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Meet the Founders:
Why Brickflow was a necessity, not a nice-to-have
Ian Humphreys and Robert Lange explain why it was high time to bring the development finance market online
With research revealing that 39% of property developers have had sites stall or fall through due to issues with securing finance, it’s no surprise that the UK is facing a chronic housing shortage, with a deficit of over one million homes.
Combine this with an archaic, inaccessible development lending market, yet to join the majority of industries in the digital age, and it’s apparent why Brickflow founders Ian Humphreys and Robert Lange saw an opportunity to revolutionise the market.
In the first episode of our new podcast, Brick by Brick, two of the brains behind the bricks introduce the UK’s first search engine for development loans. In our interview, they discuss their personal experiences in the worlds of tech and commercial real estate, their motivation for launching Brickflow, and why it was critical to bring the property finance industry online.
Tell us about your experience and what attracted you to the property finance sector in the first place?
Like most kids I wasn’t sure what I wanted to do after university. A friend of mine introduced me to a mortgage brokerage, where I ended up working for the first five years of my career. I was lucky enough to receive great training and learned the ropes of property finance.
From there I joined a couple of guys who had set up on their own, specialising in high-end, more complex transactions, working with some fascinating entrepreneurial developers and investors from all around the world. I left to start my own business, focussing on similar clients, but always had one eye on the development of technology in the residential space; something that really interested me.
Residential Property Finance was becoming really efficient through technology, but the development finance market was still so behind.
I then did a stint as a property developer and encountered first-hand the frustrations that borrowers face. I think it was this experience, together with my interest in how technology was being used in other sectors, that led me to wanting to innovate in the commercial real estate space.
I love what I do and it’s undoubtedly the people that make it. No two projects are the same and learning about peoples’ journeys in property, and the hardships and sacrifices they have made to become successful is fascinating to me.
I’m all about sharing knowledge to benefit the industry, and the whole idea behind Brickflow is not only to help borrowers have better access to finance, but also to understand the market better as a whole, so they can ultimately be more successful.
I’ve written software for just about every sector, from e-commerce to telecommunications but primarily in the engineering and finance space. There are two sides to what I do; taking business ideas, and understanding them and implementing them in software through fairly complicated calculations and algorithms. I was attracted to the commercial development finance sector because of the coming together of these two situations.
So, why did you join forces to create Brickflow, and what are the problems you are trying to solve?
The primary problem we’re seeing in development finance is access. It’s not choice; there’s actually a lot of lenders. We estimate that there are about 40 to 50 in the market at any one time, depending on the economic climate.
But most developers only know a few and don’t know how to find other options, so they tend to find lenders through developer friends or a broker. There’s nothing wrong with this, but the majority don’t understand that loan offers vary hugely from lender to lender, so speaking to only a few lenders severely impedes your ability to progress as a developer.
If you speak to 20 lenders, you will get 20 different answers around loan amounts and loan pricing. So, like any search engine, Brickflow shows you as many answers as possible and organises them in a way that makes sense.
It’s impossible for an individual to get 20 lenders to quote for development finance, as it would take months. With Brickflow, we aid developers by giving instant visibility as to which loans might be available to them, and by putting them in order (largest loan first). Like any other search engine, you ask a question, which in this case is, ‘how much can I borrow and at what price?’.
Apart from loan amounts and pricing, what are the other factors borrowers should be aware of?
There are a lot of variables. If you take any site and move it from the South East to the North West, or Scotland for example, the number of lenders that will quote, the order of those lenders and the pricing will change. Similarly, if you reduce or increase the number of apartments in a block, or change the asset type from residential to student accommodation, everything will change again. So, any variable that changes can change the loan options that are best for you. Rather than starting from the beginning, Brickflow will immediately provide the best loan for your scenario
Whilst the development finance market and the method of calculating development finance are incredibly dynamic, the current method of finding it is static, and the two don’t match.
For example, if you ask a lender for their best offer on a Monday, it might be different by the Tuesday as there are things going on in the background that we would never see. Lenders will normally have restrictions on how much they can lend in a geographic region or in one particular asset class, and if the lender reaches that threshold between your initial conversation and when you apply for the loan months later, they may no longer be able to help you, or might be less competitive.
So, presumably bringing the development finance market online makes it much quicker and easier to apply for a loan?
In short, yes. All documentation can be uploaded onto Brickflow and sent securely. There’s no paperwork, so everything is very slick and easy. We’ve done manual development finance applications before and it’s not something we want to go back to. Some lenders don’t accept applications like Dropbox, so we’d have to send them all the paperwork through the post. We’re really trying to enforce change in the market. It’s mind-blowing that the industry hasn’t come into the digital age as a whole yet.
It’s probably one of the last to be untouched by technology, and there are a huge number of people involved in the process. You only need one of them to go on holiday and the whole system breaks down. There is plenty of technology available that could make the process better, but it’s not being used. It’s like the last 20 years haven’t happened, and the industry is really ready for a change.
The current system is really broken for lenders, borrowers, brokers and agents, and along with planning, securing finance is the other biggest contributor to the chronic shortage of housing in the UK. Resolve that problem and it benefits society as a whole.
If everyone in the industry is doing more business, it’s good for the economy, and ultimately everyone in the UK could have access to accommodation that they can afford. We see it as our role to help the whole industry to be better. If developers had visibility of the finance market, I think we could easily hit the annual housing target in the next five to 10 years.
What are your hopes for the future?
The hope is that we can help people to become more successful and be better developers. We’re not going to find them better sites or teach them how to build, but everything starts with the finance. If you make a bad decision on the finance, you’re chasing your tail all the way through the deal. If you pay too much for your funding, or you need investors where you profit share, or you don’t borrow enough, it means you’re not maximising each site’s potential or your returns.
Get the finance right and everything else becomes much easier, yet for most developers it’s a secondary consideration. They find the site, know what they can build and what it will sell for, and then they think about the finance. Really, the finance should be the first thing they think about, and that’s how a lot of people use Brickflow. They run sites through the software and won’t bother going to see the ones that aren’t coming up with the right numbers. So rather than wasting your time going to see 10 sites you could never afford based on the deposit level you have, you just go to see two because you’ve run the numbers through Brickflow.
It creates more opportunities and awareness and allows people to set their sights higher. A lot of people are surprised by how much you can borrow on sites. If the numbers align, and a lender really fancies a site, you can mobilise big sites with big profit margins off of very small deposits. Hopefully everyone who uses Brickflow will come away knowing more about finance and the industry, and will be more successful as a result.
My biggest hopes are really about Brickflow becoming the standard for developers for property development finance. We want to extend it so that the process becomes even smoother and provides more value in terms of what it’s doing for developers. With the way it’s reaching everybody, it almost becomes a verb – Brickflow is the thing to do for your property finance.
To listen to the full interview, download episode 1 of Brick by Brick, our brand-new podcast for the property development industry.
To find out more about how Brickflow can help you secure the development finance, get in touch on 020 3488 1674 or email firstname.lastname@example.org.
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