How P2P can help solve the housing crisis
Peer-to-peer lending platforms can help solve the ongoing housing crisis by financing good quality loans and supporting small- and medium-sized enterprise (SME) housebuilders.
P2P property lender Kuflink has been successfully funding SME housebuilding projects for many years now, while maintaining its track record of zero losses for its investors. This is thanks to its well-oiled credit checking process and engaged team of underwriters, which is led by Hiran Patel (pictured).
“The fintech lending space can help to bridge the gap to meet the housing shortage, which has been created partly by more traditional lenders pulling back with their lending,” Patel says.
“And it’s P2P lending platforms like ours that can be a part of the solution.
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“We’re able and willing to lend to SMEs to support the national housebuilding effort and play our part in supporting the UK economy, and obviously help deliver the prime minister’s vision to build the homes that the country needs.”
The UK government has pledged to build 300,000 new homes every year. However, in the 2020/21 financial year just 216,000 new homes were delivered.
Kuflink continued to lend to SME housebuilders throughout the various lockdowns of 2020 and 2021. At the height of the lockdown last year, the platform did £50m in development lending, while many other lenders were scaling back.
“SME housebuilders and developers are consistently efficient in the way that they deliver their projects and build new homes,” Patel explains.
“But it’s these small housebuilders who often struggle to obtain the funding needed. Obviously the pandemic had a massive impact on the industry.
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“A lot of the traditional lenders were busy trying to administer government-backed lending schemes, so this provided an opportunity for Kuflink as an alternative fintech lender and other alternative lenders to show value. And we continue to lend to SME housebuilders.”
Kuflink’s underwriting team works very closely with borrowers throughout the loan process cycle, even undertaking site visits.
As a result, Kuflink sees a lot of return borrowers, allowing the platform to build long-term trusted relationships with SME housebuilders over time.
Much of the platform’s success can be attributed to its strong due diligence process. A key part of the platform’s underwriting process is to ensure that there’s a strong team behind the developer at every step along the way.
“We’re flexible and individual in our approach to lending, so we’re often happy to fund quirky deals that traditional lenders won’t typically fund,” says Patel.
“We don’t go for a tick-box exercise, we work as a team. We make the decisions. When the enquiry comes in and the underwriting process begins, we collaborate further.
“Once that loan is live, we continue to monitor. If it’s a development loan, we will continue to collaborate internally and externally with the borrower and their professional team, especially if they haven’t got as much experience as a mainstream lender would like.”
Patel has worked at Kuflink for more than three years, and over the next 12 to 18 months, he hopes to add to his team as the Kuflink platform enters a growth phase.
If Kuflink can repeat its past success at a larger scale, it could play a significant role in helping the UK government to meet its annual housebuilding targets, while showing the world the power of P2P property lending.
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