LendInvest makes £3.1m – but can P2P solve housing crisis?

P2P mortgage platform LendInvest has reported a second profitable year of trading since it launched in 2013, growing its profit from £1.2m in year one to £3.1m in the year to March 2015.

The company says it has facilitated almost £400m of loans from investors to landlords and developers, funding 700 mortgages on properties worth £700m.

Investors can expect an average 7.5% return per year, making it a significantly more attractive option than traditional savings models.

The platform makes its money by charging borrowers an arrangement fee on completion of their loan.

The company, a spin-off of short-term mortgage lending business Montello, secured what it believes is the UK’s biggest ever Series A fintech round back in June, bagging £22m from Chinese technology firm Beijing Kunlun Tech Co.

“Traditional mortgage lending isn’t dead yet, but the reception that we see from mortgage brokers and borrowers to LendInvest’s tech-based process is all the proof we need that the move online has started,” Christian Faes, cofounder and CEO of LendInvest told Tech City News.

“As consumer and business finance continues to be transformed by P2P lending and the general trend towards taking more financial services online for faster, fairer and more transparent experiences, the traditionally offline mortgage market must evolve too.

“The value of the UK mortgage market is larger than both the consumer and SME markets put together, making the market potential for P2P property lending enormous.”

Following the Conservative Party conference last week, Prime Minister David Cameron has been criticised for his plans to encourage the private sector to build 200,000 “starter homes” by the end of the next parliament, given that they may only be affordable to those earning more than £50,000 per year.

Additionally, housing campaigners believe that more than 200,000 homes must be built every single year to meet current demand.

“We are supportive of the PM’s campaign to promote house building; it is right that the government is taking the housing shortage seriously and acting fast, but there needs to be a greater focus on the private sector’s contribution to solving the housing problem at the same time,” Faes added.

“LendInvest borrowers have supplied thousands of improved or new houses to the UK market, an increasing number of which are sold to Help-To-Buy buyers. As a nation that loves property, private landlords and builders have a huge opportunity to help contribute to the housing crisis and using P2P lending that is fast and fair, they can do so more easily than ever.

“But if the Treasury moves ahead with its plans to tax more buy-to-let mortgage holders and keep stamp duty high, some crucial landlords and developers could be pushed out of business with fewer homes built.”

Given the success of the sharing economy in the UK, with research from JustPark suggesting that London is the sharing capital of Europe, and that money lending is the largest sector within that, it’s perhaps not too far-fetched to think some kind of P2P system could kill traditional lenders and start a housing revolution.

Julia Groves, cofounder of the UK Crowdfunding Association, said: “Given the challenge faced by almost a whole generation trying to get on the property ladder, crowdfunding for home deposits is also proving popular, evidence that this new form of funding may be the ‘Heineken of finance’, reaching the parts the banks don’t reach.”