TR Commercial director on lender risk appetite, what gets deals over the line, and why waiting for the right moment is a mistake
The commercial mortgage market is not getting simpler. Lenders are active, appetite is growing, and new entrants continue to arrive, but the gap between a deal that looks straightforward and one that actually completes cleanly remains significant.
Sam Rose (pictured top), co-founder and director of TR Financial and TR Commercial, has built his business on bridging that gap, and his advice to brokers moving into the space is blunt. Prepare for the worst before you do anything else.
Rose founded TR Commercial three years ago after enquiries on the more complex end of property finance outgrew the regulated business he runs alongside it, and from that position he has watched the commercial market shift considerably – in terms of who is lending, how they are pricing risk, and what they expect from brokers and clients.
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The high street retreat and what it means for pricing
The withdrawal of high street banks from complex commercial lending continues to shape how deals are structured and priced. "High street want vanilla," Rose told Mortgage Introducer. "They're in a position where they can do that." The result is that landlords and investors with more complex needs have had to adjust their expectations.
"Gone are the days where you can just waltz into a bank and they'll give you 75% of the value of something without batting an eyelid," he said. "If you want a lender to take risk on something, you've got to be more realistic about the space that you inhabit." Smaller lending requirements can still find a home on the high street, but anything complex now sits firmly in specialist and challenger lender territory.
That market is growing. Rose pointed to a steady increase in lenders entering the bridging and commercial space. "There's so many lenders, you can't keep up with them," he said. But lender volume does not equal lender flexibility. "That doesn't mean they don't remain picky, because they're in a position where they need to be as well as want to be."
What lenders are actually scrutinising
When a commercial case lands on a lender's desk, the asset is the primary focus, but Rose was clear that it rarely tells the whole story. "Lenders' main concern is, do we know enough about this client to make themselves comfortable?" he said. Valuations carry significant weight, and lenders will often cap loan-to-values on certain asset types regardless of their broader appetite.
Goalpost movement is a recurring frustration. "A lot of lenders will say they'll stick to the deal," Rose said. "But once they get their teeth into the property itself, that's when they look to change." Strong financials and clean credit matter throughout. "If there's a blip on the file, that's when lenders start to pull their hair out a little bit," he said.
The gap between an advertised rate and the true cost of completing a commercial mortgage deal is another area where clients need managing early. Rose described a recent case where a client buying a commercial space to operate their business from appeared straightforward – until the building's setup introduced complications the lender had not anticipated, including an office element requiring closer scrutiny and fire risk assessments that surfaced post-valuation. "You've really got to fine-tooth comb absolutely everything," he said. "Because there's so much that manifests itself during the process."
Working the deal from day one
Rose's answer to commercial complexity is methodical preparation and the right professional network. The relationship with a lender's business development manager (BDM) is, in his view, underused by brokers new to the space. "I personally prefer to speak to a BDM than a sales team," he said. "You can have more real conversations because they'll know more. Sometimes with sales teams, you don't know whether you're talking to someone on their first day or their 400th day."
Pre-application conversations with lenders matter just as much. Rose argued that brokers should be mapping the full journey of a deal before submitting anything, not just through to completion, but well beyond it. Some commercial lenders do not offer follow-on rates at the end of a fixed term, meaning the entire process restarts at the five-year mark. "You've really got to project manage the whole thing and see where something is going to leave the client over a longer period," he said.
The case for acting now
Rose had a clear message for investors sitting on the fence. "A couple of years ago it was, let's wait until the election. Then it was, let's wait until that budget. Then let's wait until the next budget," he said. "Waiting doesn't achieve too much. Action is important. Until the deal is completely done, you're not committed to anything."
The broader commercial property lending market remains more realistic than it was a decade ago, and Rose said investors need to adjust their thinking on capital growth accordingly. But the structural case for commercial property, handled well, remains solid. "Although lenders want to lend, they're not becoming any easier to deal with," he said. "You've got to use professionals who will take the time and effort out of doing something, because they're the ones who can use their contacts to get things over the line."
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