Arya Taware is not afraid to stir things up. The 26-year-old founder and managing director of peer-to-peer development property lender FutureBricks tells Kathryn Gaw why she represents the future of alternative lending…
AT 26 YEARS OF AGE, Arya Taware is probably the youngest alternative lending leader in the UK. With youth comes ambition, and Taware certainly has this in spades. But she is also unusually suited to run a London-based property lending platform.
Born in Mumbai, India, she spent her childhood visiting construction sites with her property developer father. Before she was 18 years of age, she had moved to London to study urban planning and real estate at the Bartlett School of Architecture at UCL. She went straight from university into a job with architect-developer Solid Space, and it was there that she discovered the limitations faced by small- and medium-sized (SME) house builders.
“My job was to look for sites, and there were a lot of sites that we found where the developer couldn’t get funding,” she says. “That bothered me. If everything else is stacking up, why is there this lack of finance, especially from the mainstream lenders?”
She then moved over to a role in the planning department at Southwark Local Authority, where she quickly learned how the council’s bigger sites are sold to house builders and how planning permission is granted. It was in this role that – convinced that she had spotted a gap in the market – she decided to establish peer-to-peer property development platform FutureBricks.
Taware’s aim for the platform was to make funding available to those SME house builders who were not eligible for bank funding, while also making property investing accessible for retail investors.
With the backing of 20 angel investors, she launched FutureBricks in 2018. Within its first 12 months, the platform has amassed more than 1,000 active lenders, lending more than £1m to seven different property development projects across the UK. If you are wondering why you may not have heard of the platform, this is probably down to Taware’s under-the-radar style of marketing. “We had to be very smart with our limited resources early on,” she says.
“So we started by targeting doctors and IT contractors because we realised that they had a lot of disposable income. We started sponsoring events at doctor’s unions, and IT events – then once we get into those communities we just talk to them.”
Taware also hand-picks her borrowers; sourcing developers in need of funding by using planning data. A member of the FutureBricks team will contact these developers directly and explain how the platform works and what sort of financing is available. Following a rigorous due diligence process, borrowers are typically offered rates of between eight and 10 per cent on a first-charge loan, and between 10 and 12 per cent on a second-charge loan. Since FutureBricks makes its profit purely via arrangement fees, whatever interest rate is paid by the borrower is what the lender receives.
The FutureBricks approach relies heavily on the team’s expertise and ability to explain the benefits of P2P lending to people who may never have considered alternative finance before. “Expertise is so important,” says Taware. “If you look at our sales team they have PhDs in finance; they are former property developers – they have a lot of experience.”
One thing that FutureBricks’ team and angel backers have in common is a long-term commitment to the idea of ethical lending and filling the gaps in the property lending market. “SME house builders don’t get access to mainstream finance and this has been quoted as the main reason for the housing crisis,” she says.
“If you look at any government document from the past five years this is a consistent theme. We actually built more homes after the Second World War than we did in the 2000s.” FutureBricks will only consider properties with a value below £5m, which tracks with the company’s aim to deliver more affordable housing, rather than targeting prime real estate or big-budget projects. It caps loan-to-values (LTVs) at 65-70 per cent to ensure that there is enough liquidity if something goes wrong.
“The problem with the banks is that they’re not looking at projects below £5m,” explains Taware. “They prefer lending to bigger housebuilders because they’re publicly-listed companies. Even if they do give money to projects below £5m, it has to be to someone who has a track record of 20+ years and a strong balance sheet.
They will usually only offer a maximum of 55 per cent LTV and after all this they’ll take three to four months to deploy the capital. The site could be gone by then.” Of course, the other option that SME housebuilders have is bridge lenders, but this can be an expensive option. “Everyone wants to do bridge loans where it’s quick and easy and they don’t have the headache of development,” Taware points out.
“But there are a lot of hidden fees in bridge lending. For instance, if there are delays in construction that are not necessarily the developers’ fault, they’ll still get charged penalising interest. What you want to do as an ethical lender is to make sure that the developers are also making their minimum 20 per cent profit, otherwise what is their motivation?”
Taware’s professional background means that she has first-hand experience of the difficulties faced by smaller property developers. “Just because they are smaller housebuilders, that doesn’t mean that they are amateurs,” she says. “These are professional property developers – we will not fund someone if it isn’t their main business.”
However, FutureBricks is not racing to build an extensive loanbook just yet. Taware entered the market just as Lendy was on its way out, and she has learned some tough lessons from that platform’s failure. “I learned never to compromise on the quality of the loan and not to give in to pressure just to grow the loanbook,” she says.
“We are here to be ethical long-term lenders. We might not always have a project on the platform but we’re OK with that as long as we’re only putting the best of the best deals on there.” Next up is the launch of the first FutureBricks Innovative Finance ISA and a plan to start accepting pension investments via the Small Self-Administered Scheme.
Machine learning is also on her radar within the next five years. “Our mission is ‘let’s break the brick ceiling’ and that applies to everyone,” she says. “Let’s build houses for the borrowers, and let’s give retail investors access to secured lending as well, because investing in property was always seen as something with a very high barrier to entry.
The property industry is still very, very traditional, but we are here to try to change that.” Taware knows better than anyone just how challenging this traditional environment can be for newcomers. She has dealt with both sexism and racism in the property industry so far, but it is her age which seems to draw the most criticism. “I think ageism is something I have faced more than sexism or racism because the property sector is very old and traditional,” she says. “But we are coming in with a completely different perspective and our ambition is to shake up the industry. Those who don’t adapt are dinosaurs.”
Taware is committed to gender equality and inclusivity in the property lending sector and she regularly gives talks to young women to help inspire them to enter the industry. “The P2P property sector could definitely be a more inclusive space,” she says. “Our business touches property, lending, compliance, technology and marketing – and out of those five core streams, three are super male-dominated.”
This extends to the borrower community as well. Taware estimates that around 95 per cent of FutureBricks’ borrowers are male, and five per cent are female. So how can that change? “More role models,” says Taware, instantly.
“Women are great property developers because they have a great eye for detail. They are highly organised and efficient. It’s in our DNA. In my experience, women make great property entrepreneurs.” She would like to see more female driven apprenticeships, and a move to make workplaces more inclusive in terms of age, ethnicity and gender. “It sounds so basic but if we were all more inclusive I think the world would be a better place.”
In the meantime, Taware has her own business to grow and her own goals to achieve. Underestimate her at your peril.
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