Landbay - Secured Buy-to-Let Property Loans
Summary of Investment Proposition
In my view, Landbay is one of the safest P2P lending platforms trading in the UK marketplace. It focuses solely on the property-backed buy-to-let mortgage lending space and at the time of writing boasts an average rental income vs. mortgage interest repayment ratio of 192.29%.
I currently have a small £200 investment in the Landbay platform. This is purely due to having a higher risk appetite, with the majority of my funds directed at P2P plays with higher potential returns (such as Growth Street / Assetz Capital). If I was looking to save money over the medium/long term with a lower risk of capital loss, then Landbay would receive more of my attention/funds.
The current cashback offer is £50 when investing £5,000 or more if you are referred by an existing investor. If you intend to invest, I would be grateful if you could use my referral link. This offer is not currently available if you sign-up via Landbay directly without using a referral link.
Time in business
Hands off investing
Summary of key features
The key features of the Landbay investment account are listed below.
|Estimated annual returns||3.19% (tracker) – 3.54% (fixed)|
|Loan security||Secured against buy-to-let property (max 80% LTV, but typically less than 70%)|
|Early exit||✓ (0.2% fee if exiting prior to end of fixed term, no fee to resell outside of fixed term)|
|Innovative Finance ISA||✓|
|Cashback offer||£50 when investing £5,000+|
Detailed Landbay Review
Landbay first launched in 2014 and has grown to become a business which has lent over £300 million to buy-to-let property investors, funding over 1300 property loans.
What type of lending does Landbay focus on?
Landbay offers investors the ability to invest exclusively in buy-to-let mortgages. No other mortgage types are offered by the platform. All mortgages are secured against UK buy-to-let property, with a maximum LTV of 80%.
When you invest with Landbay, there is no option to invest in individual loans. Instead, your funds are automatically diversified across multiple mortgages. To keep it simple there are two investment options: 1) fixed rate 2) tracker rate.
How safe are investments made with Landbay?
To date, the platform has recorded no actual borrower defaults. You should note that the past is no guarantee of future results. Having said that, this is an impressive track record given the platform launched in 2014.
Landbay reports that the buy-to-let asset class has historically been very resilient. At the peak of the global financial crisis in 2008, the Council of Mortgage Lenders recorded the buy-to-let mortgage default rate at just 0.35%.
How frequently is interest paid on the money I invest?
Interest on funds invested is paid within the first three working days of every month, for interest earned in the previous month.
How good is the website reporting?
The investment dashboard is simply and very easy to use. There is limited information available within your investment dashboard. Upon logging in, you are greeted with a page which states your total funds, lifetime interest earned, weighted average interest rate and investment performance percentage (100% if no issues).
Functionality exists to generate tax statements summarising your taxable income for the year.
What lending data does Landbay publicly provide investors?
Landbay is very transparent with regards to the level of data it provides to potential investors. Anyone can download a complete database of the existing loan portfolio in Excel format. This database is regularly updated and gives information such as:
- City of property
- Type of property (i.e. detached house, purpose built flat, etc)
- Number of bedrooms
- Property value
- Loan amount
- LTV %
- Rental coverage (i.e. % of mortgage payment)
- Loan term
- Number of missed payments
At the time of checking, only three loans (out of 1,147) had ever missed a repayment, with no actual loan defaults.
Is money invested in Landbay protected?
Landbay Partners Limited is authorised by the FCA (link). Authorised status does not mean that money invested is covered by the FSCS protection scheme which applies to banks, building societies and credit unions only. However, it does provide some comfort as authorised firms must comply with client asset rules which set out how firms hold and control client money.
The two key risks are 1) the borrower fails to make repayments on time and 2) Landbay itself goes into administration. Safeguards exist with regards to both scenarios.
Risk of borrowers not repaying on time – This risk is reduced via 1) diversification of funds across many loans, 2) a small provision fund to cover late payments and 3) first charge security over the underlying property should the borrower default.
Risk of Landbay going into administration – As an FCA authorised business, Landbay Partners Limited is required to have a contingency plan in the event of going out of business. The company states that if the business went into administration, trustees would be appointed to manage existing loans and the money invested. All security in relation to loans outstanding would not be affected by any insolvency of Landbay.
How easy is the sign-up process?
The sign-up process was very quick and easy. You just need to go through the standard security checks which in my case was painless.
How can I pay money into my Landbay account?
Conveniently, you can deposit via both bank transfer and debit card (subject to a minimum investment of £100).
Does Landbay offer an IFISA?
Yes – you can invest in a Landbay IFISA, subject to a minimum investment of £5,000.
What cashback does Landbay offer its new investors?
The current cashback offer is £50 when investing £5,000 or more if you are referred by an existing investor. This offer stands regardless of whether you are investing in a Classic or IFISA account.
This offer is currently available only when signing up via a referral link – please feel free to use my referral link to access this offer.