An interview with Andy Thomson – Senior Director Operational Real Estate – United Trust Bank

What is your background and experience in the property industry?

Following graduating from the University of Glasgow, the first 25 years of my career were spent working in Bank of Scotland and then RBS. This was predominantly working within the real estate sector dealing with loans ranging from £1m to £1bn, across all of the key commercial and residential asset classes. More recently I have been working within smaller challenger banks, including Secure Trust Bank, BLME and I have recently joined United Trust Bank to head up their move into Living Sector real estate lending.

Can you tell us a bit about your business and what you do?

I am a Senior Director within the Property Development team at United Trust Bank (UTB). UTB has assets in excess of £4bn and property development commitments of around £1.3bn and at any one time our funding enables housebuilder and developer customers to create in the region of 4,500 new homes across England and Wales. In addition to making an important contribution to building new houses and apartments, this activity also has a significant positive impact on both national and regional economies. According to The HBF’s Housing Calculator, creating 4500 new homes supports over 15,000 jobs, generates over £28m towards infrastructure, including £12.6m towards new and improved schools, and generates over £120m in new tax revenues.

My role is focussed on providing senior debt to assist with financing living sector assets including Build to Rent, Co-living and Purpose Built Student Accommodation (PBSA). The UK has seen considerable growth in professionally managed residential properties for rent.

According to research by Savills, in the face of tighter mortgage regulation, the average first-time buyer deposit has risen from 55% of household income in 2000 to 94% today. In London, this has risen from 69% to 142%. The private rental sector (PRS) is filling an important gap in the market, as people decide to rent either as a lifestyle choice or through necessity,

Who are your typical clients, and how do you market your service? 

Clients of the wider UTB property development and structured finance divisions are typically small to medium size housebuilders, entrepreneurial developers and investors and contractor/developers. My clients are mainly specialist living sector developers and investors, however, we are also seeing more traditional housebuilders who are considering building to rent rather than building to sell. They are attracted by the speed at which units can be let compared to the time taken to complete sales and also exploring the strategy of building a portfolio of rental properties as an investment for the long term. Residential investment works well in wealth preservation and can provide an income closely correlated to inflation.

UTB is very successful in nurturing borrower relationships with over 50% of business being from repeat customers. We also source new business through our website, direct approaches and importantly through introductions from our network of lawyers, valuers and other real estate professionals.

How did you first cross paths with Newmanor Law?

I was introduced to Newmanor Law by my colleague Paul Turton, Director of Business Development & Marketing – Property Development, at UTB. Paul is a highly experienced banker and is responsible for marketing, PR, events and business development for UTB’s property development and structured finance businesses.

Newmanor have worked on several UTB transactions for both property development and structured finance teams and the Bank has been impressed with Newmanor’s expertise and professionalism. Relationships with James Dakin and Karen Mason go back many years.

What are the key challenges currently facing the real estate sector, and how are you addressing them?

The key challenge facing the real estate sector is meeting the government’s target for building 1.5m new homes during the life of this parliament whilst managing significant headwinds. These headwinds include: continued geopolitical uncertainty; high construction costs; lack of skilled labour; interest rates, although falling, remaining high; significant delays in obtaining planning permission; no replacement for ‘Help to Buy’ and the new building safety act.

UTB is committed to supporting customers by providing competitive funding as well as collaborating with a variety of private and public initiatives to give housebuilders and developers the gearing they need. Our knowledgeable and approachable team provides a quality relationship-based service throughout the lifecycle of a property development project. We can fund land acquisition, construction costs and developer exit funding, rent stabilisation facilities and long-term investment loans.

What trends do you foresee shaping the real estate industry in the coming years?

One of the key trends is the continued shift of investors moving away from more traditional real estate asset classes such as retail and office, into living sector assets which they perceive to have a more favourable investment outlook.

Retail property continues to see reduced tenant demand due to the continuing popularity of online shopping and the office sector has been materially impacted by working from home. This reduced demand has led to falling rents and therefore falling values. In contrast living sector assets are seeing strong tenant demand leading to higher rents and therefore higher values. A recent example of this trend is Land Securities, one of the UK’s largest and most respected real estate investment trusts (REITs), announcing it was divesting of circa £2bn of office properties, with the funds being invested into residential asset classes.

The UK Living Sector is an attractive real estate asset class for domestic and international capital seeking high quality investment and development opportunities. 2024 saw more than £5bn invested into the UK BTR sector and the UK government’s goal to deliver 1.5m homes over the next five years is an important catalyst for further growth. UTB is keen to support activity in the Living sector by funding a variety of scheme types proposed by experienced operators.