BestAdvice fires the questions at James Gillan, managing director at Pure Panel Management
BestAdvice (BA): What were your expectations from a valuations and general housing market perspective coming into 2023?
James Gillan (JG:) The nature of our work means we always maintain a keen eye on market conditions and trends. While I don’t think anyone could have been too bullish going into 2023, as a business, we were confident in the lending partnerships we already had in place, especially with those operating in the specialist sectors.
We have now entered Q2, have these expectations changed and if so, are there any particular sectors or areas of the mortgage market which, in your opinion, have performed better than anticipated?
We thought we might see a slight drop in business in Q1 but that was certainly not the case. In fact, after a relatively slow January, February and March represented record months for us, which really blew us away. This helps demonstrate the fact that demand remains evident across the mortgage market, especially in the second charge, bridging and more specialist areas of the BTL sector.
BA: What valuation trends can we expect to see in Q2 and beyond?
JG: We haven’t seen house prices fall to any great extent over the past few months and our view is that if they haven’t by now, then we are unlikely to see any major drops in the coming months. The caveat being that there are no further seismic economic changes in the meantime.
As it stands, we expect residential purchase activity to rise towards the end of Q2 and into Q3 as an increasing number of consumers become aware that the current interest rate conditions are unlikely to dramatically change anytime soon.
From a valuations perspective, in such a fast moving rate and product environment we need to help lenders and borrowers by offering physical valuation which are both swift and accurate. Therefore, I predict further moves away from an overly onerous red book approach towards a shorter form valuation report.
Some longer form reports can be up to 36 pages in length. However, these can easily be condensed into three to four pages and still contain all the relevant information a lender needs from a risk perspective. Such a move would not only speed up the valuation process but also stop underwriters from having to dissect an overly long document to source pertinent data.
It’s an area which forward-thinking lenders are embracing but there are still some legacy issues to overcome from the more traditional lending institutions.
BA: You were recently added to Paragon’s valuation panel, how do you view the performance of the current BTL sector and, from a valuations perspective, are there any particular property types which landlord seem to be gravitating to?
JG: There is no doubting that it remains a tough market for many landlords, especially for those who have come to, or are approaching, the end of fixed rates deals.
On the flip side, high levels of tenant demand across the UK will continue to prove attractive for a host of landlords who maintain a medium to longer-term view of their property investments and have a strong handle on how to manage their portfolios and their tenants ever-changing needs going forward. Purchase business is likely to mirror the residential market and we expect to see some further uplift over the course of Q2 and into Q3.
What we are seeing is a rise in HMO-related activity, whether this be existing HMO properties or properties which are being refurbished into HMOs. This is especially evident in the larger university towns, although there is also growing demand amongst young professionals. In the Newcastle region, we are currently seeing yields of up to 10% on good quality HMOs which have been done to a really high standard and we expect more landlords to take advantage of the opportunities which will continue to present themselves in this area.
What’s next for Pure as a business? Are there any opportunities within the current market that you are looking to explore?
JG: Improving our green credentials is something we are keenly focused on from an internal and external perspective. Within this, EPCs represent an extremely interesting area and we are carefully evaluating various ways to incorporate these into our proposition and working closely with a host of lenders to deliver a range of solutions to meet their ongoing EPC needs.
We are also looking to grow our presence across the specialist markets and are in talks with a number of new and established players to further support their propositions and processes.
Supporting the local community is an ongoing passion from the business and we have just renewed our sponsorship of the Newcastle Eagles Under-16’s academy basketball team, a relationship which has been going for over 15 years now. We are also involved with a number of charities including The Newcastle United Foundation, The Foundation of Light and Kids Out.
The common theme across these various charities is helping children and adults to thrive in often challenging circumstances. The desire to help them achieve their best outcomes whilst at the same time remembering how incredibly blessed we are, fits closely with Pure’s core values of passion, understanding, relationships and excellence.
