LendInvest, the peer-to-peer (P2P) mortgage lending platform, attained £4.125 million from hundreds of private investors for a residential housing project in Croydon, South London.
A properrty developer attained the loan to fund the acquisition of two adjoining commercial buildings. The buildings have permitted development to turn the buildings into 110 new residential units.
Over 300 investors, who provided sums from £10,000, in the residential project have been offered an annualised interest rate of 12 per cent.
The Croydon deal will help increase the supply of affordable housing in London and the regeneration of the Croydon area as the flats, due to be sold off-plan, will be priced between £200,000 and £250,000.
The developer in this transaction turned to LendInvest after they couldn't secure finance in time from traditional lenders, illustrating the scale and flexibility of LendInvest when SMEs require funding.
The previous largest P2P loan is believed to have been secured via Assetz Capital and was valued at approximately £1.75 million.
LendInvest, founded by two of the principals of Montello Bridging Finance, provides investors with the opportunity of lending to the huge funding gap in the residential and commercial mortgage market.
LendInvest now has almost a thousand investors that are participating in loans with amounts ranging from £10,000 to their largest investor who has put in £1.6 million, with the average amount invested being £80,000.
Since being established LendInvest has paid lenders an average rate of return of 10.4 per cent. Lenders are vastly diversified – from small institutions to professional investors to mums and dads.
Ben Gilbert, an ex-City trader from London, has been an active investor on the LendInvest platform. He said:
“Having had difficult experiences with banks, I know that it can be difficult to borrow money. Even when the chance of the lender losing money is low, borrowers sometimes just don’t fit one of the lenders’ tick boxes. LendInvest is making it more possible for more people to borrow.
The loan marks a dramatic shift in the sorts of funding undertaken through peer-to-peer websites.
In November, LendInvest announced that it had lent more than £8.5 million since its launch in May 2013. The platform has now completed over £25 million worth of loans.
Christian Faes, Co-Founder of LendInvest, said: “This is a big moment for the burgeoning P2P industry, which is increasingly becoming a credible mainstream asset class for investors, as well as a source of funding for SMEs.
“Investors will secure a great rate of return and London will also benefit from an increasing amount of affordable housing. This deal is a real shot in the arm for the British alternative finance sector, which is fast emerging as a world leader.”
More peer-to-peer platforms are tapping their models into the property market, with Funding Circle confirming to B&C in November that it is to launch into the buy-to-let and development finance sector.
The peer-to-peer market is growing rapidly with £480 million raised in the UK last year; this is set to grow to over £1 billion by 2016.
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