PR: What has Blend been up to over the past few months and what are its plans for the year?
YM: As development finance lenders, the past few months have certainly been frustrating as we have seen many of the SME property developers we support hit as collateral damage in an unfortunate episode of economic and political mismanagement. We ourselves are in a strong position and well capitalised due to being backed by capital from well-known family offices.
As a result, we have been able to step up our efforts and support SME property developers who saw their funding dry up overnight as a result of the crisis. But generally, it’s been tough to see our industry go through so much pain, especially SME property developers who are the lifeblood of our economy.
Looking to the future, sentiment around the housing market recovery has started to become a lot more positive and we have seen prices in many areas have held up much better than expected. Most excitingly, we are nominated in 2 categories at the upcoming Property Reporter Awards next week, (Best Specialist Lender and Best PropTech Company) which is very exciting and we are very much looking forward to attending the awards next week.
PR: Following last September's mini-budget, hundreds of mortgages were pulled from the market as panic spread throughout the financial markets. How was Blend able to navigate this and what has happened since?
YM: As I said, we are very lucky to be in a strong position and well-capitalised due to being backed by capital from well-known family offices. We had also closed an equity funding round a few months prior, so we were very well capitalised (and still are!).
Our source of funding, family offices and institutional investors, is a notoriously flexible source of funding, and so we are able to step our funding efforts and support developers who had seen their funding dry up by their traditional lenders or those who saw opportunities within the challenges and wanted to work with a lender who saw the opportunities through their eyes.
And that has really paid off because what we’ve learnt is that when you support a developer (or any client) through the tough times they stay with you for a lifetime.
So, we have been able to build some strong relationships with new customers while also continuing to support our existing customers. We have also expanded our activity in new markets such as Northern Ireland where we now have a well-established presence and Lending Managers on the ground.
This has been very important for the local community at a time when some other regional lenders have receded and we have been able to support many developers locally.
PR: Blend is currently shortlisted in 2 categories at this year's Property Reporter Awards (Best Specialist Lender & Best PropTech Company). As proptech, particularly AI such as ChatGPT, continues to transform the property industry, how are you using tech to support SME developers?
YM: For decades, innovation and tech were considered dirty words in housebuilding, a sector that was referred to by economists as ‘the backwards industry’ due to its reluctance to embrace technological innovation. Others described the industry as ‘conservative’ – some still do.
The reality is that for decades, the continuous efforts to disrupt the multi-trillion-pound industry have been consistently failing while many other sectors were embracing innovation with both hands. But things have been changing as of late.
We have witnessed a quiet, yet forceful transformation spearheaded by a new generation of younger, digitally savvy and socially engaged property developers eager to leverage innovation to help improve how we build, live, invest and sustain.
And as development finance lenders, our job is to support this new generation of property developers who live and breathe tech and who are looking to tech to make their life easier. From offering a fully digital onboarding journey to the use of AI to offer our customers insights and market information so they can make better decisions.
I can see several further technological innovations occurring in the housing market. For example, I can see Big Data and Analytics disrupting the housing market by helping us price a property through real-time regional price analysis and forecasted future price fluctuations.
I can also see Virtual and Augmented Reality disrupt the housing market by saving us time because they avoid us having to physically visit a property. Drones are also of course another big area where tech innovation could impact the housing market.
PR: What are your predictions for the property market over the next 12 months?
YM: In a piece back in January, I wrote that I expected greener, smarter, and nimbler to be the 3 property trends to watch for in 2023 and so far it seems that this is indeed the case. Greener because homebuyers are increasingly taking notice and searching for green features when looking for a home.
Smarter because homebuyers are increasingly becoming more aware of the capability of smart technologies to control the basic functions and features of their home either automatically or remotely. And nimbler because homebuyers are increasingly interested in smaller homes (due to the growing concern about their homes’ green credentials and energy bills, and propelled by the cost-of-living crisis and the millennial desire for freedom of movement).
PR: What were your thoughts on the recent Budget and how this may affect the property industry?
YM: Well, unfortunately, there really wasn’t much, or at all, for the property industry in the recent budget! For a budget intended to tackle the economic slowdown and the cost-of-living crisis, it failed to tackle the housing crisis that sits at the core of the UK’s economic challenges.
Without direct action, which sadly failed to materialise in the Budget, we will continue to see the cost of renting spiralling out of control and SME housebuilders will remain out in the cold unable to build the homes the country needs.
PR: Last year, you wrote an open letter to the Secretary of State for Levelling Up, Housing and Communities which outlined how the current government could hit its target of building 300,000 houses per year.
Since then, compulsory housebuilding targets have been scrapped in favour of 'advisory' targets. How is this likely to affect SME developers and how does Blend plan on navigating this latest government challenge?
YM: The Government’s 300,000 houses per year target was never met – we didn’t even get close enough to those targets. But instead of working hand in hand with the housing sector to find solutions that would enable us to achieve those targets, the Government took the easy way out and scrapped those targets.
I believe that this move reflects a lack of vision and certainly puts the country in a weak position to tackle the cost-of-renting crisis at a time when availability and quality of housing remains a key issue. We at Blend continue to work very closely with property developers, especially mid-sized developers who need funding to build more homes. We know that funding remains one of the key challenges that these SME developers face.
