more investors deciding to transact. The cost of funding from a mortgage lender’s perspective has been broadly stable for the past year. More people are prepared to invest in the private rented sector as opposed to investing in equities or commercial property. There is also massive demand in terms of today’s social demographics. High loan to value mortgages are just not available, people don’t have the deposits or if they do they can’t raise the mortgage because the income multiple they’d need is simply too high. Renting is picking up the slack for that reason, as well as because of a growing desire to have more flexible tenure later into life driven by employment mobility. Similarly there are an awful lot of people in this country with a considerable amount of capital which is doing very little. They’re looking for a home for it and what are their choices? Savings and investment products don’t offer the same yields as HMOs for example. The result is that demand in the residential investment market is still underserved at the moment and a lot of small lenders could make hay in this area. Previously there was a whole host of building societies that would have looked at commercial buy-to-let and the high street banks but that’s not the case anymore. The high street banks are almost dysfunctional in this part of the market and show little interest. The centralised lenders of the pre-credit crunch have gone. So the demand is rising but there are still not enough lenders prepared to put the money up. While we won’t be able to meet the demand for the whole of this market last year we did about £130m and this year we plan to do considerably more than that, we hope around £200m. The investment sector has contributed well to this. At this point in the cycle that’s where we want to play and for lenders it’s about being in the right market at the right time. The investment market is where all the activity is at the moment.
Working with brokers We couldn’t play in this market without our brokers and we’re working very hard on our processes and systems to make things as simple as possible for brokers who deal with us. We’ve invested a lot in upgrading our operating systems this year which will come to fruition in the fourth quarter and we have dedicated, experienced business development managers. We also recently held a broker conference to discuss what we’re doing and we offer to train brokers to help them do more business with us. Through the year we’ve worked on enhanced commission schemes to help brokers improve their earnings by working with us. We pay between half and three quarters of a per cent to brokers and there are opportunities for brokers who work harder with us to benefit from us working harder with them. The volume and conversion rates they can offer us will afford them opportunities to enhance their commission levels, though it must be said we put a lot of emphasis on applications reaching conversion or else we’re all wasting time. We work with a carefully selected planel, the reason being that there is so much pent up demand our services offering would disappear if we went out to the whole of the intermediary market. The upside of working with limited partners is that they grow with you as you learn with them. We believe business gets done more effectively as a result. We’re keen not to waste anyone’s time. The broker wants to present an appropriate deal to their client that fulfils their needs. We’re keen to help facilitate that by being up front about our criteria and helping brokers understand what we need from them so they can get it right for their client first time. The clearer we can make our offering the quicker it all is for the client. That’s the key. It’s about a business partnership to deliver excellence. n
Interview by Sarah Davidson 29
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