Wikipedia definition: 'Peer-to-peer lending (also known as person-to-personlending, peer-to-peer investing, and social lending; abbreviated frequently as P2P lending) is the practice of lending money to unrelated individuals, or 'peers', without going through a traditional financial intermediary such as a bank or other traditional financial institution. This lending takes place online on peer-to-peer lending companies' websites using various different lending platforms and credit checking tools.'

While most P2P loans are traditionally unsecured personal loans, the credit crunch led to large pension funds and insurance companies starting to lend to commercial property developers in an effort to fill the void left by banks and earn a better return in the process. More recently, online lending platforms have emerged, allowing small investors to either solely or jointly lend to property developers that want to buy residential property. As many of you will know only too well, there are numerous reasons why a property developer might be unable to borrow from a bank, while the cost of a bridging loan may be too expensive for a large project that may take a year or more to turn around.

Lenders can expect to earn close to a double-digit return or more, which is several times more than they can currently earn in any UK savings account, while having the security that at least they have a charge over the property if the borrower defaults on
the payments.

Funding Circle and ThinCats, two outfits that specialise in small-business loans, are starting to broker commercial mortgages, and one start-up, Relendex, will focus only on commercial property, but at the moment it only has one deal on offer. Thanks to these and a few other companies, private investors can lend directly to property landlords for the first time. This is appealing because it offers a way of accessing the high yields available in commercial and residential property without the hassle and capital risk of direct ownership.