Ultimate Capital has said it prides itself on taking on difficult cases. Why do you think it’s important to look at cases that many other lenders wouldn’t consider?
Every day, we see great prospective developments and genuine opportunities that are perceived as ‘difficult’ and struggle to secure timely funding, purely on what we’d call a “computer says no” basis. So many lenders reject quality clients who could become long-term customers because they make decisions based on past history, rather than looking at the potential of the scheme on its own merits.
As a team of experienced property developers ourselves, we understand that life isn’t black and white. We work with developers to understand and overcome any barriers holding them back from a second chance that many of them deserve. Focusing on the future and not the past is more important!
You also lend at 100% LTV on some cases – why did you decide to do this?
In a sea of lending misinformation, there’s nothing clearer than a 100% financing commitment. If they’re not slowed down by lending delays or U-turns, many projects are on course to be highly profitable and have sufficient embedded value within them for us to do so.
Property has been our background for decades – we’ve seen uncertainty before and successfully weathered through three recessions, so we know the right opportunities to back. Plus, we don’t dilute our expertise across other sectors.
And, as we’re lending our own substantial resources, we don’t have the same constraints as other lenders who are answerable to wholesale investors. When you talk to Ultimate Capital, you’re talking to decision makers, not policy followers. We can see the opportunity a client brings and fully support it, when other lenders have to take a narrow view.
What do you think will be the biggest drivers for change in the development market in the next 12 months?
Most developers have enough on their plates without having to become experts in macro-economics! But with all the changes that will occur over the next year, we expect one of the biggest will be the regulator. Most lenders are frightened of their own shadows, never mind the bigger one the regulator casts.
Out of these shadows, we expect to see a lot of poor quality underwriting. Policy makers will modify their financial products to suit this ‘new order‘ – which means that property-specific lenders, like Ultimate, who understand the challenges of the property market, will respond and use our specific knowledge to make sure developers can still find the financial support they need.
It will be interesting too to see if, as some have predicted, there is any kind of flight of capital away from property in the UK, which already has a disproportionate amount of weight in most lenders’ ‘books’. This, at a time when property is at peak lending, with a record imbalance of housing supply to demand and a demographic housing time bomb waiting in the wings… These are all ingredients that will make UK property lending a spicy dish! I’d want to feel safe in the hands of the specialists and the experts.
If you had to give one piece of advice to brokers working in development finance, what would it be?
Know your customer well, know the project well and choose your lender to suit the circumstances. Some brokers ‘ping on’ cases to as many lenders as possible, but we’d say the more successful ones take the trouble to really understand what the customer’s scheme needs. A case can go round many lenders and offers are generated, but it can be detrimental to your relationship with the client if they fall through one by one. By choosing the lenders specific to the case, you’re more likely to get the deal your customer needs – and delivery of finance is remembered, long after the rate percentage is forgotten.
If you weren’t in financial services, what would you be doing?
They say that if you love what you do, you’ll never work a day in your life and for me, property finance and development is just that. I’m in a fortunate position – I could take more of a back seat, I could take a less hands-on role… but the truth of it is that I’d still be drawn into property; it’s a passion. I thrive on being busy, I relish the different challenges that every day brings – and I love it when we can spot a great development opportunity and make it into a successful, profitable reality. Why would I want to do anything else?