Landbay Launches IF ISA Offer Today

Today secured by property p2p lending marketplace Landbay launches its Innovative Finance ISA (IFISA). The IF ISA offer carries an interest rate of 3,69%. The minimum investment amount for this product offer at Landbay is 5,000 GBP. There is no account opening fees, no ongoing fees and no transfer-in fee. There is a 50 GBP transfer-out fee.

Investors can make use of the current annual tax‐free ISA allowance of 15,240 GBP. In the next tax year the allowance will rise to 20,000 GBP.

Why I Joined The Money Platform, a Short Term P2P Lender

This is a guest post by Kevin Allen, CRO at The Money Platform

It’s important to work for a company that you respect and provides a product good for its customers. It’s classic dinner table question, “what do you do for a living”.  Mostly I’ve always worked for large blue chip companies including Standard Chartered Bank, PriceWaterhouseCoopers, Centrica, FICO, MasterCard and Lloyds Banking Group. So although I wasn’t going to set any dinner party conversations alight, I didn’t have to admit I worked as an estate agent, politician or worse. Then I worked with RateSetter and I became actually proud of my employment, what’s not to like about working for an internet start-up in something funky called “peer-to-peer”. I was helping to provide a better product to a new type of investor called a “lender” in a new asset class that was providing fair and consistent returns. We were bringing a new lexicon to banking and innovations such as the Provision Fund. Borrowers also got a better deal from a company with excellent customer service, not disdain. I wasn’t a banker anymore, I was working in the “sharing economy”, a financial hipster….

Kevin Allen, The Money PlatformHowever I’ve been lucky to have these employment choices. I’ve been the first cynic to sit on his pedestal and mock those that worked for less altruistic companies. And when I met people working for high-cost short-term lenders, I never let them forget it. I wasn’t a supporter of the football clubs that took their money to advertise a terrible product on their shirts. This is especially personal as I have a family interest, someone that isn’t so financially literate (and to be blunt, who was in dire straits) that borrowed 300 GBP, and ended up having to pay back 1,200 GBP within nine months. As far as I was concerned the sub-prime pay-day loan industry had a poor reputation for a reason, some lenders were exploitative. I mean, can anyone really defend 5,000% APRs? So why have I agreed to work for a short term lender, The Money Platform. A few of my friends are already looking down on me from that moral pedestal that I previously sat upon. Continue reading

Huge Spike in Deposits Reported After Lending Works IFISA Launched

Lending Works CEO Matthew Powells reported an influx of more than 500K GBP deposits within 3 hours after launching the Lending Works Innovative Finance ISA (IFISA). Lending Works’ IFISA product offers 4% (up to 3 years) or 4.7% (up to 5 years term) tax-free for investments on the p2p lending marketplace. However Lending Works, anticipating the huge demand, has launched the offer with an upper ceiling: ‘We’re anticipating a significant spike in lending volumes as a result of the new ISA. Because we want to match your money swiftly at all times, we will only be accepting ISA monies from lenders in fixed, periodic tranches totalling £1 million at a time. Once this limit is reached, we will then temporarily be closing this window of opportunity until further notice.’ as stated on the company website. It is expected that Lending Works might lower rates after this threshold is met.

Investors can draw down either interest, or interest and capital over the term of the loan, or reinvest the interest. A recent survey of Lending Works’ existing investors found that 88% plan to open an IFISA, with around a third expecting to invest between 10,000 GBP and the maximum threshold of 15,240 GBP of their annual ISA allowance into the IFISA before the end of the tax year in April. In the next tax year the allowance will rise to 20,000 GBP. Continue reading

International P2P Lending Volumes January 2017

The following table lists the loan originations of p2p lending marketplaces in January. Funding Circle leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 476 million Euro. I track the development of p2p lending volumes for many countries. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms.

Zopa celebrated passing 2 billion pounds in loans lent since launch. That figure means  300,000 loans to 246,000 borrowers funded by around 75,000 lenders. Jaidev Janardana, Zopa’s CEO, commented: “We’re excited to be the first UK peer-to-peer lender to pass the 2 billion GBP milestone. Over the last 12 years, we’re proud to say we’ve helped a third of a million people get better interest rates for both borrowing and lending. The 2 billion GBP milestone demonstrates how far we have come, but our journey is only just getting started. Our decision to launch a next generation bank reflects our mission to create better options for consumers and to shape the future of finance.”

Further milestones reached this month were:

  • Harmoney passes 500 million NZD since inception
  • Assetz Capital passes 200 million GBP since inception
  • Twino passes 100 million EUR since inception

Investors living in national markets with no or limited selection of local p2p lending services can check this list of marketplaces open to international investors. Investors can also explore how to make use of current p2p lending cashback offers available.

P2P lending statistic 01/2017
Table: P2P Lending Volumes in January 2017. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.

Notice to p2p lending services not listed: Continue reading

Funding Circle Raises 100M US$ from Accel and further VCs

Funding Circle raised 100 million US$ of equity capital in a round led by Accel Partners. The round also included other existing investors Baillie Gifford, DST Global, Index Ventures, Ribbit Capital, Rocket Internet, Sands Capital Ventures, Temasek and Union Square Ventures.

The company will use the funding to continue to consolidate its position, as well as to continue to invest in technology and talent.

Measured by new origination volume during the last months Funding Circle is the largest p2p lending marketplace in the UK. The company is also present in the US and in continental Europe. Last week the British Business Bank committed to lend 40 million GBP to British SMEs through Funding Circle.

Funding Circle has now raised 373 million US$ in equity capital. The previous round was a 150M US$ in 2015 round led by DST Capital.

Investing in British Properties Through Property Partners

For decades buying houses, refurbishing them and selling them at a higher price and moving on to the next property seemed like a popular sport to Brits. Many of them see properties as investments and with house prices mostly moving up lots of them aimed to finance a property while they were young and then build a portfolio. With limited supply of new land with planning permissions this strategy worked well most of the times in the past, except when the market overheated and a real estate bubble popped.

There are downsides to this do-it-yourself approach:

  1. Concentration of risk in one or few properties: if they underperperformed for what ever reason, the yield was sub-average
  2. A lot of money, time and work required. The investor had to do everything itself as a landlord
  3. Selection of new properties usually limited to a small region the investor lives in

British platform Property Partner allows everyone to invest in British properties from a minimum of 50 GBP. Investors select a listing, invest into a SPV (special purpose vehicle company) that pools the investment in the property. The SPV collects rental income and pays dividends to investors monthly. A useful table of the past achieved rental income can be seen here. In the green marked cases the actual rents are higher than the original forecsts. Potentially investors can also gain, if the value of the property rises.

The time span of an investment is 5 years, however investors can try to sell their parts on the secondary market, which allows discounts and premiums any time.

The platform allows the investor to diversify across multiple properties easily. The fee is 2% for investment (in new listings or buying through the secondary market). For management, advertising and letting Property Partner charges 12.6% of gross rent.

So far Property Partner has funded 311 properties for 43.9 million GBP with 9.100 investors participating.

property partner listingFor new listing there is a pre-order period, where bids are collected. If the listing is oversubscribed then each investor is allocated a lower proportionate amount of shares.

Each listing contains an investment case desctiption, property details, a floor plan, financials, a solicitor’s report and a surveyor’s report as well as the house price index (HPI) information for the area.

For the secondary market there is a ‘data view’ section which lists key indicators for the parts listed for sale.

Investors that do not want to pick listings can set up the auto-invest option which will automatically invest an amount the investor sets each month in 5 properties.

Investing from abroad

Property Partner allows foreigners (except for US residents) and corporations to invest. If you do not live in the UK but see the UK housing market as an investment opportunity Property Partner is a hassle free possibility to invest in british real estate. Non resident investors should consider using Transferwise or Currencyfair to avoid high bank fees and get a better currency exchange rate.

How to get 50 GBP cashback at sign-up

To get 50 GBP referral cashback, when you invest more than 1000 GBP sign up now via this link . To see available promotions by other platforms visit our cashback offer page.

property partner cashback

Property Partner cashback confirmation at sign-up. To see it follow this link and sign up.

 

 

International P2P Lending Volumes December 2016

The following table lists the loan originations of p2p lending marketplaces in December. Funding Circle leads ahead of Ratesetter and Zopa. Lendix reports an all time record month. Saving Stream and Assetz Capital had a good month, too. Mintos crossed the milestone of 100 million EUR originated since inception. The total volume for the reported marketplaces adds up to 414 million Euro. I track the development of p2p lending volumes for many countries. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms.

Investors living in national markets with no or limited selection of local p2p lending services can check this list of marketplaces open to international investors. Investors can also explore how to make use of current p2p lending cashback offers available.

P2P Lending Volume 12/2016
Table: P2P Lending Volumes in December 2016. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.

Notice to p2p lending services not listed: Continue reading

FCA Publishes Interim Feedback Following a Call for Input to the Post-Implementation Review of the Rules for Crowdfunding

In August the FCA posted a call for input preceeding a planned review of the current regulation of p2p lending and crowdfunding for equity. Today the FCA publishes interim feedback. The feedback statement provides a first response to the feedback received and sets out next steps.

Based on a review of the feedback received, issues seen during the supervision of crowdfunding platforms currently trading and consideration of applications from firms seeking full authorisation, the FCA believes it is appropriate to modify a number of rules for the market.

Initial findings

Loan-based and investment-based crowdfunding

For both loan-based and investment-based crowdfunding platforms the FCA has found that, for example:

  • it is difficult for investors to compare platforms with each other or to compare crowdfunding with other asset classes due to complex and often unclear product offerings
  • it is difficult for investors to assess the risks and returns of investing on a platform
  • financial promotions do not always meet our requirement to be ‘clear, fair and not misleading’ and
  • the complex structures of some firms introduce operational risks and/or conflicts of interest that are not being managed sufficiently

Loan-based crowdfunding

In the loan-based crowdfunding market in particular the FCA is concerned that, for example:

  • certain features, such as some of the provision funds used by platforms, introduce risks to investors that are not adequately disclosed and may not be sufficiently understood by investors
  • the plans some firms have for wind-down in the event of their failure are inadequate to successfully run-off loan books to maturity
  • the FCA has challenged some firms to improve their client money handling standards

Proposals for new rules to be considered in Q1 2017

The FCA plans to consult on additional rules in a number of areas. These include more prescriptive requirements on the content and timing of disclosures by both loan-based and investment-based crowdfunding platforms.

For loan-based crowdfunding the FCA also intends to consult on:

  • strengthening rules on wind-down plans
  • additional requirements or restrictions on cross-platform investment
  • extending mortgage-lending standards to loan-based platforms

The FCA’s current rules on loan-based and investment-based crowdfunding platforms came into force in April 2014. They aimed to create a proportionate regulatory framework that provided adequate investor protection whilst allowing for innovation and growth in the market.

The call for input in July 2016 launched a post-implementation review of these rules. The paper summarised market developments since 2014 and some of the FCA’s emerging concerns.

Andrew Bailey, Chief Executive of the FCA, said:

“Our focus is ensuring that investor protections are appropriate for the risks in the crowdfunding sector while continuing to promote effective competition in the interests of consumers. Based on our findings to date, we believe it is necessary to strengthen investor protection in a number of areas. We plan to consult next year on new rules to address the issues we have identified.” Continue reading

Zopa with New Look

zopa-logo-2016Today Zopa launched a new design for the website and introduced a new logo, which I find very simplistic.

Zopa says:

This fresh new identity will give us a springboard for our ambitious plans to bring our products to even more UK consumers, and create radically personalised services that will help people fully realise their financial potential.

While a lot has changed – a bold new logo, icons, and tone of voice – our products still work in exactly the same way.

A year in the making

We started on this journey 12 months ago. In partnership with, KBS Albion, we took stock of who we were and where we wanted to be. We wanted to capture and build on our customer-focussed culture: ensuring that our borrowers’ and investors’ interests remain at the heart of what we do.

Our Values

Since we were founded in 2005, we’ve cultivated a dynamic, customer-obsessed culture. As part of our partnership with Albion, we defined our seven core values that guide and influence our behaviour and decisions:

  • We are customer-obsessed.
  • We are positive.
  • We are results-focussed.
  • We do the right thing.
  • We are bold.
  • We work as a team.
  • We strive to be the best.

Our new look and tone of voice have grown out of, and continue to reflect, these values; underscoring our commitment to being open and honest in how we look and sound.

Very first opinions voiced by investors on the new design are mixed.

Earlier this month, Zopa was the first pp lender that said it will (temporary) stop to accept new lender money. With this unprecedented move Zopa reacted to lender demand that is much higher than matching borrower loan requests. Zopa described the reasons in its investor communication:

Continue reading

Interview: Wellesley Pitches to Raise 1.5M from the Crowd

UK marketplace Wellesley is currently pitching to raise 1.5M GBP in a convertible from the crowd.

Interview with Graham Wellesley, CEO, Wellesley

What is Wellesley about?

Wellesley is a lending business. It provides an alternative for borrowers than traditional high street lenders. Our business allows us to meet the needs of two key underserved markets:

  • experienced mid-sized property developers who are building homes in the UK
  • investors seeking higher returns that can be achieved in deposit accounts who are willing to take a level of additional risk through a range of different products.

What are the three main advantages for lenders?

  • Lenders can achieve higher risk adjusted returns than are available in traditional deposit accounts
  • Property development lending is asset backed
  • Funding is being put to good use, helping to build homes in the UK

What are the three main advantages for borrowers?

  • They are dealing with a lending firm who specialises in property development
  • We are committed to very high levels of service and quick decisions
  • Each individual borrower is important to us

Wellesley is quite established in the UK marketplace lending sector. Why do your raise capital via Seedrs through a convertible now?

We want to raise more capital to enable us to invest in acquiring new customers and developing our technology. All of our external funding is retail rather than institutional. Raising further equity through a retail route will help us to build a business where strong alignment of interests between investors and shareholders will build a stronger company for the long term.

To which extend (if any) are equity investors covering capital losses on loans to p2p lenders vs the mini bond holders?

  • So far the board has chosen that the company (shareholders / equity investors) will cover the losses incurred by all other investors. This is at the board’s discretion and investors are all aware that they are taking risk in relation to property development lending. Investors continue to carry the risk of losses on both P2P and mini-bonds.
  • Wellesley aims to use the funding to expand its business, its marketing, human resources and IT development.

Wellesley originated about 80M pound YTD. Did you experience any effect of Brexit and what is your outlook for 2017? How do you see the opportunity of the IFISA market?

  • In the run-up to the referendum and in its immediate aftermath property development across “middle Britain” took somewhat of a pause. There are signs now that growth is returning to the market and the outlook for 2017 is positive as the key driver – the demand for more housing – shows no sign of reducing.
  • We continue to develop a product that meets the technical requirements of the IFISA market and will provide an update as soon as there is more to say.
  • We specialise in multi-unit developments, our average unit size is less than £500k. As a result we believe that we are well-placed to face any challenges that the UK residential housing market may face post-Brexit.

Are there any plans for international expansion?

At this stage, quite the opposite. We had started doing some lending in Majorca, Spain and decided back in the first half of 2015 that we would be better able to serve our customers through the economic cycle if we focused on our core expertise and competency in the UK market. Continue reading