IN THIS ISSUE
THE FORMALITIES
!"
FOREWORD A letter from our Founder, Matt Siddell
HERITAGE
!# BRERETON HALL By Emma Morby
DEVELOPMENT & CONSTRUCTION
$% MIND THE GAP: ADDRESSING AGE, SKILLS & IMAGE DISCREPANCIES IN CONSTRUCTION Cover featuring Oliver Lowrie,
By Jan Tore Grindheim
Architects, tells us about his personal journey building a practice to design the cities of the future on p. 40.
ISSUE NO. 17
Co-Founder of Ackroyd Lowrie
$& THIS TOWN (TOWN)... IS COMING LIKE A GHOST TOWN By Michelle Lowe
HOMES WITH HISTORY
%% WHAT’S IN A NAME WHEN IT COMES TO THE VALUE OF REAL ESTATE By Gary Hersham
INTERIORS
(% TOP TIPS FOR WORKING FROM HOME By Debbie Robinson
PROPERTY DEVELOPMENT
(# BRIEF LESSONS FROM SCALING A PROPERTY DEVELOPMENT COMPANY By Dorian Payne
PROPERTY FINANCE
'& ONE-STOP ISN’T A CLICHE - IT”S A VALUE PROPOSITION By Paul Oberschneider
#! A NEW GENERATION OF TECHPOWERED REGULATED LENDERS DISRUPTING THE LENDING MARKET By Paul Watson COVER / ARCHITECTURE
"! BUILDING A PRACTICE TO DESIGN CITIES OF THE FUTURE By Oliver Lowrie
CROWDFUNDING
'" PLANNING AHEAD By Mike Bristow
MEMBER PROFILE
#" TINA PATEL
FOREWORD _______________________________ Qandor Founder Matt Siddell Partner, Head of Content & Marketing George Le Roux Partner, Head of Membership Simon Podd Events & Publishing Manager Tess Lawson Photographer/Videographer James Evans Membership Manager Jordan Brown _______________________________ For editorial and advertising enquiries, please email: magazine@qandor.org Visit our website www.qandor.org Contributors Debbie Robinson Dorian Payne Emma Morby Gary Hersham Jan Tore Grindheim Michelle Lowe Oliver Lowrie Paul Oberschneider Paul Watson Tina Patel
Whilst it’s fair to say the construction industry has been historically slow to adopt technology, it’s great to read in this month’s issue how both Ackroyd Lowrie and Fonn are setting the pace of change. In his cover feature (page 40), Oli Lowrie talks of marginal gains in the same way an Olympic athlete looks to improve performance by making small adjustments to clothing, diet, equipment etc. Oli’s firm has successfully made such a tweak by adopting the use of Virtual Reality (VR) to take clients (two Qandor members are namechecked) and planners on a journey to bring the plans and schemes to life. In addition, Jan Tore Grindheim, Fonn’s CEO talks about embracing digital technology to help transform construction and address the major gap in skilled labour at the same time in his piece “Mind the Gap: Addressing Age, Skills & Image Discrepancies in Construction. Qandor members are the lifeblood of the club and we’ve introduced a new feature, “Member Profile”. This month, founding member Tina Patel from Formed Architects, talks about why, among other things, she started working in property (page 64). If you’d like to be featured in a future issue, do please contact the team. Of course, where Qandor excels is via the live events that allow you to meet each other in-person and network at a fine venue, such as the Summer Lunch at the Oxo Tower (page 66); where the fabulous weather meant a “summer” lunch was indeed delivered! Look out for the upcoming Diwali Dinner and Christmas Party too – l look forward to seeing you there.
_______________________________ Legal Qandor Ltd does not endorse any of the members or contributors to this publication. Always seek your own independent advice prior to investing or agreeing terms of business.
_______________________________ 004 – Qandor – Issue No. 17
M! Sidd" Founder
Matt Siddell
HERITAGE PROPERTY
BRERETON HALL EMMA MORBY Director of Land Acquisition Heritage England www.heritageengland.co.uk
This is one of the finest examples of a compact Country Estate with a Grade I Listed Elizabethan country house. With its long driveway and impressive entrance, why wouldn’t you be tempted? For this month’s property, I have focused more on how you can generate an income to maintain a Grade 1 listed property and still enjoy living in the wonders of an Elizabethan Country home. 006 – Qandor – Issue No. 17
The house dates back to 1586 and is listed in the Domesday book. It was originally built for Sir William Brereton who died in 1631. The home was passed down through generations and more recently it became a girl’s boarding school until July 1992. It was then bought as a retreat by a Pop Star who built a recording studio at the back of the property. More and more people are working from home or downsizing offices, so looking for a property offering both living and
HERITAGE PROPERTY
working accommodation is key to finding the right home. This beautiful Grade 1 listed country estate located in Cheshire recently sold for over £3,500,000. The main house comes with 12 bedrooms, 10 bathrooms / shower rooms, a large kitchen, 4 reception rooms, a billiards room, study, and a very impressive conservatory. 008 – Qandor – Issue No. 17
Brereton Hall has so much to offer for the ever-changing property market with a suite of offices which could be used to generate a rental income, plus a further estate office to manage the day-to-day home working.
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“This property is a great example of how you can mix an impressive family home whilst generating an income to maintain the listings”
It has approximately 120 acres with a number of outbuildings and garages. Some of the outbuildings are perfect for conversion under the planning principle of an enabling development. There is already planning permission on the stable block, so work could get started straight away, with a potential income of around £4,000 £6,000 per month. This could help towards the upkeep of the listed country house and the Estate. Often, historic buildings sell short of their list price, as most buyers are fearful of the upkeep. However, this property is a great example of how you can mix an impressive family home whilst generating an income to maintain the listings. Q.
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DEVELOPMENT & CONSTRUCTION
MIND THE GAP: ADDRESSING AGE, SKILLS & IMAGE DISCREPANCIES IN CONSTRUCTION JAN TORE GRINDHEIM CEO and Founder FONN Construction www.fonn.co.uk
Despite a prolonged economic downturn marked by redundancies, instability and the COVID-19 pandemic, the UK construction industry has been one of the main engines of growth in recent years. Globally, the construction market is expected to grow by approximately 70% by 20251. However, not unlike the situation in other nations, the UK construction workforce is steadily 012 – Qandor – Issue No. 16
aging, and the industry is failing to successfully promote careers in the trades that attract qualified professionals with both technical and trade skills. The construction industry has historically been slow to adopt technology, and several underlying factors are contributing to the gaps in age and skills, beginning with lack of development and appealing career paths.
Issue No. 12 – Qandor – 063
“Young workers are looking for change and ways to innovate and improve. They want advancement and excitement” Construction work can be perceived as rigid – “This is the way we’ve always done it” and “It’s worked this way for the last 120 years,” are heard far too often on projects. Young workers are looking for change and ways to innovate and improve. They want advancement and excitement in their chosen field of work. Just as a young person who has begun a career in tech wants to see a clear path to advancement and promotion, why shouldn’t a Level 4 Advanced Apprentice want to see a clear path to becoming a project manager, project coordinator, project executive or project support officer? They need to see the benefits of pursuing a career in a skilled trade such as construction, reasons to stay in the field, and ways they can bring innovation and positive change. By showing young people the benefits of working in construction and modernising construction techniques through technology, there will be an increase in the appeal for young people who are evaluating longer-lasting roles when choosing a career path. Another, and perhaps more obvious, issue is the shortage of skills. The gap in skills often results in additional costs, delays in production, and sometimes even lost business. The UK construction workforce is 014 – Qandor – Issue No. 17
an aging one, with over 20% of tradespeople being over 50 and 15% being in their 60s. The trouble is, as these plasterers, painters, brickies and plumbers retire, the same percentage of young people are not entering these professions. The construction industry covers careers in architectural design, engineering and project management along with on-site trades. All of these roles require specialist skills – whether it’s the designing of a building or the physical making of it. Although there are endless opportunities in various trades, only 3% of young people aged between 18-24 have searched for a job in the construction industry.2 But why? Whilst construction is one of the fastest growing industries, studies suggest it’s one of the least digitised. Many construction businesses struggle to invest or implement new technology. Hence, it’s no surprise that a global report from McKinsey Global Institute recognised construction as the second least digitised sector in the world. (The least digitised being ¬noted as agriculture and hunting).3 The lagging use of technology puts many companies at a disadvantage when it comes to executing their projects in a cost and time-efficient manner. The younger generation of workers needed to fill this gap were practically born with a mobile device in hand. They’ve grown up with technology, and the industry needs their technical prowess. They don’t know a world without lightningfast broadband, smart devices, and instant access to information. Subsequently, if the young people needed to fill the gap don’t see or experience familiar apps and other technological advancements being used by trade workers, it stands to reason they won’t be interested or even relate to a career as an electrician or plumber, for example. The
government is already recognising this with a number of initiatives launched last year aiming to help the sec¬¬tor adopt newer technologies and increase productivity levels. And finally, let us not ignore the image of construction work. For many years now, young people leaving school have been encouraged to “better themselves” and go to university. Construction has a reputation for being dangerous and dirty work as well as an industry of middle-aged white men. The skills shortage in construction may be – in part – a demographic one, with women and ethnic groups feeling construction is not the place for them, and an industry that does not embrace diversity. With Brexit also influencing the available number of workers, construction may also be perceived as an unskilled field of employment by British nationals. It isn’t all doom and gloom. In an increasingly digitised world, we have the capacity and availability to introduce workers – both young and aging – to new digital tools
and technologies. Collaboration between educators and construction companies who are already using these technologies and willing to provide apprenticeships, is instrumental in closing the gap. Utilising software solutions and apps that are webbased and easy to use can help both fresh graduates and long-term workers come to grips with game-changing technology. Products such as construction management software can enhance projects from start to finish, ensure better accuracy of the construction project, use materials more efficiently and help create safer working environments. It also allows young people to feel more at ease in an environment that recognises and respects the digital skills they bring and share whilst teaching them a trade. Widening and diversifying the talent pool for recruitment and acceptance into the industry is another way to stop limiting the number of people entering the industry. Pushing back against the perceived idea that construction is a “boy’s club” and challenging Issue No. 17 – Qandor – 015
gender inequality in construction will make the industry more appealing to women, vastly increasing the number of people interested in a career in construction. As an industry, we must be willing to examine our hesitation to adopt resources that have launched the rest of our world forward. Embracing digital technology will help transform construction by ensuring the planning, building and maintenance of our infrastructure is done in a more profitable, collaborative and sustainable way. If a side effect of this adoption also helps us fill a major gap in skilled labor, we would be foolish not to take an objective look at what’s available in construction technology. Q.
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References HM Government: Construction 2025, Industrial Strategy: government and industry in partnership, July 2013 1
https://www.ukconstructionmedia.co.uk/case- study/skills-shortagerising-cost-construction/ 2
3
https://www.globalinfrastructureinitiative.com/ sites/default/files/pdf/The-digital-future-ofconstruction-Oct-2016.pdf
4
https://www.chas.co.uk/blog/tackling-construction-skills-shortage/
DEVELOPMENT & CONSTRUCTION
THIS TOWN (TOWN)… IS COMING LIKE A GHOST TOWN MICHELLE LOWE Founding Director Redshell Project www.redshell.org
The Construction Industry is busy! Booming maybe. There is no shortage of new and exciting projects, main contractors are busy tendering, suppliers and manufacturers are reporting no downturn in demand. After the rocky past few years, this should be good, you say? 018 – Qandor – Issue No. 17
We’ve weathered the COVID storms over the last 18 months. The site closures, the CILC and government directives on remaining operational during the pandemic and safe working practices, the isolations and even we, to a fashion, are weathering material delays and price hikes as a result of Brexit.
What we are not weathering, what has brought our sites and projects to an absolute standstill recently, is a much more homegrown issue. Labour shortages. For the last three months I have noticed, with alarming blatancy, the painfully slow, if any, progress on some of my live sites. I have never experienced such obvious downturn in productivity over my time in the industry over multiple projects. The odd one maybe, for reasons altogether outside of this. But not across the board. On my last few site visits, I haven’t taken any progress photographs. Too embarrassed, I think. I can barely see any progress of the project. Valuations have been pitifully low, and the head count? Well, even my £5m build had just two operatives working on-site at the last visit. I just couldn’t bear to share any more photos of the same steel frame that was still going up! The frustrations are tangible, and confusing! With the industry still busy, projects, funding and workflow all available, it made no sense that productivity could be so slow, and with both the client team and main contractor unable to do very much about it. Construction programmes are now stretching like elastic, with everything pretty
much a fluid best guess. We are in the hands of the gods. Well, the operatives. But right now, that seems like quite the same thing. This isn’t just a site by site problem, nor I think a blip over the summer of 2021. This has a far-reaching implication that I suspect is going to get much worse before it gets better. The Construction Leadership Council reported construction output in June 2021 at just 0.3%. A fall of 1.3% in the month, combined with a 25% increase in vacancies from the pre-pandemic times of 2019. Yet, new construction orders grew by a whopping 17.66% over the second quarter of 2021. Can you foresee the problem here? The labour shortages we are currently experiencing, however, are not just a result of the current high demand but compounded by a lack of homegrown skilled workforce in the first instance. Now, who didn’t know this was coming? Who hadn’t heard the phrase ‘labour shortages’ or ‘lack of skilled workforce’ over the last 10, or even 20 years? Government initiatives had been made with various parties, the CITB (Construction Industry Training Board) and the like to encourage careers in construction. But I guess, with less than desirable results. Construction News has reported that
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we are currently running at 100,000 fewer construction workers currently in the UK than in March 2020, pre-pandemic. 100,000 fewer naturally, let alone the increase in construction orders. Construction News predicts a requirement of 217,000 new construction operatives in order to keep up with demand. We have relied heavily on the influx of construction workers from Europe or even further afield over the last decade or so. The ability to rely on this, it seems, is firmly over. Speaking with main contractors has revealed some of their frustrations currently experienced. The procurement process for any trade is now incredibly long and difficult, with tendering to up to 10 different subcontractors required for each trade. Trying to get a response, trying to get interest, trying to get a commitment, trying to get a reasonable price. The subcontractors in high demand, particularly over the summer with a reduced workforce, are able to pick and choose, to dictate their availability, lead in and of course their prices. And if a job is not of interest, then straight up turn it down. Our project at Stratford stood still for the summer whilst the bricklayers went home to Europe. In past lives we would have replaced the bricklayers with a company whom were able to resource. The project led. It doesn’t now. Reading the news this week, this doesn’t seem to be solely a construction issue. Sky News reported on the current vacancy crisis, with the top 10 jobs where people are needed now. HGV drivers and nurses top the bill, with metal working production and maintenance fitters at 8th and carpenters and joiners at 9th place. In my own experience bricklayers need to be added to the mix.
Filling these voids won’t be an easy task, and with any trade taking some years of training and experience before they become viable, we will have a lull in resource for some years yet. What this has brought about are some considerable labour rate price increases in recent times as demand outstrips supply. The latest labour data from the ONS showed the average weekly earnings for people in the construction industry have jumped almost 14% between April 2020, when the UK was in lockdown, and April 2021. It is the highest increase recorded in any industry. This may be our only carrot to dangle. Material prices are shooting through the roof, labour rates are shooting through the roof, construction projects are systematically delayed. So, who pays the bill for all of this? Well, in the first instance the main contractors, depending upon the form of contract, are responsible for the resourcing of the project. But let’s not all be naive and think that these cost increases won’t filter through to the developer, employer and end purchaser. There are two parts of the chain that are not having to suffer the escalating costs at the moment: suppliers and subcontractors alike. For the first time these parties are standing firm, sitting comfortably in the supply and demand chain, and with a regal wave of a godlike hand, they are currently dictating. Will construction costs, both labour and materials stabilise? Will we be able to adequately resource our projects? Stay tuned for the next exciting instalment. Q.
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HOMES WITH HISTORY
WHAT’S IN A NAME WHEN IT COMES TO THE VALUE OF REAL ESTATE? GARY HERSHAM Founder Beauchamp Estates www.beauchamp.com
While the ‘fame’ factor may add a certain cache and unique provenance to a given property, it is rarely this alone that bolsters its value. The connection to a wellknown individual or institution will certainly help garner media 022 – Qandor – Issue No. 17
attention at sale time, and the bigger the name, the bigger the headlines.
Generally, homes occupied by famous individuals need to have more than the obligatory Blue Plaque outside if they are to deliver real, real estate value. A flat once lived in by Jimi Hendrix will attract interest, but the fact adds little more than promotional value.
A house that was the childhood home of Sir Winston Churchill will, however, carry greater weight due to the fact that the property in question is a grand townhouse in Connaught Place, London, with a Blue Plaque in the name of his father, Sir Randolph Churchill. Issue No. 17 – Qandor – 023
HOMES WITH HISTORY
When the name is almost legendary and relates to the man who is credited with having introduced production line assembly to the automotive industry and has provided such iconic quotes as, ‘Any customer can have a car painted any colour that he wants so long as it is black’ and a personal favourite, ‘You can’t build a reputation on what you are going to do’, then both the level of interest and the property are going to be exceptional. 024 – Qandor – Issue No. 17
When the property was also home to not one, but two former Prime Ministers, then the potential interest is likely to be global and significant. The Grade II* listed Blue Plaque Belgravia home of Mrs Henry Ford II, used by Prime Minister Margaret Thatcher, and originally the home of Prime Minister Stanley Baldwin at 93 Eaton Square, is the property in question.
The four-bedroom main residence on London’s Eaton Square, and an interconnecting two-bedroom mews house at 35 Eaton Mews North, provide 7,489 sq ft (695.8 sq m) of living space including grand reception rooms, elegant bedroom suites, a spacious patio garden, a garage and was brought to the market by Beauchamp Estates.
Located in the best central position on the favoured northern side of Eaton Square, the main residence and mews together not only provide spacious accommodation on a rarely seen level, but come complete with what can genuinely only be described as an outstanding history that includes the 1936 Royal Abdication Crisis, two Prime Ministers, Royalty, captains of industry and celebrities.
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Eaton Square is London’s largest and most renowned garden square with number 93 part of a palatial white-stucco terrace of grand residences designed in classical style, originally built in 1827-1828 by Thomas Cubitt, under the auspices of the Marquess (later Duke) of Westminster. In 1913, 93 Eaton Square became the London home of conservative politician Stanley Baldwin, who would go on to become Prime Minister, and his wife, the couple moving upon Baldwin’s retirement in 1937 to 69 Eaton Square. 028 – Qandor – Issue No. 17
It is in the grand main reception room of 93 Eaton Square and the adjoining dining room that Stanley Baldwin entertained his cousin and close friend, author Rudyard Kipling, and politicians including Winston Churchill, Neville Chamberlain and Lord Halifax. It is also where he entertained the Prince of Wales, later King Edward VIII, of which it is said the two took an instant and mutual dislike of each other, and the address at which the seeds of the famous 1936 Royal Abdication Crisis were sown.
In the early 1980s Henry Ford II purchased the property with his wife Kathleen DuRoss Ford so that they could have a London residence to complement their UK country house, Turville Grange, near Henley-onThames that Henry II had owned since the 1970s. Henry Ford II was the eldest grandson of Ford Motor Company founder Henry Ford and between 1945-1979 was the CEO of the world-renowned firm and remained the ultimate authority at Ford until his death in 1987.
Kathleen DuRoss Ford, a former model, accomplished photographer and keen aesthete, transformed 93 Eaton Square into one of the most elegant and gracious homes in Belgravia, commissioning architect Jeffrey Smith and renowned design house Colefax & Fowler to refurbish and decorate the interiors in an English country-house style. After Henry II’s death, each year Kathleen would spend six months during the summer at Eaton Square and Turville Grange and the winter in Palm Beach, with
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“Homes occupied by famous individuals need to have more than the obligatory blue plaque outside if they are to deliver real, real estate value” Eaton Square staffed by a housekeeper, chef and driver. Kathleen loved music, fashion, films and backgammon and alongside family members guests included Lee Radziwill, sister of Jackie Kennedy Onassis, actress Lily Tomlin and fashion designer Karl Lagerfeld. When Prime Minister Margaret Thatcher left office in 1990, Kathleen generously lent her 93 Eaton Square, which Thatcher and her husband Denis then used as their Belgravia home until they purchased a house in 1991 in nearby Chester Square. Kathleen and Margaret remained in touch, and on occasion Kathleen would entertain Thatcher to lunch in the dining room of 93 Eaton Square. 93 Eaton Square offers a glimpse into history and the elegant and refined private world of one of America’s most celebrated families. The location has a cache in its own right, and if extended, remodelled and refurbished, the property could yield a new owner a substantial return, in excess of its current asking price of £23 million. How then do you harness the property’s exceptional history to advantage? Q.
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In the course of our 40-year history, Beauchamp Estates has been instructed on an almost bewildering number of outstanding properties, many with exceptional and interesting histories, that are of interest not only to potential buyers but also the world at large. Researching, discovering and telling these stories has almost allowed ‘the walls to talk’, and it has been our privilege to share these stories, securing targeted media exposure in the process for our clients. From a home that once served as Napoleon’s battle HQ in Italy, to an estate owned by media mogul William Randolph Hearst in Beverly Hills, via the inspiration for the house in Dodie Smith’s 101 Dalmatians, every home has a history and occasionally a great story to tell; though infamy can equally secure headlines in our experience, this is quite a different matter and generally best avoided. Beauchamp Estates Anthology: Homes with History, is a compendium of some of Beauchamp Estates’ most famous instructions, to be published later this year and will be available from Beauchamp Estates and Amazon.co.uk. Beauchamp Estates Tel: +44 (0)20 7499 7722 W: www.beauchamp.com
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INTERIORS
TOP TIPS FOR WORKING FROM HOME DEBBIE ROBINSON Managing Director House to Home www.house2home.co.uk
While trying to separate work from leisure time, which is now more difficult than ever, seeing that a lot of us both work and live at home – the lines are very blurred. The ideal scenario is to have a separate home office space so you can close the door, but if that’s not possible, how can you create/divide space to make the distinction between work and play? 032 – Qandor – Issue No. 17
We understand that incorporating a workspace into a small home may be challenging, but our designers have some top tips to inspire some productive spaces.
For many of us, working from home is the new normal, rather than the way that it’s always been. And when that’s the case, taking a space that’s previously been used for other purposes and switching it over to your full-time home office can understandably be quite the transition. By this point, however, it’s been more than a year of working from home, and with little sign that we’re heading back to the traditional office (at least on a full-time basis) anytime soon, now is the time to find your best work from home setup if you haven’t already. Over the last year we’ve all approached this differently. Dining tables have become desks, and sheds have become ‘offices with a short-commute’. How you divide work and
home while at home pretty much depends on how big your house is, and how many people live in it. I have seen spectacular understairs offices, and I’ve set up garden pods that, quite frankly, I could have set up home in. A little corner hub in a kitchen and living room works for most people, but I would say try to avoid setting up an office in your bedroom (this is one place that should be sacred, and totally work-free). Whether you’re freelancing or fulltiming it, working solo or spending your days fielding video meetings, let me share some of my useful must-haves for your ultimate home office setup that will help you be at your best day in and out – even if you’re wearing your PJs while you do it!
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1. Desk Call me Captain Obvious, but if you’re working from home, you really do need a desk. Don’t roll your eyes at me – I’ve tried to work remotely whilst staying away from home and trust me: makeshift desks just aren’t the same. If you’ve got an unused corner of your home, you’ve got space for a desk which will be hugely beneficial in terms of helping you switch in and out of productivity mode. 2. Ergonomic Office Chair Unless you’re opting for a standing desk, in which case you’re a brave soul and I salute you, you’ll also need a chair. There’s no point searching far and wide for a desk that supports your posture, only to do all your work on a bar stool. Instead, choose a chair that gives you the support you need and deserve. The perfect office chair will vary between people, but look for a slightly reclined position, dynamic back movement, and back support. 3. Light I hope you work in a south-facing house with twelve hours of sunlight a day, and that your office room has huge glass windows. But, if like me it’s not, or if you prefer to work at night, this is where having the right light comes in. And even beyond that, the light that you choose for your home workspace can have a big impact on how you feel while you’re working, with a lack of light leading not just to squinty eyes and headaches but to the potential for poor mental health. You can choose between a table lamp and a floor lamp, depending on how much space you have and which you like the look of. I prefer a floor lamp with a light above my head level as I feel it’s better for my eyes. Just my preference. Whichever you choose, evidence suggests using 500 lumens per square meter (this is as technical as I get!), and opting for white light is best to increase productivity. 034 – Qandor – Issue No. 17
4. Communication When I say communication, I’m not talking about office gossip that so many of us miss. But if your home job involves working with clients, you need the right equipment. One of the biggest issues that work from homers have is that it can be hard to focus with kids, significant others and/or pets around. A good workaround is to have a pair of headphones that can hep you tune out the background noise and get into a work frame of mind, regardless of whether you opt for music, a podcast or some good old-fashioned silence. Decide if you want to go wire-free or not with your headphones, as well as if you’re looking for a noise cancelling option or just a set that will tamper down the volume of whatever is going on around you. Personally, I’d recommend investing in a Bluetooth headset with an attachable microphone – it makes such a big difference for sound quality during conferences or calls. You could also consider a voice over IP for cheap (and sometimes free) phone calls without a phone, and a phone dock to charge your phone cable-free.
5. Desktop Organiser Don’t you just hate having a load of papers and random stuff lying around on your desk? I know I do; that’s why I use a desktop organiser. Although technically you still have a load of random stuff lying around, it just looks so much better once it’s placed in an organiser. It all comes back to that mental well-being for me!
6. High-speed internet access Wherever you set up your workspace, make sure your Wi-Fi isn’t going to let you down. When I move clients from A to B, I am often asked to check the Wi-Fi and make improvements if necessary. Make the most of whatever you have by upgrading to a great package and splashing out on a quality router. Once you make the switch, you’ll wonder how you survived before! And finally, there’s a reason every desk you see on Pinterest has plants and other greenery. Yes, flowers look pretty, but they’re also great for our mental health. Go to your local garden centre and pick up a few plants that catch your eye, then pop them into some aesthetically pleasing pots. And if you’re bored at staring at the same four walls, splurge on some new wall art. It’s amazing what a difference a new view can make! Q. Issue No. 17 – Qandor – 035
PROPERTY DEVELOPMENT
BRIEF LESSONS FROM SCALING A PROPERTY DEVELOPMENT COMPANY DORIAN PAYNE Co-Founder & Managing Director Castell Developments Ltd www.castellgroup.co.uk
Scaling a property development company is a difficult venture to undertake. The industry is very capital-intensive with a lot of uncontrollable yet significant ‘hoops’ to jump through, plus all the ‘red tape’ that accompanies it. It is also at full exposure to market volatility. That being said, it is a lifechanging business if it works out well, and that’s why, despite the 036 – Qandor – Issue No. 17
difficulty, there are new entrants to the industry looking to scale a property development company. We are early in our scaling journey but have reached some key milestones in a short space of time, and so I feel it is fitting to share some lessons that have been learned up to this point. These have been condensed as I could probably write a detailed book if I was to cover everything!
Where We Are: Castell Group is a high-growth property development company that specialises in building high-quality affordable, social and disabled homes throughout South Wales. Over the past two years, we have raised in excess of £10M in debt and equity financing whilst securing a project pipeline of over £40M in project value, all of which has been forwardsold to local Registered Social Housing Landlords. We have secured the backing of a family office and are well on track to achieve our phase 1 goal of building 250 homes per annum for those truly in need. LESSONS (IN NO PARTICULAR ORDER):
1. Clear Vision Having a clear vision of what the company should look like in the future, and even now, is extremely important and I believe will continue to be important for as long as the company is operational. It doesn’t necessarily matter how big or small the goals are, or what type of developments the company focuses on. Having a clear vision keeps the company and team focused and reduces the likelihood of ‘shiny penny syndrome’. I’ve had personal feedback in various meetings with new customers, team members and investors that the clear vision comes across as inspiring and exciting; it makes people want to be a part of the journey. It also helps with company goal setting and performance audits of what is happening versus what should be. !"##$% &'()*+((% ,+-$+.(% /.+-0+% -% 1)()#*2% -.0)/',-0+%03+%1)()#*2%4-(()#*-0+,5%#6*%03+% 1)()#*%-*$%.+,+*0,+((,5%$.)1+%)0%0#%/#74,+0)#*89% :%;-/<%=+,/3
2. Strategy It is probably best to say now that original strategy and timescales probably aren’t going to work out the way you thought. That’s why a lot of business development books advise on not spending a lot of time trying to map the exact route to success. It’s better to understand your starting position, have a clear goal or targets and focus on building the relevant team and support network who will share your goal. This will help you to keep motivated and make it easier to keep moving forward when things inevitably don’t go to plan. !>+0?(% @#% )*1+*0% 0#7#..#62% .-03+.% 03-*% 6#..5)*@%-&#'0%63-0%3-44+*+$%5+(0+.$-589% :%A0+1+%;#&( 3. Cash Cash management is phenomenally important within your property development company because, as previously stated, this is a very capital-intensive business. It really won’t take long for you to find yourself in difficulty if cash management isn’t high on the agenda. If this isn’t a strong point for you, then I recommend you find a business partner for whom it is, or that one of your first employees be someone with the ability to understand and manage the numbers. Throughout your growth, funds will be needed for the following: !"#$%&'()*#%+,-.,(/01#2)345/2)6#(/&2)#07(8 9"# :2',42),# '-%;,37# 3%070# 2)345/2)6# /,026)1# '4())2)61#4,6(401#-,'%-70#,73" <"#=,(4#,>527(?4,#3%)7-2?572%)# @"# :-%;,37# A5)/2)6# 0.%-7A(440# B# /5,# 7%# %+,-0',)/0#%-#A%-C(-/#A5)/2)6#,4,&,)70#%A# (#?524/#3%)7-(37
Issue No. 17 – Qandor – 037
We currently have over £1M invested in pipeline project costs, and this is only set to grow. We have a master cashflow forecast, which automatically takes the income or expenses from our pre-construction cashflow forecast, overhead forecast and individual construction project net cashflow per month. This is then compared with cash reserves and live finance facilities. Thus, it is a fundamental cash management tool that allows us to forecast when new facilities are needed and/ or when strategic business decisions need to be made to prevent cash running out.
As you’re building your team, don’t forget that in addition to having clear roles and responsibilities, they need to have the relevant authority to deliver on their roles without being hindered. There also needs to be clear accountability and a culture of constant learning, with no holding back for fear of making mistakes. Invest in your team, and they will return dividends. Also celebrate successes, acknowledge their achievements, and undertake detailed one-to-ones with them in order to build trust and seek their feedback.
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4. Team It is an understatement to say that your team is an important part of the business’s growth. At an early stage when the company is scaling, having a strong team is vital, which saves years of time due to higher performance. It’s harder than you may think to find good people who can fit in with the company’s culture. Individuals (or yourself) may cause more damage than good by trying to undertake a variety of roles. It is better to get highly skilled team members who can fulfil clear roles required to take the business forward. One of the difficult things about building a property development company is that cashflow can be very lumpy. So if you’re starting with no/low working capital, which will easily be eaten up in building the pipeline, there may not be sufficient funds to invest and grow a team to undertake all the roles required. This is a genuine risk that will need to be considered in detail by each individual business. 038 – Qandor – Issue No. 16
5. Leadership Developing leadership skills is a constant learning curve as the company’s activity or size grows; this means dealing with different problems or opportunities. Thus, leadership can be quite fluid in the company’s early phases of development but must focus on both a charismatic as well as transactional approach where systems, controls, targets and individual performance metrics are emphasised. Some key points for a leader to remember when scaling are as follows: ("#D,&(2)#.5&?4,# ?"#E%350#%)#%7.,-#',%'4,F0#0533,00#()/#.,4'# 7.,&#(3.2,+,#7.,#C2)0# 3"#$(-,#&%-,#(?%57#7.,#3%&'()*F0#6-%C7.# ()/#0533,00#-(7.,-#7.()#',-0%)(4#6(2)0 /"#=%#C.(7,+,-#),,/0#7%#?,#/%),# ,"#G33,'7#-,0'%)02?2427* A"#H,,I#A,,/?(3I 6"#J2+,#A,,/?(3I ."#$%)72)5,#7%#4,(-)K-,(/#(?%57#4,(/,-0.2'1# 0,4AL(C(-,),00#()/#7,(&#&()(6,&,)7 2"#M,#.%),07#()/#-,(420723# ;"#N,(-)#A-%&#&207(I,0
“A genuine leader is not a searcher for consensus but a moulder of consensus.” MARTIN LUTHER KING JR
6. Execution When scaling your business there is going to be a tremendous amount of ‘stuff ’ to do. This will only get worse, and it can be very easy to become extremely busy whilst not really getting anything meaningful done. It is also very easy to be trading but not really understanding what the performance looks like. It is difficult to explain in such a short piece, but focusing on execution will be the difference between growing slowly or growing more quickly without making avoidable mistakes. The business generates a significant amount of data that will normally be telling you what’s needed; you just need to have relevant systems and processes in place to organise that data in a way that makes decision making efficient. I will need to give examples in a future article to build on this in more detail. In a nutshell, try to consider the following in your business: ("#E(3,#7.,#A(370#B#O.(7F0#C%-I2)61#C.(7#20)F7# C%-I2)61#C.(7#(-,#*%5-#7,(&#0(*2)61#C.(7#(-,# *%5#3507%&,-0#%-#%7.,-#07(I,.%4/,-0#0(*2)6P# H,,I# A,,/?(3I# 2A# *%5# 3()F7# 0,,# '-%?4,&0# *%5-0,4A"# ?"#O.(7#(-,#7.,#3%&'()*F0#'-2%-272,0P# 3"# $%)02/,-# /%2)6# ()# ,Q,-320,# C.,-,# *%5# .%),074*# 7-(3I# C.(7# *%5# 0',)/# *%5-# 72&,# /%2)6#2)#7.,#C%-I2)6#/(*0#A%-#%),#C,,I1#7.,)#
3%&'(-,# 7.(7# (6(2)07# *%5-# '-2%-272,0"# R.,# -,0547#C244#&%07#'-%?(?4*#0.%C#*%5#(375(44*# 0',)/#(#A-(372%)#%A#*%5-#72&,#(372%)2)6#*%5-# '-2%-272,0"# /"#O.(7#/(7(#(-,#*%5#3('75-2)6#+,-050#C.(7# *%5#0.%54/#?,#3('75-2)6K&,(05-2)6P## ,"#O.(7#0*07,&0#/%#*%5#.(+,#2)#'4(3,#%-#),,/# 7%# .(+,# 2)# '4(3,# 7%# &(I,# %',-(72%)0# &%-,# ,S32,)7P ! =)03#'0% (0.-0+@52% +M+/'0)#*% )(% -)7,+((8% =)03#'0%+M+/'0)#*2%(0.-0+@5%)(%'(+,+((89% :%N#..)(%E3-*@ 7. Culture The culture of a company is critical to its successful growth because it is the intangible foundation that gives the team its sense of purpose. Until your company is relatively large, you will have a significant influence over this culture because a large part of it will be reflected by your leadership, personality, mannerisms, views, values and opinions. It is paramount that you become conscious of this and frequently undertake a self-review to ensure you are energising the company with the correct culture. Some key characteristics we look for within our culture are as follows: ("#J-%C7.#&2)/0,7# ?"#:5-'%0,L/-2+,)#&2)/0,7 3"#T8,372+,#3%&&5)23(72%)#U#A,,/?(3I# /"#G33%5)7(?2427*# ,"#$%)07-5372+,#/,?(7,#U#7,(&C%-I# A"#:-%(372+,),00# 6"# T)7-,'-,),5-2(4# # U# '-%?4,&L0%4+2)6# &2)/0,7 ."#T/53(72%)#U#',-0%)(4#/,+,4%'&,)7 !E#74-*5% /',0'.+% )(% 03+% &-/<&#*+% #J% -*5% ('//+((J',%#.@-*)(-0)#*89% :%"-.5%O-5*+./3'< Q.
Issue No. 17 – Qandor – 039
COVER STORY / ARCHITECTURE
BUILDING A PRACTICE TO DESIGN THE CITIES OF THE FUTURE OLIVER LOWRIE Director Ackroyd Lowrie www.ackroydlowrie.com
In the heart of East London, fastgrowing architectural practice Ackroyd Lowrie is attracting attention. Delivering imaginative, sustainable and award-winning schemes that hold real commercial value, the firm is adamant about offering more than just good design. 040 – Qandor – Issue No. 17
“From the outset, our intention was to do things differently,” explains director and co-founder Oliver Lowrie. “After more than a decade each in the industry, my co-director, Jon Ackroyd and I realised there was a genuine opportunity to start a practice that would work smarter, emphasise collaboration and reimagine what architects could offer their clients, including how this could improve the cities they create.
We wanted to better utilise technology and bring our environmental expertise to the forefront, encouraging mainstream developers towards more sustainable thinking without compromising on value, design or the end-user experience.” From humble beginnings delivering schemes of just three or four units, Oli and Jon have grown Ackroyd Lowrie to a team of 30, working on residential developments in excess of 100 units as well as major commercial and educational projects including the unique Alva Coachworks film and photographic studio and the conversion of the Royal Academy of Dance into a secondary school for Thomas’s Day School. Oli added: “Our initial ambition was to focus on urban, brownfield sites: places
we could reuse, revitalise or retrofit to build the cities of the future. Happily, this has really become what we’re known for, and the majority of our current work involves regeneration. We put people at the heart of our design to create healthy and sustainable environments that will encourage a return to town centres and high streets.” Whilst this design-led approach is crucial, Oli believes what sets Ackroyd Lowrie apart is the firm’s ability to seek other avenues to add value. “Most architects focus heavily on the design proposal, sometimes overlooking the wider property development process. We take a more holistic approach. By concentrating on the client and other gatekeepers such as planners, local politicians or estate agents, Issue No. 17 – Qandor – 041
COVER STORY / ARCHITECTURE
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we can ensure that we not only achieve the optimum planning consent, but that the product is appropriate for the local market. Engagement of this level also helps negotiate potential obstacles, and we find this leads to faster realisation of a site’s maximum value,” he said. One of the ways this engagement is achieved is through Virtual Reality (VR) technology. On every project, Ackroyd Lowrie uses VR headsets to present a unique, first-person perspective. This, the firm says, not only helps promote its ethos of putting people at the centre of design but also enables planners to understand a proposal from street view rather than in elevation.
“We’re always careful to design our proposals so they sit comfortably in context, and VR allows us to take planners on a journey,” explains Oli. “By walking them through an urban environment and then around our high-quality design proposal, it enables them to feel comfortable with how we’ve handled the design in its context. Invariably this leads to faster understanding and helps the client unlock maximum value from the site. “Actually, our 150-bed aparthotel in Lambeth, a partnership with Qandor member Evan Maindonald, is a great example of this. We set up the VR headset in Lambeth Council’s office for the preapplication and walked the Head of Design and Conservation through the conservation
Issue No. 17 – Qandor – 043
“Our 150-bed aparthotel in Lambeth, a partnership with Qandor member Evan Maindonald, is a great example of this. We set up the VR headset in Lambeth Council’s office for the pre-application and walked the Head of Design and Conservation through the conservation”
area in the headset. We explained the features that we thought were characteristic, and how we had reimagined them in our design proposal. We managed to propose that our building be a storey taller than its listed neighbour because the Head of Design and Conservation was able to test out the views from key points and was comfortable that the extra height was not visible.” Ackroyd Lowrie’s use of VR isn’t limited to just optimising design. More recently, the firm has been using the technology to create VR walkthroughs, videos and website content to support developer sales collateral. “Our involvement isn’t limited to design and delivery; it’s very much a start to finish process. The limitations imposed on us throughout the lockdowns meant we
had to innovate even faster, so we developed a VR walkthrough that can be accessed via a QR code from the comfort of a potential purchaser’s home. “One of our first projects to utilise this was for fellow Qandor member Phil Howard on his Perfume Factory development in Hanwell, where a number of off-plan sales have already been secured. In addition to using the virtual walkthrough, we also used VR to unlock further value for Phil. We were appointed after planning was granted, so were limited in the overall building envelope that could be built. However, by scrutinising the 3D model, we were able to achieve an additional 108m² net saleable area in a nineunit development which effectively equates to an additional unit.
"#9,(#6-6'1=-$""$">#!746#?*6.,-*'/)#@7%#6"1#&,*3*>'6&,$.#)3A1$*B#1()$>"(1#C0#!./'*01# 2*-'$(#3*#'(3'*@3#6"1#'(&A'&*)(#6#+*'%('#D$.3*'$6"#3'6%#'(&6$'#1(&*3#$"#E*'3,#2*"1*"<# Issue No. 17 – Qandor – 045
COVER STORY / ARCHITECTURE
048 – Qandor – Issue No. 17
Issue No. 17 – Qandor – 049
COVER STORY / ARCHITECTURE “I think of all this in terms of marginal gains. When Olympic athletes compete, they make a series of small adjustments – choice of equipment, clothing, diet, etc. that cumulatively add up. It’s the same with development. First, we need to ensure the best planning result by knowing the politics and policy of an area, and making the planners believe we’ll deliver a scheme that adds to its context. Then we need to analyse and understand the market, then optimise layouts to maximise the net to gross, then produce the best and most eye-catching marketing material. Adding up each of these elements typically results in faster returns for our developers, who are then more likely
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to release the capital for a new project,” said Oli. This added value approach extends well beyond client relationships, and Ackroyd Lowrie has invested heavily in creating a welcoming office for its growing team. As employers in the post-COVID world, Oli and Jon feel a responsibility to provide a working environment that engenders interaction, including a variety of different spaces for work, socialising and relaxing. “When the alternative is only a few footsteps from your bedroom, the office has to work much harder to compete, so we’ve spent considerable time redesigning our three-
"
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storey former warehouse to encourage staff back to work. New layouts inspire different styles of working; we’ve added Zoom rooms, designated spaces for VR reviews, a roof terrace, hundreds of hanging plants to improve air quality, and our meeting room wall has been built to fold into three different configurations, one of which accommodates a ping pong table. “As mental health and wellbeing has become even more important post-pandemic, we wanted to create somewhere our team can enjoy spending time, feel included, ask for help and be active,” added Oli. The redevelopment of the office is only the beginning for Ackroyd Lowrie as the firm has just embarked upon its first development project, a regeneration one of course. Oli said: “We’ve recently bought a brownfield site in Harlow town centre that we’re proposing to regenerate with a 12-storey building of around 50 new homes.
We’re currently working with our planning consultants to finalise the designs and submit an application later this year. I like to think this is another way we’ll stand out from our peers; we’re really putting our money where our mouth is! In all seriousness, though, by acting as architect and developer, we hope to demonstrate a greater depth of knowledge and give clients further confidence that how we work for them will be replicated on our own project.” So, what else does the future hold for this ambitious young practice? “I think first and foremost it’s about consolidating and growing the team. Over the next few years, we’d like to build to around 50 staff, with the five-year plan being to have 100 people. If this is the case, we’d obviously need to find a bigger studio so perhaps this could be a future development project for us. “In the short-term, it’ll be interesting to see how we learn to live with COVID. Issue No. 17 – Qandor – 051
It’s certainly changed the way people live and work, but this isn’t necessarily negative. I personally believe it’s fast-forwarded trends we would have eventually adopted. The acceleration of online, the renewed emphasis on green space, demand for coliving/working are all ways of living we can embrace. The architectural challenge will be to deliver these new spaces creatively 052 – Qandor – Issue No. 17
and sustainably, and it’s one our practice wholeheartedly accepts,” concluded Oli. Q. !"#$%&'( )%*$+,( +-( ./( .*.$'0*+//+/1( .$"2+3,"34$.5( 6$."3+",( *+32( .( $,643.3+%/( 7%$( ',5+8,$+/1(+//%8.3+8,9(2+120:4.5+3&(-"2,;,-<( =%4/','(>&(?%/(!"#$%&'(./'(@5+8,$()%*$+,9( 32,( 6$."3+",( -6,"+.5+-,-( +/( 32,( $,-+',/3+.59( "%;;,$"+.5( ./'( ,'4".3+%/( -,"3%$-( ./'( +-(
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Issue No. 17 – Qandor – 053
At CrowdProperty, we’re dedicated to continuously innovating and improving our service offering – as such, we are delighted to announce the launch of our Planning Gain Finance product this month. Our newest service line affirms our commitment to partnering with ambitious SME developers, providing innovative financing solutions as a result of our extensive property development and investment experience. Our Planning Gain Finance will assist developers in securing developments
054 – Qandor – Issue No. 17
that have not yet received the benefit of planning permission. There are a few lenders in the market that currently offer such a product, and those that do may not have the detailed in-depth planning knowledge to be able to add significant value. CrowdProperty is an expert development lender with over 250 years of property and development expertise: our Specialist Property Team is made up of professionals with a passion for property and backgrounds in surveying, agency, managing their own property development projects and planning with our in-house Chartered Town Planner,
Victoria Lane MRTPI, bringing over 15 years’ experience in the planning industry. Victoria has worked for local government, private consultancy and client side with Morris Homes, and so understands the commercial aspects of project development. She regularly advises clients on the benefits of planning gain. Planning Gain Finance is primarily provided to commercial to residential opportunities or small infill opportunities within the development boundary – subject to planning policy, there is scope to extend the product to new build developments adjoining settlement boundaries in the longer term. Developers may be required to undertake an Abortive Planning Cost Insurance policy to reduce the risk-averse nature of this type of development.
This insurance policy would protect the LTVs in a planning refusal scenario. Once permission has been granted and the necessary pre-commencement conditions discharged, the developer would be converted onto a CrowdProperty Development Finance Loan. Victoria Lane, Chartered Town Planner at CrowdProperty, commented: “This new product will offer a new way of financing projects which have yet to receive planning permission. The ability to assist developers in this way is a new direction for CrowdProperty which will enhance the current offering of development finance. Property professionals with a proven record in achieving development proposals with the benefit of planning consent will benefit immensely from this service,
Issue No. 17 – Qandor – 055
and CrowdProperty is happy to have discussions with prospective borrowers and developers regarding potential projects which may benefit from Planning Gain Finance.” As experts who stay at the cutting edge of property market trends, the addition of this specialist finance product complements CrowdProperty’s existing suite of funding solutions – supporting all types of residential property projects, no matter the structure, nature or complexity
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of the project. CrowdProperty has funded over £300,000,000 of property projects, changing the game of property project finance for SME developers – apply in 5 minutes and get value-adding expert advice and terms within 24 hours at www. crowdproperty.com/apply.
PROPERTY FINANCE
ONE-STOP ISN’T A CLICHÉ – IT’S A VALUE PROPOSITION PAUL OBERSCHNEIDER Founder Hilltop Credit Partners www.hilltopcreditpartners.com
Anyone who’s been on the development journey knows that the finance side is complicated. They quite possibly have the scars to prove it. Alternative lenders have been quick to fill the gap left by traditional lenders withdrawing from the development finance market since the GFC. There are now more approaches to funding than ever before, which can be bewildering for 058 – Qandor – Issue No. 17
local SME developers who’d been more accustomed to the simplicity of borrowing from the bank. Financial, technical and research expertise is needed these days in addition to just understanding the development process, in order to get the delicate matter of funding right. One-stop funding brings all of the above together to simplify the process for smaller developers without the financial expertise and brings additional benefits with it.
Partnership The traditional capital stack involves multiple lenders. Having multiple lenders means fragmented responsibility – each being responsible for just one aspect of the funding and only caring about their own returns. They’re insulated from wider project issues provided they get their money (and returns) back. One-stop funding assumes the risk of multiple lenders all at once. It becomes truly invested in the project’s success as it has way more to lose. This equates to a funding partner – financial expertise that works throughout the development lifecycle to resolve any issues that may arise, to make sure the deal is always as strong as it can be. This can be a real boon for smaller developers. Risk Tolerance Higher LTV financing is not always easy to secure for SMEs. As per above, onestop funding by its very nature is designed to assume greater risk. It comes from a greater understanding of – and appetite for – risk. It broadens access to finance for SME developers, as well as opens the door to building bigger projects and building a greater number of them. Flexibility Traditional funding approval follows rigid assessment, meaning small but strong developments can slip through the cracks if they don’t tick all the right boxes. One-stop funding looks at the nuances of individual projects and assesses them on their own merits. It requires deeper analysis that can be unpalatable to the traditional model, consequently offering greater flexibility across terms, pricing and funds – meaning a
greater likelihood of a facility that meets the developer’s needs. Every scheme is different – every funding package needs to be too. Agility The more entities involved in the capital stack, the longer the process takes – meaning potentially months of meetings, negotiations and paperwork. Worse still, there’s the ever-present threat of the whole thing falling over should any one party pull out – straight back to the drawing board! One-stop funding delivers the entire capital stack – one lender, one set of documentation, surveys and valuations. Zero intercreditor agreements. We’re talking weeks instead of months to get the deal done. Cost In a similar vein, multiple lenders can negatively impact the bottom line. In a competitive market, you’d expect using individual lenders for each part of the capital stack to drive down rates. Whilst that’s certainly a possibility, in reality piecing together funding from multiple lenders entails multiple sets of fees which can not only affect the developer’s ability to scale their business, but also carries an opportunity cost – time spent negotiating intercreditor agreements is time lost servicing other potential deals. The one-stop model can prove to be more cost-effective. One-stop finance is about structuring a competitively priced alternative to the traditional capital stack. It’s about delivering success in the simplest way for developer, broker and lender alike rather than just closing a deal for the sake of it. Q.
Issue No. 17 – Qandor – 059
PROPERTY FINANCE
A NEW GENERATION OF TECH-POWERED REGULATED LENDERS DISRUPTING THE LENDING MARKET PAUL WATSON Head of Origination Blend Network www.blendnetwork.com
We are often told to use the right tool for the job. Specialist finance requires specialist lenders, and so real estate development finance requires niche lenders who can get their head around the intricacies of building a ground-up development
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or doing a conversion. Paul Watson, Head of Origination at specialist lender Blend Network, explains how the new generation of specialist, tech-powered regulated lenders are helping property developers.
Whereas a few years ago we lived in a much more ‘generalist’ society where we used doctors, salespeople and lenders, nowadays we live in an increasingly ‘specialist’ world where we can access professionals with a high degree of expertise in niche fields such as orthotics, digital marketing and real estate development finance lending. This evolution is nowhere more relevant than in the financial lending industry. Only a few years ago, a generalist lending manager at a high street bank was tasked with assessing loan requests for all types of different purposes, from building or buying a house to purchasing a car or paying for a wedding. However, the emergence of so called ‘specialist lenders’ over the past decade has brought a breath of fresh air into the financial lending industry by allowing for a much more tailored service and customized lending solutions. Nowadays, the high degree of specialism in the financial lending industry means that in the same manner we wouldn’t go to a supermarket to buy a car, we wouldn’t go to a high street bank to request a development finance loan. The truth is that building a groundup block of flats, doing a commercial-toresidential conversion, or even renovating a house into HMOs involves having a lender who truly understands the property development process and can get their heads around how it works. Property development deals are rarely standardized one-sizefits-all deals. Most often, they will be nonstandardized deals with quirky features that require unique structured solutions. For example, HMOs may offer very small capital appreciation to the borrower with
rental income being the main reason for the investment. Or there may be planning uplift that needs to be taken into account when assessing a ground-up development deal. Traditional or ‘generalist’ lenders are usually happy to lend on off-the-shelf deals that are easy to value based on market comparables. Yet when it comes to nonstandard deals in nonstandard locations, specialist lenders are more likely to get comfortable with them, provided that the deals make sense. Another important factor is that specialist lenders are often staffed with experts with professional expertise in the specific area where the loan proceeds are to be used. For example, at Blend Network our development finance underwriters have years of property development experience under their belt, thus being able to speak the borrower’s language. It is no surprise then that specialist finance providers have become the key go-to lenders for development finance. With their nimble setup, flexible structure, dynamic approach to lending, sharp use of technology and top-notch customer service, specialist development finance lenders are able to better serve time-poor property developers who have grown accustomed to faster, better and simpler processes with good old-fashioned customer service. But there is one key area where this new generation of specialist lenders have really been able to add value: the gearing offered to property developers. In a market – property – where cash is always king and winning a deal may depend on the lender’s ability to move quickly, gearing is one of specialist lenders’ key selling points. Their more flexible setup
Issue No. 17 - Qandor - 061
PROPERTY FINANCE
“a new generation of tech-powered regulated lenders is disrupting the real estate development finance lending market, and it is easy to see why: they are faster, better, simpler”
062 – Qandor – Issue No. 17
compared to traditional lenders helps structure deals in a way that works for the borrower. For example, at Blend Network we have structures in place that allow us to go up to 73% LoanTo-Gross-Development-Value (LTGDV), thus effectively blending senior and mezzanine into one loan. In summary, a new generation of techpowered regulated lenders is disrupting the real estate development finance lending market, and it is easy to see why: they are faster, better, simpler. Q.
Blend Network is a peer-to-peer (P2P) property lending platform that provides development finance and bridging loans from £150,000 to £5,000,000 to experienced SME property developers and small construction companies. More information can be found at www.blendnetwork.com. Blend Loan Network Limited is is authorised and regulated by the Financial Conduct Authority (Registration Number: 913456)
MEMBER PROFILE
TINA PATEL
When did you join Qandor? I have been a member since the beginning - November 2017! How did you end up working in property? Creativity and a passion for design was something that I loved as a child. At around age 9 when I used to love drawing, I decided I wanted to be an architect. Obviously at that age I had little idea or point of reference as to what it entailed, but as I grew up and understood more about the built environment and the fact that being an architect would allow me to be a business owner and professional, with the flexibility for a family life on my terms, it became a career of choice. So, from around age 14, that was the focus, and I have been following that journey ever since. What is the best thing about working in property? For me, the best thing is that you can make an impact on people’s lives in both subtle and intangible ways. You can improve people’s outlook by their built environment, whether that be their home, their place of work or the infrastructure in-between. What are you working on currently? As a practice, at any one time we have multiple projects on the board. Currently, these vary from Grade 1 listed buildings overlooking Regent’s Park, through to the development of a luxury housing masterplan in North London for 25 units. What is your ideal project? For me it’s not really about the ideal project in
terms of the end result. I find the best projects are the ones where you have a great team that come together to deliver exceptional results, where we create functional spaces that meet the needs of the end user in tandem with the aspirations of the developer. That for me, is the ideal project. What are the biggest obstacles facing architects at the moment? I think there are so many moving parts. Many developers don’t consider the true value in engaging architects and have unrealistic timelines. Too often we go in and fix up schemes where the original solution hasn’t worked, or the team have not managed to get planning. All too often this comes from a place where the brief has not been clearly defined collectively, and expectations not managed at the outset. Inevitably, this ends up costing more when it could have been avoided from the start. Who would be your ideal guest speaker at a Qandor event? There have been such a mix of speakers to date, I think they have all brought something new to the discussion. So, I don’t think there is an ‘ideal speaker’, as there is much to learn from them all. How does being a member of Qandor add value to your business? Being in a room where we can add value and collaborate with various parties to make things happen and collectively advance the growth of all parties has been really powerful.
Issue No. 17 – Qandor – 065
A CAPITAL VIEW
Qandor Summer Lunch, 16th September 2021, Oxo Tower Brasserie Qandor members gathered on the terrace at the Oxo Tower Brasserie to take advantage of some fantastic late summer sun, great food, chilled drinks and marvellous company. A good time was had by all.
Qandor.
