CrowdProperty is a well regarded peer to peer lending platform, which offers the opportunity to invest in bridging, auction, refurbishment, conversion and development loans.
It is a founding member firm of the Innovate Finance 36H Group, an independent industry body that represents and advances the global FinTech community in the UK. Furthermore, it has been ranked as the #41 company in the Deloitte Fast 50 and #1 in the Midlands.
To date, the platform has funded over 280 property project loans with a 100% capital and interest payback record to investors. In order to reduce risk, CrowdProperty takes first charge security on all loans listed on the platform, typically offering investor returns of 7.0-8.0% per annum.
As well as offering a standard investment account, CrowdProperty also allows investment via a tax-free ISA wrapper. Alternative Finance ISAs (IFISAs) are separate to Cash and Stocks and Shares ISAs, so you are able to open one even if you have already opened one of those ISA types already in this tax year, provided you don’t go over the overall annual ISA limit.
If you choose to sign up as a result of reading this review, I would be grateful if you could sign up using this referral link, at no cost to yourself. As always, do your own research and be sure to read the company’s own website for detailed information.
Description: CrowdProperty does not currently operate a cashback scheme for new investors.
- Time in business
- Hands-off investing
Summary of key features
The key features of the CrowdProperty investment account are listed below.
|Estimated annual returns||7.0 - 8.0%|
|Loan security||Exclusively first charge security against the subject property assets|
|Early exit||No, as all loans are short term (6-24 months, average 14 months) and there is no secondary market|
|Auto re-investment||Yes, the platform features an AutoInvest and AutoReinvest feature.|
|Minimum investment||There is a £500 minimum investment in each project loan. However, if you invest a minimum of £500 via the AutoInvest feature, you can spread this cash across multiple loans as low as £50 per loan for easy diversification.|
|Innovative Finance ISA||Yes, investments can be made via an IFISA.|
|Pension investments||Yes, investments possible from SSAS and SIPP pensions.|
|FCA regulation||Directly authorised|
Detailed CrowdProperty review
CrowdProperty Limited (‘CrowdProperty’) was incorporated in November 2013. The business launched in 2014 and became FCA authorised in 2017. The largest shareholder is currently Simon Zutshi. Simon co-founded the business (with Mike Bristow and Andrew Hall). The business raised £1.1 million of external funding in March 2019 via the Seedrs platform, which valued the business at £15.7 million (pre-money).
What type of loans are offered?
CrowdProperty exclusively offers property project loans (including bridging, auction, refurbishment, conversion and development loans) which are always secured with the first legal charge against the subject property assets.
What are the key lending criteria?
Borrowers and their teams are required to have a proven track record in property development. You can find out more information about the borrowers prior to making any investment in specific loans and there is the opportunity to ask questions to the borrower on pre-launch webinars held for every project.
The maximum LTV accepted by CrowdProperty is 70% (i.e. the value of the loan, plus all rolled-up interest, shall not exceed 70% of the RICS-certified value of the property). Certain loans for larger projects are phased – in these circumstances, an LTV value is calculated for each phase of the project.
Aside from LTV, CrowdProperty also considers ‘Profit on Cost’ (‘POC’), ‘Loan to Cost’ (‘LTC’) and ‘Loan to Gross Development Value’ (‘GDV’) when analysing deals. Where POC exceeds 25% and planning is in place, a borrower would qualify for the maximum 70% LTV if LTGDV is less than 70%. If the POC is less than 25%, CrowdProperty also considers the LTC formula (loan amount divided by hard construction costs) in determining the maximum amount to be loaned, again with a maximum of 70% LTGDV.
A maximum of 100% LTC is accepted when providing development finance, provided the expected POC exceeds 25%, typically when the initial asset is owned.
What is the typical duration of loans on the platform?
Loan terms for individual loans vary between 6 months and 2 years in length, with an average of 14 months. This information is clearly stated within the specific loan details.
How frequently is interest paid?
No interest is paid throughout the term of the loan (unless the borrower makes a partial repayment). Both capital and interest repayments are due back at the end of the loan term.
Interest on occasional serviced bridging loans, which are clearly labelled on the project page is paid monthly.
Can I sell my loan investments early?
No, CrowdProperty does not operate a secondary market. It is important to understand that your funds are committed until the end of the loan term (and potentially later if the project(s) you invest in are subject to delays).
What different products does CrowdProperty offer?
You can either invest in individual loans of your choosing, or via the AutoInvest feature which will automatically invest your funds across new loans on the platform (subject to rules set by you i.e. maximum pledge per loan).
When investing in individual loans, the minimum investment is £500. This same limit applies to AutoInvest, however, the £500 minimum investment is spread across 5 or more loans with a minimum individual loan investment of £50, meaning you can enable greater diversification without needing to invest quite as much money on the platform.
Both the SelfSelect and AutoInvest options are available via an IFISA account (Innovative Finance ISA) or Pension (SIPP Self-Invest Personal Pension and SSAS Small Self-Administered Scheme).
How frequently are new lending opportunities offered?
The frequency of new lending opportunities varies, however CrowdProperty aims to average two new loans per week. A short term pipeline is provided on the home page to give a view of upcoming investment opportunities.
How good is the reporting on CrowdProperty performance?
The reporting via the dashboard is simple and easy to follow. Once logged in, all investments can be found on your investment portfolio dashboard.
This will show all of the key information relating to your investments (i.e. project name, amount invested, interest rate applicable, loan start/end date, current status and expected interest).
Loans held within your Standard, Pension or IFISA portfolio will be shown within a separate portfolio page.
The page is split into ‘funds not received’ (where cash has not yet been received for pledges made), ‘Not yet started’ (funds invested, but the loan has not commenced), started (loan has commenced, interest generated from the specified start date) and completed (a record of all loans repaid via the platform). Expected capital repayment timing is also helpfully laid out and the entire lending and transaction histories can be downloaded in csv format.
CrowdProperty also features a statistics page which provides a detailed view of historical investment performance.
What happens if a borrower does not repay on time?
If a borrower does not repay on time, CrowdProperty would consider granting an extension on the loan, though this is dependent on the specific circumstances. If a loan is not repaid by the loan end date the borrower would be subject to penalty interest and the lenders would receive additional interest for the extended period. CrowdProperty retains first charge security on each underlying property – this enables the business to initiate proceedings to take possession of the property if the loan is not repaid when due. In these circumstances, CrowdProperty would be the first to be paid out and would have control over the recovery processes.
What are the key risks in investing in CrowdProperty?
The two key risks are 1) borrower default and 2) platform insolvency. The risks of borrower default are present across all forms of peer-to-peer lending and are partially mitigated by the due diligence conducted by the platform, set lending criteria (outlined above) and the first charge security taken on each loan. To date, the platform boasts 100% investor capital and interest payback record (though as always, there can be no guarantees regarding future performance of loans made via the platform).
With regards to the second risk, peer-to-peer investors should continually monitor P2P platforms for any early warning signs.
CrowdProperty has a publicly available and rather comprehensive wind-down plan (as required as a result of being FCA authorised).
In the event that CrowdProperty were to go into administration, Smith and Williamson (a top 10 ranked accountancy firm) would be appointed as administrator. The plan quotes Smith and Williamson as believing the businesses cash flows would provide sufficient cover for the wind down period of the loan book. It’s important to remember that investors maintain the rights to the underlying loans. The wind down plan is required to ensure that the business has sufficient cash flow contingency plans to ensure the business can be operated until such a point that all loans offered via the platform are administered with funds returned to investors.
How easy is the CrowdProperty sign-up process?
The sign-up process is quick easy. You will need to provide proof of identity and proof of address to complete checks. Once provided, your account should be verified within 24 hours.
Visit the CrowdProperty website to invest or learn more.