Kuflink CEO Says UK Investors are Returning to Real Estate backed P2P Investments
Khattoare noted that investment inflows are coming in again, after the UK government started to ease Coronavirus-related lockdown measures.
Investor confidence returning to property-backed P2P
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Coffee with Kuflink; Investment Outlook
In our series “Coffee with Kuflink”, CEO Narinder Khattoare shares his thoughts on the Peer 2 Peer industry.
“Our experience demonstrates that confidence is returning on the part of investors. Since the lockdown has started to ease, inflows of new investment have been steady. Much of the new investment has come from previous customers who are returning because of their positive experience with Kuflink. Talking to them about their motivation for returning, the main reasons were the ease with which they can engage, the return and the professionalism behind the proposition.
Another reason for the return centres round the belief that the property market is not going to experience a cliff edge moment. Of course, this could be premature, however Kuflink’s reputation for picking projects with strong collateral security is now part of the brand identity among returning investors*. When added to the Chancellor’s stamp duty ‘amnesty’, the case for carefully chosen property backed P2P projects is a strong one.
New investors to Kuflink are sensibly looking for the kind of capital appreciation they can’t get by having money on deposit in a negative interest rate environment. They have weighed up the risk:reward balance and looked for one of the diminishing number of P2P providers still keen to accept personal investment, of which Kuflink is one.
The phrase ‘unprecedented times’ can be overused and we are all navigating in seas where there is no map, however the fundamentals of choosing the right projects to put on our platform, backed by good property as security*, remain the guiding stars in which our investors put their faith.”
*Capital is at risk and Kuflink is not protected by the FSCS. Past returns should not be used as a guide to future performance. Securing investments against UK property does not guarantee that your investments will be repaid and returns may be delayed.
Kuflink is Southampton FC’s P2P Investment Partner
Kuflink, a Peer to peer Platform, and Southampton FC share similar values and aspirations, making this partnership opportunity the ideal fit.
£50 Million Milestone for P2P Investment Platform Kuflink
Having undertaken just over 300,000 investments, in mid-June the P2P Investment Platform announced it had funded over £50 million worth of bridging and development loans since its establishment.
Kuflink to target development finance
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Coffee With Kuflink: A chat with Kuflink CEO Narinder Khattoare
We chat with Kuflink CEO Narinder Khattoare again, in our feature “Coffee with Kuflink”. This week: Prudence, Professionalism and Performance
When I was looking for a summary of what investors should be looking for in an investment vehicle, the three PS above seemed an appropriate shorthand to apply when searching for the right path to take.
As a P2P platform, Kuflink has managed to tick each box for its investors. Kuflink’s philosophy is based on a prudent approach to investment by ensuring that all of its investment opportunities are properly assessed and secured against property* which has been properly valued. In 4 years, (although there are no guarantees) not one investment has lost any part of our investors’ money*.
Our whole ethos is based around a team which is justifiably proud of its professionalism and deep knowledge of the property market. Our systems are designed to make investment on our platform as simple to navigate as possible and our online tools provide investors with all the information they need to make positive decisions over their future investment.
During the pandemic, Kuflink has maintained its presence in the market and continued to lend, where some of our peers have not. At the same time our approach saw us adjust our risk appetite to reflect the potential changes in the property market by reducing Loan to Values (LTVs), increasing terms and being particularly vigilant over valuations and cautious about large retail units.
Finally, our performance has remained consistent with realistic returns being offered and paid out*. In fact, unlike some of our competitors we have continued to pay interest to our investors throughout lock down.
That is the Kuflink difference.
Coffee with Kuflink; a chat with Narinder Khattoare, CEO
The first in a new series we’re bringing you; Coffee with Kuflink. An informal chat – what’s new, what’s current, and what’s on our minds.
Narinder Khattoare said, “There is no doubt that lenders like Kuflink have come through the COVID crisis very well. So many lenders dependent on the whims of their funders had to pull out and have yet to return. As a P2P business offering investors strong but sensible returns backed by the value of commercial property*, we were largely insulated and able to lend throughout the lockdown period.
We have been able to help a number of adviser firms who had clients caught out when their favoured lenders pulled offers or closed the door to new business. It also brings into perspective the old chestnut surrounding headline rates. So many brokers have been conditioned to look for the cheapest product, which is fine in principle if we are looking at long term lending but makes little sense in bridging particularly with terms of less then one year. Advisers should be looking for funding on which their clients can rely, rather than chasing a rate, for which very few cases will actually qualify and if they do, the money ‘saved’ in interest is actually negligible in real terms. At Kuflink, we maintain that the quality of service and funding availability we provide more than offsets the paper thin difference in interest charged.
In terms of what we are looking for as a lender, the answer is to move towards a stronger appetite for development finance, which we feel will be an area which is going to see considerable growth as the property market comes back to life.
Part of the reason also lies with the changing habits of investors, many of whom are looking to invest over longer periods, which would fit nicely with longer term development projects.
Ultimately though our mantra is that if we like the asset, can see a proper exit strategy then we are happy to lend over any term our products will allow from a few months upwards.
*Capital is at risk and Kuflink is not protected by the FSCS. Past returns should not be used as a guide to future performance. Securing investments against UK property does not guarantee that your investments will be repaid and returns may be delayed.
Parked Prices; A Look Back On April
Month four of lockdown, and there seems to be some light at the end of the tunnel.
Let’s reflect briefly over the changes throughout the economy during these strange and unprecedented times and see how the property market fared.
April; month one of lockdown. The worrisome unknowing of COVID-19 was at its peak, freedom of movement had been restricted, and a downturn was inevitable.
What was the effect?
“April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-covid-19 fall. In April the economy was around 25% smaller than in February.”
Jonathan Athow –
Deputy National Statistician for Economic Statistics
Record falls were also seen across all sectors:
- Services – largest monthly fall since series began in 1997
- Production – largest monthly fall since series began in 1968
- Manufacturing – largest monthly fall since series began in 1968
- Construction – largest monthly fall since series began in 2010Where did this leave the property market?
Guilfoyle, J., Rubinsohn, S., Ellison, S., Parsons, T. and Zehra, K., 2020. UK Residential Market Survey. [online] Rics.org. Available at: <https://www.rics.org/uk/news-insight/research/market-surveys/uk-residential-market-survey/>
The two graphs above show market demand through enquiries (left), in comparison with new vendor instructions (right).
RICS reported in April that “80% of survey contributors have seen buyers and sellers pull out of transactions” as a direct result of the pandemic (Guilfoyle et al., 2020).
This might seem alarming, however; Savills report on April demonstrated there to be no change in price (Hampson and Buckle, 2020). This was due to efficient market forces. New vendor instructions “fell in sync” with enquiries (Hampson and Buckle, 2020) as a result; property prices remained constant throughout April. It can be argued that actors within the market acted rationally during April. The combination of previously agreed sales being executed, and a pause in activity; enabled the property market maintained its value.
With property showing itself to be a good form of security, maintaining value during COVID-19’s first month of lockdown; sectors such as the P2P industry consider themselves to be in a forward-facing position. Narinder Khattoare, CEO at Kuflink, an exclusively property backed investment P2P company; is optimistic in future market conditions, stating that the steadiness in property prices “helps to show the effectiveness and stability of the P2P industry during times of crises” *. With properties maintaining their prices throughout April and May, and with COVID cases decreasing throughout the UK, the reopening of the market will have a positive impact on the P2P industry. In Narinder’s view; “Pent up demand will act as a catalyst” in propelling the industry forward, coming out of lockdown. Savill’s report echoes this sentiment, adding that although there is a pent-up demand, that demand has changed with an increase in desire for countryside properties and those with a garden. (Hampson and Buckle, 2020).
April was a strange time for everyone. Nearly all activity ceased, and fear increased. Looking back and analysing various sources of data; the efficiency of the market, along with policy implementation has prevented a repeat of the 2008/2009 housing crises. The drop in enquiries, along with new vendor instruction enabled value to be stored and an equilibrium maintained. For sectors such as the P2P industry, house prices remaining constant has been a great additional advantage, easing borrower and investor fear, whilst giving the sector an opportunity to prove its strength, and capabilities during economic downturn and crises.
Written by Jarom, June 2020.
References:
Athow, J., 2020. GDP Monthly Estimate, UK – Office For National Statistics. [online] Ons.gov.uk. Available at: www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/april2020
Guilfoyle, J., Rubinsohn, S., Ellison, S., Parsons, T. and Zehra, K., 2020. UK Residential Market Survey. [online] Rics.org. Available at: www.rics.org/uk/news-insight/research/market-surveys/uk-residential-market-survey
Hampson, E. and Buckle, C., 2020. Savills UK | UK Housing Market Update – May 2020. [online] Savills.co.uk. Available at: www.savills.co.uk/research_articles/229130/300057-0
*Capital is at risk and Kuflink is not protected by the FSCS. Past returns should not be used as a guide to future performance. Securing investments against UK property does not guarantee that your investments will be repaid and returns may be delayed. Please read our risk statement for full details.
