Blog Post

An idea for London: Peer-to-peer-lending for housebuilders

Arya Taware shares the idea behind her business, FutureBricks – a peer-to-peer lending platform to finance small and medium-sized house builders.

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The problem

We aren’t building enough homes. The government believes that 300,000 dwellings must be delivered every year to meet the housing needs of the country’s growing population – but according to official figures, only 217,000 new homes were built in 2016-17. While this was an improvement on the numbers for the previous year, it is clearly difficult for many people to get on the property ladder.

In February 2017, the government published a white paper, Fixing our broken housing market which includes a plan for building homes at a faster rate and diversifying the housing market. This white paper highlights the decline of activity among small builders following the recession. Small builders registered only 18,000 new homes in 2015, down from 44,000 in 2007. This is important because these small to medium-sized builders (SMEs) provide affordable housing, which is what many first-time buyers want.

SMEs have struggled to access development finance, particularly since the 2008 banking crisis. The obstacles include stricter regulations, a poor economic climate, and little attention from the government. Many have struggled to stay afloat. But the UK needs smaller builders if we are to build more affordable residential properties.

The idea

Arya’s idea is a peer-to-peer-lending platform offering alternative finance to small and medium-sized house builders. It also opens up property investment – currently an exclusive activity accessible only to those with significant capital and the right connections – to a much wider pool of investors. Through the FutureBricks platform, anyone can invest as little as £1000 in property development projects for secured returns of up to 12 per cent per annum (capital at risk). This helps to democratise investments in property while also helping to solve the housing crisis.

The potential

FutureBricks can enable financing for the kind of housing projects that the UK needs. Their vision is to enable a financially self-sustaining housebuilding economy, reducing the need to depend on larger institutions for funding. At the same time, they will also trace the socioeconomic impacts of these property investments on local communities. A social impact feature will allow lenders to track the creation of jobs, as well as the number of trees planted and the amount of materials recycled – so that they can watch not only the accrual of interest, but also the social impact of their investments via a personalised dashboard.

Arya Taware is Founder & MD, FutureBricks.

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