Monday saw the official Beta launch of Landbay – a peer-to-peer lending platform aimed at borrowers seeking a buy-to-let mortgage.
For investors, the model mirrors the standard p2p lures – low risk returns at inflation-beating rates. But Landbay is unique in that it becomes the only platform upon which lending is exclusively for buy-to-let mortgages on UK residential property. All lenders will enjoy the security of a first mortgage charge on a property. Returns will range from 3.5% to 10% pa from a range of risk levels (there are 3 different loan-to-value bands).
“The peer to peer finance sector is booming in the UK, having just passed the £1 billion mark. It is great to see Britain genuinely leading the world in unlocking the huge benefits for the consumer of this breath of fresh air in finance.”
“Landbay is an important new innovation that will open the door to a much broader cross section of the public to the attractive returns available from investment in Britain’s residential buy-to-let market, a sector that was worth £21 billion in new lending last year alone. We are looking forward to our full public launch in May once the beta stage is complete.”
Landbay will appeal to that “broader cross section of the public” in that minimum investment via the platform will be set at £100. The aim is to democratize investment in the buy-to-let arena, allowing ordinary savers easy access to one of the UK’s favourite investment assets – residential property.
The new platform will also seek to offer investors a level of comfort through the stringency of their valuation processes. All applications are subject to valuation conducted by an approved Landbay partner. That initial valuation is then subject to a satisfactory peer review by the platform’s independent valuation partner. All applications must go through a holistic affordability check that includes minimum rental coverage of 125%. In some instances the platform will also require a personal guarantee from the borrower.
There are a number of p2p lenders focusing on property, but none that specifically target the residential buy to let mortgage market. Landbay believe that the commercial property, bridging loan and property developer markets represent far riskier investor propositions than their own. Time will tell whether the new platform’s low-risk approach resonates with investors.