Property Moose is one of the UK’s largest Property Crowdfunding platforms. I’ve reviewed them in more detail in this review and they continue to be one of my largest personal P2P/crowdfunding investment platforms. I spoke with the founder, Andrew Gardiner, on a new type of loan investment they’ve just launched.
The Existing Investment Mix
Most of the investments to date on Property Moose are equity investments in individual properties (‘SPV’s). A few of the more recent investments were split into an equity part and a loan part. The equity investors took on more risk, but had the potential for higher returns. The loan part investors had a fixed rate of return but were first in line to get back their capital.
The New Loan Product
In future, some (not all) of the new investments will be split ~50/50 between an equity part and a loan part. The loan part will have:
- A ~50% Loan to Value, first charge against the property
- A 5% fixed rate of return
- Visibility on the underlying property asset (properties will also be listed as equity investment)
For the equity part investors, their property investment will be leveraged with the 50% mortgage. So, if house prices rise 10% their share would theoretically rise 20% (subject to fees). On the other hand, if house prices fell, they would lose more of their capital.
I asked Andrew if there would be any platform fees on the loan-part. He told me that there will be no fees for the mortgage lenders but there will be a finance fee on the SPV of 2% (paid for by the equity investors which will cover putting in place all of the loan documentation). Andrew added that this is a normal cost of borrowing money and that they have tried to make it as similar to bank borrowing as possible.
I can’t think of any other P2P lending platform that offers exactly what Property Moose are planning to do: low LTV mortgages with full visibility on the underlying asset. These two alternatives are probably the closest I can think of:
- Buy to Let property mortgages to 3rd parties
- 3.43% or 3.75% returns
- Max LTV of 75%
- Possibility to invest within Innovative Finance ISA
- You are paid interest even while waiting for new investments
- Commercial property lending, not residential BTL
- £1,000 minimum investment
- Splits property loans into multiple tranches: often a 50% LTV tranche available
Property Moose have also come up with their own comparison against similar products (read more on their blog):
Property Moose have just released the first of these deals. The details are:
Loan Amount: £30,000
Property Value: £65,000 (post renovation works)
Loan to Value: 46.15%
Security: 1st charge against the property and debenture over SPV
Interest to Investors: fixed 5% net p.a.
Monthly Interest Due: £125 (against an expected monthly rental of £425)
As part of the initial fund raise, the SPV will hold 12 month’s interest cover on account as the property is undertaking some renovations (expected to last around 3 weeks). This is to cover any void periods and ensure the interest can be paid.