P2P platforms offer support as share of SME new builds drops
Peer-to-peer property lending platforms have highlighted that they are well placed to support small- and medium-sized enterprise (SME) housebuilders after it emerged the share of homes built by SMEs across England has continued to fall.
Sirius Property Finance has found that the estimated share of homes built by SMEs across England dropped from 193,810 in 1988, representing 40 per cent of all homes built, to 162,470 in 2017, representing 12 per cent of all homes constructed.
It then fell again to 147,890 new homes per year, just 10 per cent of the total market share, in 2020.
Nicholas Christofi, managing director of Sirius Property Finance, said that many SME housebuilders simply have not been able to weather the problems posed by Covid in the same manner as their larger counterparts as many would not have the same cash reserves.
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Filip Karadaghi, co-founder and managing director of LandlordInvest, said that the exact reasons behind the drop in the share of new homes built by SMEs is unknown as there are many possible factors such as inflation or difficulty in obtaining finance.
He said P2P platforms can help by providing finance to SMEs but are still an overall small part of the market.
“P2P platforms can provide financing to many of those SME housebuilders with competitive rates and good underwriting standards,” Karadaghi said.
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Stuart Law, chief executive of Assetz Capital, said that SMEs have an essential role to play in improving the national construction output and this year will require specialist funding as banks pull back their lending.
“Specialist finance will be crucial in 2022 as big banks continue to show a relative lack of interest in supporting housebuilding by SME housebuilders,” he said.
“We also need to make a big investment across the sector in modern methods of construction such as modular housing, as this allows faster, cheaper, more environmentally-friendly builds, which require less highly skilled labour than traditional construction methods.”
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Yann Murciano, chief executive at Blend Network, said that a lack of finance is part of the problem that SME housebuilders face and specialist finance can help fill this funding gap.
“Obviously funding (or rather a lack of it) is a big part of the problem, but not all the problem,” he said.
“The cost of raw materials is also impacting SME developers more disproportionately than larger established homebuilders.
“I believe specialist lenders like us can – and must – play a big role in filling the funding gap. And that’s exactly what we are doing here at Blend Network by reaching out to more and more SME property developers in need of funding.”
Similarly, a spokesperson from Invest & Fund said that the reduction in the estimated share of homes built by SMEs across England is down to a combination of factors, one of which is a funding gap and P2P can play a “hugely important role” in supplying finance to these developers.
“One of the main factors is the main headwind they have faced in recent years, it’s a lack of easily accessible, suitable funding options from the finance sector or funding that doesn’t suit their ambitions,” the spokesperson said.
“Businesses like Invest & Fund are exclusively focussed on developers and provide access to dedicated funding.”