Property-Backed AltFi Loans In Review

Regular readers of this News section will be aware of Money&Co.’s increasing focus on niche markets, such as music-rights lending, and property-backed loans.

LendInvest was responsible for the lion’s share of peer-to-peer property lending in 2019, accounting for a whopping 58 per cent of the £1.7bn lent during the year, according to data from the AltFi Alternative Lending State of the Market Report 2020.

The data provided by Brismo (recently acquired by LoanClear) shows an explosive year-on-year growth of the property lending sector up from £1.2bn in 2018, but with much of the expansion contained in LendInvest’s loanbook.

In terms of sheer growth, CapitalRise topped the rankings with its 2019 originations up 312 per cent to £33.9m, helped by a shift to larger loans and securing an institutional funding line from an unnamed financial institution.

CEO Uma Rajah told AltFi not to expect a slowdown in CapitalRise’s 2020 figures as her team facilitated: “almost as much lending as we did in the whole of 2019 during the first six months of 2020.”

Indeed, despite Covid-19, industry players including LendInvest, Zorin Finance, the third largest peer-to-peer property lender, and CapitalRise have consistently announced dealflow throughout 2020.

Looking ahead lenders surveyed as part of AltFi’s State of the Market Platform Survey 2020 were among the most bullish of any lending sector.

Nearly three quarters (72 per cent) of the platforms surveyed said they believe their ability to find attractive borrowers in the next 12 months will increase, and just 14 per cent think it will go down.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.

  • Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.

So here’s our guide to the process:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.

Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.

Risk: Security, Access, Yield

Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.



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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.