The higher price of buy-to-let finance, with average new mortgage rates one third more expensive for landlords than for owner-occupiers, leaves a gap for peer to peer mortgage lenders, according to research commissioned by peer-to-peer lender Landbay.
In the first-ever published stress tests for a P2P lender, the report claimed secured P2P lending against buy-to-let properties has a natural stability against economic shocks.
The Wriglesworth Consultancy, which carried out the research, stated that this contrasts with severe uncertainty over other types of riskier P2P finance, such as unsecured personal loans to consumers, business credit, or other forms of direct peer-to-peer property ownership and development finance.
John Goodall, co-founder and chief executive of Landbay, said: “All peer-to-peer finance is relatively new – but it would be an enormous mistake to assume that means this broad swathe of lending is in any way uniform.
“Combining peer to peer lending with the backstop of income-producing property as security can create an entirely different class of investment – while shaking up competition in the world of mortgage lending.”
The level of P2P business lending has increased by 250 per cent since 2012, according to data from innovation charity Nesta, with £749m being lent in the first three quarters of 2014 and consumer lending also up by 108 per cent.
This rise led to the chancellor giving P2P platforms relief in the recent Autumn Statement, with individuals now able to offset any losses from loans which go bad against other P2P income. Support for crowdfunding platforms will come through a package of measures to remove barriers to their growth from regulation and tax rules.
The government also launched a consultation on how best to include P2P loans in existing stocks and shares Isas, or whether a new type of Isa should be developed specifically for them.
emma.hughes@ft.com
