Moving on up

Grant Bather

June 24, 2006

The name of UK Mortgages and Finance Services Limited has for some time now been synonymous with the successful re-structuring of many agricultural businesses.

The company was originally started by Des Phillips, himself a third generation dairy farmer. When faced with difficulties of re-financing after a series of natural disasters in the 1980’s, he realised that there was a real gap in the market place and set about creating a business to fill that gap. While alternatives to the high-street banks for prime cases of finance were, and still are, available if the strict lending criteria demanded by such institutions could not be met, any potentially struggling farmer had a very limited choice of where to go.

Not without its own early difficulties, the original company found itself very often in head-to-head conflict with banks seeking reductions and/or early repayment. Very often lines were drawn and battle commenced. That was all some years ago but the principle of having a farmer leading a finance company had been proven to be effective. As relationships were established, and trust and respect grew, so did the scope of the business. The client base expanded and the newly formed UK Mortgages and Finance Services Limited became, by the end of the 1990’s, a recognised avenue for those in agriculture or those advising farmers to assist in financial re-structuring. A relationship with a long-term lender had been personally established and this grew into the foundation blocks of the business we see today.


By 2000, things were beginning to change both from a directional and personnel view point. The long-established staff of four began to grow and an ex-banker, John Ledbury, who had been with Hill Samuel Bank for 12 years, joined the company. Phillips and Ledbury rapidly established a good rapport on both a personal and business basis and with new ideas and business opportunities increasing, a new perspective was born.

The company moved to larger, rented premises in Bridgwater and as staff numbers increased, Phillips’ daughter Karen joined the firm. The ability to offer long-term finance was growing and with the formation of UK Farm Finance, together with the forging of a new and successful relationship with a bridging loan company, the ability to assist in restructuring exercises was improving. The reputation of both companies was beginning to attract some positive interest from some of the banks when they had a potential problematical situation to solve.

Every new enquiry received, as is the case now, personal attention, and no obligation visits remain an essential part in the building of the business relationship. This, coupled with a rigid policy of no up-front fees assists in demonstrating to the potential client the practice of ‘old fashioned lending’ is not yet dead. The enthusiasm demonstrated by many farmers in particular, when they are able to talk over their problems in their own kitchens proves the worth of the policy.

Other sectors

Since moving to Bridgwater, the company has increasingly become involved in commercial lending without detracting from its agricultural bias. Relationships with lawyers and surveyors nationwide, together with successful advertising campaigns linked to positive results have ensured continued growth.

Whilst still in the Bridgwater premises, staff numbers have grown to 25. Additionally, following 12 months of employing a representative in Scotland, a new office has recently been acquired on the outskirts of Aberdeen, adjacent to Aberdeen and Northern Market, perhaps the largest of its kind north of the Border. The portents for growth in this area are both positive and exciting.

This has coincided with a rapid period of further growth following the successful launching late in the autumn of 2005 of UK Country Capital Limited, allowing the business to operate its own bridging company, advancing facilities over three, six, nine or 12 months. This is proving a most attractive vehicle as brokers throughout the country are making enquiries on behalf of clients. A good level of commission is paid upon completion of business taken on, thereby satisfying all concerned.

The UK companies are now embarking on a move to new premises less than five minutes from Junction 22 of the M5, whereby it is hoped that sufficient space will be available to cope with keenly anticipated growth nationwide over the next few years. Despite anticipated expansion, the business will continue to be managed along the established lines of close client rapport and the availability of a personal service. In addition to this, stringent efforts are made to ensure the best comprehensive advice from professionals is made available where necessary in unravelling difficult situations, which can at times present the most challenging of restructuring requirements. UK thrives in such complex situations.

Building relationships

We look forward to meeting new faces throughout the next year in the belief that reliable relationships will continue to be forged. Most facilities that are backed by land and buildings as security will be given careful scrutiny with a rapid decision-in-principle, at least, being offered. Those involved in UK, firmly believe in the future of agriculture in this country, despite the numerous difficulties experienced by farmers over recent years. This, coupled with the substantial increase in commercial business being undertaken leads us to view the future with confidence and excitement.

How can we justify such confidence in the knowledge of the sometimes parlous state of British agriculture? Confidence in the future and the old cliché ‘things can only get better’ certainly helps. Whilst bird flu has to be accepted as a potential alarm, until it’s influence, if any, is established, we are entitled to look back upon BSE and foot and mouth disease as terrible and unexpected obstacles that are at last beginning to be viewed as horrors of the past. Horrors of the present are more of a man made nature and rest largely as the responsibility of politicians both here and in Europe. The farming community have historically met with only limited support from ‘non-country’ folk whether in respect of their way of life or their ability to work and hopefully thrive, within the confines of economic limits often imposed upon them. Prices are largely out of their control and the loneliness and desperation of many within the farming community is neither understood, nor appreciated by the majority of the population.

Financial strain

No wonder the current scandalous delay at the hands of Government in respect of the Single Farm Payment is causing such widespread despair and financial strain upon so many involved in agriculture as a livelihood. Delay coupled with broken promises has severely increased pressure in many instances adding to cash flow difficulties, with many lenders failing to appreciate the underlying problems. Additional short-term borrowings, such as UK can offer, can ease matters in many cases.

What has stood out, however, during recent difficult times when farmers have found it increasingly difficult to service their level of borrowings, has been land prices. Amazingly, not only have we seen no fall off in prices over the last five years, real increases have been the norm. This in itself has allowed UK to take a more favourable stand in respect of restructuring a farmer’s finances as all potential loans are viewed on a loan-to-value (LTV) basis. Very often, and particularly where some degree of diversification is envisaged, we are able to look beyond the normal requirements of serviceability demanded by so many. It may involve additional facilities to acquire extra milk quota or to even increase a milking herd thereby having the effect of restoring the ability to service borrowings.

Both in agricultural and commercial applications, the fact that all fees and costs are a ‘one-off’ charge, also assists. Renewal fees, service charges and other substantial costs related to borrowed money may no longer be considered as an annual outgoing, particularly when solid overdraft situations are transferred onto longer-term loans. If not avoided, they may at least be reduced. UK always deducts fees from the drawdown of the Loan. This may even include the cost of the necessary professional valuation, although it is stipulated that it remains the responsibility of the potential borrower whether or not the facility proceeds to completion.

Interest rates, of course, have a real bearing on the outcome of restructuring discussions. In this respect we proudly proclaim that we are as competitive as any. With regard to short-term bridging loan facilities, a set rate is applied across the board and many borrowers appreciate interest being taken up-front to overcome any servicing difficulties during the short life span of the loan.

The competitive angle really falls into place with long-term facilities. While we are in a position to offer facilities to borrowers with adverse credit records, such facilities by their very nature, prove more expensive than some. However, with the evidence of bank statements, clean credit records and accounts where appropriate, rates akin to many of the best on offer in the market may be available. UK has a proud record of achieving the best available rates for clients.

Our past growth and immense experience in a very demanding financial marketplace, coupled with confidence in the immediate future, allows us to view positively the way ahead. We can expect interest rates to rise only slowly and hopefully only slightly, if at all, confirming our enthusiasm and anticipation for the future whether it be agricultural or commercial. We have firm ambitions to become a major source of finance over the next five years. It is some five years since the acorn was planted and the tree is showing signs of strong growth.

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