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Why specialist lenders have a key role
in the property market
Specialist finance is key in the current mortgage market, as mainstream lenders become more hesitant, according to Lee Merrifield, associate director of credit at MSP Capital, one of the largest providers of property finance in southern England.
He says the appetite of businesses such as MSP Capital, which provides bridging and development loans for projects across the whole of the region, makes the sector highly relevant in today’s economy – and specialist lenders are thriving.
“I think they play a very important role in the current climate,” Merrifield says. “Companies like MSP Capital have stepped in and filled that void. Their appetite is there to do deals, whereas I think the traditional lenders have just got a little more cautious and harder to do business with. Their criteria are a bit trickier.
Merrifield, who has been with MSP Capital for over five years, is an experienced finance professional, primarily working as a credit coordinator and underpinned by a wide set of skills including negotiation, financial risk management, business relationship management, and deal analysis/structuring.
He notes that a lot of traditional lenders stepped back in the aftermath of the global financial crisis of 2007–2008. More recently, the turbulence of the economy following last September’s controversial mini budget caused further issues, making it noticeably challenging for the buy-to-let sector.
Even so, the property sector remains an enormous economic driver in this country.
“Things are calming down now, but borrowers are continuing to fall foul of lenders’ changing risk profiles,” he observes. “It’s a challenging time at the moment. There’s maybe a sense that some business development managers are not quite as joined up with their credit function as they should be.
“Maybe there’s also an unrealistic view on pricing and terms that still persists in the market. However, there are deals to be done. Things are stabilising, and deals are starting to come back across our desks.”
Founded in 1981 and based in Poole, Dorset, MSP Capital is a principal development and bridging lender, offering lending solutions for sums of up to £20m to help its clients make their visions a reality.
Its carefully chosen team of experts includes experienced property developers, property banking professionals, chartered accountants, and RICS-qualified valuers. MSP Capital believes this wealth of experience gives it a unique ability to think like its clients and act as an extended part of a project team.
Reflecting on the current market, Merrifield is clear that inflation remains an issue, as the energy crisis and the invasion of Ukraine continue to make an impact, particularly on ground-up development.
“Data is still suggesting that sales are holding up,” he notes. “And liquidity in the sector seems good at the moment.”
Merrifield considers how property professionals and intermediaries will fare over 2023–2024.
“Clearly, some operators will step back and take a more cautious approach,” he predicts. “That presents opportunities for those who have a greater, dare I say it, risk appetite for transactions.”
MSP Capital’s associate director of credit points out that having cash reserves is always useful, as it allows for quick movement when required. He highlights, too, the government’s aim of achieving higher Energy Performance Certificate (EPC) ratings and better-quality housing in terms of energy efficiency.
“So you can see modular housing and other unusual construction methods becoming more prevalent over the next couple of years,” Merrifield reasons.
“Whilst they cost more money to deliver, there’s now an arguably better payback for those kinds of facilities.
He adds, “Offering modular construction is actually potentially the way forward to tackle some of those energy prices that are out there.”
Although MSP Capital is able to lend directly to clients, Merrifield clearly values the broker-and-lender relationship.
“Brokers are absolutely crucial to our sector,” he affirms. “They’re a vital cog in the wheel. They deliver a massive amount of business to all lenders, whether it be on buy-to-let or development, so they’re really vital to our success.”
Merrifield notes that the information coming from brokers can set the tone for a smooth client journey.
“Provision of data is clearly an important starting point,” he suggests, “making sure that the flow of information is coming through so that lenders can base their lending decisions on all the facts.
“It’s understanding the lender that they’re dealing with – where their specialities lie – so, making sure that they’re packaging the deal and placing it with the right lender at the right time.”
He continues, “Rates have changed dramatically over recent months. I think there’s a requirement for brokers to educate their clients and make sure that they understand where the market sits at the moment.”
Summing up, Merrifield believes this will prove a challenging year, because the markets are more complicated, and the industry is going to be operating in a higher interest-rate environment – but he strikes an optimistic note in conclusion.
“There are still opportunities out there,” he confirms.
Spotlight
Founded in 1981, MSP Capital has grown to become one of the largest providers of property finance in Southern England. As a principal development and bridging lender, it offers lending solutions for sums up to £20 million – helping its clients to make their visions a reality. Being a principal lender means it always considers the bigger picture and gives its clients direct access to the relevant lending decision-makers who are able to take a proactive view on each and every application for finance. Its carefully chosen team of experts includes experienced property developers, property banking professionals, chartered accountants, and RICS-qualified valuers.
Company Profile
42
Years in business
£20m
Upper limit for loans
125%
Percentage of office carbon emissions offset
12
New team members in 2022
£20,000
Total donated to charities last year
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QUICK FACT #1
Merrifield has a
30-year track record in financial services
LEE MERRIFIELD
Associate director of credit at MSP Capital
With traditional lenders becoming more cautious in the current economy, the specialist finance sector is coming into its own. It has an appetite to do business, Lee Merrifield of MSP Capital tells Mortgage Introducer
Read on
“Companies like MSP Capital are able to be more nimble. Their appetite is there to do deals, whereas I think the traditional lenders have just got a little more cautious”
Lee Merrifield,
MSP Capital
“Specialist lenders are able to understand the risks better and have been able to fill that void that the traditional lenders have left”
Lee Merrifield,
MSP Capital
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IN Partnership with
2019
2021
2022
2022
2023
2023
London Stock Exchange Group identified MSP Capital in its 1000 Companies to Inspire Britain report
2019
MSP Capital lent £11m in its biggest property deal to date to enable a 43-home scheme to come to fruition
2021
In the fastest lending turnaround in its history, MSP Capital delivered a £1.5m bridging loan to a developer
2022
MSP Capital was named Non-Bank Lender of the Year at the Solent Deals Awards recognising its 30% year-on-year lending growth
2022
Shortlisted for Financier of the Year – Residential at the prestigious RESI Awards, held to celebrate success across the UK’s residential property market
2023
MSP Capital was named Non-Bank Lender of the Year at the Solent Deals Awards for the second time
2023
Milestones
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Published 30 MAY 2023
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“So, yes, specialist lenders are able to understand the risks better and have been able to fill that void that the traditional lenders have left.”
QUICK FACT #2
Volunteers as finance director at Wimborne Town FC
QUICK FACT #3
Based in Dorset, Merrifield enjoys coastal walks and sport
