Banking on the Future

For most of his 26 years in short-term lending, Matthew Anderson had a very clear idea of what Arbuthnot Latham could offer clients.

“I have always known the name, but for me and my friends talking shop down at the pub, it was always an established private bank and not seen as part of our lending world,” says Anderson, whose career has included spells at industry stalwarts Amicus Property Finance and Bath & West Finance.

But in one of those great life twists, he was welcomed into the Arbuthnot Latham family in March 2021 to help change that perception, when he was appointed Head of Sales at Arbuthnot Latham’s short-term property finance subsidiary, Arbuthnot Specialist Finance (ASFL).

“Now, I’m on a mission to tell the industry and my network that we are so much more than a private bank,” he explains. “It is partly why we are joining the Bridging Loan Directory to get that message out there to those who do not know us at all and to those whose perception of us needs changing.

Arbuthnot Latham has changed quite dramatically in the last six years and diversified from core banking. I believe that our combination of competence, skill, safety, and security will be much needed in the weeks ahead.”

Residential First

ASFL’s core business is residential finance, where it offers LTVs of up to 75% including interest and little to no fees, on loans from £30,000 and an interest rate per month from 0.6%. Other core areas are:

• heavy refurbishment & conversion with LTV of up to 70%, loans from £100,000, and a monthly interest rate from 0.70%
• light refurbishment with an LTV of up to 75%, loans from £30,000 and a monthly interest rate from 0.65%,
• and development with an LTV of up to 70% and maximum GDV of up to 70%. monthly rates are from 0.85%.

“We do look at commercial transactions but given that they are more investments than anything else, we have a slightly more targeted focus on other areas,” Anderson explains. “Our bread and butter have been residential, especially HMO acquisitions and conversions.

People have been looking for extra space and homes in the country during the pandemic which has helped residential sales. The HMOs are also good income generators for customers.”

Despite being impacted by Covid-19 and the initial hit to property demand during lockdown, Anderson says the business has performed strongly since its launch.

Indeed, he says that Q1 this year was the best quarter in terms of enquiries that the business had ever seen. “We had over £300m worth,” he states. “That figure only includes loans that meet our credit appetite.  If enquiries meet our criteria, we are keen to support!”

Property Correction

Matthew has also seen his fair share of downturns and recessions and despite the high demand in residential property at present he feels there could be a correction on the way.

“If you look at the economics, then the property market is kind of defying gravity. Maybe we are due a slight correction in that regard,” he says.

“It is not just geopolitical concerns like the war in Ukraine but the cost-of-living crisis that we have ahead of us, with rising energy and food bills. At some stage this will impact real estate demand, albeit supply never quite meets it.

We are not seeing any signs of a downturn at the moment, and there are no suggestions that loan repayments are not being made. It is, however, always something we are mindful of, and more so just now.”

If a recession does come, he believes ASFL will remain strong and be a market standout for clients.

“In my lending career, one of the issues has always been whether funding is available,” he states. “But here at ASFL, I not only have the flexibility to operate in the lending market but also the security of being part of a bank that has been around for over 180 years.

Funding is not an issue and if a correction does take place, we will be in a stronger position to help clients find the loans they need. We can be there for them in a period of uncertainty because even though markets and trends might change this bank is not going to disappear.”

Others in the industry may not be so lucky, especially those new entrants.

“There are not too many days or weeks that go by when you do not see a new lender popping up,” Anderson says. “The returns in the short-term lending industry can be attractive.

In fact, I think sometimes property lending is seen as easy however, the skill and the art in it is providing the right solution for the client.”

Banking Benefits

Having a large bank behind you also brings ‘one-stop shop’ benefits. “For example, it could be a business owner needing property finance, whom we then discover has other needs such as refinancing their fleet of vehicles, and we can introduce other parts of the bank to assist,” he explains.

“There are increasing amounts of collaboration within the business, we are always talking to other sales teams in the other sectors. We offer a holistic approach.”

Another factor likely to keep brokers and their customers returning is ASFL’s policy of not charging fees for default, extensions, exit, minimum interest periods, and non-utilisation.

There are also no early repayment charges, and we only charge interest on the amount of debt outstanding at any time.

At ASFL we believe this helps customers better understand the total cost of a loan before committing.

“We try and be clear and transparent to brokers and clients,” Anderson explains. “If a broker says they can get a loan cheaper elsewhere then we discuss the lack of fees and factor in how that impacts the cost. I say to them do not look at the rate, look at the total cost. If I am being a little cynical these fees often add to the reason bridging is viewed as expensive.”

Future Gazing

What does he see for the future?

“We are nationwide already, although we would like to explore more business in Wales,” he says. “We are also expanding our team with two new BDMs whose remit is to be out on the road and see clients face-to-face and we are looking to recruit two new underwriters. That would take our team to 13 strong.”

In terms of product, we are looking in the future to some form of regulated lending product in the self-build market which, Anderson says, is very popular at the moment.

“We provide development and refurbishment loans already, so we have the skill base,” he states. “We may also look at putting together a product to cater for sustainability and new building technologies.”

Instead, 2022 is about consolidation, establishing the business and getting its message heard. “We have targets and are keen to treble our loan book, but it really is about steady growth,” Anderson says.

“There are challenges ahead but we are not scared as we see them as opportunities. The bank remains very supportive of us. We want to keep stressing that we are more than a private bank, but it is such a strength to have them behind us.”

If you want to find out how bridging finance can help you or your client achieve their real estate goals using the financing ASFL provide, please do get in touch ASFLenquiries@arbuthnot.co.uk or submit an enquiry.

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