LandlordInvest Review

By Jordan Stodart | On August 25th, 2017
LandlordInvest logo

LandlordInvest was established in 2014, however is considered to be a new entrant in the peer-to-peer lending (P2P) market having officially launched 5th December 2016 after receiving full FCA authorisation. The P2P platform facilitates investments in secured buy-to-let (BTL) and bridging loans, providing investors with returns in the region 5% – 12% per annum (p.a).

LandlordInvest has facilitated almost £2 million of investment in under nine months and was one of the first P2P platforms to offer the tax-efficient Innovative Finance ISA (IF ISA).

LandlordInvest offers property-backed real estate loans to investors, and allows the investor to manually selects the loans they wish to fund.

 

Investment details are as follows:

Loan selection type: manual

Interest rate range: 5-12% p.a

Interest payment: monthly repayments are made into the investor’s LandlordInvest account, where interest can be reinvested or withdrawn

Investor criteria: 18 years or older, with identity checks required

 

LandlordInvest Review: Withdrawing Funds

To withdraw invested funds from LandlordInvest, investors are required to sell their loan part(s) on the LandlordInvest secondary market. The minimum amount (loan part value) that can be listed is £100. Loan parts will remain on sale for 14 days, and there is no guarantee the part(s) will sell as the secondary market is reliant on other investors substituting the commitments.

It is currently free to sell loans on the secondary market, as the usual 0.5% fee has been waived during a trial period ending 7th September.

 

LandlordInvest Review: Loan Book Statistics

Statistics correct at time of publishing 25/08/17

TermTypeProperty ValueGross Loan AmountChargeBorrower RateInvestor RateLTV
12 MonthsHouse - Semi£2,000,000.00 £357,396.00 Second12.0%11.0%56%
12 MonthsHouse - Semi£435,000.00 £84,316.00 Second13.2%11.5%70%
8 Days
House - Detached£550,000.00
£108,429.00 Second10.2%9.5%35%
6 MonthsIndustrial Unit£235,000.00 £132,747.00First12.0%10.0%57%
6 MonthsFlat - Purpose Built£890,000.00 £100,000.00 Second24.0%19.0%78%
6 MonthsPublic House (Pub)£360,000.00 £220,999.00 First13.8%11.5%61%
6 MonthsHouse - Terraced£800,000.00 £254,081.00 First9.0%8.0%32%
6 MonthsHouse - Semi£950,000.00 £740,741.00 First10.0%9.5%78%
Total£6,220,000.00 £1,998,709.00

NB: Some information has not been included for visual purposes, such as first and second charge values, but have been made available by LandlordInvest. 

 

Volumes

LandlordInvest has only been writing loans since the turn of 2017, and therefore has a modest-sized loan book. The platform aims to have completed £4-5m loans by the end of 2017 and projects a potential £15m by end 2018. The investments will be comprised of self-directed retail and some institutional capital.

 

Total lent (to-date): £1,998,709

 

LandordInvest advertises returns in the region 5% to 12% p.a. With an average weighted interest rate of around 10%, LandlordInvest lenders have experienced the top end of the return range over the course of the nine months LandlordInvest has been writing loans.

In the tables below, we display the minimum, maximum and average weighted rates for investors and borrowers across the eight loans funded through the LandlordInvest platform to-date. The spread between borrower rates and investor rates are also displayed.

Investor Rates

YearMin Investor RateMax Investor RateAverage Investor Rate
20178.0%19.0%10.0%

Borrower Rates 

YearMin Borrower Rate Max Borrower RateAverage Borrower Rate
20179.0%24.0%13.0%

Interest Rate Spread

Loan No.Borrower RateInvestor RateSpread
110.2%9.5%0.7%
212.0%11.0%1.0%
312.0%10.0%2.0%
424.0%19.0%5.0%
513.8%11.5%2.3%
613.2%11.5%1.7%
79.0%8.0%1.0%
810.0%9.5%0.5%

 

The spread is the entire servicing fee LandlordInvest takes from the borrower prior to repaying the investor, i.e, the company’s revenue earned per loan. This is exclusive of any arrangement fees, if any. As seen in the table above, the spread is typically sub 2% which, for long term commercial viability, is low. 5% is more aligned with the expected spread and is likely to be the servicing fee moving forwards.

 

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LandlordInvest Review: Borrowers 

LandlordInvest helps UK property borrowers raise capital through buy-to-let mortgages or bridging finance loans. All loan applications go through a rigorous vetting process, ensuring the borrower is of a creditworthy standing, with realisable assets available to underwrite the loan. Borrower type is fairly split between corporate and individual borrowers.

 

Read Other Professional Reviews From Orca:

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LandlordInvest Review: Security

The platform employs a strict borrower assessment and risk rating methodology when reviewing borrower applications.

Risk rating

LandlordInvest’s risk rating is based on an assessment of the three “C”, commonly used by high-street banks in their underwriting process:

  1. Character: the borrower’s credit history;
  2. Capacity: assessment of the borrower’s affordability to service the loan;
  3. Collateral: the security property pledged as collateral for the loan.

The risk ratings range from A to D, where A is lowest risk. Loans with lowest risk, A, carry a lower rate than loans with a D risk, to compensate lenders for the extra risk.

Loan-to-Value (LTV) Rates

Loan-to-value protects investors as the value of the borrower’s asset underwriting the loan will always exceed the actual value of the loan. This means the asset can be liquidated in the event of loan default and, in theory, cover any outstanding repayments.

 

YearMin LTVMax LTVAverage LTV
201732%78%62%

 

With an average weighted LTV of 62%, LandlordInvest ensures a healthy buffer of protection exists should a borrower default and the asset securing the loan requires liquidation. The property market would need to drop significantly for the average LTV to be compromised and affect the sale of assets, which would, in turn, affect the likelihood of outstanding repayments being recovered.

 

 

LandlordInvest Review: Fees

LandlordInvest earns revenue by charging a servicing fee of up to 5% of the loan amount; this is automatically charged each month upon repayment. The platform also, usually, charges a 0.5% fee on loan parts sold on the secondary market. However, this fee is being waived until September 7th.

 

LandlordInvest Review: Innovative Finance ISA

LandlordInvest was granted full FCA authorisation in December 2016, which is when the P2P platform officially launched. In January, the peer-to-peer lending platform was approved as an ISA plan manager by the HMRC. This paved the way for the first residential property-backed IFISA to be launched in the UK market. Up until mid-summer 2017, 50% of capital invested came via the LandlordInvest Innovative Finance ISA.

You can open an IFISA with LandlordInvest with relative ease; you will need your National Insurance number to hand, be a UK resident for tax purposes and at least 18 years old.

It is important to review a peer-to-peer platform’s ‘Innovative Finance ISA terms and conditions’ carefully before agreeing to anything. More IF ISA information can be found by clicking here.

  Important:

  • You cannot exceed your 2017-18 tax-year ISA allowance of £20,000 to the various ISA types: Cash; Stocks & Shares; and IFISA.
  • You cannot subscribe to another Innovative Finance ISA in the same tax year that you subscribe your annual ISA allowance to the LandlordInvest IF ISA.

 

LandlordInvest Review: Benefits vs Risks Investing

LandlordInvest is a reasonably new peer-to-peer lending platform for residential real estate loans. It was fully FCA authorised in December 2016 and became the third P2P platform to offer the Innovative Finance ISA.

Other benefits:

  • Attractive risk-adjusted returns ranging 5 – 12% p.a
  • Property-backed loans
  • Minimum investment of £100

Being a new entrant into the peer-to-peer lending UK market, however, comes with risks to investors:

  • Limited track record, having only started in early 2017
  • Unpredictable default rate projections due to limited historic loan book
  • Potentially limited number of loans available, despite secondary market being fairly active

 

Visit LandlordInvest

 

LandlordInvest Review: Conclusion

The above risks are perhaps understandable, given the platform’s relative infancy. It is up to you whether the benefits of tax-efficient returns (if IF ISA), in the region 5% – 12% p.a., outweigh the risk of entrusting your capital to a new entrant in the P2P lending sphere. However, the team behind LandlordInvest comes from a real estate finance background, having worked for top-tier City firms, which could potentially mitigate some of the risks associated with being new to this competitive marketplace.

Editors note: This is a refreshed article, updated to include up-to-date loan book analysis and other insights. It was originally published January 31st 2017.

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