Choosing an aircraft from a financier’s perspective

In previous articles as part of our Aviation Insight series, we’ve explored the major benefits of availing yourself of aircraft finance: it preserves your cash flow, allowing you to redeploy capital away from a depreciating asset back into your business, or into investments that earn a return. 

We’ve also looked at the financier’s motivations to extend finance: they need to demonstrate that they can generate an acceptable risk/return balance on the funds they commit against aircraft, in order to protect and enhance their license to operate. 

With this in mind, we’ll now look at points to consider when choosing an aircraft from a finance-ability point of view. The more strongly these points inform your choice, the more likely it is that you’ll be in a position to secure the benefits of aviation finance without too many of the hurdles.


1.     Aircraft suitability – financiers like to work withclients that can demonstrate experience and familiarity with the cost of owning or operating an aircraft. Ideal clients will evidence that they either have, or have solicited, the expertise to select an aircraft with a capability that fits their usage needs. The client will have budgeted realistic fixed and variable costs covering insurance, crew, scheduled and unscheduled maintenance, fuel, handling, etc; and can demonstrate the financial wherewithal to comfortably cover those costs.

2.    Aircraft age– the overwhelming rule of thumb is that the younger the aircraft, the more readily financeable. There’s absolutely nothing wrong with well-maintained older aircraft, and there is a pool of financiers willing to lend against them for the right client; but generally speaking, younger aircraft in the 0-7 year old range are the easiest to finance competitively. 

3.    Aircraft value – larger deals are generally more attractive. As with older aircraft, there is always finance available for smaller lends (below $5 million) for the right client, but there is a smaller pool to choose from, especially if other aspects of the deal are not straightforward. 

4.    Aircraft market position – it’s easier to find finance for “liquid” aircraft: types that have a large customer base, are in well-established production and conform to “standard” in terms of capability, configuration and appearance. Financiers are generally more willing to lend money against an asset that they believe would be relatively easy to remarket if they had to. 

5.    Aircraft maintenance programmes– practically every financier will require that at the very least, the engines be fully enrolled on an hourly maintenance support programme, offered by the manufacturer or by a reputable third-party such as JSSI.

6.    Aircraft operator– the financier will generally want to be satisfied that the operator is competent, properly certified, reputable and fully independent of the client. You can generally expect a tripartite agreement will be required between the financier, the operator and the client. The purpose of this agreement is to enable the financier, in the event of a default, to have the operator secure the aircraft.


7.    Aircraft due diligence– the financier will want to satisfy themselves that the aircraft condition is fully explored. For pre-owned aircraft this generally means an in-depth inspection that looks for things like records entries that are missing or not in English, damage history, corrosion, accidents & incidents, etc – the exact same issues that your technical expert should be alerting to you as a prospective buyer.

8.     Aircraft regulatory compliance– your technical expert should advise on what is required for your usage in terms of, for example, avionics capability e.g. ADS-B, FANS-1/1A compliance (if you don’t understand that jargon, make sure you have a technical expert who does!). Bear in mind that a financier will generally want to see that it is compliant on a global (or at least a US or European) basis, and this includes looking ahead for scheduled upgrades or expected developments over the term of the financing.  

What it boils down to is this: when evaluating an aircraft finance opportunity, lenders need to do their homework when it comes to the aircraft, and a key part of that is ensuring that you’ve done your homework too. Your interests, and the financier’s, are aligned: you both want comfort that the aircraft you’ve chosen is as it should be.


To find out more, contact:

Gary Crichlow

Arc & Co. Aviation Finance

Arc & Co.'s Article on the Truth About Help to Buy

Arc & Co. and Butler & Stag Estate Agents wish to share their joint article on the Truth About Help to Buy.

If you wish to learn more about your residential mortgage options, please feel free to contact Alistair.

Alistair Hargreaves
Financial Consultant
Arc & Co.
30 St George Street, London, W1S 2FH
Office: +44 (0) 203 205 2129
Mobile: +44 (0) 796 750 9318

New Article: The Six Senses of Appeal for Private Jets


We are hugely excited to release the second article in our Aviation Insight Series.

TODAY we release our next article 'The Six Senses of Appeal for Private Jets' and explore Cabin Refits. We look at the top private jet interior trends and recommendations for condition, utility, history and transferability, with the view to maximise re-sale value. 

Thanks to our contributors: Tobias Laps from Comlux the Aviation GroupCelia Sawyer one of the leading Private Jet Interior Designers and Iain Houseman from Elit'Avia

Download your copy below. 

Our Contributors:

Arc & Co. Launch Article: 'The Ethical Yachtsman'

The ability to travel in style has always been the predominant factor behind a high net worth individual’s (HNWI) decision to purchase a yacht. However, in today’s socially-aware world, it is also important that travel is conducted in a responsible and ethical way. Being presented with a large fuel bill at the end of a sailing trip would jolt the conscience of most people, particularly when the effects of ocean pollution is a hot topic in the media.

However, given the typical price-tag of a yacht, style, speed and status are still attributes that a HNWI will be looking to acquire. So, is there an option that ticks all of these boxes, while limiting damage to the environment? Enter the solar-powered yacht manufactured by Silent Yacht.

Is this a viable replacement for the standard yacht and can it be financed and valued for resale? Is it part of a trend or here to stay?

In this interview with Andrew Robinson, CEO of Arc & Co., James Jaffa, lawyer at Jaffa & Co, Harry Bristow-Holmes, Yacht Broker and Founder of Bristow Holmes and Chris Nicolle, Senior Surveyor and Valuer at Ward & McKenzie Yacht Consultants, we explore the financial and legal issues surrounding solar-powered yachts

The Ethical Yachtsman

The Ethical Yachtsman

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Section 21: The view


It is probably too early to provide a detailed comment about how the removal of Section 21 evictions will impact the renting and mortgage markets. The government is clearly doing this to provide more security to tenants so they can only be evicted with good reason. However, will this have the unintended consequence of restricting tenancies for some, because landlords may not want to take on a tenant that they are not 100% certain about? Ultimately, landlords can still evict for non-payment of rent, or for damage done to their property; but only by using a Section 8 eviction, which is a far longer process than Section 21, and can be challenged in court by the tenant.
The Government has also said that it will amend rights for landlords who wish to evict tenants if they want to either sell the property, or move into it themselves, as well as speeding up the Section 8 process.
We are yet to see how this will impact on lenders, although they are usually led by the legal advice they receive from the solicitor when the application is made. As long as lenders are able to obtain vacant possession in the event of a repossession,then this should not affect the mortgage market.
Anything that can be done to improve the experience of tenants has to be a good thing, and offering greater stability, especially for renters with children, is clearly important. However, it still needs to be fair to the landlord, and to allow them to run their property in a way that allows fairness and flexibility on both sides. Ideally the best relationship is one where the landlord and tenant can have an adult conversation about the contract, and where no one has to resort to Section 8 or 21 evictions; however when all other options have been explored, the legal mechanisms should be as quick and as simple as possible – whether removing Section 21 will allow this remains to be seen.

**HMO enforcement: coming soon to a Council near you. Read More**


Alistair Hargreaves

Financial Consultant - Arc & Co.

T: +44 (0) 203 205 2129


Stealth HMOs

When is a normal buy-to-let (BTL) house a stealth HMO (House of Multiple Occupancy)? When you think of an HMO you might consider a house with two kitchens, or it being more than three storeys high, or one let room-by-room with five tenants in it.

However, thousands of landlords might now own a HMO and have no idea about it… on for more information.


From 1st October 2018, HMO rules changed and now any property let to three unrelated people can be classed as an HMO, as the property will comprise of more than one household. This is the guidance set by the Government and individual councils then decide on their own rules and adoption.

So, if you have a standard mortgage on a property with three unrelated people living there and the local authority deems this an HMO, then the council will write to your lender to inform them. You will then receive a letter stating that you will need to remortgage onto an HMO product. Some lenders are reasonable and will allow you to remortgage at the end of the fixed term. However, some are different to this and will demand repayment within a shorter time scale.

Arc & Co. strongly recommend that landlords check with their local authority to see if a license is needed, and if you do need a new one, then contact your mortgage broker to start reviewing your new lending options. 

We are already seeing a number of clients receiving letters from their lenders. The good news is that there are a range of new, specialist BTL lenders who offer a whole range of HMO products - both in personal and Ltd company names - and as this area of the market is now more crowded, we have seen lowered mortgage rates and reduced fees.

The following link allows you to check on your local authority’s status when it comes to HMO rules.

If you are concerned about the above then please contact Alistair Hargreaves.


Alistair Hargreaves

Financial Consultant - Arc & Co.

T: +44 (0) 203 205 2129


Arc & Co.'s Jeremy Robinson features in Development Finance Today and NACFB

Arc & Co.’s Jeremy Robinson has hit the press this week with his article:

‘Clearing banks - a timely return to the development funding market’

The article has so far appeared in Development Finance Today and NACFB.

A preview of the press coverage is below, along with the article in full.

Clearing banks - A timely return to the development funding market?

One of the first impacts of the global financial crisis was the withdrawal of the high street lenders from the development funding market for the vast majority of smaller and medium sized developers. 

As the market has recovered since 2010, a variety of participants has moved into the space they vacated, from a very diverse background: private funds from family offices, specialist lenders, P2P platforms, listed vehicles, institutional funds, traditional bridging lenders and challenger banks have all competed for this market share. 

This increasing liquidity has resulted in strong competition in what had become a smaller segment of the overall housebuilding market, with the numbers of smaller housebuilders having not recovered to the numbers seen before 2008, with the uncertainties of the planning system, and the perception amongst those who just approached their high street lender that funding would not be forthcoming putting potential developers off. 

Jeremy Robinson   Asset Finance Advisor - Structured Finance

Jeremy Robinson

Asset Finance Advisor - Structured Finance

Gradually, however, the broker market together with the mainstream and the development funding press has raised perception that this diverse funding market can be accessed by smaller developers. Challenger banks, in particular, are visible in increasing loan books, and this has started to come to the attention of the high street lenders. Until recently, losing clients and market share did not seem to bring much reaction: it seemed like they were comfortable with others taking the action. 

Seemingly, they were comfortable with a dwindling market share, and were not keen to pursue new customers, being happier to service those clients they had remained with since 2008.To the extent they did have an appetite, the common trend has been to provide funding lines to the new lenders, whereby they would be cushioned from any downturn by the equity of those funders, and would have no need to develop their own back office teams to handle.

Is that now starting to change? At Arc & Co. we have recently been approached by 3 different high street names, all keen to expand their development funding offering and perhaps recover that market share. As a recognition of the need to compete in the market, two of them have teamed up with funds to offer levels of gearing that move well beyond that traditionally offered, and compete with levels that the challenger banks and others canoffer.  One of these partners has been very active in the market over the last 10 years, whilst the other is new, so this is a very interesting move. Given the cost of funds advantage that the high street lenders enjoy, the overall products appear very competitive indeed. To try to tackle the slightly negative perception over process, one has set up a dedicated arm to directly serve the broker market, liaising with the internal departments to try to ensure that timelines are manageable. 

We have seen some of the new entrants to the market experiencing issues with funding lines over the last few months. Also, uncertainties over Brexit and the stamp duty increases have slowed down end sales, causing lenders anxiety. If, however, this return to the market by the high street lenders is sustained, then overall liquidity will increase and the competition for market share will intensify, leaving the market robust and hopefully tempting more of those small developers back. 

Press Coverage

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Springboard/Family Mortgages 

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The Bank of Mum and Dad is becoming a more common contributor towards first-time buyer’s deposits. Not all parents will have enough capital set aside in order to gift the full amount, so it’s good to know that there are now products available that allow parents to place their savings with a lender for three years, which acts to reduce the loan to value on the mortgage. These are called Springboard or Family Mortgages and are available from a small number of mortgage providers. 

A client can effectively have a 100% mortgage with savings of 10% to reduce the overall loan to value to 90%. After three years the savings will be released, giving parents a definitive timeline for the return of their money. Ideally, after three years, the loan to value will have reduced to 90% or lower, so when the money is returned the client can then remortgage to another lender on a standard basis. 

This option is ideal for parents with more than one child, where they know they will not be able to afford to gift multiple deposits, but can use the same money to help each child and still use those funds ultimately for retirement. 

If you would like some advice on your options for a mortgage please get in touch in touch with Alistair.

Alistair Hargreaves
Financial Consultant
Arc & Co.
30 St George Street, London, W1S 2FH
Office: +44 (0) 203 205 2129
Mobile: +44 (0) 796 750 9318

Understanding Aviation Lenders


Aviation Finance Facts Part 2:

Understanding Aviation Lenders
There really is a method to the madness.

At Arc & Co., our primary function is to help our clients to structure and close aviation finance deals that work for them. A key part of facilitating the right structure is helping our clients understand and navigate the motivations of the lender on the other side of the table. When it comes to aviation finance, the main motivation for the lender on the other side of the table can be summed up as follows:

A lender’s primary concern is keeping his or her team’s licence to operate.

The funding that a lender uses to complete deals is not free. Every lender has to meet the expectations of the providers of that funding: it might be that they have to compete internally with other business units of their firm for access to their institution’s balance sheet; or externally for third-party investor funding; or a combination. The key point is that every lender needs to win, and continuously justify, the funding – and the mandate – to deploy against aviation assets. To do this, a lender must demonstrate to his or her funders an ability to put deals on the books that generate an attractive return, while keeping risk manageable. It is a critical balancing act: too risky, and the lender will lose credibility with the funders when things go wrong. Too risk-averse, and the lender will not be able to generate sufficient returns to compete.

What this means for clients seeking finance is this:

1. Your financing proposition needs to justify the lender’s time and effort

Lenders constantly weigh up the opportunity cost of their time: every minute that they spend on one deal is a minute that they cannot spend on another. Furthermore, there is a certain amount of effort that is required no matter how small the deal is. The reason that lenders will often dismiss outright an opportunity below a certain size, or in certain jurisdictions, is because they judge the time and effort involved is insufficient to justify the potential risk and/or return. This is where Arc & Co. can help: our knowledge, based on longstanding relationships across the industry, can help target your proposition to those lenders who are most likely to be interested, avoiding a waste of everyone’s time.

2. The earlier you can demonstrate commitment to and seriousness about a deal, the better

It follows then that lenders will strongly prefer potential clients that can demonstrate upfront that they have already done their homework and are ready to commit: they have identified the aircraft, they have placed a deposit, they have their financial documents ready to go, etc. Regardless of where you are in the process, Arc & Co. can assist you in assessing, firming and presenting your proposition so as to attract the most interest.

3. You must allow the lender to clearly evaluate your proposition’s risk

Each lender will have certain red lines; certain must-haves around their ability to properly assess and manage the risk of a deal. It is the reason that lenders require financial disclosure, proof of identity, details of a client’s source of wealth, and a full review of the asset: in order to satisfy themselves that they have a clear understanding of, and can manage, any credit and asset risk. Arc & Co. can act as your trusted partner, helping to ensure that you provide the right amount of information to facilitate the sensitive but necessary conversations around your deal.

To discuss your aviation finance needs, please contact Gary Crichlow.

Gary Crichlow
Arc & Co.
30 St. George Street, London W1S 2FH
Tel: +44 (0) 20 3205 2128
Mob: +44(0)7795 128041

Shared Ownership


In 2018, the average UK tenant spent 52% of their disposable income on rent and with rental payments so high it makes saving for a deposit to purchase a flat or home very difficult.

There is however a scheme that provides an option for those who wish to own a property but do not have a large disposable income or savings. The Shared Ownership scheme allows applicants who are not able to currently afford to buy a property with the option to 'purchase' a share of a property whilst paying rent on the remainder. To be eligible for this scheme your household income must be £60,000 or less (£90,000 or less in London).  Also, you need to be approved by the Housing Association and often you can only buy in the borough that you currently live in.

An Example
You buy a 25% share in a £500,000 property for £125,000. Your deposit is linked to the value of your share of the property and would normally be 5%, so £6,250 in this example. You will then pay a mortgage on the amount of the property you own yourself along with rent on the remaining share, allowing you to build up some equity as the mortgage decreases and value (hopefully) increases.  You also have the option to staircase and purchase a greater share of the property overtime, allowing you to make larger contributions towards the mortgage as opposed to the rent and to own more of the property.  The rental and mortgage payments combined will generally be less than what you would pay for the full rent on the open market, and you will also have access to the equity that you have built up when you come to sell or remortgage.

The disadvantages of using this scheme is that you will generally be paying a maintenance or service charge on the full 100% of the property as opposed to just the share you own and these costs can be quite high. Also, since you are a tenant in law, you could lose the property if you are unable to keep up with rental payments. Not all lenders offer shared ownership mortgages, so it is a restricted market but you have to factor in the service charge and rent into your affordability – so if you have debt or childcare costs you might struggle to find a mortgage.

The Shared Ownership scheme is a great way for many to get onto the property ladder while becoming part owner of a more expensive property than you would otherwise be able to afford without this scheme.

If you are considering Shared Ownership or would like some advice on your options for a mortgage, please get in touch in touch with Alistair.

Alistair Hargreaves
Financial Consultant
Arc & Co.
30 St George Street, London, W1S 2FH
Office: +44 (0) 203 205 2129
Mobile: +44 (0) 796 750 9318

Choosing the Aircraft Deal that Works for You


Over the next few weeks, our Aviation Finance Specialist, Gary Crichlow will be informing us about the ins and outs of aviation finance through a series of posts called Aviation Finance Facts

Part 1:

Choosing the aircraft deal that works for you

Look beyond the headline rate and monthly payment

A low quoted margin does not always mean you’re getting the best deal for your needs (sometimes it does, but not always). A higher quoted monthly payment may actually represent better value. Here are a few things to consider when determining the optimal deal:

  1. The overall cost of the financing package 

    Consider the financier’s reference base rate, not just the margin they quote. if you’re looking at a debt structure, consider how much equity you are being asked to put in or how much wealth you are being asked to place under management; what your balloon payment is at the back end; what the break costs are for terminating early, or what the options are to extend;  and how you will handle the responsibility of selling on a depreciating asset at maturity. If you are comparing it to an operating lease, consider whether the typically higher quoted monthly payment of an operating lease is worth the benefit of no upfront equity injection and the peace of mind of being able to hand the aircraft back at the end of the lease.  


2. The quality of the financier

 There are financiers and there are financiers. Closing a deal is not just about the rate, it is also about the process: is the financier responsive?  Is the financier sufficiently skilled in aviation finance to know what they are doing? Do they have procedures that organise all the expertise needed (legal, compliance, credit risk, technical, tax, and billing to name a few) to get the deal done efficiently? The ability to execute is key.


3. The overall cost of using the aircraft

The cost of financing is only one part of the costs that are inherent in using the aircraft. It is important to take into account the cost of managing and maintaining the aircraft, especially where the financing on offer is contingent on the aircraft being based in a certain location; being registered in a certain jurisdiction; being managed by a certain operator; or being enrolled on hourly maintenance programmes. A low-rate financing offer that demands a high-cost operation may not always be the optimal overall deal.


Aircraft financing is complex. At Arc & Co., we act as a trusted partner on our clients’ behalf, helping them to navigate the complexity, look beyond the headline quoted numbers and arrive at a deal that works best for them.

To discuss your aviation finance needs, please contact Gary Crichlow.

 Gary Crichlow
Arc & Co.
30 St. George Street, London W1S 2FH
Tel: +44 (0) 20 3205 2128
Mob: +44(0)7795 128041

The Truth about Help to Buy?

The Help to Buy (Equity Loan) scheme is a government initiative created to help those who can only raise a small deposit towards buying a new build house or flat.  With Help to Buy, the Government lends you up to 20% of the cost of your newly built home, so you will only need a 5% cash deposit and a 75% mortgage to make up the rest. In London the maximum equity loan amount rises to a maximum of 40% of the property value meaning you only need a 55% mortgage. Since its introduction in 2013, Help to Buy has allowed 145,000 people to buy a new build house or flat.

So how does it work? In return for their loan, the government takes a stake in your property equivalent to the percentage contribution they have made.  The loan is interest free for the first 5 years but is subject to a management fee of £1 a month for the duration of the loan.

On the fifth anniversary of the loan, it is very important to note that your loan becomes eligible for interest payments at 1.75%. At first glance, that may not seem like much but since neither the management fee nor the interest fees are capital repayments, your loan amount does not decrease. Also, your loan amount will most likely have increased as it is linked to the value of your house. Therefore, after five years your loan amount might have increased along with the associated interest payments requiring you to review your finances to cover your loan payments.  

Before you start to worry, you have three ways to repay the loan. The first is simply to sell your property after 5 years, repay both the mortgage and the equity loan from the proceeds and use the remainder to fund the deposit for your next property purchase. The second is to re-mortgage the property and to use the additional funds to repay the loan thus financing the entire property in a traditional way. The final option is to make capital repayments on the loan either before interest fees are due reducing the amount of interest payable or after the 5 year anniversary until the loan is repaid in full.

Whichever method you chose, it is critical you obtain the right advice from your financial consultant before you commit to any mortgage or loan.  Our advisors at Arc & Co. have considerable experience in the Help to Buy scheme and will talk you through your options to make sure you have something in place to clear off the equity loan before you start to pay interest on it.

Let us help you future proof your mortgage.

If you are considering the Help to Buy scheme or would like some advice on your options for a mortgage, please get in touch in touch with Alistair.

Alistair has been in financial services since 2004. He started his career with RBS progressing to Santander then John Charcol before joining Arc & July 2017. Alistair specialises in complex cases, often involving multiple income streams, unusual properties or nonstandard personal situations. As well as providing quality, individual advice to his clients, Alistair prides himself on his customer service, economic understanding and industry knowledge. Throughout his career Alistair has built up strong relationships with underwriters at a number of smaller, bespoke lenders, allowing him to advise and find solutions for difficult cases.

Tel: +44 (0) 203 205 2129
Mob: +44 (0) 0796 750 9318


Arc & Co.'s guide to buying your first home

Buying your first home can be daunting, especially with news reports about the increasing house prices and the restrictions on finding a mortgage. However, there are now many more ways available to you when buying your first house such as using family help, government schemes or buying with friends. 

Over the next few weeks, Alistair Hargreaves, a financial consultant at Arc & Co., will be writing a series of articles about the different ways that you can buy your first home. He will explain the advantages and disadvantages of the various options. These should help you decide which is the best option for you. The areas that will be covered are:

  1. Help to Buy

  2. Shared Ownership

  3. Joint Borrower/Sole Proprietor

  4. Family Mortgages

  5. Buying with Friends

If you require further information or advice about your situation then please don’t hesitate to contact Alistair on or +44 (0) 203 205 2129.

The Budget, First Time Buyers and Help To Buy

With Brexit looming the Chancellor didn't have a much room for manoeuvre. However, as widely expected he has extended Help to Buy for a further two years, now ending in 2023. The policy has proved popular with home buyers, with 145,000 new build homes bought with the equity loan option from its inception in 2013 to March 2018. The policy allows a client to buy a new build house with the aid of a five year interest free equity loan. The loan is up to 20% in England and Wales and 40% in London. After five years, interest is charged on the loan.

House builders certainty like the policy and it has been accused of driving up prices. However it has helped a significant number of people to buy when they almost certainty would not be able to afford to.

The key thing to remember, if you plan on buying via Help to Buy, is how you are going to repay the equity loan after the five years; it could become very expensive as interest is charged on a potentially increasing loan amount (the level of loan is based on the current value of your property, not the amount borrowed).

The other key area that Philip Hammond delved into was extending the stamp duty holiday for first-time buyers purchasing shared equity properties up to £500,000. This on its own, I don't think, will encourage someone to buy a first home, but it’s a nice bonus for first time buyers who are scraping together a deposit.

So no new bells and whistles for people buying, but a huge sigh of relief for landlords as no further changes to tax for their portfolios have been announced.

Of course, dependent upon Brexit the above could all change.


If you would like to review your current mortgage, or if you are considering buying then please do not hesitate to contact Alistair using the details below.

Alistair Hargreaves
Financial Consultant

Tel: +44 (0) 203 205 2129
Mob: +44 (0) 0796 750 9318


PCD Club Podcast Interview with Jimmy Baillie of Arc & Co on Property Finance

David: Good morning everyone and welcome. This morning we're recording a podcast with Jimmy Bailey who is from debt finance specialists Arc and Co who are based in Mayfair in London and we've got a few questions today, talking about current state of Prime Residential lending market, about bridging, a whole range of different things, arranging finance for non resident clients. So we'll hope to have an interesting conversation today, good morning Jimmy.

Jimmy: Morning David.

David: So first to kick off, everyone always wants to know about the state of Prime Residential property in London, and from your perspective on the lending side can you give us an overview on the current state the market in London?

Jimmy: It's no secret that obviously this sort of high end residential market in London is a bit flat at the moment, so obviously that does reflect in how the banks look at these transactions.  In terms of the finance market, there's definitely less on the purchase side, but there's a lot on the refinance side and the equity release side. Rates are still low, bank lending rates are still low so it is business as usual and these banks are very keen to lend.

Jimmy: One of the most important things we're finding with these transactions is to make sure that any sort of down valuations in properties don't really hurt the deal from the start, so I think it's very important you have a good relationship with valuers and some of the top valuers in London.  You can quite often get a comment on the value of the property in the way that they see it going before you actually instruct the valuation or even get the deal going, so that does help clients a lot.

These properties are all bespoke in nature, non standard, so where the banks are currently pulling back on loan to value slightly because of the liquidity issues on that end of the market at around 60 to 65 percent loan to value. Good lending rates are available, as long as you get all your ducks in a row, you make sure you're firm on the value of the property at the start, you know it really does solve a lot of issues moving forward.

David: And how to best approach the financing of new build properties. I mean a lot of Asian investors would look at properties in London, for example in Docklands, how would you approach that from financing side?

Jimmy: Yeah, obviously the trick there is that they've got the old assignable contracts situation there, so quite often with lenders nowadays, especially with these new build properties, it's the trick of balancing the actual current market value with the purchase price.  Especially with these types of deals you get an Asian buyer, and the contracts have been flipped the once, twice, maybe three times and then they've got the offer accepted and they come to you at a late stage to arrange finance. So once again the valuation is very important here. We have relationships with a couple of very good private banks who will actually look at the current market value even though the contracts have been assigned a couple of times.

Jimmy: It's important to look at the profile of the client there too. But navigating that is quite important, or once again working closely with the valuers, the relationships we have in London is very important in trying to sidestep those issues. Most high street banks will require you to hold the property for at least six months, so that's quite a restrictive issue, but as long as you do select the right banks and you do make sure you have the valuers lined up before the time, it usually is a problem that we can solve. And we do quite a lot of those at the moment, as you can imagine.

David: So on the broader point of just dealing with non resident investors, as someone who might live in Dubai or Hong Kong buying property in London, are there broader things that you tend to pick up and work with on these clients?

Jimmy: Yeah, we see quite a lot of that. The majority of our clients are all based offshore. The most important thing there is really aligning the clients expectations with that of the reality and the market at the moment. I mean, things change quite a lot in London, so you need to obviously make sure your client is prepared and they understand that.

Jimmy: When you go into some of the local private banks or even the Middle Eastern private banks, with the London branches is, as opposed to the high street banks where they would be more looking at your income and expenditure, with these types of clients we can move it to specialist private banks. They will look at the client as a whole and they will be less focused on your bog standard income and expenditure analysis and they want to look at the whole story, so it creates a lot more flexibility for clients with complex income streams.  They really help and it's important to make sure you go to the right bank for clients like these.

David: I know I can go have a lot of expertise around bridging, I mean how are you seeing the innovation for clients looking at short term financing for their property investments?

Jimmy: Well, this is obviously quite a hot topic at the moment. I mean, the short term bridging market has really has exploded in the last couple of years. I mean, there's so many new entrants into the market you struggle to keep up sometimes. Every month there seems to be a new lender. But, there's a lot of opportunity, and a lot of flexibility and there seems to be a lot of liquidity and a lot of cash in the market looking for good deals. So whereas previously people thought of bridging as a bad name, it's important to know that there are a group of private banks out there who do look at the bridging and who do offer bridging at very good rates.

Jimmy: We've got a couple of private banks who will actually look at bridging for the right client around three percent, three and a half percent all in, something along those lines. It's, for example, you've got banks like HSBC and Barclays pulling out of Russia, some of the Eastern European countries, so you've got clients who've had facilities with private banks like HSBC and Barclays, they've come in off those facilities, they're looking to refinance and their client, for example it could be a Russian client, he's found out, "Oh no, I can't refinance anymore. What do I need to do?" So quite often these cheaper, short term facilities are very useful and this can give the client enough time to either sell the property or refinance elsewhere. So this is obviously quite a useful tool and I think we're seeing more and more people come into this market, especially as it just seems to be more and more competitive as time goes by. And that naturally drives prices down.

Jimmy: So you're seeing private banks coming into that market and they seem to be changing things quite a bit for on the positive side.

David: Great, well thanks Jimmy. If you have clients who are looking at investing in property in London, either new builds or super prime or they're looking at refinancing options, please do reach out. Jimmy, I'm sure, would be delighted to hear from you. So thanks a lot this morning and I appreciate your time.

Finance for CIS clients

Since the implementation of increased sanctions from the west, clients resident in CIS region countries certainly raise challenges for us when helping them to utilize the full potential of the current credit market.  Weak local CIS currencies, increasingly strict regulation policy and limited appetite from lenders to finance those clients means access to cheaper finance is narrow or non-existent.  Despite this our CIS desk has placed more than £500M in finance.

Arc & Co. is a specialist in assisting CIS clients.  Over the last 10 years we have helped our clients access the best available products in the market tailored to their particular needs in terms of gearing level, pricing and duration whilst taking account of circumstances like nationality, residency, the source of wealth, types of the underlying asset and the client’s income.  During an initial phone call, based on our experience, we can predict what is achievable for the client in the current market conditions. We can assist in cases of short time frame, ongoing loan term expiry, lack of liquidity or the lender particular jurisdiction/asset policy change through to giving advice in cases of debt structuring like refinancing, acquisition financing or equity release.

Starting 2018 with continued growth

The start of 2018 is proving to be as busy as the end of 2017.  In addition to the many smaller deals that have completed this month, the £11.3 m loan for a large redevelopment in Reading is a great way to start the new year.  As we look forward to the year ahead we welcome Jeremy to the Arc & Co. team.  Jeremy is the first of several new hires that will take place as we look to not only grow the team but also to expand the skills and experience within the company.

Jeremy is a highly accomplished property lending professional with direct corporate acquisition and ownership experience over a 28 year career including spells with lenders UCB Bank Plc (a then Paribas subsidiary) and PLT Ltd. Success in residential property development and commercial investments as both owner and lender give him the expertise and understanding to provide the outstanding level of advice and service that clients require in today’s marketplace.

Review of 2017 and the year ahead

2017 is coming to a close and despite a troublesome financial market, Arc & Co. have had another successful year. As a team we have organised and structured over £450m of loans.

Although the headlines suggest a volatile market, there has been an increase in the amount of liquidity available and the majority of funders are still keen to deploy money into both development and investment transactions.

We have arranged 70 loans across the capital stack throughout the year, ranging from a 17.5% LTV investment facility on a central London property, up to 95% LTC/75% LTGDV on large residential developments.

Please find below a list of products we put in place throughout 2017:

·         Development & conversion loans throughout the capital stack

·         Bridge loans to purchase

·         Bridge loans to purchase, rolled into development facilities

·         Development exit bridges

·         Investment loans for purchase or refinance (in many cases releasing capital for re-investment)

·         Bridge to purchase and stabilise, rolled into long-term investment money

In 2018 we hope to do much of the same using our expertise in structuring real estate loans for all areas of the market.  If you have any transactions in the pipeline for 2018 that you would like to discuss, please make contact.

Nick Holding-Parsons

Nick is a professional debt advisor specialising in structured asset finance for UK and international clients. In the time Arc & Co. has been running, it has built strong relationships with a wide range of different funding lines to suit our clients' specific property transactions, whether it be development or investment projects. Unlike your typical advisor/broker, we do a great deal of underwriting in-house which means we can quickly find the best solution for our clients.

Tel: +44 (0) 20 3205 2129
Mobile: +44 (0) 79 7350 632