Kuflink is a well-established online debt investment platform for retail investors to invest in debt secured by UK property. The investments are IF-ISA eligible, and multiple auto investment options are available. In this interview, you will hear from the CEO Narinder Khattoare what it means to invest with Kuflink.
First, could you tell the readers a bit about your background? How did you become interested in working with finance?
I have always been interested in finance, on the lending side, from a sales angle and a risk management perspective when assessing individual or business borrowing.
My journey started when I worked at Provident Financial in 2004; that is where I learnt the hard way of lending and collecting money - these were small cash loans issued on the doorstep of borrowers and where agents collected payments weekly. After this, I went into Secured second-charge lending and felt the effects of the market as I was made redundant during the financial crisis of 2008-2009! I then dipped into the insurance market with risk management away from the Financial Services sector.
Still, I needed to get back into lending as I thrive off dealing with brokers, borrowers, and internal assessing teams. My time with Kuflink since 2013 has gotten me into a position where I have been involved in every aspect of lending money to get the Company to where it is today. We have many individuals with various backgrounds helping to take Kuflink to even greater success.
How do you find and assess the investments Kuflink makes available to retail investors?
I have always worked with brokers and built up many connections, some of which survived the 2008 crash and some newer entrants in the market.
We had opportunities to go to borrowers direct, but we continue to deal with experienced intermediaries in this sector who can provide the best product and service for borrowers. We, as a lender, will never claim to be the cheapest or offer the highest LTV. We have a more measured approach considering the borrower's needs and ability to repay. We will never look to oversell to our borrowers; it is prudent to lend what the borrower can pay back to exit the loan.
We get a lot of positive feedback from our investors as our overall default and recoveries in this sector are way below the industry average. We are not in the sector to rapidly grow our loan book to £500m, but we can get there by being conservative in what we do.
Why should the readers choose to invest at Kuflink?
We can never advise investors on who to use. I have always gone on record to say that investors need to do their due diligence on the lender platform and read what others have been saying about them in forums and rating platforms, as that will give them a better idea of who they are dealing with. It is far too easy to see the number of investors led by higher rates. They may be good on small cases but never on a mass level.
For a platform to offer double-digit returns, particularly in the property sector, the borrower will need to be paying north of 15% pa, which will be a challenge, particularly over the past few years due to interest rates being so low and heavy amounts of funds being pumped into the short-term lending sector.
If the borrower has been paying higher borrowing rates, that could mean the borrower's credit profile is not great, or the asset itself may be deemed high-risk. There is no point in putting deals like this on any platform, as the chances of default or recovery are higher.
What sets Kuflink apart from other real estate debt investment platforms?
It is the number of years we have been around. We set up our platform as we saw an opportunity to make money, and our entry point in the sector was from a very experienced lending background. We have been a Bridge and Development lender since 2011. We got into Peer-to-Peer lending as we saw this as an additional way to fund loans.
We have never signed up officially with an institutional facility, but this is not to say it won't happen in the future, as this could easily allow the business to offer more opportunities to investors.
We have a very experienced team who come from a variety of different backgrounds, some more hands-on with property developments themselves, some with RICS experience and others from a credit risk background – this is why we have low defaults, zero investor losses, a 4.8 excellent rating with Trustpilot and we are a winner of several awards which I won't list here.
How do you decide when a loan is defaulted or with minimal chance of recovery?
The FCA's default definition is 180 days which could mean that investors' investments are tied up for a longer period before a loan is flagged in default on other platforms. Our dealing with defaulted loans is different in that we allow a grace period of 30 days after the loan end date, and then this will be in default, and we will take action.
We do this to deal with a potential issue as quickly and efficiently as possible for the borrower, investor, and us as a business. This is a better way to deal with defaults to minimise the risk; to date, none of our investors has lost a penny.
How is Kuflink regulated?
We became fully regulated by the FCA in 2017 after running on an interim licence for some time. To become fully regulated, we had to provide a lot of information to the Regulator, such as detailed business plans, wind-down plans etc., which are updated annually or more often if changes are required. We only offer unregulated deals on the platform.
What do you think the future of Kuflink looks like? Which challenges do you see for the industry in the coming years?
We are always looking to grow as a business. We have performed very well during the pandemic and are still getting enquiries, even with the rate rises here in the UK and the current government's instability. I have said earlier that we are only looking to do the right deal, which enables the borrower to exit and not get them into trouble later down the line.
Challenges will be on the cost of material which has increased over the past 12 months, and developers being able to complete projects and exit, still making a profit.
There will be more opportunities in the market as the high street banks have not really been active in this space, and that's why alternative lenders like us exist, as it provides borrowers and investors with an alternative to the norm.
There will be some other products that we will be bringing to the market in the future– we will release that info in due course.
What's next for Kuflink? Where do you see your platform in five years?
It is more of the same with additional product launches when the time is right – who knows, there may be an IPO on the cards at a later date!