Kuflink is on track to become profitable next year for the second year in a row, after the turmoil of Covid-19 opened up new opportunities for the platform in the property development space.
Earlier this year, the peer-to-peer property lending platform turned a profit for the first time by cutting six jobs, reducing its marketing spend and raising £3.4m of equity. Kuflink’s chief executive Narinder Khattoare says that the company’s success is down to the hard work and flexibility of his staff.
“Kuflink has been one of the platforms that has managed Covid quite well,” says Khattoare. “We managed to work remotely straight away which was fantastic.
“Everybody plays their roles in the business, and I think overall, Covid brought the team together. They gelled better, they got on with each other better.
“We’re finding that people are working more efficiently now, and they actually have a better work life balance as well. Our staff are in a happier place.”
Remote working, flexible hours and daily staff catch-ups have resulted in better communication between different departments, and as a result the platform has been able to identify and embrace new opportunities in the P2P property space.
Ever since the first lockdown, Khattoare has seen an influx of property development deals, and now approximately 70 per cent of Kuflink’s deals are for development loans. This segment has huge potential for growth, Khattoare believes, and Kuflink is perfectly placed to take meet this demand.
“Traditional lenders weren’t very heavily involved in this space pre-pandemic,” he explains.
“The majority of loans in this space have institutional funds. And the moment you get a pandemic, these institutional funds will halt all lending. They’ve got an average return that they need to provide their investors, and if they can’t achieve that target they’re just going to stop lending.
“That’s one reason why alternative lenders like ourselves have seen an influx of those deals. There’s nothing wrong with development loans, it’s just about managing them and having the appetite to do it.
“Our business philosophy has always been that we’ve got to make sure that the asset is right, that it’s secured, and that there’s an exit plan in place.”
When it comes to managing a development deal, Kuflink’s team will work together to identify and manage every potential risk.
“We go from a stress scenario from start to finish,” says Khattoare. “We look at various layers of risks that are involved on that loan and when it comes to maturity.”
Kuflink has also reduced its loan-to-value slightly – from an average of 67 per cent before the pandemic, to 65 per cent today.
“These loans come with their own challenges because the loans are going to be out there for a longer period of time, and they’ll be riskier because something can go wrong during the build phase,” says Khattoare.
“But what we see is that we are helping the UK economy build more properties, which is fantastic.
“We’ve been very fortunate that over the last 12 or 18 months, property prices have gone up. And now they look like they will stay more steady, but there’s no guarantee. I think the key thing is to do your due diligence on your platforms, do your due diligence on the projects, and spread your risk across various different types of asset classes.”