Ying Tan

P2P lending is fast becoming the go-to option




It's been a while since I've come out in praise of a government scheme.

Indeed, as a buy-to-let specialist, the vast majority of schemes relating to the property industry coming from Westminster have been disappointing to say the least. But the government’s decision to free up more brownfield sites is a good one and one that should have wide-ranging benefits.

Under the new system, which is now in play, local authorities will be made to produce accurate, up-to-date registers detailing available brownfield sites. These registers will be made public and, as such, developers will be able to see where there is opportunity for development.

It’s all very well trying to incentivise developers to build – and buyers to buy – but the land needs to be available and for too long it has been off limits or not known about. These registers will make the industry more transparent and allow developers to make use of some prime sites.

But along with the right land, the right finance needs to be available. Following the credit crunch, access to development finance became severely restricted and, interestingly, it fell to alternative lenders to pick up the slack.

P2P lending offers an innovative funding option for businesses – including developers – and is fast becoming the go-to option.

Recently, however, one such lender decided against property lending. Earlier this month, Funding Circle announced plans to withdraw from the property development finance market by 2018. The lender said the move will allow it to focus on its core area of SMEs (another area in need of alternative forms of finance, so a wise move). However, I hope this is not a sign of things to come.

It’s essential that the development finance sector stays competitive and vibrant, and alternative lending allows that to happen. Far from just being a back-up for situations that the traditional lending sector can’t cater to, crowdfunding and P2P platforms can actually be a more efficient source of funding.

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