“Experience, trustworthiness and high service levels are pillars of our business”

Octane Capital hopes to keep lifting the spirits of beleaguered UK landlords by joining the Bridging Loan Directory.

The specialist short-term property lender, founded in May 2017 by industry veterans Jonathan Samuels, Matt Smith and Robert Graham, believes that it has never been more challenging to be a residential landlord in the UK.

“Landlords and investors have become disillusioned by the yields within their portfolios being eroded by increased mortgage rates and maintenance costs, EPC requirements and regulations as well as affordability problems in the mainstream Buy to Let market,” says Josh Knight, sales and marketing director at Octane.

“It is a difficult combination of challenges and one which has led many people to believe that single let investment properties are no longer worthwhile.”

However, Octane’s focus on refurbishment finance offers landlords and investors a solution to their concerns.

“It is probably what we are best known for, helping property investors to alter, improve or convert existing property with a view to increasing its value or income potential,” explains Knight.

“You might be buying a run-down property at an auction with a view to selling or buying a house and converting into a House in Multiple Occupation (HMO) or flats with the view of holding it as an investment.

In fact, house to HMO conversions is the most interesting area of work for us at the moment. The demand has completely exploded over the last couple of years.

The beauty of being able to convert a three-bed house into a six bed HMO means that you could triple or even quadruple the property’s income. It’s a huge growth area for our business.”

Octane is currently focussed on short-term lending across mainland England with refurbishment loans, bridging and developer exit finance being its main core business areas.

It covers the residential and semi-commercial sectors offering non-regulated and first-charge finance.

Since launch Octane has lent around £1.5billion to clients with a loan book currently standing at £500million.

Its Developer Exit business is also powering ahead driven by current market and economic conditions. “Developers are faced with many challenges at the moment including the longer length of time it is taking for properties to sell.

Especially last year there is a real feeling of inertia amongst homebuyers. They have been adopting a wait and see approach because of what has been happening with mortgage rates,” says Knight.

“Developers are therefore feeling the pain of selling their properties at a much slower rate but in addition being faced with the inflation in build costs.”

However, he says both challenges dovetail perfectly into its Developer Exit product.

“We can alleviate some of these pressures by giving them more time to market and sell their properties. In some cases we can also step in before their development is finished and provide them with the necessary funds to complete the build if cash is low,” he explains.

“Many of our peers would want full building control sign off before being able to lend, but we don’t. It is a key part of our offering.”

The third core element – bridging is also performing well. “Refurbishment and Developer Exit continue to be our sweet spot, but all types of bridging come across our desks,” he explains.

“That can be auction finance, complex borrower profiles, title splits and capital raises. We have seen it all! The good, the bad and the ugly!”

Indeed, a key factor in Octane’s success and proposition is the experience of its founders who have been involved in the short-term lending sector for the last 15 years.

Before Octane the team launched and scaled Dragonfly Property Finance which had lent over £2billion before being sold to Octopus in 2013. The Dragonfly brand lived on until 2016 when it became Octopus Property.

“Clients take great confidence in the knowledge that this isn’t our founders first experience of running a UK specialist lender; many of our Senior Management Team have worked together for over a decade in this space,” says Knight.

“Experience, trustworthiness and high service levels are pillars of our business.”

Knight says that across all three key areas its competitive rates policy is crucial in helping it secure deals. Its bridging and developer exit rates start at 0.33% per month plus the Bank of England base rate. Its refurbishment rates start at 0.35% per month plus the Bank’s rate.

“These are both pretty sharp offerings in the market,” he says. “Our rates are linked to the Bank of England base rate. If market predictors are correct and the base rate were to drop during the client’s loan term, so would our rate.

It is a unique position for us to be in. It is a competitive rate today and could become even more so as time goes on.”

Furthermore, in its refurbishment product Octane lends at up to 70% loan to value from Day One with interest added to the gross loan amount rather than taken from it.

“It means you have quite a high Day One position compared to the propositions from other lenders,” explains Knight.

“In addition, we fund 100% of any refurbishment costs, which borrowers access via drawdowns. It is light-touch monitoring to make it as seamless a process as possible.”

He adds that Octane seeks to adhere to strict SLAs such as issuing credit backed terms within 2 hours of receiving an enquiry.

“We also fully underwrite a new application within 48 hours of its receipt which we think is industry leading,” he says.

“Certainty is also important, and we try to be crystal clear. When we say yes to our clients, we mean yes. Our numbers are strong. We are lending at pace and scale.”

In fact, Knight is speaking to Bridging Loan Directory just after a companywide meeting looking back on the success of 2023.

“There is a great feeling amongst the team at present” he says. “We surpassed our lending targets for last year and beat all of our other financial metrics.

At the meeting we also set out our plans for this year which include some big ambitions in terms of lending targets. We are engaged, enthused and excited about hitting them.”

To help in that aim Octane is looking to hire six new employees by the end of March in a range of positions such as sales, internal and external business development, finance and marketing.

It also hopes that joining the Bridging Loan Directory will provide another boost.

“Bridging Loan Directory has been an ever-present in our industry for as long as I have known.

I am acutely aware of the following and readership the platform has and I have been very keen for us to join for some time now,” Knight says.

“We have got a brilliant offering; we want to make sure that brokers know all about us and our products and that we get maximum exposure.”

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