What are the risks with asset backed P2P lending?

LandlordInvest enables you to invest in buy‐to‐let mortgages and bridging loans, backed by British property. Whilst we take precautions to ensure your investment is performing well, as with any type of investment, there are risks involved. Below we set out these risks and our approach to mitigate them.

The main risks with secured P2P lending are:

  1. Borrower default
  2. Platform insolvency
  3. Property market risk
  4. Real estate risk
  5. Illiquid instrument

Borrower default is the biggest risk and happens when a borrower does not repay his/her loan. This means that your capital is at risk.

Unlike most other P2P lending platforms, we only participate in secured lending which means that the total value of the loan is always secured against property. If the borrower does not repay their loan then we can sell the property to cover any shortfall. We only lend to borrowers who have a good quality properties that we believe could be sold easily.

However, please keep in mind that whilst the investment is backed by property, the realisable value of the security depends on the value of the underlying property.

If a loan goes into default we will contact you to make you aware that your borrower is in default and explain the next steps of the enforcement process that we will manage on your behalf.

Platform insolvency is the risk that the company operating the lending platform goes out of business.

We have taken a number of steps set out below to ensure that in the unlikely event of our insolvency you would have full protection and all your loans would be serviced until maturity. These include:

  1. All customer money that is not on loan is held in a segregated client money trust account with either Royal Bank of Scotland or Santander Bank
  2. We have created a segregated reserves account which can only be used to service loans going forward if our company was to fail and become insolvent
  3. The security provided by a borrower in favour of the loan is held by an independent security agent for the benefit our lenders.

We have made arrangements with a back-up servicing provider to take over the administration of our loans in the case of us no longer trading. The back-up servicer will manage the day to day operations of LandlordInvest to ensure that the platform can continue service existing customers and that all borrower payments of interest and capital are credited to lenders account as usual.

Property market risk means that the borrowers ability to pay interest and repay their loans could be affected if there was a downturn in the UK property market. We have established procedures to protect our lenders against this risk including by requiring a minimum rental income coverage, maximum LTV cap and other measures.

Interest rate risk means that the general interest rates might rise above the interest rates that you are earning from your loans. We are mitigating this risk by only including loans with a short term duration on our platform.

Illiquid instrument means that you might not be able to sell your loan or loan parts before the end of the loan term.





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