Over the past decade, the peer-to-peer (P2P) lending sector has gone from strength to strength. A number of government measures have shown just how much they are behind the idea – not least with the introduction of the Innovative Finance ISA (IFISA) from April 2016, for the first time allowing tax exemption on interest and gains from P2P loans.
For many, investment in P2P property lending has become an attractive alternative to investing in property directly through buy-to-let, or indirectly via a real estate investment trust (REIT).
P2P property lending has seen a great level of innovation, and that means that there are a variety of different approaches on the market. As with any type of investment, potential returns are intrinsically linked with risk levels.
The types of property involved, the nature of the lending, and the lender’s track record all come into play; lending on residential properties or buy-to-let, for example, typically carries less risk than bridging finance or property development loans.
I’m going to take a look at three examples of P2P lenders, at various levels of risk and potential return….
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