Sally Laker

2019 – the start of a new year, new plans and a new strategy! There are plenty of opportunities that lie ahead this year and Sally Laker, Managing Director at Mortgage Intelligence, highlights the importance of having a strategy.

Having a clear ambitious but also achievable strategy is essential for every successful business. So here are some top tips to help you make the best out of the year ahead.

Road Map

A strategy is a plan to enable you to get to where you want to be in a specific time scale. Think of it as a road map to get you from A to B, it stops you getting lost and it keeps you on the right track to ensure you reach your destination. 

Decide on your goal

Firstly, decide your destination or goal for the business, what do you want to achieve this year, what are your business priorities, growth plans and areas you want to explore?

Identify potential opportunities and threats

Understand your business, identify the strengths and weaknesses that could hold you back. What are the potential threats and opportunities (SWOT) and have you taken outside factors into account in this changing world? A SWOT analysis is a simple but effective way of jotting down all possibilities that might thwart or supercharge the plan.

Involve key people

It is so important to involve the key people within your business to make sure you have the right information and insight to build your strategy and agree the goal that you want to achieve.

Develop objectives

Once you have agreed on your goal you need to develop some key objectives that should summarise the priorities that will deliver that goal.  They need to address KPIs, resource, and budget requirements.

Once you have agreed the key objectives you will be able to put the meat on the bones, by translating those objectives into action plans for the people in the business that can deliver them. These could also apply to suppliers and third parties. Once these are agreed and geared to deliver the key objectives, you stand a really good chance of delivering your goal.

Create a strategy document

Finally, the most important part, formally create a strategy document, clearly defining the goal or vision for the business, with key objectives needed to achieve that goal, and the action plans underpinning the key objectives. Make sure you clearly define who is responsible for delivering them and within agreed timescales. Share the document with everyone in the business, and review it every month, make it a live document, so that you are not only checking if you are on track, but sharing good news with everyone in the business. Also tweak the plan if you need to, change frequently happens in this industry and you need to be able to accommodate unexpected curve balls! Keeping a close check on progress and pushing forward each month is the key to success.

Whatever your strategy looks like, we’re here to help! We have a wide range of services available for you on Broker Zone, from marketing materials to compliance support exclusive products. Make sure you’re making the most of what we have to offer! Visit brokerzone.experiencemi.co.uk

To become a member of our award-winning network or club contact us today on 0345 130 7446.

Managing Director Sally Laker looks at a recent scenario that highlights the importance of communication and case checking in the property chain.

Just when you think you have seen most events linked to a sale and purchase transaction, you realise that there is always an interesting story that reminds you of the need to be vigilant. Recently a friend decided to downsize from their big family home to a newer property with no mortgage and to release some cash. The move took place but had turned out to be a nightmare for all. She assumed that this must happen all the time and was surprised that I had never come across it before.

In all there were seven people in the chain, only two with mortgages, and exchange was all set for a Thursday with completion on the following Monday. As soon as the removal vans were all loaded up everyone was waiting for the completion confirmation. They all received a phone call to say that one of the lenders had decided to carry out an ‘audit’ and therefore could not complete on that day, and they would be advised once they could confirm a completion date! So with a completely empty house, and everything in the removal van, they ended up having to pay an additional £1600 for storage as completion wasn’t until three days later.  My thoughts were immediately that this must have been some sort of fraud or money laundering alert, right at the last minute.  I decided to look into what kind of reasons might have triggered the lender to impose the action at such a late point in the process.

Whilst unusual there are a number of possible reasons for the lenders actions.

It was unlikely to be money laundering because this would generally be checked and picked up by lenders before completion. This is one of the key reasons that lenders will stick to a panel of solicitors that they have approved.

It is possible that when the lender system screened the transaction that the outgoing accounts details hit a trigger that stopped the transaction from going ahead. Again, although not impossible, this would be unusual as this would normally have been thoroughly checked before getting to this stage – especially with an approved solicitor. The fraud screening system may have picked up that the bank account and sort code was linked to a previous fraud, and maybe the lender did not work from a closed panel of solicitors.

Alternatively, it could be an example of a “property hijack” or false positive match. This means that the applicant appeared to be the same person screened at application stage but on closer inspection they were not.

Another possible scenario is that a new piece of intelligence was received and it matched a past case that then concerned the lender about the collateral they were lending on. It is possible that the lender received information and, given their experience from the sequence of events, they suspected the person selling the property was not the owner. That would make it likely that the solicitor would be involved too.

New build is another area that lenders are currently concerned about, mainly regarding assignable contracts, also called “contracts of novation”. This is where a developer is selling his property via a middle man who has offered to take on, for example, 20 units at a reduced price. The middle man buys them for, say, £380k each rather than the developers asking price of £500k. The middle man is confident that he can sell them speedily, which in turn, frees up cash for the developer. They make an agreement between themselves and the middle man sells them at £450k each. The middle man offers the buyer a £50k cashback off the £500k purchase price on completion. That enables the buyer to apply for a 90% LTV mortgage as the purchase price is £500k, and a credit (cashback) of £50k is passed directly back to the buyer once completed.

This should normally be picked up by the solicitor who will notify the lender, as there is no buyer deposit. If the lender finds out about this prior to the completion it would mean that they had lost transparency on the deal, and an alert would be placed on that developer and that broker.

It is impossible to say what the real reason was, and it seems that all the transactions went through, but it is useful to know what can be hidden behind a seemingly normal transaction. This example is a very good reminder of how important it is to know who we are dealing with, and to carry out thorough checks in all cases.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.

Sally Laker looks at how insurers’ recent hard work could be undone if they pass on the Chancellor’s premium tax increase to consumers.

Chancellor George Osborne announced in his summer Budget that, from November, insurance premium tax would increase from 6 per cent to 9.5 per cent. This is a rise of almost two-thirds: a jump that has received a mixed response from industry experts.

Osborne justified the change by highlighting a recent fall in insurance premiums, with the cost of contents insurance alone falling by 8 per cent since 2014. He said that, despite the increase, Britain’s insurance premium tax “is well below tax rates in many other countries”. He assured us the Government would continue to make insurance better value for consumers, claiming the recent fall in the cost of contents cover was due to previous alterations.

The Treasury has suggested that, by 2021, ministers will have accrued more than £8bn from the tax changes. However, by far the biggest concern is that, although insurers pay the tax, the extra cost will be passed on to the consumer. The Association of British Insurers calculates the new rate will add £9.48 to the average annual household insurance policy.

Osborne has confirmed that the increase will be added only to general insurance products, which account for just a fifth of all premiums. However, it is this fifth that needs to be encouraged wherever possible. I am concerned the important cover that consumers need will be further pushed out of reach due to price, and the public will be tempted into not protecting themselves at all.

This change has come at a time when cheaper premiums and more comprehensive value from insurers had started to re-energise the industry. At Mortgage Intelligence, we feel this hard work could all be undone if insurers end up passing on the increase to consumers. UK insurance premium tax may still be relatively low but, with so many under-insured, the need to incentivise remains high.

If you would like to join our award-winning Mortgage Network as an appointed representative or become a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.

At Mortgage Intelligence, we invest in the right people and the right technology for both appointed representatives and directly authorised advisers. Sally Laker highlights the importance of maintaining a balance between embracing new technologies and continuing to support a people-based industry.

I recently changed my TV package online as the lure of the next two series of Homeland got the better of me.

The change was the usual story really – my password didn’t match, my e-mail address didn’t match and so I decided it would be easier to pick up the phone and speak to someone about changing the package. And, it was. It made me think about our industry and the need to deal with people face-to-face and over the telephone. The people factor builds trust and relationships as well as providing a valuable service.

The other essential tool is good technology. To provide a valuable record of the advice given to the customer and all the associated documents loaded onto the system. A good Point of Sale (POS) system is so important but like everything it is only ‘good’ if it is kept up to date.

We recently updated our version of the Key POS system to change the way in which we record data and use it. Even though the system is an up to date system, it was a substantial piece of work bringing in contract developers to deliver the changes we required. There are numerous stages, including the specification, which takes time and requires experienced people who understand the system to map out what is required. This then needs to be formatted – a different skill required, so that the specification can be interpreted into ‘developer speak’ to enable the work to commence.

Frequently, there are choices and processes that need guidance all the way through and it is important to consider the impact of any slight change, or you could be back to square one. Once the work is ready, testing begins. You need people who understand the system and will test it and try to break it. Flaws get picked up and then fixes and changes need to be done. That goes back and forth for some time until the upgraded system is ready to be released achieving the desired result. The cycle needs to continue and we regularly look at what the next enhancements will be.

The recent changes we have released were significant and we now have an enhanced system that incorporates the dynamics of today’s regulatory world.

After going through this process, it becomes less onerous as knowledge of the system improves. It was still a challenge, expensive and time consuming but we allocated a six-month timeline which was a tight timescale to keep the focus on the job and complete it.

We have always promised to invest in technology that provides a system that is up to date with mortgage and insurance industry needs and we will continue to do so. We do know that both appointed representatives and directly authorised advisers are not robots and that’s important to us, because although this is a people-based mortgage and insurance industry, we need to be backed up by good technology and not replaced by it.

If you are interested in switching over to join our award-winning Mortgage Network as an appointed representative, or becoming a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.

Even though the General Election took place over a month ago, many people are still talking about how it was such compulsive viewing, with many staying up until the early hours awaiting the result.

The fascination was watching all of the opinion polls and predictions fall by the wayside as the losing political parties accepted their fate graciously. How did these parties get their strategy so wrong, why did it not deliver the clear objective to win the election with an outright majority?

Commentators gasped as the charts changed to a sea of blue and the Labour party were in shock as they saw virtually all their Scottish seats lost to the Scottish National Party in one night. Surely if the Labour party had been close to their customers and understood what they needed to do to get their vote they would have changed their tactics to secure those votes.

What was their strategy and did they have the right culture within the party to question the tactics to deliver that strategy? How would it achieve the end goal?

If people are afraid to speak their mind and go with the majority to keep the peace that is a culture that doesn’t work in either politics or business. If the public didn’t see Ed Miliband as a strong credible leader, why did the Labour party not see that either? If they were in touch with their customers surely someone would have stumbled across it.

It is the same in business – we set a goal, we put together a strategy to achieve it and then look at the tactics required to deliver that strategy. As always it is the team that you build around you that adds the magic required, they need to feel valued and listened to, their views are important to ensure you get the tactics right.

Once the team understands what is required of them and why their role is so important to deliver the overall strategy you have a good chance of achieving your goal. Setting the right culture is in my view essential, and putting the customer at the heart of the business is a culture that works well and leads to success. We have seen what happens when you don’t!

Just a couple of months ago at our annual conference I was speaking about how this year is the year of the broker, and how everything is in place for brokers to be the key channel for lenders.

We have lived through lender shareholders demanding that more mortgages go through their branch network rather than the broker channel, and employing dual pricing tactics to deliver that result. All symptoms of a crushed market with restricted lending resulting in a ‘feed our own’ policy, and generally leaving brokers feeling unappreciated for all the business they had provided in the ‘boom’ years.

We have to accept that this is all part of changing market conditions and changing circumstances, and right now mortgages are back in favour, they offer good returns and my favourite words ‘market share’ are back. Those words are key to the intermediary sector and the desire to be at the top of the sourcing systems is also back. Despite mixed messages about the housing market, brokers are reporting all time highs in terms of mortgage applications and certainly we are seeing a 20% increase in the number of applications made when compared to 2014, which is significant because the first four months of the year were extremely strong.

It does seem to be across the purchase spectrum, with a few star sectors – first time buyers, especially new build, and buy-to-let with the addition of some promising new contenders gaining traction. Some lenders are already getting close to reaching their maximum ratio to residential lending. Consumer demand is still high for 2-year fixed products at good prices, although even 5-year fixed products are getting a mention if the rate is low enough.

The interesting misnomer is remortgages. Despite the real saving for borrowers who are coasting on lender’s standard variable rates; they are not rushing to the table to switch mortgages. In my view, it is a little bit like cash savings – most people don’t really bother to shop around to switch. If the difference is insignificant, it just isn’t worth the bother. Even though the differential on the mortgage could be far more substantial, apathy still seems to rule. It could be the thought of all that may be required in terms of time and effort to change, it may be on the ‘too much trouble’ pile, and unless the client is contacted specifically to remortgage they may not even think about it.

There is little in the media for consumers about the positives of remortgaging but with interest rates having been low for so long, arrears at an all time low, if people are managing their finances comfortably there is no incentive to investigate the options.

The threat of an interest rate rise has been publicised a number of times now and that has not made much impact apart from keeping fixed rates as the most popular choice for the consumer. So, it looks as though an actual rise is the only factor that will revitalise that sector of the market, which is probably around 25% of current mortgage lending. Such a different place to two years ago, and it is a good place right now.

As the market continues to be buoyant in the broker space, it is interesting to see how the relationship with the lender’s Business Development Managers (BDMs) is playing a more important role.

The market is exciting and constantly changing in terms of criteria and rates almost on a daily basis. As a distributor we do everything we can to get these messages across to network and club members but that interaction with the lender BDM is clearly adding value.

The feedback we receive is that the broker feels more confidence and trust in the lender when that relationship is good. Unfortunately, a less effective BDM creates the opposite and often a reluctance to use that lender when there are others that are equally suitable.

It’s all about communication and ensuring that the important changes are fed through quickly. Whether that’s at the end of the phone to give clear, correct information or face-to-face, the BDM is of paramount importance.

This sounds pretty simple but the range of service does differ. From a distributor aspect we also find that a good key account manager is a truly valuable asset. They enable us to get messages out to members on time and ensure that they can maximise opportunities. Exclusive products are slowly coming back in vogue and this is a key part of the lender relationship with us, and knowing your customer applies at all levels, and frequently delivers good results.

The new addition to this service is also the increasing ability to speak to underwriters about a case on day one. This is a well received service that can save time; reduce the application to offer time, making the process more efficient and cost effective for both broker and lender. With business levels increasing, it is very important for lenders to continue to look at new ways that they can make their proposition easier to access, as we all know 2015 is all about service.

With another Conservative government at the helm, it is business as usual for many involved in the new build sector. But it is this area in particular that has been given the biggest shot in the arm from several schemes, designed to re-invigorate a housebuilding market that is still lagging behind required volumes.

So with a government adamant they can now focus on new-build in this upcoming term, does the future look good for this crucial industry sector?

The only way is up…

Building up to the election, things were looking good for the new build market. The proportion of first-time buyers has risen from 35% to 50% since 2006, as a result of high rental costs, increased product choice and schemes such as Help to Buy. Meanwhile lending continues to grow, with the Council of Mortgage Lenders’ estimate for 2015 being £222 billion, the highest since before the financial crash. According to one leading lender, there were 118,760 new build purchases in 2014, up 8% from the previous year. There were also 137,000 new build starts in 2014, up an impressive 10%.

The increasing number of consumers that have used an intermediary for their mortgage is a positive outcome to stricter affordability post-MMR. This is especially true of first-time buyers, as they begin their journey up the property ladder with trepidation, making the expert advice you provide invaluable.

Scheme successes…

First-time buyers are still key to the success of the new build sector, which means things are looking good on the back of several governmental schemes designed to encourage and incentivise. Many schemes have been successful, especially Help to Buy, which saw 60% of all new build sales with a mortgage and over 80,000 purchase completions as a result of the schemes.

The Equity Share Scheme, or Help to Buy 2, has also proved successful and the number of new homes built last year would have been even smaller had this not been available. The Conservatives have already pledged that this scheme would continue until to the end of 2020.

A sunny outlook…

Starter homes are on their way. The conservatives have promised 200,000 by 2020, bringing advantages such as removing buy to let opportunities, earmarked brownfield land and reduced development costs. But some experts are dubious as to whether spending cuts can co-exist with promises such as this, putting even more onus on the private sector to supply.

It also looks like we will continue to see a record low Bank of England base rate for most of 2015, which will surely only be a positive thing as lenders continue to offer low deals and increase demand to spur on housebuilding. Experts believe that there are other factors forecasted to remain positive for the new build sector, such as increasing consumer confidence and stamp duty reductions.

With so many struggling to afford the current large deposits for their first home and the undeniable relationship between house prices and housing supply, it is welcome news to hear that the next Conservative government will focus on the new build sector over the next five years.

Back in 2007 the Labour Government set a target of 240,000 homes a year to be built by 2016, in order to sufficiently meet forecasted demand. At current levels, the UK is quite a way off meeting this target. The National Planning Policy Framework (NPPF) highlighted that, “in the 12 months ending September 2014, only 117,070 houses were completed.” In fact, in 2012-13 the UK hit a post-war low of only 135,500 homes built.

But investigating and pinpointing exactly why the number is not being met opens up a minefield of debate; from the lack of social housing, limited building supplies, to the proposed link to poorly regulated immigration policies. Clearly a tricky subject to tackle with a myriad of issues, but this piece will dive in regardless and take a look at some of the possible causes for the UK’s current lack of housing:

Planning permission, red tape and local opposition

When UK house builders were surveyed earlier this year, they recognised that the house building target, even when modestly reduced to 200,000 by the Coalition, was in their eyes “unachievable”. This is a damming indictment from those at the front end, as they recognise that there are simply too many barriers preventing the UK from producing a free and fast-flowing house building system. The Home Builder’s Federation (HBF) pointed out that the current system is just “too slow, bureaucratic and expensive”. When questioned further, house builders suggested that the two main reasons for this are the planning system itself and local opposition.

The Coalition has made some moves to tackle these issues, such as slimming down NPPF regulations to streamline the system and increasing annual planning permissions close to 240,000. But Chris Walker, Head of Housing and Planning at Think Tank Policy, warns that not all permissions are built: “We probably won’t even get to 200,000 on the back of that 240,000”.

Affordable land, priority of profit and social housing

The charity Shelter points out that land prices have inflated “massively “in recent years. In fact, residential land prices rose 170% from 2000 to 2007, compared to house prices which rose 124%. Jeremy Blackburn, Head of Policy at the Royal Institution of Chartered Surveyors, suggests that public sector land is only one element. He emphasises the importance of actively encouraging private landholders to also release sites for homes.

Under the current system, house builders are not forced to use land that is bought, which could change under a Labour government with their “use it or lose it” policy. This would lead to house builders and developers being encouraged to build on land immediately, instead of gradually releasing properties in order to keep profit at maximum levels. It is business after all, therefore only strong state intervention for the good of the country can force the hand of house builders in the UK.

Several comparisons have recently been made between the private sector’s current domination of the house building market and the post-war boom of social housing. This era saw on average 100,000 public sector homes built a year, a trend that continued all the way through to the late 1970s. Although there is still much scope and need for private sector building in the UK, it has simply not produced enough homes on its own in recent years, which suggests an emphasis on social housing in the near future is fast becoming a necessity.

Materials, labour and small business

As we have already covered the grass roots of house-building, it is important that we also look at the production side of the industry. It is vital to ensure that we have the labour and materials needed so that once buildings have been approved, the process can move forward quickly, economically and cost-effectively. Planning permissions were last year granted on 230,000 homes, more than an improvement to previous years; but do we have the necessary materials and skills to produce the homes and meet demand?

Matthew Pointon, property economist at Capital Economics, suggests that “the surge in demand in late 2013 and early 2014 led to materials such as bricks running out”. According to monthly reports from the Department for Business Innovation and Skills, and the Office for National Statistics, stockpiles of vital building blocks dipped to 323m at the end of October 2014, down almost a third from 2012, and massively down from stocks of more than 1bn recorded in 2009.

If the UK wishes to meet the housing demand, it will also need to address the current shortfall of skilled labour, such as bricklayers and construction workers. In response, tens of thousands of new housebuilding jobs and apprenticeships are up for grabs under a deal struck in November 2014 between ministers and the industry. But training a labour force needs time, with the government even proposing bringing former military personnel onto building sites to cover the shortfall of labour.

An important area of the industry that has seen one of the biggest declines, is the number of small to medium businesses that are able to develop land. In 2007, there were 15 firms providing more than 2,000 homes a year. The following year there were just six. The effects of the financial crisis have exacerbated the issue by restricting lending criteria and making it difficult for small business to invest and gain traction in the market. In fact, data from the HBF shows how the number of firms in England and Wales building 100 or fewer units a year fell significantly over the 24 years preceding 2013.

The government is attempting to put strong solutions in place to solve the issue, but many experts feel more needs to be done before we see the results and numbers needed to solve the UK Housing Crisis.

What I love about this industry is the constant changes and challenges we face, often we look back and find our businesses are stronger as a result.

Take the quality metric for example, lenders decide that they were no longer talking about sales volumes but had a whole new agenda about quality. Huge metrics were drawn up for networks with various combinations with which our appointed representative firms would be measured. Some were so complicated it was difficult to interpret them.

Over time they were tweaked and more information was shared with the networks, as a level of trust was built up for the first time with lenders and their fraud and risk departments.

As a result we all know and understand so much more. We are able to recognise information that needs to be challenged from day one. Many cases that may have potentially been a fraud case don’t get through the door and once you know what to look for, it is so much easier to protect your business and deal with the right clients.

However, one of those metrics has always puzzled me – how can networks and brokers improve on the number of cases that go into arrears?

Divorce, death, illness, redundancy and financial hard times are all reasons for falling behind with payments but they are not events that the broker can predict when arranging a mortgage. It is, however, a relevant discussion to have with the customer and therefore providing protection for them plays an important part in the advice process.

However, it may be time for the lender to accept that if they are unable to give the broker any information on cases that are in arrears, including client name, brokers can do no more to cover this aspect.

The lender holds the data and the lender makes the ultimate decision to lend. They currently have little interest as to whether there is a policy in place to protect the client’s income which could prevent arrears in some cases. Maybe it is time for lenders to not only review the metrics but look at addressing the issue of protecting for the future when arrears may not be as low as they are now.