The Intermediary speaks to Yann Murciano, founder and CEO, of development finance lender Blend Network.
In this interview, Murciano gives us the low down on the £120m the lender recently secured in capital from six high-profile family offices and his views on the UK’s lack of homes.
Congratulations Yann, Blend Network recently secured £120m committed capital that is now planning to inject into the UK housing market to help SME property developers build more homes. Tell us more about this capital.
Thanks! This is very exciting news for us indeed, but most importantly for the UK property market and for all those SME developers we regularly support.
This fresh funding line will allow us to not only boost our origination capability significantly but also widen the breadth of services that we offer property brokers to assist them in sourcing attractive lending opportunities.
Overall, it allows us to offer greater support to help mid-sized residential property developers across the UK boost their lending capacity, which will in turn make a greater contribution to solving the country’s housing crisis.
That is indeed good news at a moment in time when the property market needs all the funding it can help. Last year we saw a historical price rally in the UK property market following the Spring Budget’s stamp duty holiday and the support to the demand side of the property market. But while the Government has been very supportive of demand, it has been less active in proposing solutions to boost the supply of housing. How do you think the Government can support the supply side of the equation?
That’s a great point and a very fair question. Indeed, we have been saying for a while that the Government needs to do more to support the supply side of the equation and the numbers speak for themselves.
The Government has pledged to continue to increase the number of homes being built and referred to a need to rebalance the housing market towards more homeownership. It recently said progress towards a target of 300,000 homes per year by the mid-2020s would continue, which would see us build at least a million more homes over the next Parliament. Some estimates put the annual need for new homes even higher than 300,000.
According to one estimate commissioned by the National Housing Federation and Crisis, around 340,000 new homes need to be supplied in England each year, of which 145,000 should be affordable.
Ramping up housing supply is a key priority for the Government, as discussed in a Research Briefing published by Parliament in February titled ‘Tackling the under-supply of housing in England’.
Yet we are very, very far away from such targets. 216,000 new homes were supplied in 2020/21, which is even lower than the 243,000 new homes supplied in the previous year, in part because of disruption to housebuilding caused by Covid-19 in early 2020. But funding is a big part of the reason.
According to a report titled ‘Reversing the decline of small housebuilders: reinvigorating entrepreneurialism and building more homes’ published by the Home Builders Federation, availability and terms of financing for residential development has become extremely difficult for small housebuilding companies over the past decade or so.
The report explains that lenders have drastically changed their attitudes to the sector since the Global Financial Crisis.
As a result, since the 1980s a structural decline has taken place which has seen the number of smaller developers shrink from more than 12,000 in 1988, when nearly four in 10 homes were completed by SMEs, to around 2,500 companies responsible for just 12% of new builds today.
So, there’s no question that funding, or rather the lack of it, is a challenge for many SME property developers since traditional lenders mostly excited the market over a decade ago.
So, what is the solution in your opinion?
Well, of course there are no silver bullets, but I do believe that a big part of the solution is to invite the new wave of specialist digital development finance lenders to the table. Lenders like us at Blend Network, we are nimble, we are efficient, we have got cash to deploy in the market and we have the type of can-do attitude required to help tackle the housing crisis – or at least, give it a good go!
We are rolling up our sleeves and working hand-in-hand with SME property developers to build more affordable and energy-efficient homes from the ground-up, and to convert old derelict industrial buildings into beautiful family homes.
For example, last year we funded the conversion of an old beautiful Victorian shoe factory in Northamptonshire into beautiful apartments and the conversion of an old Government office block in Great Yarmouth into 30 affordable flats with prices ranging from £95,000 to £180,000. I enclose images of housing schemes we have recently funded in different locations.
In an interview with Business Leader Magazine back in 2019 you were called ‘the Frenchman who wants to solve the UK’s housing crisis’. What is your assessment of the UK property market at the moment?
If I had to describe my assessment in one word, that would probably be ‘inefficient’. The housing market struggles due to lack of funding to deliver new homes, yet at the same time there is a lot of cash in the market.
Take our example, and that’s just one example. We secured £120m from six family offices who are keen to fund more housing schemes, we want to deploy those £120m (and much more!) in the market.
I think there still needs to be much understanding of what specialist lenders like us do and we really do need to be invited to the table when discussing how to solve the housing crisis.
We are part of the solution and can be a key ally to the Government and to the local (cash-strapped) Councils who want and need to deliver more homes!
