A new loan has landed on site. Fleetwood Legal (FL) has an A rating from our credit committee and offers a yield of eight per cent over its one-year term. Below we offer an extract from our credit analysis. Readers wishing to see the full note and to subscribe to this offer must log in (or register if you are a first-time lender).
FL has been formed to provide funding to a legal firm that is focused on housing disrepair (HDR) claims.
Money&Co. lenders have funded the legal firm in the past and all previous amounts lent have been repaid. HDR Housing disrepair claims are usually brought against local authorities or housing associations although there may be some claims against private landlords. The most frequent issue is damp. When a claim is made, a surveyor will be appointed to inspect the property and provide an expert report. During the pandemic, there was major disruption to surveyors’ inspections, especially during the first lockdown when access to properties was not allowed. Further issues arose as a result of the courts being closed during the first lockdown. The backlog has begun to clear and the period during which a claim is settled is beginning to reduce. Initially when we started funding HDR claims, the settlement period was 9 months and this elongated to 15 months. Claims are now taking around 12 months to settle. FL is looking to lend £3,000 per HDR claim to fund court fees, the cost of the expert (surveyor) report, a working capital payment for the legal firm and the initial cost of After the Event insurance. The insurance covers the amount borrowed to fund the claim and protects against the defendant’s costs being awarded against the claimant should the claim fail. Security Money&Co. will have a charge over FL on behalf of its lenders and each ATE policy will be assigned to by the claimants.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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.
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:
The ISA allowance for 2020/21 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.