digest some more of your content?
Yeah, so on LinkedIn I'm Amy Richardson ACA and on Instagram it's @propytax queen. property tax queen. It's memorable and I'm sure lots of people will be reaching out to get your advice on various things. You might get bombarded with some really stupid questions which I'm not sorry about because I'm really grateful that you came.
So, thank you so much for coming and joining us and thank you for some real pearls of wisdom.
Thank you for watching as well and we'll be back next time with some more sound advice from within the property space.
Hi, I'm Joe Aston. I'm the Sales and Commercial Director at Aria Finance and I'm joined today by my colleague and a team leader within our business of our second charge division, Adam Lord. Hi Adam. So we're going to talk a little bit around the second charge market. It's a market that was north of 20 % up year on year from a total lending perspective and it's still an untapped opportunity for many brokers in the market and in the space where their borrowers may be asking for more money out of their property.
Hi Joe.
but it's inappropriate or the wrong move or they're unable to take more money out from a first charge basis. And there are other options in the background. So I'm keen to discuss with a legitimate expert in the market, sort of how that looks, what opportunities there are. And you've been with us a long time as well. Talk to us a little bit about your experience with our business.
Sure, okay, so just giving you bit of historical context, joined the company when we were formerly Enterprise back in 2017. Coming up to a decade in the industry prior to that, I was more so specialising in first charge mortgages. So, sort of seeing things both sides of the fence here and yeah, grown as the company's grown, learnt more, taken on more. So, keen to share and impart some knowledge today.
Yeah, good. And you know, it's funny because actually the product has evolved so much in that time. You've probably grown with the product, but how different does it feel as someone who, as much as you're in a team leader role, you're also running your own pipeline and one of our senior advisors in that business. How does it feel running second charge mortgages now compared to back in 2017 when you started?
So yeah, the landscape has completely changed. It was back in 2016, you saw the mortgage credit directive come in place where these products became regulated products, and it did the same stresses and same disciplines as your conventional mortgage products.
The process of which has evolved over the last 10 years is very compliant, more efficient. We're seeing this from our lenders as well in their standpoint, in the way that they assess cases, the way that cases are keyed into their systems as well, their decision choices. So the whole process has evolved. It's become more compliant, more strict, more mainstream and more conform.
And it's funny because the market now is massive, know, over £2 billion worth of second-charge lending last year. And actually within what is still a tight-knit lending sort of environment in terms of lending options, there have been a couple of new disruptors in the space in the last two years who have taken big market share and are growing as well. How have lenders and their processes changed? Is this a complicated loan? Is it efficient? How are you finding actually the delivery of these facilities now?
I in the last two years, the process in itself has evolved to such a degree where things are more efficient, more streamlined. Yes, there's still the manual decision making, which is the fantastic element of the second charge mortgage, and that runs to a certain degree completely different to your residential mortgages, where it might be the case that the computer says no, the second charge, there is that manual input, there is that human decision making being placed. However, on the operating system front, these systems are
more efficient. You're seeing the increased use of automated valuations, so taking that out of the mix as well. As opposed to a physical valuation, it's further speeding up the process. Our lender's portals are more efficient in making quick decision making initially as well. A lot of our lenders also dynamically price their products as well, they can adapt to the marketplace and really capture business where they feel there might be a particular
It needs to capture its business in specific product ranges, but it allows them to react to external market impacts as well.
Yeah, and I think that's a really key point because, know, I do a lot of, as you know, I write unregulated business, I do commercial and bridging finance and buy to let's but one of the big selling points for our industry and our sector and our business is that we live and operate in the grey and regulated arm of mortgage lending has always been a little bit more rigid but second charge is a bit of a hybrid. Like you say that there's a human being at the other end, you can have a conversation and if there's a common sense approach to be taken there are lenders that will go down
that path right? Yeah which is great and you touched on something really interesting there which is efficiency and speed which again is a major reason and motivation for some borrowers to look to this product where actually it's just an immediate requirement and the equity they have happens to sit within the residential home right? We're turning deals around I think on average it's something like 10 working days from application to completion but how quickly can a second charge be done?
Correct.
If everything aligns and in the perfect store it can happen within the same day. We've had cases complete within five, six hours. Now I'm not saying that is going to be the norm but most certainly the efficiencies and the processes there with our lenders that we have to allow that to occur.
Yeah, it's the right caveat to say I think those are the unicorn cases, but the fact it can be done is great and highlights with a motivated borrower and the perfect storm of circumstance it can happen, right? inevitably, there'll be a wave of inquiries now looking for five-hour turnarounds, so hopefully not. Just if we take a step back, look there are still a lot of...
Certainly borrowers and consumers, but also a lot of brokers in the market, competent, experienced and expert mortgage brokers in their own right, who maybe don't fully understand or are aware of what is a second charge mortgage. Can you give a high level summary of what is a second charge mortgage?
Yeah, the name suggests exactly as to what the product is. It is a second charge against the home. It is a secondary mortgage payment that is made in conjunction with your first payment each and every month. Now the need for that product might arise for multiple reasons. The most widely recognised reason as to why somebody may wish to take out a second charge mortgage very likely is either they're adversely impacted
So they've gone to their mortgage broker, they've gone either for a further advance or further borrowing on their current mortgage facility. They've looked at a potential re-mortgage. They've taken their existing mortgage and going with a new provider and potentially looking at additional borrowing there. And it could be to what we alluded to earlier, very simply, where it is the computer says no. The second charge comes into fray where the clients want to try and maximise their borrowing capacity, their credit score.
very simply doesn't enable them to do that with high street lenders. So again, it could be that you have a client that is...
keeping all their items of credit up to date each and every month. But very simply, their credit utilisation has an impact on their credit score. They're not a bad borrower by any means. It's just very simply, they're not able to borrow through their high street lender because of the scoring algorithm to place with those lenders. that would prompt another reason as to why someone might look at a second charge mortgage. have the typical, don't want to currently disturb a historic rate of interest or they might fund
on a very preferential rate. Those rates or clients that were locked into fixed rates prior to certainly 2022, it's not uncommon to still see and have discussions with clients that are sitting on interest rates between 1 and 3 % in some cases. So they may not want to.
And that's an interesting point because I think, you know, if I go back in time five years, we would see loans come in for, if I'm with a broad brushstroke, one of three reasons, right? Avoiding paying the ERC, stretching their income further, because income multipliers start at six times income, don't they? So you can factually raise more on a second charge. Or they were consolidating debt, but that protecting the legacy rate is a landscape shift and is a new trend in the last couple of years. And you're quite right. At the time of us filming this, you know, you've got borrowers on
those five-year fix and they are three years in to those rates still sub 3%. So the ERC becomes less the driver in taking second charge debt, it's protecting the original rate.
exactly that.
Yeah, there's been a new trend as well of sort of newer rationale, newer reasons for people taking second charge borrowing and some of that. I'm keen to know some of the more nuances around these from your side. But one that I see in the market is there's a wave of borrowers taking PTs execution only, particularly in that year 23 that was really difficult when the first charge lenders, I think, were really proactive in reaching out. There were quite a lot of execution only product transfer, someone panicking, getting it done early for PTs.
Yeah.
of mind than realising they wanted to tap into debt. We can raise a second charge pretty much at day one behind a PT, right? Fantastic. And the second thing then is that in a tighter economy and with the cost of living crisis still bubbling away in the background.
Correct.
We see a lot of people who have gone from a lifetime of PAYE employed to self-employed, or people who were clean borrowers for many, many years who now have some credit blips, some defaults, something that's not aggressive but is a credit discrepancy. Actually, those borrowers are more likely to get preferential eyes on them from the second charge market, quicker to lend to self-employed, a little bit more lenient with some credit defaults than maybe the first charge market across their entire debt.
Is that fair?
Yes, yeah, it's very fair and a good comment to make there. And really, when you look at it, with a lot of homeowners, a lot of households will carry debt. Some of that may be legacy debt. Some of it might have occurred in the last five years as a result of COVID, a loss of earnings. And we still are seeing those enquiries come to us where clients are very simply skiing uphill with their debt, unfortunately. It's accumulated historically five years ago.
the payments they're making are very simply just servicing the interest. You you're just taking the ice off the tip there, know, the tip of the iceberg. And it's really trying to see how we can help and accommodate those clients in moving forward, getting them out of a debt cycle and really getting them debt free, saving them money each month. I mean, to put into context and just give you a very brief example here, if you had a couple who had accumulated
Mm.
£50,000 worth of debt. Most high street lenders and credit card providers, I'd expect a payment of around two and half percent on that month. Now that could accumulate to around just over 700 pounds a month, give and take. If you're condensing that into a second charge mortgage payment, and let's go for a default term of 25 years here, at an interest rate again, a default rate here of 7%.
That client would stand to save between £500 and £600 a month at least for that. So it is a significant saving here and it's a particular loan purpose which second charge mortgage market is probably most widely accommodated for and used for.
on the back.
Yeah, and it's a good point because actually we sort of touched on why,
when do people take second charges, stretching income, avoiding ERCs, protecting the rate, those type of things. But the, what are they using the money for is a separate conversation entirely. And sometimes that's what rules out the first charge lender from lending. But debt consolidation is a great example. It's 60 % of the second charge lending market. And, you know, that's a huge, huge reason, you know, to, and not only that, it's because it's a regulated product, right? And, you know, correct me I'm wrong, but actually a good reputable mortgage advisor doing the right job, doing the right
due diligence is advising somebody here on something that puts them, product that puts them into a better financial position long term. So although the second charge debt can be a slightly increased rate from the first charge debt, that's a red herring right, because we're looking at the bigger picture and the blended rate and the impact on someone's finances as a whole.
Yes, yeah. And certainly we would go into this in quite a degree when we're talking to our clients. You know, we're assessing what are they currently paying? What does that interest rate look like? How does it impact to move them forward with the introduction of second charge mortgage? Very likely an interest rate reduction in most cases, certainly in comparison to a standard credit card APR to a second charge mortgage rate, there's going to be a significant reduction there. So we're not only looking at it terms of an initial reduction in terms of interest rate monthly.
cost, how does it impact our client and our consumer longer term as well? Yeah. And that's something that we look at, not just the short term impacts, but also the long term impacts of the clients.
Yeah, it's good. And it's a great, I mean, it's just a fantastic product and weapon in our armory to help put consumers into a better position, right, which in line with consumer duty, selling all brokers, I think should be thinking of for their borrowers, certainly when someone's in a maybe distressed position. And if I'll add one more thing onto debt consolidation before we move on. But I think one of the myths and misconceptions is that a debt consolidation product, particularly in second charge space, has to be a rescue product.
But we see people taking this proactively, right, to get ahead of problems that they can see coming.
Exactly that, to sort of touch on that point a little bit earlier, you know, with most people servicing their debt at the moment, their payments are very simply servicing the interest, you know, they're not really reducing off the capital and it's just accumulating over time. So by practically looking at these products, they are making waves in taking these credit cards out of the equation, condensing it into one month repayment, making a significant saving each and every month with the aspiration to hopefully take that
Yeah, yeah,
second charge mortgage, within a period of one to five years, replacing it back into their primary mortgage. And that's something that we also look at and we encourage our brokers that refer to us to also have that eye on as well. It's we are here to provide that service and not a temporary relief, but a solution equally for our brokers and those introduced to us and may want to introduce to us in the future. Well, you know, the option of
Right. We've placed the facility in place for them in the next one to five years. Is it possible and is it viable that the client can re-mortgage and exit out the second charge mortgage? The ideal scenario is they don't keep the second charge mortgage for the full intended term, that's 25, 30 years, because yes, when you look at the accumulative cost, then they will be paying potentially more long term. But equally, we're looking to plan for both. So we're looking for a
efficient short-term solution explained to the clients long-term cost implications when we're clickable but equally try and give them that midterm solution and give them back to the broker to really refinance and exit out of that product.
Yeah, it's a great product and we encourage everybody that actually is dealing with clients, looking at remodelling, looking to tap into equity in the home, looking to consolidate some debts to consider this and to run it past a reputable broker to understand and ascertain whether it's the right move. But outside of debt consolidation, what else are people taking second charge monies for? What's the purposes of some of these funds?
So yeah, I mean, the most widely recognised is debt consolidation. Second to that is more so home improvements. You know, lot of people in the current marketplace, you know, they're looking at the cost of moving versus the cost of extensions, you know, and sometimes when they've done their due diligence and have done their cost comparisons for a lot of people, it might be a cheaper, quicker and more affordable solution to consider extending the home. So we are seeing an increase in clients looking at that.
You do have other niches. It might be aspirational purchases, whether they want to purchase a buy-to-let. You might find the bank of mum and dad. you have clients wanting to purchase properties, get on the ladder. Unfortunately, they don't have deposit there.
mum and dad might look at raising against the main residence it possible to really provide them with that deposit and start
Yeah, yeah.
It's a great point because also the bank of mum and dad is one of the biggest lenders in the UK still, right? Technically, there's a lot of it's gifted but the sentiment remains. you know, the market has changed that people aren't as liquid. So actually to tap into that money to give it in the first place, they're often taking it from their own home or from some assets or consolidating things that they have. So that's a great example as well. One reason that we see quite a lot of is, and it comes to us for a second charge because the first charge markets still don't like this rationale, but
taking money out of your home to put into your business. And that's something we can do that's widely accepted within the second charge space, isn't it?
Yeah.
Yes, yeah, there is going to be a sense check in that to the fact of what is the money being used to in conjunction with the business. If it's to grow the business, if it's an established business, is it to purchase additional equipment? Is it to hire extra resource? All these things, and I'll set in a blanket term, typically are subject to referral to lenders, but most certainly lenders in the single charge mortgage market space have that appetite to lend for that loan purpose.
As with anything, you know some questions may be asked there just to obtain further information which is pretty typical.
Yeah, think if those funds aren't saving a business where we think it's going to slip again, actually there's a broad brush stroke, there's ability to look at that market, which is great because the first charge market isn't there. So, you know, for brokers representing clients who are business owners as well, it's a really good thing to consider. And for me, I've seen a real trend and a lot of my conversations in the market centre on how can we be creative? And I hop back to two things, really, and one can be as unusual as it's going back a couple of years now.
funded around the world trip, right? But actually the concept of taking money out of the home to send somebody away from the security for nine months, know, trusting that their passive income is going to remain is, for glorified cash flow for holidays, something that the first charge market just wouldn't be allowing, but we had a couple of options in the second charge space, so for the right borrower and the right creative reason, we can step in, can't we?
Yes, yes, and you know those funds could be also used for weddings, you know these once in a lifetime experiences and events, you know, that perhaps the first charge mortgage market space may not be comfortable in lending to, you know, our lenders would also have an appetite for reason to consider lending for those purposes.
Yeah, yeah, it's a great example. And the other one that I really wanted to touch on is the change in private school fees. So we see a lot of this. And actually, as I've done the rounds in the market, we've done a few loans for brokers that we've presented to talking about their clients where, you know,
Adults with children in the independent school structure, their costs have gone up because of the VAT changes. So there's an extra 20 % of spend on there. Generally costs rise year on year anyway. And you can have a saving by paying bulk upfront for a number of years or for the year ahead. And we're seeing a lot of people tap into the home to raise those funds, right? But that again, from the first charge market perspective, is kind of a cashflow thing. And it's not necessarily widely accepted within the first charge market, but we're really comfortable with that.
Yes.
scenario aren't we?
Totally agree.
Yeah, yeah. One to remember and I think it's a good market. I guess sort of to finish off really with a snapshot and an intro to second charges. What do you think is going to happen with the space? What are the opportunities that you see coming? And I guess, you know, not to bombard you with questions, but in a nutshell, if you had to give advice to brokers looking to find more second charge opportunity, engage with their borrowers, what should they be looking for and what can they do to generate more of this business?
Okay, So answering the first part of that question, where do I see the market going? I only think it's only going to become more competitive as the year flies by. Not only are we seeing lenders being more reactive with their pricing, as I mentioned earlier, a lot of lenders are now switching to their dynamic pricing of products, so allowing them to really sort of adjust the ebbs and flows of the external market influences very quickly, so we can see price reductions at a whim.
really can be the case of one week to another, a very quick rate reduction there. To give context and broadly speaking terms of rates, I'd expect really for the low loan to value deals at the moment, interest rates are likely to sit and start around 5.5%.
Which is competitive, right? mean, the gap between the first and second charge market is just not that big anymore. No, it's closing. Yeah.
month by month it really is. I can only see that going down as the year progresses and becoming more and more.
closer and more aligned to perhaps historic market conditions, know, those that might have echoed a sentiment of five years ago, six years ago. that is really, really good for the market space. Lower rates, cheaper monthly payments, better savings, bigger savings for clients. I certainly think so.
So a growth year again you think. So to sort of wrap up, what advice would you have then for these brokers that we deal with across the country who are looking to tap into the second charge market and start these conversations with their borrowers?
That's a very good question again. So the first thing I would say is...
any no's you've had on your desk. you know, if you've looked at any recent re-mortgages, any recent transfers, further advances, know, a no for you may certainly be a yes for us. Yeah, absolutely. That's the first place to start looking. For those brokers that certainly find themselves fortunate to have a, you know, a back book of clients, really is exploring the opportunities those clients have purchased, you know, certainly all re-mortgaged in the last five years. So those that are holding on
to those preferential good historic rates, know, they don't still want to disturb, you know, somebody five years ago might find themselves three years into their fixed rate, can they look to borrow those additional funds certainly at a cheaper cost than what it would be as opposed to redeeming their current mortgage you know, and place everything on a higher rate of interest. So that might be, you know, something that would
Yeah
It's a ready-made client pool, We deal with experienced, competent, expert residential mortgage brokers across the country who are sat on a black book of great borrowers, hopefully with appreciating assets, that might want to tap into those funds. So if those conversations are something that a broker has time to do, you know, we'd encourage them to do it, right? And see if there's some opportunity there to support and to help. And finally, for a lot of brokers, whether they're part of a network or they're DA themselves, a lot of them are worried about the advice process, but we're happy to own
the regulatory responsibility, right?
Exactly that, know, and in some cases, in most cases, we recommend you do that, you know, really let us do the heavy lifting. You know, can be very simply, give us name and number, a very brief backbone, you know, backstory to the case. We'll take it off your hands, you know, it's our job, it's our bread and butter, you know, alleviate the stress and the workload. You concentrate on what you are the expert at and let us do what we're best at.
Yeah.
Yeah, quite right. Well, I'm really grateful for you taking some time out to come and do this as a true expert as well. Thank you to everyone that's either watched via our emails or online. Really appreciate it. If you have any questions about getting into the second charge market, any second charge cases or borrowers that you think could do with the conversation, do get in touch with our team and we'll try and help.
Hello and welcome to our property matters feature industry insights. On today's program we're going to focus on the world of finance and my guest today is Lucy Waters MD of Area Finance.
Lucy, welcome.
Hi Steven.
Um Lucy, I guess we better start with the current USA Middle East conflict and what's the effect on the financial markets at the moment?
Yeah, really sad times and and obviously um you know it's a another big market event which we could have really done without and the knock-on effect is uncertainty. So all of the goodwill that we've built up at the start of this year which has obviously fed into interest rates, swap rates and therefore what customers are
borrowing at has been undone really in the space of a couple of days. Um we saw swap rates bounce immediately after the event by about 25 basis points over a couple of days settled slightly. Um but in response to that we saw some of the big banks um announce that they're going to price upwards across residential and buy to let rates when we were sort of expecting it to go the other way. But that uncertainty in the market, rising oil and gas prices, it just creates a another layer of volatility which we thought we'd put behind us for the time being.
Um, you you mentioned oil and gas rates.
Um, I was listening to some commentators yesterday saying that the uh almost 100% increase in gas prices at the moment will take until July to really feed through to anything that matters to us as, you know, private individuals, shall we say? Um, but I think in the financial market, it's going to be a little bit more instant, isn't it?
Yeah. The the the financial market predicts what will happen. So the interest rates that consumers are paying are a forecast of where they think interest rates will go within a period of time. So you look at SWAT rates on a 1, two, three, four, five year basis. The ones that most banks are concerned with a two and five year because most borrowing is linked to two and five year. Um and that's really what drives the interest rates that people see. So whilst we're actually only back to sort
of pre Christmas levels, so that they've not, you know, they've not shot up past where they were at the back end of last year, but it's just like I say, we've undone some of that good work that we've seen early this year, which has fed into confidence and what have you. But hopefully it's a blip, Stephen.
Hopefully.
So what would you say to those people that have been sitting on their hands waiting for interest rates to fall?
Yeah, I say this all the time. I'm a bit of a broken record that you can only predict so far as to what's going to happen and and the market has been fairly clear that it believed there would be a few interest rate reductions this year. Um every year we've come into over the last few people have always said at the start of the year we're going to see four five interest ratecuts. We've been slower than what people have predicted. So therefore, anybody that's held off has probably not seen
the benefit when they finally come to do it and perhaps has lost opportunity in in that waiting phase. So it just shows you really that even when the direction of travel is considered to be fairly certain that it only takes an event and whilst it's unusual times, we've seen quite a few of these events happen of late. So perhaps less usual, unusual than normal. And I think no matter how much we try and stay out of it, it's going to affect us one way or another, isn't it? You know.
Okay. Um Lucy, the final thing that I just want to talk to you about, um with your knowledge of the development market, um the London development market is experiencing serious challenges. Do you want to just run through one or two of those because it's it's holding us up with new homes, isn't it?
It is. Yeah. So the ongoing gateway to issue, whilst anecdotally I think it's getting better, a lot of developers have shied away from constructing towers, high-rise blocks of flats and and actually even if you take Gateway 2 to one side, the resale of those homes because of the pressure on affordability from interest rates and the number of buyers in the market for those homes has drastically reduced. and therefore lots of developers have been sitting on unsold stock u which has obviously had a knock-on effect to valuations which impacts refinance if developers decide to hold on to stock and rent it out. So there actually is not much of an injection of large schemes of flats coming into London versus what there has been in previous years because developers have got too much red tape and uncertainty about resales and a buying resistance due in part to high service charges and high ground rents.
So yeah, there we are.
Okay, Lucy. Um, thank you very much. That's all we've got time for today. I'm Steven Golpin and thanks to our guest Lucy Waters, MD of Area Finance. Thank you for watching our Property Matters feature, Industry Insights, and I look forward to seeing you again next time.
Hello and welcome to Property Matters.
I'm Steven Galpin and today we're going to be looking at the state of the property finance market and to help us with this is Lucy Waters, MD of Area Finance. Welcome Lucy.
Hi Steven. Good to have you back in the new year. Yeah, thanks for having me.
Good. Well, I only got good news for us and not bad news. That's all I'm talking about today. Now, um UK house prices soften towards the end of 2025 um with a quoted 6% fall in uh 0.6% fall in in in in December. Um on calculations it looks like that the uh UK average property price is around 290,000.
Do do you go with that?
Yeah, I think the last Halifax data came out 297 there or thereabouts for December. Um, so actually the the sort of overall picture isn't too gloomy in terms of house prices, but there's obviously some regional differences there with London and the Southeast suffering somewhat. Yes. Where obviously I'm I'm very nervous about taking a cross-country view on on these things. I remember um sort sort of back in CO there was a a a sort of um rush to buy properties in the country with more garden space because people restricted to home and all the rest of it. And we got all sorts of stats coming out sort of saying oh well country homes they they they've had a 400% increase in sales numbers this month. and you'd think that's good. But actually what it meant is they sold four properties instead of one, you know, so it wasn't that meaningful. And I'm a although I get criticized sometimes for being a bit London centric, I do believe that London sets the pace and it ripples out countrywide. Now I don't know whether that applies to the finance market, does it?
I think yeah, look, London is it's always going to be a hub and I think in terms of people making money in property, investing in property, London has always been a really safe place or perceived to be a really safe place to park money. Um, obviously with average property prices being considerably higher, yields have always struggled a little bit more in any case because your yields are lower and and therefore when it comes to investment that drives lower debt and and that couldn't be truer at the moment with obviously interest rates having risen significantly over the last few years and affordability pressures on those mortgages actually borrowing and and investing especially in Buy to let assets in London is a lot harder than it used to be. And then obviously from a home homeowner perspective, you have the affordability pressures for people to be able to come up with the deposit and afford the monthly repayments and and pass the lenders affordability test. So I think London has whilst you see obviously higher wages and perhaps better affordability than you might see in regional areas, it's it's definitely struggled the most. And I think it's pulled down property prices because you see much better results coming out of some of the northern regions.
And why why is that? Is it because commuting costs are so big now or?
Um I think that the whole way that people live and work has changed a little bit for one. So you get a lot more working from home, although that tide's definitely turned a bit and we've seen more of a move back to offices. I think there are still a lot of businesses that offer a degree of flexibility. So people who work in London don't necessarily have to live in London. Um, and I think that has had a contribution and we've talked about it actually on here before with the help to buy leaving the market that had a huge impact especially on your kind of two-bedroom flats in and around London. Um, that definitely caused a slowdown.
But this work from home business, I mean because it's perfectly obvious, but a lot of the big firms now, say here in Canary Wall, for instance, are saying,
"Hold on a minute. We're we're paying five or 10 million quid a year rent for this huge huge office block full of every facility that you can manage, and you want to sit at home and work at home. No thank you. You're going to come back to the office." Yeah. The tide's turned.
It has, isn't it? Yeah. And I I don't think that's a bad thing. I think it takes a really disciplined person to be able to get the best out of themselves working at home and I agree with that. I think productivity goes down.
You've only got to have something good on the telly and you you're gone, aren't you?
Yeah. I've always believed and and us as a business, we've always been off office office based entirely and we noticed that a lot of the banks and the lenders that we work with that moved to homework, we really noticed that service suffered as a result of that and I think that's true of all sectors. You've got no interaction with your work colleagues. So if you have ideas or you have problems, you've got nobody to discuss them with other than on a phone call, which is never the same. Yeah. You don't learn in the same way.
I mean, if you, you know, if you talk to young people, they'll only they'll only ever text. And if you say, "Well, why don't you talk to me?" They say, "Well, I did. I text you." You know, but it's not the same. You know, you can't see the tears. You can't see the smiles. You can't see the thought, can you? It's it's a difficult subject.
Okay. Just coming back to London and this sort of softening of prices. I mean I accept that in some regions of London um prices have dropped quite significantly and 25 to 30% in some cases prime post codes before.
Yeah. Um what what's causing that that softening of pricing?
I think it's I think there's a number of factors. So interest rates is an obvious one. Um, I think there's also tax regimes and the perception of the UK as somewhere to invest and and how we attract foreign investment and foreign buyers. I think that was a large part of the prime market. Um, the budget obviously last year was it was a real hindrance from the summer onwards at the very least because it was one of the most speculated budgets that I remember ever seeing. And I think that that with the speculation specifically around the higher value properties that put a lot of people off transacting in that market in the runup to the budget even though it was obviously nowhere near as bad as we anticipated.
Do do you think the government understood that that would be the reaction? It's a really good question, Stephen.
And it's hard to see how they wouldn't have understood that because speculation is never any good for a market, especially when it's negative speculation. So, it's hard to believe that they didn't see it, but perhaps they just needed more time to get their ducks in a row. I think the question I I I would like to ask of number 10 is that with that budget taking into account also the U-turns that have gone on since and and the some of the catastrophic choices that were made. Was it a budget
that was created by number 10 and our chancellor? So number 10 and number 11 working together or individually what whichever way they do it or or was it a budget that was inflicted on them by civil service advice?
Yeah, it's I mean it's an interesting thought, isn't it? Where did it come from?
Yeah, I think there was a lot of ideology in there and there was a lot of um it it was a very political and a very politically debated budget, wasn't it? there was this um sense of you we heard it a lot a lot in the news in the run up the border shoulders and and I think that that really spooked specifically the London and the prime markets um where you would expect the border shoulders to lie. I mean I I I I was listening to the news today and for instance the government are apparently considering um stopping or or restricting the London Freedom Pass.
Right.
Right. Now what does that give you? It gives you after the age of 66 free travel on the tubes, trains and and buses in and around London.
Okay. And apparently wi within hours of announcing this thought process, they had a petition with 3 million signatures on it. Wow.
And saying, "Look, you haven't thought this through because you get up to the age of 66." 60 to 66, you get a free Oyster card which isn't chargeable.
Then the freedom pass takes over as you head towards your 70s. And so what are you going to do? give it to people free for 60 to 66 and then cut them off and create poverty amongst pensioners or or or what and communication. The government always go on and say, you know, talk to your neighbour, travel, go and see your friends, go and do this.
And that seems just the kind of thing that again they're they're sort of ignoring and it just smacks to me as somebody in the Treasury saying, "Oh, listen, we could save three billion a year doing this and let's do it."
Yeah. I I I think the the thought process to you if certainly from the property side and from the earning side to try and tax our way out of it rather than to invest in growth is a continued frustration. And we certainly see that in the property market with a lot of our developer clients who feel frustrated at all of the red tape and the inability to be able to cut through that. And you know, every time that something positive is announced in order to try and achieve housing targets and what they may or may not do, something else comes in that creates another burden and it's the the whole lack of ability to be able to grow and and you know improve the economy rather than just pay tax.
I think my comment when they announced the 1.5 million homes by the end of this parliament was I think I said good luck.
Yeah. I mean, we're we're we're abysmal at hitting housing targets in any case, but I think that was but there's there's a fundamental flaw there anyway because even if you build this 1.5 million, whether it's to a housing association, whether it's to an individual client, whether it's to an investor, somebody's got to buy all these homes. Yeah.
And somebody like you has got to provide the finance for them to do that. And I'm not sure you can. Well, look, there's there's actually a real availability of mortgage products out there. And that's the funny thing. Mortgage lenders are there. They want to lend, but has to stack up. The affordability has to stack up. And at the moment where there's such a disconnect between house prices and affordability and deposit size and then your other costs such as stamp duty, it's really hard to make it work for people. And therefore the private rented sector is such a important part of our of our economy that actually on the other side we should be supporting that more and looking for ways to help to grow that side of the market if we can't encourage more home ownership.
But hold on it's a little bit like the electric car syndrome, isn't it? They want to encourage electric cars and what do they do? They cut the benefits. Yeah.
I I it's just barmy to me. And I mean as far as as far as housing is concerned um if you're a young person trying to get on the ladder um as I've said to you previously um here in Canary Wolf you know you've got one of the developments here starting one-bedroom flats at 880,000. Well I don't know how young person's ever going to afford that even if they're a couple.
No it's a lot of money is I mean with a combined income they're going they're going to need 150,000 quid aren't they? Yeah, I mean general rule of thumb and obviously this is this is not binary because there's a more complex affordability calculation that lenders apply by looking at people's committed outgoings and their sort of discretional expenditure. But as a general rule of thumb, you might say broadly four times an income would be required um for mortgage affordability.
Some lenders still have that in play and some of them work more on an affordability only. If you say four times income on average, you know, some would do slightly more and some would do slightly less. That just shows you really what you'd need to be earning in order to But you know, let's just wind the clock back a little bit. I mean, I think at the height of it all before we had the financial crash of 2008, 9 or 10, whichever whichever bit you think was the catalyst. Um, we looking sometimes six times earning, weren't we? And I have seen exceptional cases where it was eight times. Yeah, I was I was going to say I think six actually was probably at the lower end in many cases and and self certification too.
Yeah. And look, that didn't work either.
So I think that we needed to see a more prudent affordability regime come in and I think that's probably served us well because we often hear the term stress test and we've heard that a lot over the last number of years and and I think a lot of people that are borrowing see it as a hurdle to overcome but actually the stress came didn't it? We saw the stress in 2022 and 2023 when interest rates went through the roof and actually then people coming off of low fixed rates and their borrowing costs rising exponentially actually the stress test that lenders put in place to make sure that they could afford that rise stopped us from then falling off of a cliff when it came to affordability at the end. So there's a balance for sure, Stephen. And I'm not sure that we've quite got the balance right at the moment. And I think the interest rate, the new interest rate environment will probably prompt a little bit of a reset on that. And and that's happening. You know, there's regulatory review on affordability and lenders are looking at whether there should be certain stress tests and and how they how they look at things moving forward in a more normal or, you know, more usual interest rate environment. Well, let me just comment, you know, 100 years ago when I bought my first home, um I think I paid about n 9 and a half% and I was always taught at that time that if your if your borrowing was at a rate of under 10%, you were doing okay. You were lucky. Yeah.
Yeah. You know, and then of course it went up to 15% at one time, didn't it?
Um but just coming on to the subject of um mortgages for um and I don't mean this in a disrespectful way but for ordinary people and I say that people with normal jobs normal salary expectations no super growth in their career path just just as normal. M um do you think it's time that we looked at the way we provide house finance rather than this just either building society or bank provision? I mean I'm thinking in terms of mortgages that perhaps stay with the house rather than the person. Um longer period of payback maybe 50 years and that could be passed down through generations. I I just wonder whether it's time to have a rethink.
Yeah. Well, there are economies which have longer term fixed rates, which which is an interesting one because I think if somebody was going to buy somewhere and it felt like it was their forever home and they fixed their mortgage for 20 years or 25 years and they knew they knew that that was going to be the cost of their mortgage and that they had done their numbers on that appropriately and the bank had checked the affordability appropriately. Obviously things can change in the future but that is I suppose one way of looking atit whereas ours is a little bit more we fix for two years we fix for 5 years some people might take a variable rate we move a lot so our market doesn't really operate like that um a wholesale shakeup of mortgage finance I mean it's an interesting question but it's I suppose you become quite embedded don't you in in the way things work. And we always hear this word innovation and everyone's always talking about innovation, but it feels like innovation in the mortgage world for us has been really just tinkering around the edges as opposed to wholesale change.
Yes. You see, I I'm I'm thinking um I read some of um your notes on the subject and you are witnessing a return to a higher loan to value in terms of mortgages. you know, we're looking at 90 or 95% mortgages again now, which I suppose is a step towards the 100%, isn't it? I'm not sure what my view of 100% mortgage is. I don't think anybody takes a mortgage out with the idea of defaulting on it. So, I don't think it's quite as bad as some people would make out, but I do I do agree that it it could cause young people stress if there is a sudden change in the market, whether it be interest rates, house prices, negative equity, or any any of the taboo subjects that we get with property.
So, I don't know, but I do you think it's a good thing? Look, I think it serves a purpose and I think that there are still some soft costs and you have your stamp duty, your legal cost, valuation fees, moving costs, and you know, if it's a first-time buyer, they have to set the house up with furniture and, you know, there's there's costs
associated with it that would not seem insignificant to that individual when buying their first home.
um the problem that you have with it is some of the stress situations that you just listed. You then can end up in a situation where you create mortgage prisoners. So I think we would have to have the banks and building societies and non-bank lenders support to the market that they would continue to allow that loan to to run and if it reached expiry of say its initial fixed period, if it was a two-year or 5year fixed period that they would allow that to run without a reunderwite, which a lot of products transfers do allow for in the market because that you know they want the client retention anyway. So if somebody's
paying their mortgage they you know a customer that's already with them is valuable versus going out and having to acquire a new customer. So I think if
they can transition people on and you don't create a scenario where you have a mortgage prisoner that can't do anything. But if somebody then looks to
sell and their property value has fallen, that's when you can cause the problem because then it's a case of actually having to stump up the money.
But I think if I remember rightly, I've got a feeling it was the '9s where banks and building societies were ordered to be more more helpful to um shall we say delinquent borrowers, right?
And um I I thought that was always a very good idea rather than just leap for repossession. M we saw it in co as well,
didn't we?
Yeah. I mean, you know, people forget a bank don't want to repossess your property. The last thing they want is to have your property on their board.
It's also not very easy for a bank to repossess property. It takes time and you know it's it's it's not easy on anybody involved.
Okay, let's just um move on uh for the final minutes of our our show to buy to let.
Now the government has been quite difficult with what they call accidental landlords and I think what they mean is really the land the private landlord with one two three four properties now they've had a a bit of a holiday in terms of lending criteria have been specialist firms for buy to let who've been quite relaxed about the conditions they base the lending on rental income rather than the person's finances and I think that's a great thing specialist lending uh because you do get professionals looking at what you're asking for and I I I think that's absolutely great. But again, the government seemed to have jumped in and and put a stop on all of that by encouraging the you know institutions to take over by and I'm not sure the institutions are going to be very much better at it than anybody else. Why?
because I think the private landlord is very conscious of his asset, tries very hard to get a good tenant, and tries very hard to look after them. I'm not sure that some of these big corporates will, and in fact, I think they'll be quite um don't know what the word is, but um quite brutal when it comes to affordability and and and what they're going to get in terms of yield. How are you finding the financing for these sort of projects? Are are the big institutions taking up the finance and
and individuals being left behind or we're seeing a we're seeing a mix actually now I think when when it comes to the smaller landlords the sort of sub3 properties perhaps if you were to use that as a cut off um that market is really tough so unless somebody has ambitions to scale I think it's very difficult for people to transact in that market and make it work. So we've seen definitely a movement more towards higher yield assets which is probably part of the London sort of regional divide and people are much keener to seek better yields either by moving further a field or you know in areas that present stronger yields or by changing the asset class slightly to HMO co-living student accommodation and alternative types of assets and co-l living is something that we've actually seen quite a rise in in recent times. So you see that that that calling of the small private landlord is being converted into perhaps a restructuring of that kind of business I suppose then yeah to to some extent and I mean we still we still deal with a lot of landlords that have say three four properties upwards to you know many landlords that have 50 60 100 properties and and actually I think the difference there is it becomes a bit more systemized. They It tends to be somebody's full-time occupation as as opposed to something that they're doing alongside their main occupation. And that I think that makes a bit of a difference. And I think people I don't think that's a bad thing.
I don't think that's a bad thing either because people can give it more time and attention. Um and in terms of mortgage availability, there is a lot out there.
you know, there's there's debt is not difficult to come by, provided the numbers work and and I think that's the key really. It's about finding
appropriate yields to support the debt in today's interest rate environment.
Okay, Lucy, I'm going to say thank you very much for coming in today. It's been great to have you in the studio. So, that's Lucy Waters, MD of Area Finance.
Really big thank you and thank you for thank you for the information that you've provided. We're now going to go over to Will Stevenson, co-founder of
Fiber Pay for this month's industry insights on foreign [music] exchange.
Will, welcome to our industry insights property program and our monthly look at the world of currency exchange. What have you got to tell us this month?
Beginning on the uh property market, I think 2026 we've already seen a fantastic start to the year. um thatncertainty that we had from the bud the late budget last year now we know that the expectations of it causing a lot of havoc for this year we know now it seems business as usual um so that's of course fantastic terms of the currency exchange markets I think one big factor to look out for this year is interest rates um of course we've had an interest rate cut towards the end of last year um and it seems that the Bank of England is talking about further cuts throughout the year. Now, that technically should uh devalue a currency. Um however, actually the complete opposite. Ever since CO um we've seen a complete flip in trends in the markets and actually we could see uh the currency go the other way. I believe that it's still going to attract overseas buyers. Um the pound is probably a little bit undervalued at the moment. um and looking at other jurisdictions and their interest rates, Europe currently being lower, I think it's still really appealing for um Europeans uh to to of course transfer funds and purchase in in the UK.
The standard comparison is obviously with the dollar. Yes.
I mean, how's that going? I I some reports you read that Trump is absolutely decimating the American market, so therefore the dollar should be cheap, but it's not.
It's not. The dollar is the the world's safe haven currency. So whenever we see huge yeah geopolitical problems like as we're seeing um there the dollar tends to gain strength again another trend that seems to be uh yeah more common since co days so actually US market uh is m is still huge I think it will be this year it's also incredible value if you look at since the referendum to buy to purchase pounds and sell dollars so yeah those people that have been looking for a few years might be thinking, "Oh, I'm getting 30% off." Um, and I think that it's going to hold this strength.
Trump did want a weaker dollar, but uh with um yeah, all the all the things that he's up to, uh we're we're absolutely not seeing that at the moment, but uh yeah, I think continuing going forward, dollar strength and pound undervalued.
What's the comparison of particularly in the property market of of money coming in to money going out? There's still a I think if you particularly if you focus on London, there's still such a demand for uh internationals having that that London property. Um I guess it's a bit of a a flagship piece that you you have to have if you're a particular high net worth. Um but yes, there are a lot of uh UK people moving abroad. The easy one is still Middle East Dubai. um we see a lot of of fund flow of funds going over there probably because it's it's particularly easy to obtain residency and it's so tax efficient. Now again a trend since since co we see working conditions so different people don't need to go to their offices every day you can work particularly better weather um and better tax situation. Is Dubai still the hot favourite to get for people to go to or where where else is looking good?
Interestingly, the start of this year um Saudi Arabia have of course opened up their property market to the world. So whether that I I think it'll be a bit of a slow start for them just because of the infrastructure Dubai is already so welcoming in terms of the uh yeah being so easy to move into. probably Saudi might look a little bit more frightening, let's say, for people that don't know um the jurisdiction. Uh other than that, Europe's still popular. Portugal, Spain, we see a lot of a lot of people that are retired, expats moving to um why would you not with the you having 300 days of sun on your back?
Well, will thank you very much for coming in and doing your five minute appraisal of the currency exchange market. Very pleased to have you in the studio. Look
forward to having you again next month with your latest comments. I'm Steven Galpin. Thank you for watching. See you again next time.