By Ryan Weeks on Tuesday 16 December 2014
The up-and-coming peer-to-peer lending platform Proplend is now able to accept investments from SIPP, SSAS and other pension fund holders.
The nascent property lender has been approved by a number of nameless pension providers. Proplend has partnered with the clearly forward-thinking pension provider SIPPclub in order to guide pension holders through the process – following in the footsteps of secured peer-to-business platform ThinCats. Proplend’s investors will now have the capacity to buy into income producing commercial property through the self-invested pension schemes mentioned above, and to benefit from high interest rates without suffering the burden of Income Tax.
“This represents a significant breakthrough for Proplend. Pension investors who have historically been able to invest directly in commercial property, will now be able to benefit from the relatively high returns offered by lending to the owner of a commercial property without being taxed. It moves the pension investment lower down the capital structure from being an equity investment, higher risk, to being a debt provider, lower risk. It also opens the way for much-needed funding to reach the commercial property sector.”
Estimated fixed rate returns on the platform supposedly range from 5% to 15% at present – post fees and anticipated defaults. All Proplend loans are secured by a first legal charge over the underlying property. The platform also creates a reserve for each loan to cover 6 months’ interest payments.
Much has been made – and rightly so – of the impending P2P ISA opportunity. Less attention has been given to the involvement of personal pensions within the peer-to-peer space. But some astute industry commentators suspect that the incorporation of pension plans into P2P investment could represent at the very least as enticing a boon as ISAs.
ThinCats serves as a useful case-in-point. The demand for inclusion within the tax-efficient SIPP wrapper has been such that the ThinCats team has now devised a method of valuing current accounts – in order that they might be transferred into a personal pension fund. Proplend will be hoping to have to come up with a similar solution before long.