YBS Commercial Mortgages | YBS
Commercial Investment policy changes simplify lending across sector
YBS Commercial Mortgages has made some positive changes to its criteria, in a bid to support commercial investors and those rebuilding their businesses following the pandemic and other economic challenges which have since followed.
The commercial lender is standardising lending on all commercial investment properties let out to a tenant, either entirely or partly for commercial reasons, regardless of sector.
This move reverses measures introduced during the pandemic, which saw lending on some businesses - such as non-essential retail and wholesale – restricted to a maximum loan of £3 million per property up to 65% loan-to-value (LTV).
Moving forwards the maximum loan amount will be £5 million per property, up to 75% LTV, with a total portfolio limit of £20 million, and is applicable to all businesses, irrespective of sector.
A further positive change is the removal of other limitations unrelated to the pandemic, such as the £3 million restriction on lending on properties with solely retail rental income (lending now available up to £5 million); and the removal of the requirement for a retail property to be 15,000 square feet or less in size to be considered for a commercial loan.
These changes will improve the borrowing experience for brokers and clients alike, as Tom Simpson, managing director at YBS Commercial Mortgages, explains:
“This move will create more certainty, removing unnecessary complexity for brokers to navigate, especially when dealing with clients with portfolios stretching across multiple sectors.
“What’s more, as well as all types of businesses being able to benefit from the same loan conditions, it will streamline our internal process in support of our focus on reacting to the changing market in a dynamic way to help clients achieve their commercial property ambitions.
“This change represents our latest bid to provide much-needed support for the commercial investment market, where many non-essential sectors are still recovering from the pandemic.
“This move follows in the footsteps of our new fixed rate commercial investment product, launched in March, introduced to enhance our support for property investors.”
ENDS – CMPR15-23
YBS Commercial Mortgages has scooped the title of ‘Best Service from a Commercial Mortgage Provider’ at the 2023 Business Moneyfacts Awards.
The financial awards ceremony is the largest in the UK and one of the highlights of the industry calendar, celebrating the best in financial services. Finalists and winners are decided upon using product monitoring as well as all-important broker, and business community, feedback.
Tom Simpson, managing director of YBS Commercial Mortgages, said: “We’re delighted to have won this award as well as to have been highly commended in a second category.
“Over the last year we’ve demonstrated our commitment to the sector by strengthening our teams, amongst other things, with 90% of customers and brokers rating our relationship directors as very effective[1], I’m absolutely delighted with the long-term, reliable funding we’ve been able to supply to the commercial market, and the fantastic service provided by our regional hubs, sitting at the centre of our business.
“We’ve got big ambitions this year and beyond, and have already made great progress, introducing much-needed products to boost the market, such as our fixed-rate commercial investment product, launched just last month, which is designed to enhance our support for property investors.
“It’s fantastic to receive the recognition that this award provides, and I’d like to thank every single member of the team for the part they have played in this success.”
YBS Commercial Mortgages also sponsored the award category ‘Commercial Mortgage Introducer of the Year’. Tom added: “Congratulations to Watts Commercial Finance for winning this award, and well done to all the category finalists.
“Introducers have a vital role in the commercial lending market. We’re very proud of our long- standing relationships with our brokers and introducers, so we’re delighted to support this award, which really celebrates their dedication and contribution to the sector.”
CMPR10-23
Time is certainly flying in 2023 - and it’s hard to believe we’re now reaching those crucial last months of the year and starting to look ahead into the next year.
For me, having joined the business back in July, it’s certainly been an exciting journey to date. Commercial real estate is a real passion for me – so taking on the role of regional lead for the north was a very natural next step.
Ongoing change
I certainly picked a very interesting time to move into the role. 2023 has definitely seen its fair share of volatility, and the commercial market is at least 50% smaller than it has been - on average - in previous years. This upheaval began with the market turbulence following last September’s mini-budget, and we saw the impact this year, with higher interest rates being just one of the consequences, and a shock to the system compared to the rates of the last decade.For commercial investment, volumes were down – certainly in quarter one – which have been more noticeable because of the smaller numbers available in this part of the sector. However, after a low point in quarter two where the sector reached ‘rock bottom’ in terms of market activity, and investors waited to pursue their next purchase in the hope of further price drops, we’re now seeing signs of things stabilising, although it’s still true to say that many investors are still waiting for more certainty around rates, before they act.
View of the market
One of the recent trends brought on by market volatility is a move towards investors pursuing diversification of their portfolios. For example, a commercial investor branching out into buy-to-let or holiday lets. This allows them to spread the risk across their portfolios, as well as to spread income and capital growth, as different sectors are behaving differently in terms of the speed at which property assets are appreciating in value. There are also other factors at play here. For example, the cost-of-living crisis may lead to more purchases of holiday lets, as holidaymakers potentially restrict their abroad travel and choose to stay local – a similar trend to that which we saw during the pandemic.As for sector specifics – prime assets are doing well. Retail in particular, has had a transformation since the pandemic with lower quality assets disappearing – so now we’re left with better value assets as a result.
Retail warehousing is also doing well – again – because of the pandemic, which created a drive for online shopping - which continues - and industrial property is also in high demand, although this is largely due to the limited supply of stock.
In the world of office space, there are some challenges. Prime office space is doing well because workers who have returned to the office fewer times a week want a higher quality office experience with space to collaborate rather than lots of rows of desks – they want to feel that going into the office is worth the trip. So, there are a lot of lower quality or older stock office buildings around, and vendors may struggle to get these rented out or sold.
EPC changes – what next?
Looking further ahead, there may be hurdles which will affect investor purchase behaviour moving forwards. For example, although the government has recently scrapped requirements around EPC regulations, it seems by no means certain what may be required in the future instead to achieve energy efficiency targets. And this is certainly something on the minds of investors – who are actively seeking out higher quality, more energy-efficient properties. It’s also true that many lenders will still base their decisions to lend on the quality of the assets in question - for example those which are energy efficient with low carbon emissions. These are issues which will only become more important in the future.On the horizon
As to the next six months and beyond, I’d expect to see a release of pent-up demand from commercial investors with the ability to purchase - perhaps returning to the market where they see value to be had. I imagine we’ll also see a gradual increase in property value for commercial investment property over the coming years, across all sectors.I’d also expect to see a rise in capital raising by investors, as the value of their investment increases – which will in turn stimulate the economy and can only be good news for us all.
Closer to home
As for us, our focus will be on the continued development of our propositions and products to serve our valued brokers and their clients, and the strength of our teams who sit at the heart of our business, as we face into the last months of the year and 2024.For my own team – we’re looking at recruitment – including promoting internal talent - to best serve our brokers and customers. We’ve recently promoted Barry Dillion to the position of senior relationship director, where he’ll be looking at delivering the most complex loans in the Yorkshire region, as well as taking the lead for broker engagement. These types of steps are testament to our desire to ensure we have the right people in place to support quality lending in the regions as we move into the future.
And I for one - am really looking forward to what that future will bring.
YBS Commercial Mortgages is making an array of positive changes this week to benefit brokers and their clients.
These include a new buy-to-let product, available for corporate buy-to-let clients borrowing more than £1 million at 65% LTV, which comes with a competitive rate of 5.25% fixed for five-years and a 5% completion fee – offering more choice to investors wishing to benefit from a better rate by paying a higher fee upfront.
The commercial lender is also cutting rates across its buy-to-let suite by 0.20% in a move designed to support commercial landlords, providing a more competitive product range.
Highlights of the new range include:
- A five-year fix at 65% LTV at a rate of 5.95% (was 6.15%) on loans of over £1 million, which comes with a 2% fee
- A five-year fix at 65% LTV at 5.75% (previously 5.95%) for loans over £1 million, which comes with a 3% fee
- And a five-year fix at 75% LTV at 5.95% (was 6.15%) for loans over £1 million, with a 3% fee.
Rates on the lenders’ specialist buy-to-let product offerings have also been reduced. This applies to the Housing of Multiple Occupancy (HMO) product and the Holiday Let products, which have been reduced by 0.20% to 6.50% and 6.55% respectively. Both products come with a 2% fee.
Tom Simpson, managing director of YBS Commercial Mortgages, said: “The new buy-to-let product is inspired heavily by feedback from our brokers that lower rate, higher fee offerings are attractive to investors – offering them better choice, and helpful with affordability.
“We’re also really pleased to be able to reduce our rates across the buy-to-let range following a downward trend in market swap rates. These changes reflect our desire to remain as competitive as possible for all our brokers and customers in a challenging market.”