CrowdProperty chief executive Mike Bristow has underlined the platform’s commitment to retail investors, as it targets £400m of annual lending by 2024.
The peer-to-peer residential property development lender hit the £100m lending milestone today (28 October) and Bristow (pictured) said that retail investors will continue to play a part in the platform’s growth.
Retail investment currently accounts for a larger proportion of CrowdProperty’s funding volumes than institutional money.
“Institutional capital will become a larger part of our funding going forwards but we’re fully committed to retail,” Bristow told Peer2Peer Finance News.
“I think the retail side will grow definitely and will be supporting that growth [in our lending].
“I think at £400m, half or more of our funding will be coming from institutional capital.”
Bristow added that diverse sources of capital are also good for borrowers, as they create a reliable lender that is not reliant on one source of funding.
CrowdProperty has facilitated more than 230 loans across more than 170 projects, returning £50m in capital and interest to investors since it began lending in 2014.
“We’ve had a pretty strong six months,” Bristow said.
“Capital dried up in the property development space, as traditional lenders have a single source of capital. As a result, lots of liquidity came on to our platform.”
CrowdProperty saw investor capital wanting to fund projects triple between March and June, which Bristow attributed to a lack of opportunities for yield elsewhere.
The platform’s investors have earned average returns of 8.74 per cent to date.
Bristow said that the “predictable” high demand for residential property makes the sector more resilient in a downturn than other types of lending such as unsecured consumer, small business or commercial property finance.
“During the last financial downturn there was an 18 per cent on average fall in the price of residential property driven by total closure of the debt market, followed by 12 years of strong capital growth,” he added.
However, he still emphasised the need for caution during the pandemic and said that CrowdProperty has tightened its lending criteria twice this year.
“I always say, you’re only a lender if you get the money back,” Bristow said.
“People describe themselves as fintechs or platforms, but you’ve got to be great at getting the money back.
“I think there are too many platforms setting up with good tech but not the experience of the asset class.
“That links to understanding the customers – we’re delivering what our developers want.”
As part of this due diligence, CrowdProperty only accepts a small amount of the applications it receives.
“We’re seeing around £200m worth of applications per month and we’ve funded less than three per cent of all applications,” Bristow said.
“To build a 20, 30 year business it’s all about quality of lending.”