Recently launched lender Recognise Bank has entered the professional buy-to-let market.
The bank, which began lending in November 2020 under deposit restrictions which were dropped in September, has established an office footprint across London, Birmingham, Manchester and Leeds.
It has already launched commercial mortgage and bridging products, as well as a less property focused commercial capital loan practice.
Its BTL product, designed for property investors with portfolios of at least four properties or more, has already generated £20m for the bank’s lending pipeline.
With a headline rate of 3.49 per cent, landlords can apply for fixed (up to five years) or variable rate options with a loan-to-value of up to 75 per cent on loans between £100,000 and £5m.
“We want to work with borrowers which have a track record in the sector,” Recognise Bank’s head of corporate development and former Royal Bank of Scotland executive, Angela Norman, told FTAdviser.
By imposing a minimum cap on applicants’ portfolios, Norman said the lender can issue loans confidently from a risk perspective and simultaneously support those investors serious about and committed to the market.
Steadily reducing tax breaks and rental yields for landlords, combined with the more recent decline in rental prices during the pandemic, have all contributed to a fall in value of BTL portfolios - especially those owned by landlords with just a couple of properties.
As a result, Recognise Bank is targeting professional landlords, or as it calls them, small to medium-sized enterprises.
Other players in the UK market which claim to focus on landlords include Shawbrook Bank, Aldermore, Landbay, and LendInvest.
Recognise Bank’s customers have come from a variety of big banks and digital banking challengers.
“We are definitely relationship-led and digitally enabled,” Norman said. “Which is a slightly different framing compared to other newer players.”
She continued: “We’ve heavily invested in our frontline teams. This means the broker and customer have access to a whole team of colleagues who can have proper conversations from start to end. It’s the same team, who are specialists in sectors such as BTL, and understand issues such as energy performance ratings - which landlords need to think a lot about when it comes to future spend.”
Recognise Bank has recruited 16 relationship managers since it started lending, with the majority of its frontline team having worked in bigger banks.
Recognise Bank is a wholly owned subsidiary of City of London Group, a business which operates with the backing of three major shareholders.
These include PV27, the family office of Ruth Parasol, London-based property company Max Barney Investments, and DV4, a Delancey-managed investment vehicle.