‘Once brokers start to use us they like what they see’
By David Craik
Specialist lending group Lendco – which caters exclusively to intermediaries – is hoping to ‘come out of the shadows’ by joining the Bridging Loan Directory.
It may sound like an unusual term for an operation, which in its first five years of existence has recorded £1.5 billion in lending and built up a bank of 1200 broker clients, to use but to Lendco co-founder and executive director Alex King it is all about balance and growth.
“We launched in 2018 as a buy-to-let and bridging lender,” he explains. “But, until recently, it is fair to say that we have been primarily a buy to let lender which does a little bit of bridging. It has been a complimentary service mainly doing acquisition bridging and refurbishment financing before converting these loans on to long-term buy to let.”
Indeed, of the £1.5 billion lending mark to date, around £300 million of that has been ‘quietly done’ in the bridging space. Of the 1200 brokers – although a number of brokers offer both buy-to-let and bridging – King estimates it has 100 bridging brokers in its client bank.
But backed by a £200 million bridging warehouse facility it secured with high street bank NatWest in June it hopes to scale and broaden both its bridging criteria and volumes. Indeed, at the time of the deal Lendco said the funding would support its aim of becoming a ‘major player’ in the specialist lending space.
“The facility gives us much more additional firepower to actually play in the bridging space as opposed to dabbling with bridge to let cases,” King says.
“We are on the journey now of finding more bridging brokers to work with. That includes those who we already do buy-to-let with but also those bridging specialists who don’t know that we also offer a bridging service.
We are coming out of the shadows and now looking at bridging as a proper division of ours in its own right with its own cost and profit centre, specialist completion officers, salespeople and underwriters underpinned by a dedicated funding facility.”
King says he wants the current 80 to 20 annual lending origination balance in favour of buy-to-let to rebalance, with bridging recording lending of around £250 million a year.
“We want to grow both of our main businesses in terms of origination,” he adds. “It’s not growth at the expense of the other.”
Indeed, King wants to take the learnings from the stellar rise of its buy-to-let lending business to power the bridging side of the business.
“When we launched our ambition was to service the intermediary market in a way we felt was lacking,” King explains. “There were plenty of horror stories – mainly on the buy-to-let side- around service and decision making.
It was a crowded marketplace with specialist entrants who had gone on a rapid growth journey. The common-sense lending principles – which does exist in abundance in the bridging space – were not filtering through all their new staff and departments as they grew. We wanted to bring that sensible approach to specialist lending.”
He says Lendco aims to be accessible as it can and that no broker should be held in a queue waiting to speak to one of its 38 strong team. “All our people from sales to underwriters, completions and case managers are encouraged to speak to brokers and not delay in getting back to them and their queries.
Brokers want to be able to speak to people who can make decisions rapidly,” he explains.
Lendco says it looks at transactions through a ‘can do’ lens and are passionate about trying to find ways to make deals that make sense work. Every case it states is manually underwritten and assessed on its own merits. “There are no tick-boxes here,” the group says.
In addition, its sales team are empowered to make decisions, and have direct access to the underwriters for referrals. It’s all backed up by a team boasting decades of property lending and underwriting experience.
“We have got a high level of repeat brokers and borrowers,” King says. “Once brokers start to use us they like what they see. We are onboarding new brokers all the time, those who appreciate a different approach to service and underwriting transactions.”
King says most of this has been done with very little ‘PR and advertising’ to date. “We haven’t courted much of that or our reputation in the market,” he explains. “We have been flying under the radar. For many people we are the best specialist lender nobody has ever really heard of!
They are starting to get to know us now and we hope that joining the Bridging Loan Directory will get our name out there even more.”
He sees plenty of opportunity in the bridging sector despite the current state of the property market.
“I’ve seen reports showing that volumes in the bridging market are down but something similar is also happening in the buy-to-let and residential mortgage space,” King says. “It is a function of where we sit in this interest rate cycle and the property market in general.
Speaking to our specialist brokers who deal with property investors they believe we are reaching an inflexion point. They say investors are starting to see acquisition opportunities at a price point where they can refurb to add value before selling or retaining. I believe that the market should have a strong back end of quarter three and quarter four.”
At present the group lends on many types of property, with bridging terms from 2 – 36 months on loans between £100k and £5m. It offers light and heavy refurbishment and 55% LTV on land with planning. In addition, its sales team can issue same day heads of terms.
King says that being innovative when it comes to bridging products, such as a near-future aim to develop ground-up development, will also be an advantage in the months ahead.
“Even without that we can seamlessly drop people into different product silos at different price points. So, we can do you an acquisition bridge, help you add some refurbishment and once that is completed and you want to sell to release some profit we can drop you into a lower price development exit sales facility,” he says.
“Or if you want to retain the units, we can look at buy-to-let. Lots of bridging lenders do bridge to let but we are only one of a handful that prices the end BTL product at sensible terms.”
King acknowledges that the bridging lending sector is an increasingly competitive place. “There are many very good specialist bridging lenders out there who are doing extremely well,” he says.
“Some are well capitalised, but we think we can bring a cost benefit thanks to our warehouse facility. We will be cheaper than some other lenders who are funded in other ways.
We can also bring the levels of decision-making experience and speed which we have in buy-to-let to bridging. We have got a good opportunity to grow.”