The CEO of Mayfair-based lender Century Capital discusses the current climate for HNW borrowers, key trends amongst his client base, and the post-pandemic prospects for the prime London market…
How would you describe the current climate for HNW individuals?
HNW individuals have the unique ability to remain resilient in the face of adversity, whilst others simply do not have the vast wealth profile required to ride the choppy waters of an uncertain and ever-evolving prime property market. We see low interest rates, strong GDP growth, which will be very helpful for the London market for the next few years. Also, we have yet to see a return of the international buyer post the pandemic, and this will hugely benefit the London market.
Century has completed seven deals in west London in the last few weeks alone; what is attracting clients to his part of town, and what are the other key hotspots for prime buyers?
The buzzing and homely neighbourhoods of West London such and Notting Hill, Chelsea, and Fulham have never looked more appealing
Following a year of repeated lockdowns and demands to stay at home, the importance of quality of living has never been greater. Where a three bedroom penthouse in a super secure Mayfair apartment block may previously have appealed to buyers, a larger house with a separate study, outdoor space, or access to a garden square now sounds much more attractive. And as London gets back on its feet with hospitality and retail reopening for good, the buzzing and homely neighbourhoods of West London such and Notting Hill, Chelsea, and Fulham have never looked more appealing.
With the market running hot, time is often of the essence; do you have any advice for getting a deal through extra-fast when the pressure is on?
The UK property market is enjoying a boom right now, with house prices rising by more than 10% year-on-year, largely fuelled by the government’s temporary cuts in stamp duty. The breadth of the cuts varies for different categories of buyers, but they mean buyers could potentially save up to £15,000 in tax if they move before the deadline. Lawyers are key to making a transaction happen and you can’t underestimate the importance of paying a premium for good legal advisors.
How has your business been affected by the pandemic?
We have seen our average loan term become longer and our typical loan size increase as well. We have doubled down on our focus on prime property lending which, combined with a wealth of business opportunities stemming from the pandemic, has attracted an increasing number of entrepreneurial borrowers to us.
At the outset of the pandemic last year there was mass consensus the property prices would be impacted, however this has not proved to be the case. We do see a rise in unemployment impacting the lower end of the market, but this is not Century’s target space. Our business has remained resilient and continued to deliver for our clients uninterrupted over the course of the pandemic particularly where other lenders have let their clients down.
Construction costs have been rising, driven up by material and labour costs; are you seeing many developers call on additional financing to cope with escalating costs?
Century has recently stepped in to complete several development and heavy refurb projects
Yes – Century has recently stepped in to complete several development and heavy refurb projects. While rising build costs have been a factor, the withdrawal of many key lenders from the bridging market, in some cases failing to offer funds already committed to borrowers, have been the biggest cause for us to step into these sorts of transactions. Our reputation in the market for quick and dependable delivery has worked to our advantage here.
What is the most challenging/rewarding deal you have ever put together?
The most challenging deals tends to be transactions that are outside our normal sweet spot, two particular transactions we have in mind.
Deal One: The Ageas Bowl cricket ground in Hampshire – this included financing the Hilton Hotels project at an LTV of some 90%, I financed the hotel in shell condition and the project was completed and the loan full repaid exactly 1 year and a week after completion. A perfect deal.
Deal Two: Another interesting transaction was a private airport in the west of England, which was quite unusual. I would add that the typical Century deal of residential loans between 1 and 10 million still remains our chosen sector.
Bridging is often seen as a high-risk strategy for borrowers; how do you allay concerns, and what are the key advantages?
One of the biggest advantages of bridging loans is that they can be completed fast with the funds available within a matter of weeks, and in some cases even a matter of days. Where bank criterias have become more and more restrictive and private banks have become more AUM focused, the opportunities and the advantages of the bridging market have never been plainer to see. Our common sense approach to lending decisions and relationship driven business, as well as a proven ability to transact make us a valuable resource for many of borrowers.
Do you have any predictions for where the property market might be headed in the short and long-term?
We predict that house prices may soften slightly but will stay resilient and stable in 2021, mainly for three and four bedroom houses. There will be regional variations, and we are likely to see prices in some areas rising.
Some of our big cities and town centres, however, may see a fall of around three to four percent, particularly for flats, where there is an oversupply in town and city centres, with more developments already in progress.
What is the best piece of advice you’ve been given?
Never try to change the story to suit the outcome
My lawyer, when I was 23, gave me some simple advice – always tell the facts as they are. Never try to change the story to suit the outcome. Stating the facts clearly and honestly is always the best way and will put you on a steady footing to success.