LandlordInvest Investment Overview

By Jordan Stodart | On January 31st, 2017

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

The London-based peer-to-peer lending platform spent two years in the regulatory process, ensuring it was fully FCA authorised and HMRC ISA plan manager approved by early 2017; it now offers the first residential property-backed Innovative Finance ISA (IFISA) on the market, giving you tax-efficient returns on the loans you select to invest in.

LandlordInvest Statistics

(Statistics correct at time of publication 31/01/17)

Estimated returns/rates

5% – 12% p.a (loan selection dependent)

Estimated default rate 2017

N/A*

Total lent funds to-date

£0**

Total no. investors to-date

150 registered

*LandlordInvest has no historic loan book data, having not lent yet, therefore any projections are difficult to estimate.

The platform’s expected default rate will be impacted by the proportion of BTL and bridging loans funded on the platform – BTL loans tend to have a historically lower default rate than bridging loans.

LandlordInvest is modelling its expected default rate currently, taking into account various scenarios, such as interest rate changes, and how they could affect the loan book. The modelled default rate will be published on the platform’s website once the first loan is funded on the platform.

**LandlordInvest officially launched on the 5th December 2016, due to awaiting full FCA authorisation which was granted early December.

With 150 registered investors on the platform since 1st January, growing at 4-5 accounts per day, LandlordInvest expects to surpass its internal annual target.

Loan Purpose

LandlordInvest facilitates investment in loans to property borrowers. There are two borrower types LandlordInvest vets and accepts onto its platform.

Buy-to-let mortgages

Loan value:  £30,000 – £750,000

Loan term:  1 – 5 years

LTV (Loan-To-Value):  up to 75%

Security:  first or second charge

Rent coverage:  125%

 

Bridging loan

Loan value:  £50,000 – £1,000,000

Loan term:  up to 12 months

LTV:  up to 75%

Security:  first or second charge

All loan applications go through a rigorous vetting process, ensuring the borrower is of a creditworthy standing, and with adequate underwriting before being segmented into the appropriate risk grading. To demonstrate, LandlordInvest has rejected 97% of loan applications to-date.

 

Open Account

 

Security

LandlordInvest 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 processes. When reviewing a borrower, the platform considers the following:

  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.

Investments & Returns

(Statistics correct at time of publication 31/01/17)

At present, LandlordInvest has one live investment opportunity that you can invest in, either through a Standard  account or an Innovative Finance ISA (IFISA) account.

Bridging Loan

Interest rate:  9.5% p.a

Term:  6 months

LTV:  35%

Time remaining:  14 days (to fund)

Min. investment:  £100

Screenshot LandlordInvest: 31/01/17

LandlordInvest 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.

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 the peer-to-peer platform’s ‘Innovative Finance ISA terms and conditions’ carefully before agreeing to anything. The following is a standard declaration included in the process of opening an IFISA with landlordInvest:
 

Screenshot LandlordInvest: 31/01/17
 
 

Standard ISA guidelines

  • You cannot exceed your 2016-17 tax-year ISA allowance of £15,240 to the various ISA types:
    • Cash; Stocks & Shares; IFISA.
  • You cannot subscribe to another Innovative Finance ISA in the same tax year that you subscribe your annual ISA allowance to the LandlordInvest IFISA.
    • Some ISA plan managers will allow you
      to transfer in old ISA money to their ISA, even if you’ve subscribed your
      annual allowance to an ISA of the same type in the tax year.

 

Benefits vs Risks Investing

LandlordInvest is a new peer-to-peer lending platform for residential real estate loans. It became fully FCA authorised in December 2016and became the third P2P platform to offer the Innovative Finance ISA. It is the first platform to offer a residential property-backed IFISA. It does not pre-fund any loans on the platform, and so operates what could be considered a true “peer to peer” model.

 

Benefits

  • High-yield returns reaching 12% p.a.
  • Property-backed loans.
  • Minimum investment of £100.
  • No pre-funded loans.
  • No fees for investors.

LandlordInvest does not charge investors but does charge borrowers a 1% Service fee.

Being a new entrant into the peer-to-peer lending UK market, however, comes with some immediate risks to you, the investor.

Risks

  • Lack of experience in the market with no lending history.
  • Unpredictable default rate projections due to no historic loan book.
  • Lack of liquidity, and likely slow build of investor base, means you will probably be tied into any investments you make for the full term without being able to sell-out early and access your money.

 

 

Conclusion

The risks investing in a new entrant are predominantly down to a lack of longevity. It is up to you whether the benefits of tax-efficient returns, in the region 5% – 12% p.a., outweigh the risk of entrusting your capital to a newbie 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 a new entrant in this competitive industry.

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