Octopus to up commercial and buy-to-let lending

Michael Lloyd

May 15, 2018

Octopus Property has targeted lending in excess of £1bn in the year to May 2019 and sees commercial and buy-to-let as its growth areas.

D’mitri Zaprzala, head of sales at Octopus Property, wants the lender to become a multi-billion pound lender.

He said: “It’s a really big step up for us and in the ensuing three years, we expect that growth to continue.

“The biggest hindrance to lending as much as possible is people. We don’t want to hire people for the sake of filling numbers.

“We have very high standards and it’s about getting the right people in to fill that.”

He added that’s it’s also down to funding.

Octopus Property is funded through Octopus Choice, its peer-to-peer platform, through its fundraising and commercial real estate debt fund.

Zaprzala added: “We’ll probably look to widen that over the coming 12 to 18 months as well.”

He argued that the raft of buy-to-let changes, including mortgage tax relief reductions, stricter stress testing for portfolio landlords and the stamp duty surcharge for landlords, have all worked in Octopus’s favour.

This is due to more specialist clients such as foreign nationals, expats and HMO landlords being rejected by the high street banks, and turning to Octopus Property for finance.

Zaprzala added: “We’re not a bank so we’re in control of our own destiny. When we see an opportunity we look to make the most of it. We’ve now lent in excess of £3.1bn since we started trading.

“Being funded by Octopus Choice has enabled us to get a bigger funding line behind us to go after the buy-to-let sector in a bigger way.

“There’s a lot of good quality buy-to-let investors and landlords who find it harder than ever to get finance.

“We are not driven by a computer system driving out an answer; we have people looking at it, making a decision.

“We’re seeing a lot of demand from portfolio landlords and there’s still people just buying the odd property and seen as unusual by banks but as perfectly good borrowers by us.”

Octopus Property has done commercial bridging for around four years and wants to offer some longer term commercial finance.

At the end of October Octopus launched a commercial term loan product of: 5.5% per annum fixed, interest-only, a maximum LTV of 65% and requirements of loans from £500,000 to £2m and 2 to 5-year terms.

Zaprzala said: “This rate is very competitive in comparison to what a lot of banks can offer. We’re looking for a one time interest-cover ratio which is flexible. There are lots of other lenders out there. We see that whole commercial sector as huge.”

Zaprzala added: “I think you’ll see lots of traditional mortgage brokers or people that have dabbled in specialist finance come to us because we do products they come across daily. And we’ll continue to hire good people to get that message out there.

“We’re always trying to improve our systems and process so we become easy to transact with. I don’t want us to become utterly reliant on technology. I think if you do and the tech falls down, the whole system falls down.

“I want our brokers and borrowers to be able to call someone here and have a conversation and get something done and similarly to go onto an online portal, click some buttons at midnight and still get things done as quickly.”

Sign up to our daily email