P2P platform Lendy seeks permission for IFISA

P2P platform Lendy seeks permission for IFISA

Peer-to-peer property platform Lendy has applied for permission to launch an innovative finance Isa to help income-hungry investors.

According to Paul Riddell, head of marketing and communications for the secured property lending platform, Lendy was hoping to become approved by the Financial Conduct Authority (FCA) for the purposes of launching an innovative finance Isa (IFISA).

He said: "We have applied to the regulator this year and hope to be granted full permissions for an IFISA."

It is understood the lender would want to launch within the first half of 2018, but as Mr Riddell commented: "Obviously regulatory processes can take time." 

So far, there are relatively few IFISA providers in the UK, although over recent months, many P2P platforms and lenders have expressed an interest in coming out with the savings vehicle either for this tax year or for the 2018/2019 tax year.

The Innovative Finance ISA was launched in April 2016 to allow UK individuals to earn tax free income on peer to peer lending. The “IFISA” has since been extended to cover more than just peer to peer lending, with the inclusion of debentures in late 2016.

According to Mr Riddell, more investors have been looking to P2P - particularly asset-backed lenders - to help boost income for investors, which would make an IFISA a good, tax-efficient structure for the retail market in particular.

He said: "Income will continue to be a problem, I think, for the next five to 10 years.

"I can't see interest rates rising significantly over the coming months, and people need to invest for income. Yields are low globally and from an IFA's perspective, P2P may seem 'left field' but it can provide a good income stream within an overall portfolio."

Latest data from Lendy shows the interest on its P2P loans has been between 7 per cent and 12 per cent annually for investors.

Mr Riddell added that the platform acts as a "facilitator" between property borrowers and developers looking for an alternative lending source, and investors who want access to the property sector and a sustainable income, but do not want to own property outright.

Ben Lloyd, director of Pure Commercial Finance, said one of the reasons his clients have been using P2P is because the high street has been very restrictive with lending. 

He said: "Lenders shut their doors a few years ago. The high street banks have not come back into play, and are only funding schemes at low loan-to-cost. It is incredibly stressful for us and for the person looking to acquire the asset. You need flexibility."

In October, Lendy announced repayment of its biggest peer-to-peer (P2P) loan to date. The loan, secured against JML House, in London NW5, and the former home of the Kentish Town Film Studios, totalled £7.92m on a property valued at £12.5m.