myi: Since 2007, Knight Frank Finance has managed to buck the trend and see huge growth in its business. How can you explain such a stellar performance against the background of such a difficult macro-economic environment?
The economic environment has actually helped us rather than hindered the development of our business. As the credit markets became more challenging over the last few years, so the need for professional advice and guidance from people with the right relationships in place has become more pronounced.
At our end of the market, if you need to borrow, it’s probably quite a large amount, and having a broker like Knight Frank Finance who knows the market and the lenders as well as we do is a great advantage for any buyer.
While many other factors have contributed to our success, the truth is that there is no substitute for hard work.
We have been dedicated to serving our clients from day one and, while in pursuit of always securing the best deal for them, we have developed a formula which works. Focussing on clients at the top end of the property market, who are active, has been a key part of our strategy.
myi: What are the main trends in the financing environment you have observed over this time?
The recent appearance of foreign banks in the UK market has increased competition and introduced an interesting dynamic within lending circles.
Another major trend, which is unfortunately not as advantageous for some, is the fact that lenders are increasingly cherry picking the quality clients and the ‘safer’ business as they seek to ‘de-risk’ their loan books. Our clients generally tick those boxes and so the lenders are very keen to work with us.
myi: Have you seen more private banks entering the prime mortgage market?
Well, yes and no. It’s not so much that there are more private banks in the prime market, but that there are different kinds of private banks in the market.
The more traditional UK private banks like Coutts and Lloyds have pulled back somewhat from lending on property, while some others have stepped up their prime lending efforts. The large number of foreign private banks emerging are increasingly controlling the UK prime market.
myi: What do you think will be the long-term effects of the prolonged historically low base rate conditions?
Well, although a lot of lucky borrowers have enjoyed historically low rates, my worry is that as rates move up, a great deal won’t be able to afford their monthly payments.
Homeowners should be very conscious of this potential time bomb. Borrowers should be putting money aside or paying down their loan for as long as rates remain low.
myi: Which non-UK buyers dominate the prime Central London property market and what are the typical financing needs of these buyers?
We have buyers from all the typical wealth centres of the world – e.g. Europe, Luxembourg, Middle East, Far East and China, Russia – who are looking at a property purchase in the UK (often London) as a long term investment.
Typically these buyers are looking for financing only to optimise their tax position or to take advantage of the low interest rate environment in the UK at the moment. So we arrange exclusive one off deals, usually with private banks, to suit their specific individual needs.
myi: What are your ambitions for Knight Frank Finance in the next 3-5 years?
Simple. We aim to build on the success of the last 4 years by increasing the size of the business, recruiting the best professionals in the industry and continuing to deliver great service to our clients. We have no desire to be the biggest broker, but we do want to be the best, and be the place every professional wants to work with or for.
