Specialist Property Finance review 2021 and outlook 2022

By Aaron Barry

It might be a surprise against the backdrop of a global pandemic, but that hasn’t stopped a record year in property loans for our clients. So as we move into 2022 I will summarise the results of our group for last year and my take on the future for property developers and investors in 2022.


2021 Results

In combination with our parent company – Newsource Commercial Finance we achieved physical drawdowns for our clients totalling over £136M in 2021. Our clients include property developers using the funds to build out new schemes or refinance existing schemes, and, property investors remortgaging their portfolios or borrowing to add more properties to their portfolios.

We completed over 170 cases to achieve this draw down level with a mixture of small, medium and very large complex deals.

This has been our best annual performance since Newsource Commercial Finance was founded in 2013.

What are the contributing factors towards our success?

  • Packager status

Newsource Commercial Finance is a UK Elite Master Broker also known as a ‘packaging broker’. This means that Newsource acts as broker for other brokers. This can be because the broker with the client relationship is not a specialist in property finance and partners Newsource to work on the case together, or that the introducing broker doesn’t have access to the same panel of lenders. There are benefits from such an arrangement all round as follows:

1) Access to a wider panel of lenders.

2) Additional expertise at no cost to the client.

3) No fees payable for the service either by the introducing broker or the client.

4) A higher chance of a successful outcome given that Newsource has one of the highest conversion rates in the industry.

5) A better deal for the client where brokers can demonstrate that the market has been fully explored.

  • Expertise

We have testimonials from both brokers and clients to the effect that there are cases we completed in 2021 which may not have even happened without our expertise. This is particularly true in the complex portfolio refinance area which can involve multiple lenders for the same case. Our largest case this year was a £57M mixed portfolio refinance using 5 different lenders. The key to success was not only putting the deal together but also having the knowledge and expertise together with the ability to work with a variety of stakeholders including surveyors, solicitors, accountants, the lending underwriter and the client. For instance, we routinely engage with valuers at an early stage in the process to ensure that the figures we are working towards are realistic. Most brokers do not have the expertise or sufficient knowledge of the valuation process to do this. We act as a facilitator, bringing together all of the interested parties on the journey towards completion. In that regard, communication is key and we pride ourselves in our ability to keep all parties advised every step of the way and where we see hurdles we step in quickly to overcome them.

  • Qualification and Conversion Rates

One of the main reasons we can complete so many cases in a year is because we qualify the projects in the first instance and don’t spend a disproportionate amount of time on cases that ultimately will not get funded. This is a waste of time for all concerned and an easy mistake to make. Fundamentally lenders need a good client and a good project if either have issues they need to be resolved or mitigated at an early stage. If that cannot be achieved then we need to have the hard conversation that the deal is unlikely to go through in its existing form.

As part of our packager status we provide a service to the lender by ghost underwriting the case before it’s presented to the lender in the first instance. By doing this our lenders welcome our enquiries with open arms as they know we have already done a significant amount of work they would otherwise have to complete themselves. As a result we often achieve higher commission fees from the lender which enables us to pay our introducing broker and not charge a broker fee to the client – everyone wins.

We are regularly reminded by our lenders that we have one of the highest conversion rates in the industry and this is due to this approach.


  • Innovation

There are not many if any brokers that can create new lending products as this is usually the exclusive domain of lenders. Yet in 2021 that’s exactly what we did to solve a problem caused by covid. At the height of the pandemic house sale completions started to drop off dramatically so we listened to our clients and created a product called Financed Part Exchange in collaboration with The PX Hub and a select panel of lenders to enable developers to offer part exchange as a solution to broken conveyancing chains.


  • Meeting Clients

We decided back in 2020 to host an event for new clients and the Yorkshire property community to meet us and the challenger banks we work with to better understand the lending products and market. Due to covid we had to postpone this event twice but we finally managed to host the event in October last year. Until this event took place I didn’t quite realise how detached clients feel they are from lenders and how they appreciate the opportunity to keep up to date and network with their peers. This is something we will work to repeat in future. The event we held has led to a number of successful client referrals.




A record year for completions against the backdrop of covid and a review of the cases themselves indicates a number of key conclusions:

  • The demand for residential properties still outstrips supply.
  • Lenders have an appetite to continue funding new build developments and portfolios.
  • There is an increase in office to residential conversions utilising lower demand for commercial premises in favour of higher demand for residential.
  • Bridging is becoming saturated. Too many lenders are wanting the highest margin deals which leads to higher risk and return loans being approved.




Past performance does not guarantee future results, however as the COVID restrictions continue to be relaxed and business and property activity increases we anticipate 2022 being a good year.


Whilst interest rates may be on the rise in 2022, we are starting from an extremely low base so we anticipate rate rises to be made in small steps which, for now, should not unduly stretch borrowers’ cash flow.




We believe that there will be a continuing appetite to fund new development schemes. However we have noticed an increase in the costs of labour and materials and therefore developers will need to find sites with higher margins to compensate for the increase in costs. This might be achieved by negotiating better land prices and by skilful use of the supply chain to keep costs to a minimum. The lending market for this sector remains buoyant and competitive with a strong supply of funds, particularly for experienced operators.




In 2021 we saw increasing competitions in this sector and believe that this will continue throughout 2022. Overall BTL interest rates fell in 2021 and lenders appear willing to shade margins in an effort to attract market share. We see intense competition in this market continuing and believe that there will be deals to be had in 2022 with selective lenders.


Having undertaken some large residential portfolio refinances in 2021 we are aware that some lenders have more appetite for these types of transactions than others. This is generally driven by limited appetite, policy constraints and balance sheet issues. Thankfully there are a raft of other lenders who are very keen to support the larger landlord community at high LTVs at very attractive rates.


We are seeing a greater emphasis from lenders in ensuring that regulatory requirements e.g. EPC ratings, HMO, are met and where increased funding is likely to be a requirement


As a client once said to me “the deal of the century arrives on the desk every week, it is being able to act on it that matters” so being in a position to buy quickly and effectively will be important to portfolio landlords looking to take advantage of opportunities the market throws up from the evolving economic landscape. This is often done by refinancing an entire portfolio that has benefited from asset appreciation over time and equity is available to be leveraged.




Whilst we anticipate some economic head winds in 2022 these are more likely to be the result of inflation and a squeeze on household budgets. We anticipate interest rates increasing but not to a level that is likely to have a huge impact on property developers and landlords. We also believe that COVID has generated a lot of pent up activity which should be released in 2022 as the pandemic subsides.


We still see the UK as a safe haven for property investors and capital values are still increasing and, we believe, will continue to do so, particularly in the more sought after locations.


In terms of accessing funding, we are finding that lenders generally are streamlining their broker panels so direct access to some lenders in the market is difficult. Thankfully we deal with a wide range of lenders and can therefore assist clients and brokers in widening their reach into the market.


From all the team at Newsource Commercial Finance and Specialist Property Finance we wish you a Happy and Prosperous New Year.