It’s no secret that peer-to-peer lending has become a hot topic over the past few years and in many circumstances it has allowed those unable to borrow from traditional lenders an alternative route to finance. The use of peer-to-peer lending is also growing within the property industry and I am keen to understand the attraction for property developers and investors. This month we caught up with CrowdProperty, a peer-to-peer lending platform that exclusively deals with debt, and three developers that used the platform to raise funds, completed the project advertised and have since paid the crowd back in full.
CrowdProperty was created in 2013 by Mike Bristow, Andrew Hall and Simon Zutshi and set up by property investors for investors. So instead of borrowers dealing with lenders, they can deal directly with those that are accustomed to more creative financing structures. However, it is important to note that unlike some other peer-to-peer lending platforms within the industry CrowdProperty only deals with debt and does not offer its lenders equity in the property deals advertised.
When a borrower wants to raise funds via the crowd they will need to present all the details of the deal and the people behind it to Andrew Hall, who in essence acts as a gatekeeper and makes the initial assessment. Andrew has around 30 years of investment and development experience spanning both commercial and residential property both in a personal capacity and as a trained chartered surveyor, which makes him the ideal person for the job.
After Andrew has gathered all the technical information required to give the deal and the borrower the green light, the opportunity is then placed on the platform. CrowdProperty takes a first charge on the project so if for some reason the borrower is unable to complete the project it can step in and get the project to completion, although so far the company has never been required to do so.
To date the crowd, those that have lent funds on the platform for a fixed return, have lent more than £15m and to date about £7m has been paid back to the crowd.