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The CrowdProperty ISA: The Next Step in your CrowdProperty Journey

We will be launching the CrowdProperty ISA on Friday 23rd February. This will be available to our registered lenders first - please click here to register as a lender today.

The rise of Peer-to-Peer Lending

The peer-to-peer lending industry is booming, with over £3.7 billion lent in 2017 alone (A). An ever-increasing number of borrowers are using alternative finance to achieve their business objectives quickly and easily, whilst savers are taking note of the impressive interest rates on offer. You may ask how we can offer such high rates of interest: simply, we cut out the ‘middle-man’ bank, pairing people with funds to lend directly with those looking to borrow via our FCA regulated online platform.

The success of the Peer-to-Peer lending industry has been shared by CrowdProperty, and our loyal lender and borrower base.

In 2017 alone, CrowdProperty lent over £5.4 million of development finance to our professional borrower base, whilst our lenders collectively received over £370,000 of interest! Since our inception, over £1 million of interest has been collectively received by our lenders with a 0% default rate and a 100% payback record (previous results are not indicators of future results, please see our risk statement).

The launch of the Innovative Finance Individual Saving Account (IFISA), announced by George Osbourne in 2016, has only aided the growth of ‘crowdfunding’ and has proved the commitment of the government to supporting alternative finance.

 

So, what is an IFISA?

You have already seen how lending through peer-to-peer businesses can offer you fantastic rates of interest. The IFISA is a way increase your returns further, by supporting borrowers by making loans in a tax-efficient way.

The ISA Family

The Innovative Finance ISA is the latest addition to the Individual Savings Account family, alongside Cash ISAs, Stocks and Shares ISAs, the Lifetime ISA, Junior ISAs and Help-to-buy ISAs.

The annual ISA allowance per tax year is £20,000; you can choose to divide this between the various types of ISA in any way you please. For example, you could invest £20,000 in the IFISA alone, or split it by investing £5,000 in a cash ISA, £5,000 in stocks and shares and £10,000 in the IFISA (and so on).

It is worth noting that you may not open more than one of each type of ISA in each tax year, and it is an investors’ responsibility alone to ensure they do not exceed the £20,000 per annum limit.

The IFISA

Whilst cash from your ISA allowance is held in the Innovative Finance ISA wrapper, the initial investment and all interest accumulated are shielded from tax. Returns from lending through CrowdProperty are already lucrative; yet by investing in our projects through the IFISA, over time you can amass significantly greater returns (please see our risk statement).

When you also compare this to the 1% you may well be earning with the bank as we have done below, this really is a stark comparison.

 

Why open an IFISA?

Figure 1*

Assuming £20,000 annual investment

Interest Earned in 1 Year

Interest Earned over 5 Years

Interest Earned over 10 Years

Basic rate tax payer – earning 1% interest

£160

£800

£1,600

Higher rate tax payer – earning 1% interest

£120

£600

£1,200

Additional rate tax payer – earning 1% interest

£110

£550

£1,100

CrowdProperty standard product – 8% basic rate tax – £1000 personal allowance

£1,480

£7,400

£14,800

CrowdProperty standard product – 8% higher rate tax - £500 personal allowance

£1,160

£5,800

£11,600

CrowdProperty standard product – 8% additional rate tax – no personal allowance

£880

£4,400

£8,800

CrowdProperty IFISA – 8%

£1,600

£8,000

£16,000


*Assuming one invests £20,000 per annum, that there are no changes in tax rules over 10 years, the £20,000 is fully utilised whilst in the ISA and there are no defaults in repayment. This also takes into account that peer-to-peer lending is included in the Personal Savings allowance (only relevant for CrowdProperty Standard Loan Product). This means the first £1,000 interest a basic rate tax payer earns is tax-free through P2P lending, and the first £500 interest a higher rate tax payer earns is tax-free. Additional rate tax payers have no personal allowance.

 

The tax savings are highly significant when considering opening an IFISA, as you can see in figure 1. Per year, the difference between returns from your standard bank interest rate, versus the CrowdProperty standard loan product and CrowdProperty IFISA are highly significant.

As you can see, if you invest through the CrowdProperty IFISA you have the potential to increase your returns tenfold as a basic rate tax payer earning 1% through a bank. You could almost double your returns from £8,800 to £16,000 as an additional rate tax payer by investing through our IFISA.

To add to this, you can transfer an unlimited amount from pre-existing ISA monies that have been accruing over previous years without using any of your £20,000 ISA allowance. This way, you do not lose the tax benefits of the ISA, you can transfer over existing subscriptions, and you still have the £20,000 annual ISA allowance to use. This presents a golden investment opportunity.

The process to transfer an ISA into a CrowdProperty IFISA couldn’t be simpler. All you need to do is fill out our online form, sign and we do the rest for you.

 

Why choose the CrowdProperty IFISA?

Here at CrowdProperty we are strong believers that you, our lenders, should have the autonomy to make your own investment decisions. As such, you have the choice to lend to as many of our projects as you wish.  This diversifies your loans and further mitigates risk. Our IFISA will work in the same way as our traditional pledging system: you will be presented with all the facts, figures and finer details surrounding projects. Then, the choice is yours.

CrowdProperty borrowers have a strong development track record and their deals are subject to rigorous checks regarding security and profitability. Approximately 1 in 20 loans applied for in 2017 were approved and funded through CrowdProperty due to our desire to offer only the most lucrative deals to our lender base.

In addition, we have first legal charge over all properties to ensure the greatest levels of security to all lenders. This mean that, just like a mortgage company, we can repossess the property on behalf of the crowd should the borrower default on the loan. Our lenders’ security is our utmost priority.

By investing in our carefully curated development projects, you’re supporting SME developers by providing them with the funds they require quickly and easily, helping local businesses grow and providing exciting new development to local areas.

Plus of course you receive a very healthy secured return on your money!

It’s completely free to open an account and the decision to pledge is yours, so why not give it a try and open an account with us today.

 

Here at CrowdProperty we endeavour to be transparent, competitive and add to our base of happy customers. If you have any questions around lending, borrowing or the IFISA please email info@crowdproperty.com or give us a call on 0121 454 5115.

Please refer to our FAQs and risk section.

Sources:

A - https://www.orcamoney.com/blog/peer-to-peer-lending-review

Your capital is at risk. No FSCS protection. Past performance is not an indicator of future results. Tax treatment depends on individual circumstances and may change. full risk warning.

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