Overcoming a challenging year

In a year that’s been anything but the norm, tradition still sees us take the opportunity to reflect on the year that’s passed, review results and progress, and start to plan for the coming months and year just around the corner.

Twelve months ago, Brexit was front and centre of almost every news report and was destined to be the most significant and impactful event the country had to deal with in a generation. It still might be, but another, more immediate and unpredictable factor changed all of our thinking.

Adapting to a new norm

Our plans at YBS Commercial Mortgages were certainly disrupted. With a business model focused on delivering a dedicated personal service to our borrowers and developing close working relationships with our broker panel partners, we opened three new regional offices at the start of the year, staffed by teams who were new to YBS Commercial. We assumed there would be a lot of face-to-face meetings, both internal and external, as we developed relationships and embedded our new colleagues. Like most things however, this was cut short in March. The way our teams have found ways around face-to-face meetings, made use of technology to maintain relationships and planned additional investment to enhance our digital capabilities are just three of the many examples I could give to demonstrate how we’ve adapted. And the results speak for themselves - the volume of new business offers we are making has increased since the first lockdown restrictions were introduced has increased to over £200m.

As the economic impact of Covid becomes more apparent there is increased risk for investors and lenders. We don’t need a deep analysis to recognise the serious impact on key sectors such as the leisure and non-essential retail sectors in particular. There will be knock-on impacts on supply chain suppliers and transport services. The result will mean that investment and lending decisions will be adapted to take account of these increased risk factors. However, the commercial property market is broad and the fundamental strengths of the sector remain. There should always be support for experienced investors who are operating in areas which are resistant to the impacts of the pandemic, such as manufacturing, essential retail and delivery and online service providers.

There are also specialist property sectors which merit support. For example, the UK holiday sector is set to maintain popularity as uncertainty around overseas travel remains. Investors are seeking to broaden their portfolios and should be supported to acquire and improve good quality properties. We’re seeing a shift in demand in the retail space as people’s purchase habits change, which is creating opportunities for businesses in more local areas to thrive. Universities will also remain open and there continues to be demand for increasingly improved student accommodation which will drive opportunities for HMO investment.

As a sector, commercial lending can play a part in supporting the wider economy. There is little to be gained and much to be lost if lenders and brokers do not adapt to our changed environment. This means that businesses which would have been supportable previously may not now be able to raise finance. This is a difficult situation but there is no value in putting businesses under additional financial strain and increasing default rates for lenders. By providing clear lending criteria, brokers and borrowers can source appropriate finance for their needs.

Making improvements

This year we welcomed digital portals for customers, invested in improving technology to maintain close relationships, added a new 10-year fixed rate Limited Company buy-to-let product to our already award-winning range and introduced the first ever repayment holiday scheme to support customers. The latter of which saw us offer a 48 hour response to ensure borrowers were not disadvantaged by the ongoing situation. Our quick-thinking response to ways of working during the pandemic really illustrates our commitment to not letting brokers and their clients down when challenges arise.

And our plans don’t stop there. We’re going to strengthen our regional teams with new recruits to help manage our increased deal flow and we are committing £400million to new lending in 2021. We’ve also got some exciting new developments coming up in the New Year, including the launch of a semi commercial product, so keep an eye out for more information throughout January.

YBS Commercial is unashamedly cautious in our approach to risk, but we’re determined to maintain our new lending activity and will continue to seek new opportunities through our broker panel partners.

For lenders such as ourselves at YBS Commercial we are continually reassessing our product mix, service levels, pricing, broker relationships - the list is long and our priorities are ever-changing. But the fundamental importance of providing a timely, balanced service is crucial.

As we leave the last 12 months behind us and head into a new year, we remain committed to maintaining our support for all of our existing borrowers and keeping our doors open to new lending. Our industry has much strength, and while challenges will remain, if this year has taught us anything it’s that we should have every confidence that we can overcome them.

Merry Christmas, and Happy New Year!