It is no secret that the UK is suffering from one of the worst housing crises in generations.
Governments have described it as the nation’s most urgent and complex challenge and said that solving it is the biggest domestic policy challenge of our generation.
The Covid-19 pandemic is set to make the crisis worse. A new study by Savills and Shelter shows that more than 300,000 planned new homes may remain on the drawing board in the next five years, the equivalent of the government’s annual target for building new homes. Lockdown-induced delays in construction and the recession will cut the number of new homes being built by 85,000 this year alone.
Disturbingly, construction of much-needed affordable and low-cost housing will suffer most. The research shows that social housing may fall to 4,300 units annually – the smallest number since the Second World War.
While Boris Johnson’s plan to reform the planning system and “build, build, build” is welcome, one key issue still needs addressing: funding. The Home Builders Federation report ‘Reversing the decline of small housebuilders: reinvigorating entrepreneurship and building more homes’ highlighted how availability and financing terms for residential development have become extremely difficult for small housebuilders over the past decade or so.
Traditional lenders have drastically changed their attitudes to the sector since the financial crisis. At a time when large-scale public borrowing will see an unprecedented deterioration in public finances, chancellor Rishi Sunak will be scratching his head as to where to find the cash.
This could be resolved by inviting alternative lenders such as Blend Network, which emerged in response to the lack of funding from traditional lenders after the financial crisis, to be part of the solution – particularly, peer-to-peer lending platforms.
The prime minister, who promised his government would “put its arms around people at a time of crisis”, would be delighted to know that we are able and willing to lend to SMEs and support the national housebuilding effort, and help deliver his vision to build the homes the country needs.
As a key players in the alternative lending space, Blend Network strongly believes the time is ripe for alternative finance providers to work
with traditional lenders and high-street banks to achieve a shared goal: delivering the houses the UK needs and supporting small housebuilders that struggle to access traditional funding channels.
Not only is this our duty, it is what investors are demanding. Our lenders, a mix of high-net-worth investors, family offices, institutional investors and retail investors, are looking for yield and are happy to invest in UK property-secured loans.
In the past couple of months, we have seen an increase in appetite from investors looking at private debt as a way to protect themselves against the volatility of the stock market. This led to us funding our two largest-ever loans, with a record number of lenders, in May and June.
Roxana Mohammadian-Molina is chief strategy officer at Blend Network