We spoke with Ashley Ilsen, the CEO and Co-Founder of Magnet Capital, a new development finance that has recently launched in the UK.
What is the business?
We are a principal lender of property development finance across England and Wales. We help SMEs with small to medium sized property development projects including new builds, conversions and refurbishments. Most of the schemes we fund have a residential outcome, and we are trying to do our bit towards plugging the desperate shortage of housing that we have in this country.
We are not a bank, and as such we believe in applying a personal touch to the way we do business. For example, when you need a business loan from your bank these days you very rarely deal with decision makers, and are unlikely to deal with the same person for very long. At Magnet Capital we believe in genuine long-lasting relationships, and many of our clients I have worked with for many years. It’s very rewarding to meet with someone and agree a new loan for a new development project immediately, and we like to think it’s refreshing for our clients too.
What are the plans for growth?
As with any good specialist finance lender we are gearing up to be here through the good times and the bad. Many of the team have been through several recessions and therefore we know how to keep our lending at appropriate levels to ensure we can carry on doing what we do for many years to come. We have already seen a rapid uptake in our development finance offering since our launch and we currently have a plan for year on year growth to implement; that’s a lot of new homes that otherwise wouldn’t be built.
What are your biggest challenges at the moment?
There is a lot of uncertainty in our market, particularly with regards to Brexit and various macroeconomic problems. Market corrections generally work in ten year cycles and it’s been ten years since the last major crash. The other problem I see a lot of is that, in the property world, it’s very easy to be a doom-monger, and often I think we are risk of talking our market down. One thing that is for sure is that we are always in need of housing, and there is plenty of property development opportunities available around the country, many of which are stagnant due to lack of suitable funding.
I also see what I refer to as ‘bad money’ available in the market, such as lenders trying their hand at property development finance when they don’t necessarily have the capacity or expertise to deal with it, or even crowdfunding being poured into a development project where the investors have little to no appreciation of the associated risks.
What advice would give to other new businesses?
At Magnet Capital we are fortunate enough to be launching a business model that has been tried and tested for many years, with most of the team having worked together previously at a now dissolved development finance lender. We know exactly what to look out for, how to lend cautiously and how to protect our clients. There’s no shame in thinking small to start with, and as such we have been bowled over by the huge initial uptake in our offering.