In The Spotlight with Yann Murciano, Blend Network

We spoke to Yann Murciano, CEO at development finance lender Blend Network, about why ever since mainstream banks left the development finance market, property developers have been pleading for more transparency and regulation in this market and how now they are getting it from a new wave of next-generation, tech-powered regulated lenders.

Related topics:  In The Spotlight
Rozi Jones
9th July 2021
Yann Murciano
"The power of technology has brought much-needed transparency and trust to the development finance market."

FR: According to a recent report by the Home Builders Federation, SME property developers have a vital role to play in home building activity which can be a key driver of our post-pandemic economic recovery. But we also know that SME property developers face huge funding challenges. What are, in your opinion, those funding challenges?

You are absolutely right; SME property developers are finding increasingly difficult to access funding. Prior to the global financial crisis, mainstream lenders and banks were very active in the development finance lending space, but then after 2008-09 the music suddenly stopped, and overnight banks had no longer appetite to lend. Mainstream lenders have drastically changed their attitudes to the sector. Consequently, availability and terms of financing for residential development has become extremely difficult for small housebuilding companies over the past decade or so. As a result, large-scale Plc developers have increased their dominance, with SME developers finding it increasingly difficult to grow, compete and ultimately survive.

FR: Why is the lack of funding or difficulty in accessing it an issue for SME developers?

The challenges that SME property developers face when trying to unlock funding is an issue because it is ultimately hindering their ability to grow, to compete and to survive. Just to put it in numbers, in 1988, small developers were responsible for four in every ten new build homes in the UK, compared to around just 10% today. In other words, the number of SMEs in the UK home building sector has declined consistently since the beginning of the 1990s and funding, or rather the lack of it, is a key reason.

FR: Over the past few years, we have witnessed how technology can be a powerful tool when helping property developers get funding for their projects. How do you think technology can help improve the funding ecosystem and help more homes be built?

Technology brings transparency and transparency is something we really need in the development finance market. The development finance market has traditionally been very fragmented and lacked transparency ever since mainstream lenders exited the market because many of the smaller lenders are unregulated and not hugely sophisticated. So, the market really needed more regulation and more transparency, and this is exactly what tech-powered regulated lenders like us at Blend Network are bringing to the table. And we are seeing how developers are eager to work with professional lenders who are using the power of technology to provide a better, smoother and faster service within a regulated and transparent framework.

FR: Last year we saw many lenders stopped lending as Covid-19 hit. How was 2020 for specialist development finance lenders like Blend Network?

Covid-19 certainly exacerbated the funding gap as traditional lenders’ obligation to administer the Coronavirus Business Interruption Loan Scheme meant they had to re-focus their resources towards CBILS. But not all property developers were able to access CBILS and very few of the accredited lenders were active or knowledgeable in the specialist area of development finance. But that also provided an opportunity for alternative lenders like us at Blend Network who were able to keep an active funding lifeline to property developers in need of finance. We doubled our lending last year and were able to build some very strong new relationships with borrowers who had been left out in the cold by their lenders. In that sense, Covid-19 was an opportunity for specialist lenders like us to show how we can and must be part of the solution to solve the funding gap and help build more homes.

FR: How do you see the tech-powered specialist lending market evolving over the next few years?

I believe that tech has unleashed a new wave of innovation that’s now unstoppable, and that is a good thing for everyone involved in the real estate development market: it is good for property developers large and small, it is good for brokers, it is good for the Government trying to build more homes, it is good for the public who needs more homes and it is also good for the lenders. So, in that context, I see an unstoppable grow of the tech-powered specialist lending market over the next few years, and I also see increased collaboration and partnerships between specialist lenders and mainstream lenders.

FR: Blend Network recently funded the first tranche of its largest-ever project in less than 1 minute. Tell us more about what Blend Network has been up to over the past few months and what’s in store for 2021. How does Blend Network manage to fund its deals so fast?

Putting aside the challenges and hardships that Covid-19 brought for many people, it’s been a hugely exciting past 12 months at Blend Network. To start with, we doubled our lending volume last year amid the pandemic and were able to support many more SME property developers who were looking for funding as ‘lockdown on lending’ left many developers unable to borrow. As a result, Blend Network was also included in a list of the top-32 business heroes of Covid-19. We also kept expanding our team; we hired lending managers and lending associates, and most recently we also hired a COO. We were also recently granted direct authorisation by the FCA. On top of it all, we moved to bigger offices in January amid the lockdown. We did this to accommodate our growing team and ensure everyone returns to the office in a safe environment. So, it would be safe to say that our team has not stopped over the past few months. Looking forward, we believe 2021 will be another record year for Blend Network as we continue to actively fund development projects. We are also working on some exciting partnerships. So, watch this space!

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