Following on from Lending Works last week, Landbay has launched their own Innovative Finance ISA. The ISA has a minimum investment of £5000, with a maximum of £15,240 (set by the government), raising to £20,000 next April. Lenders are able to transfer in ISAs from previous or current tax years.
Like the classic Landbay account there are no fees with the exception of a £50 transfer out fee, if lenders wish to transfer their ISA to another provider, and a £50 fee if lenders exceed their annual ISA allowance.
New customers can earn £50 cashback when they invest £5000 in the Landbay ISA.
After reporting yesterday that Lending Works had launched their new Innovative Finance ISA, the platform announced today that they have temporally suspended ISA applications. This is due to £2million of funds being received within 24 hours.
Here is the statement on the P2P Independent Forum:
We received over £2m in just 24 hours, with lots more ISA transfer applications coming through in the post today. Great news, but we've had to temporarily close new ISA applications in order to manage rates/queues without compromising on the quality of loans available on the platform.
We'll hopefully be reopening applications next week...
This may be the sign of things to come as the larger peer-to-peer platforms start offering ISAs. These platforms may have a difficult job, trying to balance supply and demand, but this will inevitably lead to a reduction in lending rates.
We reported in October that Lending Works had become the first major peer-to-peer platform to receive full authorisation from the FCA. Following this, Lending Works have today announced they have launched their new Innovative Finance ISA. The platform expects a significant uptake after a survey showing that 88% of customers plan to open an IF ISA.
Here is the email sent to lenders:
We're delighted to confirm that we have today launched the new Lending Works ISA!
We've undergone immense scrutiny and assessment from the FCA to get to this point - not to mention left no stone unturned in creating a world-class user experience in the process - so to now be able to deliver this new product is something we're thrilled about. For you, it means many years of tax-free, lucrative returns from lending through our platform lie ahead*.
However, please note that in order to ensure we are able to match your money with borrowers quickly at all times, we will only be accepting ISA capital in fixed tranches, with a collective cap of £1 million at a time. Once this cap is reached, we will temporarily no longer take in any further ISA monies until further notice.
We expect this initial cap to be reached sometime this week, so we strongly suggest that, to avoid any disappointment, you should aim to set up your new ISA, transfer in funds, and make lending offers as soon as possible.
To set up your ISA, please:
- Sign in to your account and click 'Open your ISA'
- Complete the ISA application form
- Accept the declaration and click 'Open my ISA'
Once this has been validated, you will be able to transfer money into your ISA and make lending offers by following the usual procedure.
Should you require any further information relating to the rules/laws pertaining to ISAs, or on how to set up your Lending Works ISA, please do feel free to take a look at the ISA section of our Help Centre and/or our recently-prepared Ultimate Guide to IFISAs. Alternatively, our customer service team is at the ready to assist you via email or by phone.
We look forward to sharing this exciting new chapter of our journey with you!
Here is a copy of the press release:
Lending Works, the first peer-to-peer lending platform to have insurance protecting lenders against certain borrower default risks, today becomes the first major UK platform to launch an Individual Savings Account (ISA).
The new peer-to-peer lending ISA - which is better known as the Innovative Finance ISA or IFISA - is a new category of ISA set up exclusively for P2P lending. The IFISA can only be offered by platforms who have attained both full authorisation from the Financial Conduct Authority (FCA), and subsequently ISA Manager approval from HMRC.
Lending Works received confirmation of both permissions in late 2016, and the company has now become the first member of the industry-body Peer-to-Peer Finance Association (P2PFA) to launch the new ISA product.
Nick Harding, founding CEO of Lending Works, commented:
“We are delighted to announce the launch of the Lending Works ISA, giving investors the opportunity to earn higher rates of interest by using their ISA allowance to invest in peer-to-peer loans. This launch comes in response to unprecedented demand by investors, who are looking to new asset classes for income growth, at a time when other investments and bank savings accounts are often delivering mediocre returns, if at all.
“Our lenders tell us that they are crying out for yield generating products, such as our ISA. As the first major UK peer-to-peer platform to launch an IFISA, we are focused on developing a world-class customer experience and look forward to seeing our investors reap the benefits.”
Significant investor demand expected
Consumers will be able to subscribe up to £15,240 each year with Lending Works, although they have the option of splitting this across all three ISA types – cash, stocks & shares and IFISA. This allowance is set to increase to £20,000 in 2017/18. In addition, there will be no cap imposed on the transfer of funds accumulated over previous tax years within existing ISAs into an IFISA, meaning the benefits are likely to be substantial.
Lending Works is anticipating a significant influx of new investors on the back of the launch, with a recent survey of existing investors confirming that 88 per cent plan to open an IFISA, with roughly a third (31 per cent) expecting to invest between £10,000 and £15,240 of their annual ISA allowance to this wrapper before the tax year is complete.
“Given the extraordinary level of interest from both existing and prospective customers in the build-up to the launch of our ISA, we expect to see a large spike in the volume of funds coming to our platform over the next couple of months as savvy investors look to make the most of this year’s ISA season.
“But what excites us most is the prospect of delivering sustained, long-term benefits to our customers via the Lending Works ISA for many, many years to come.”
Since the launch of Zopa in 2005, there have been over 100 lending platforms allowing individuals from the UK to become peer-to-peer lenders. A number of these platforms no longer exist, having ceased trading, and a number of others have merged. Looking at all of the peer-to-peer lending platforms that launched in or before 2012, the list includes some of the best known P2P brands.
- Funding Circle
This list also includes Euroepean lenders such as Bondora (who launched as isePankur), and Burnley Savings and Loans who actually operate a local peer-to-peer lending model. Only half of the platforms that launched in or before 2012 are still around today. The notable failures include some perhaps less well known brands.
While the causes of platform failure are varied, the ratio itself is perhaps representative of what could happen in the future. Given that 75% of platforms that launched operations within the UK after 2012, the number of platform failures could rise over the next year. The risks that platforms are experiencing are now perhaps greater than ever, given the uncertainty of FCA authorisation status, increased competition and falling rates.
Money&Co have announved that they will be offering bridging loans between 6 and 12 months, joining the growing number of peer-to-peer platforms offering these types of loans.
Here is the email sent to lenders:
We are writing to tell you about a new lending opportunity that we will be offering you shortly. We have already started lending in the property sector and have recently funded two loans for WeBuyAnyHome.com as you know. We are now looking to add property bridging loans. These loans will be short term (6-12 months) and will have a fixed interest rate. The first one that we are working on is likely to have an annualised yield of 10%. The minimum term of the loan will be 6 months and the maximum term will be 12 months. The money will be lent to a property developer, who is purchasing a piece of land with outline planning permission for housing. He will then proceed to get full planning permission and, when this has been received, he will then be able to refinance the debt with a bank. The loan to value will be 80% against the independent valuation of the land with outline planning permission and interest will be rolled up for the first six months. If the debt is not refinanced at that point, then the borrower will service the loan for the following months until the monies are repaid. This means that lenders will receive no payments for the first six months, but will then receive interest payments in subsequent months. At the point of repayment, they will get the original capital back plus interest accrued over the first six months.
As the interest rate will be at a fixed rate, the auction process will be different. Lenders will offer to take pieces of the loan at the fixed rate and as soon as the full amount has been offered, the auction will close. Given that this is a new departure for Money&Co., we will arrange a lender call in the coming weeks so that you can ask any questions about how this type of loan will work.