P2P lending platform Relendex today launches its Innovative Finance ISA (IFISA). Relendex is fully-authorised by the Financial Conduct Authority (FCA). The UK Government introduced the IFISA in April 2016 and was created to sit alongside existing Cash, Stocks & Shares and Lifetime ISA products.
The Relendex ISA will work in a similar way to its regular accounts. Lenders will decide which loans to invest in and can build their own diversified portfolio of loans. Through this IFISA, lenders will enjoy tax-free returns on loans secured against UK property.
The Relendex IFISA product has been added to the P2P-Banking ISIFA comparison database today.
Michael Lynn, founder and CEO of Relendex explains why the Relendex IFISA is a viable alternative to other ISA products on the market: “Many people have built up a significant nest-egg in their tax-free ISA but in the low-interest environment Cash ISAs are only earning around 0.5% pa and Stocks & Share ISAs are potentially quite volatile and therefore investors’ capital is at risk. A secured lending P2P ISA is the best of both worlds. The yield is good at between 6 and 10% pa, tax-free and there is considerable capital protection in the form of security over independently-valued UK property assets. Of course property values can fall, but since our average Loan-to-Value is around 60%, the property concerned would need to fall 40% on average before any loss would result.
So if ISA investors are thinking of using this year’s Annual ISA Allowance or transferring existing ISA funds to a Relendex IFISA Account, they can build a diversified portfolio of good quality loans and achieve a good yield. They can also reinvest the gross interest, to achieve compound growth and build their capital.”
The Relendex ISA is a non-flexible ISA. This means that all new subscriptions made during a tax year will count towards your subscription limit for such tax Year and cannot be replaced. Michael Lynn, explains:
“Our lenders see us as a longer term investment, although we do provide a secondary market if they decide to sell on early. A non-flexible ISA recognises this longer-term demand and allows us to offer the ISA without any fees. Also, ISA holders are responsible for adhering to the HMRC annual ISA Allowance, so we track their subscriptions so they don’t inadvertently exceed their annual allowance with us.”
While there is an annual limit for new ISA subscriptions of £20,000 (for 2017-18 tax year), there is no maximum statutory limit to the amount that exitsing ISA money can be transferred across to a Relendex IFISA account (although we set a £10,000 minimum transfer value). Transferring ISA investors will need to complete a Transfer Authority Form. There is no need to get in contact with your existing ISA Manager as the Relendex specialist team will handle the entire process for you.”
Asked by P2P-Banking.com about the sales expectations regarding the IFISA product Lynn replied: ‘We will be disappointed if we don’t bring in at least 1 million GBP in the first month subject to how fast transfer-ins of existing ISAs will flow through from ceding managers. Longer term it’s difficult to put a hard number on it but our conservative target is at least 10 to 15 million GBP in the first year.‘
Further questiones whether he expects deposits to come mainly using this tax year’s allowance or rather as transfers from amounts from the previous years, Lynn answered ‘The high base of existing ISAs (with over £200 billion sitting in Cash ISAs alone) strongly favours transfers. But we also expect all transferring holders to utilise their current year annual allowance.’.
P2P-Banking also asked: ‘Should investors consider moving money from an S&S ISA to the Relendex IFISA?’. Lynn said: ‘We are not in the position to advise on individual portfolio allocations but do believe that we offer an attractive product on a risk/return basis. Obviously secured lending at relatively conservative Loan to Value and diversification does provide a good degree of capital protection for investors and a good yield. The good news is that S&S ISAs and IFISA are not mutually exclusive, so investors may consider allocating to both.’
To date Relendex states it has experienced no defaults and has maintained an average yield of 8.78% pa.