Chris Whitney

An interview with Chris Whitney: 'When implementing a loan, you are only as good as the weakest link'

In an interview with Bridging & Commercial, Chris Whitney, head of specialist lending at Enness Global Mortgages, discusses bridging exits, international lending and pulling together as an industry.

The bridging market is currently seeing an influx of new entrants. Does that create more product innovation or confusion for brokers?

It certainly keeps us on our toes! I have to spend longer with lenders than I do with clients to be able to truly say I have a grasp on the overall market — which right now is a moving feast and has been for some time. It strikes me as being not a very efficient market right now. It would seem logical for some consolidation, but there seems no sign of this as yet.

From a consumers’ perspective, it can only be a good thing with more lenders putting downward pressure on pricing and driving innovation. However, because the market is so fragmented, never has it been as important for a borrower to use a broker that knows their way around the market.

You’ve previously stated that brokers have a moral obligation to object to transactions without a viable exit. Are exits for bridging loans becoming increasingly difficult?

Yes, I think everyone in the industry has a duty of care as professionals. That isn’t just lenders and brokers, but lawyers, surveyors and anyone else that is in a position to give an informed opinion. If the borrower’s exit is weak or simply not viable, then it needs to be discussed in depth to see if there is another solution, which normally there is, in my experience. It’s rare, but we do see situations where we advise the client that a bridging loan is just delaying the inevitable — it will just absorb any equity left with fees, and that throwing in the towel at that point is simply the best course of action.

However, lending money is a risk/reward scenario. If a lender and borrower enter into a transaction that is high risk due to the viability of the exit, or indeed any other aspect of the situation, then it doesn’t necessarily make it a bad lend or a lend that shouldn’t happen, as long as both parties understand the risks being entered into and any action that can be taken to mitigate that risk is implemented.

You currently offer products across a range of countries. Are brokers missing out in not offering international finance for clients — and is there enough funding for it?

Yes, Enness (thanks to Islay Robinson, CEO and founder, and Hugh Wade-Jones, managing director) now has offices and representatives in a number of countries. However, I think what we have realised over the last couple of years is that it isn’t just about having products for different countries or even setting up offices across the world. It’s more about having a global mindset. It’s about bringing together a team of people that truly play on the world finance stage (and can think beyond Brexit). The lenders, wealth advisers, lawyers, surveyors etc that we have assembled have made this a success for Enness and we are going to be able to build on those foundations and make a real name for ourselves internationally, which personally I don’t think any brokerage has been able to do successfully to date.

Which countries do you see having the most appetite for bridging outside of the UK and why?

I think there are huge opportunities for predominantly UK-based lenders to go into international markets. I should probably keep this to myself, but after transacting in Poland, I think the opportunities there are particularly ripe for picking. There isn’t really a bridging industry there (as with many countries) and, as with the UK, the mainstream banks there are slow and hard to deal with, while lending is limited. Therefore, the demand from the growing Polish economy is huge. The legal system typically favours the lender over the borrower and because demand is high and supply almost non-existent, a lender is likely to be able to take on lower-geared loans and charge higher returns on their money. Surely food for thought when the UK market is overcrowded with rates being pushed ever lower as lenders fight for market share. Having said that, I don’t think we will see any significant moves this year. Many lenders have yet to dip their toe into Northern Ireland and Scotland and, of course, Brexit uncertainty would make going further afield very difficult in the immediate term.

What do you expect will be the biggest challenge for the bridging market this year?

I hate to say it, but both the biggest threat is also the biggest opportunity: Brexit. We have truly made a royal mess of things, but I guess the flip side is that it shows the level of democracy we enjoy in the UK has contributed to that, and you can’t have it both ways.

In my opinion, the uncertainty Brexit creates is having a direct impact on being able to get realistic valuation reports from surveyors. Also, the contingency work having to be done in case of a no-deal Brexit is absorbing huge amounts of time and money. Many lenders outside of the specialist lending market are definitely reigning back on what they are lending, so this will impact on people’s ability to exit bridging loans. As this situation has deteriorated recently, people that thought they could exit a short-term loan with a specific lender may not be able to.

However, when difficulties and uncertainties arise, it creates opportunities for our entrepreneurial clients and, thankfully, I think our industry is still liquid enough to help them achieve their goals. Our international clients are particularly active. With the pound weakening and property prices under pressure (especially if you have a need to sell right now), US investors, for example, are probably seeing an overall real saving of over 20% from the cost of, say, a year ago.

If you could change one thing about the bridging industry, what would it be?

I think it would be to root out and expel anyone who, quite frankly, isn’t up to the job and lets the whole industry down, and I include everyone in that: brokers, lenders, solicitors, valuers, QSs etc. I see too many shoddy jobs from our so-called industry ‘professionals’ far too often. When implementing a loan, you are only as good as the weakest link. You may have negotiated the finest terms on the planet, but if the lender’s legal team is sub-standard, it can all fall to pieces very quickly. This is such a shame when so many people pull together to get things right in our industry, but we still seem tainted by a few bad apples. I was told many years ago: ask a borrower what rate he got a month after drawdown and they will struggle to tell you. However, ask them what the service was like a year later, and they will remember every detail.

What is the most interesting case you’ve dealt with?

That’s a really tough question as there have been so many satisfying cases over the years. I have funded so many interesting assets for some really interesting clients. I guess one that sticks in my mind was the financing of a large, well-known castle estate in Ireland. We basically built a whole new village on the estate, which gave so many people their new homes and employment opportunities. To be part of that legacy was amazing.

If you weren’t a broker, what would you be doing?

I have a passion for anything with two wheels. I love motorcycles and cycling. I am a member of my advanced motorcycle group and a volunteer British cycling coach. Therefore, if I had the opportunity to work with a motorcycle race team in any capacity, that would be great. I would be more than happy to be in charge of the washing up or driving people around. If I was involved in any small way, I would be in my element! Likewise, I would be very happy to work with British cycling having first-hand experience of the great work they do for riders across the county at every level.

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