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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Is More Regulation Coming to Crowdfunding and P2P Lending?

Property Crowd, (following its acquisition by Global Alternatives) has now been relaunched as a cross-border property crowdfunding platform established exclusively for institutional grade real estate investments. The platform enables global real estate managers and lenders to offer debt and equity investment opportunities to professional investors.

The firm says that 2016 has been a difficult year for P2P (peer-to-peer) and crowdfunding and that further scrutiny from the FCA implies that the sector is likely to shift towards professional investors and away from retail – as has been the case in the US.

Founder and CEO of Global Alternatives, Rohin Modasia, has been an active investor in UK property for nearly 20 years. Rohin started his career with Goldman Sachs in 1998, developing a deep understanding of how property could be traded in the way equities, bonds, commodities and currencies trade; in real time and with low transaction costs.

I ask Rohin to elaborate on why 2016 has been such a difficult year for P2P lending, especially considering that a recent report by AltFi estimated that the UK P2P market grew by 26% in the year to August 2016.

“Well, I think it’s all relative”, replies Rohin, adding, “many people would not call 26% year on year growth ‘a difficult year’ and it was as high as 55% year on year during Q1 2016. That said, sentiment toward P2P and crowdfunding has certainly been hit by some high profile trip-ups in both spaces. Earlier this year, we witnessed the US-based Lending Club debacle unfold, and closer to home, claims processor, Rebus, fell into administration, representing the largest failure of an equity crowdfunding deal to date. Both have been negative for sentiment, but perhaps most crucially, the returns simply haven’t lived up to expectations. 

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