Daniel Liberto talks to Gemma Harle, managing director of TenetLime, about the UK property market, her criticisim of the MMR and how advisers neglect protection for their clients at their own peril.
Gemma Harle’s uncalculated avoidance of “regimented” thinking and “five-year plans” helped her go from leaving school with no career plan to becoming managing director at TenetLime.
In her current role for just over four years, and in the mortgage industry for just under 30, Ms Harle’s determination not to go to university or to follow her family into engineering appears to have paid off.
When, in March 2010, she took up the post of managing director at TenetLime, Tenet’s non-investment proposition, it was because her employer recognised the need to create a dedicated non-investment resource during a period when the mortgage market was still feeling the heat of the recession. She said that while other networks were focusing all their energies on investments and RDR, Tenet kept faith in the housing sector and today its mortgage business is up 70 per cent on last year because of its continued focus.
While this is good news for Tenet, however, some commentators have been unsettled by the renewed demand for property. The term ‘housing bubble’ has been all over the media, which is a claim that Ms Harle described as “unhelpful” and inaccurate.
She disagreed with the negative criticism being targeted at the Help to Buy scheme, which she said had played an important role in “injecting a lot of confidence into the market” and was a greater factor in the Midlands and the North of England where more houses were being built, and described current markets as “healthy”.
She added: “The housing market has a massive impact on the economy, but the headlines have not been helpful. It is returning to where it should be and is not in a bubble. Before the recession, lending was a bit silly. It was at £360bn. This year it is projected to hit £200bn, but it is just going back to where it should be.”
Ms Harle added that the London market must be treated differently as 60 per cent of property in the capital is purchased with cash, although even here she predicted that the market would eventually stabilise.
Also, despite headlines about an overheating UK property market - which she said the Bank of England had helped to fuel through its comments about a possible housing bubble - a property crash on the scale of 2007/2008 could not happen again, as “lax” lending by banks is now a thing of the past. She said the Bank of England: “Should focus on supporting the mortgage market not restricting it. It is important to support home builders. We need to look at how we can house everybody.”
And while she would describe herself as a supporter of the mortgage market review, she was concerned nevertheless about some of its side effects. One of the biggest issues, she said, was the lack of consistency on checks, “horrendous” delays, and the fact that the most financially astute were being punished more than anyone. She added: “Lenders are now totally responsible for affordability, but they are doing very different checks.
“It is really hard from an adviser perspective to see who is doing what, but I believe this will settle down. It needs to be more consistent and more transparent and it will take a while to achieve this. Also, the problem now is that if you are a sensible person, with income protection policies and a pension, you will have less chance of borrowing because you have more outgoings.”
Regardless of these teething problems, Ms Harle was keen to stress that the regulatory changes would have little impact on advisers, who should have already been running suitability checks on their clients. In fact, contrary to what some industry figures have argued, she said that an increasing number of investment advisers have moved over to mortgages after recognising how important a role it played in retaining clients.
She added that, for many advisers the benefits of advising on investments are “not really the same as before and the mortgage market has picked up. A lot of advisers are trying to retain their clients and avoid the risk of referring them elsewhere. If you do not want to write it yourself get someone else in the business to do it. Never just say ‘I don’t know’. The market will always be there and it is an important part of the market, with added sale potential, such as protection.”
Given the rising demand for mortgage advisers since the introduction of the MMR, Ms Harle also stressed the importance of increasing intermediary numbers in this area. At the moment she said those advisers specialising in mortgages were struggling with the demand and extra paperwork, which was having a profound effect on clients.
Mortgages and protection have always had a close relationship in the financial planning process but, according to Ms Harle, the latter had been ignored of late because of stringent workloads and a limited number of advisers to deal with the demand.
“Mortgage advisers, with all the paperwork required for MMR, have not had the time to look at protection. There is not enough blood in the market and because of the demand, those in it do not have the time to look at protection. It is great that intermediaries are very busy, but protection is just as important.”
Daniel Liberto is a features writer of Financial Adviser
Career Ladder
March 2010 – present: Managing director, TenetLime
April 2004 – August 2009: Managing director, Mortgage Next
April 1990 – March 2004: Head of new business, Mortgage Trust
1986 – 1990: Underwriter, The Mortgage Corporation
