Stuart Law, CEO of Assetz, comments on today’s Bank of England Funding for Lending Scheme – 2013 Q2 usage and lending data:

“Today’s Funding for Lending Scheme data for Q2 shows that mortgage approvals for home purchases have increased slightly indicating a follow on rise in net lending to individuals later this year.

“Common sense dictates that when you facilitate an increase in demand by making money more available you must increase supply or accept the consequences and in this case it is sky-rocketing property prices in London and the South East. The government needs to consider the easing off of support for London house prices by excluding London and the South East from the second Help to Buy scheme to be introduced next year.

“This will pull back mortgage support in these same regions to moderate demand and at the same time moving support to the rest of the country. The government needs to start making tough decisions on the housing market in order to get construction creating GDP growth whilst avoiding a housing boom in some parts of the country.”

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Abandon Help to Buy in London?

As the Help to Buy mortgage scheme drives up demand, without a correlating increase in supply, property prices will continue to surge, keeping potential purchasers off the bottom rung of the ladder. Buy-to-let specialist Assetz is calling on the government to rethink the implementation of both the first and second phase of the Help to Buy scheme in January 2014 by excluding or reducing availability in London.

 

Data released on 13th August by the Office of National Statistics* showed that house prices remain stable across the UK but are rising at an above average rate in London (8.1% in just one year). When London is excluded from the equation, prices across the UK only went up by 1.5% annually. Recovery of the property market throughout the rest of the country has not been as strong as in London. For example, the North East and North West saw annual rises of 0.4% and 0.1% respectively.

 

Stuart Law, CEO of Assetz, commented:

 

“What commentators should be pointing toward is the easing off of support for London house prices by abandoning Help to Buy in London and the South East. The government also needs to ensure the acceleration of construction in these regions through encouraging more aggressive planning policy in the South at the expensive of NIMBYism, in order to provide a balance to increasing demand, and give more affordability.

 

“Extending Help to Buy to second homes in the form of a government guarantee as planned in January 2014 will accelerate home building further by freeing up house purchase chains but this again should be concentrated outside of London and the South East. This should provide a satisfactory outcome for most, except perhaps the NIMBYs, by improving supply where prices are under most pressure, pulling back Government mortgage support in those same regions to moderate demand and at the same time moving support now to the rest of the country. The government needs to start making tough decisions on the housing market in order to get construction creating GDP growth whilst avoiding a housing boom in some parts of the country.”

 

Overseas buyers and local demand from better off families earning above average wages in London have driven up prices there and Government support is no longer needed as builders know they can build and sell well. What is now needed is support to kickstart the rest of the country and get large scale housebuilding there too.

 

* ONS House Price Index June 2013 (released 13th August 2013).

Stuart Law, CEO of Assetz, comments on today’s CML report on the buy-to-let sector:

“Today’s figures from CML yet again highlight that the buy-to-let sector continues to boom. We are seeing more people approaching pensionable age investing in order to bolster their retirement income at a time when the Bank of England indicates base rates and therefore savings rates will stay low for at least three more years.

 

“While the growth of the sector in London is clear to see, the house price ripple effect is only just beginning now in the North where there are excellent opportunities for investment – particularly in key cities like Manchester, Liverpool, Birmingham and their suburbs. Many Southern investors are broadly unaware of the lucrative yields available in northern market, at prices that represent the beginning of the next cycle.”

Stuart Law, CEO of Assetz, comments on the changing profile of buy-to-let landlords:

“We have seen the age profiles of buy-to-let landlords broadening significantly, particularly over the last five years. Retired and semi-retired people are starting to invest in BTL in increasingly greater numbers since the credit crunch annihilated their income from bank savings accounts with near zero savings rates. This is in contrast to the situation in the last ‘boom’ which saw savvy 20-somethings speculating on property. Now the bias is more towards cash rich 40 to 60 year olds looking for pension provision.”

More than half of consumers believe peer-to-peer lending is a loan to a friend

–          Over half (53%) of consumers think that peer-to-peer lending is a loan to a friend or associate

–          Of those questioned 28% were able to accurately define peer-to-peer as a non-bank loan to a “business or entrepreneur”

–          Stocks and shares considered more risky than peer-to-peer lending

 

A new consumer survey conducted by peer-to-peer lender Assetz Capital has revealed that over half (53%) of consumers do not know what peer-to-peer lending is, identifying it as “a loan to a friend or associate”. Only 28% accurately identified peer-to-peer lending as a non-bank loan to a business or entrepreneur.

 

Peer-to-peer lending is set to increase five fold in the coming three years according to the latest forecasts from the Ernst and Young Item Club, as SMEs turn to alternative methods of funding.

 

The Assetz Capital survey also revealed that only one in five consumers (20%) have actually heard of peer-to-peer lending. Although awareness of this investment vehicle is increasing among higher net worth individuals earning an annual salary of more than £71,000, with 82% having come across peer-to-peer lending.

 

There is also a significant gender gap when it comes to basic awareness levels: 62% of men claim to have heard of peer-to-peer lending but only 17% of women. However, when quizzed on the meaning of peer-to-peer there was little difference in knowledge as 29% of men and 28% of women correctly identified the meaning of peer-to-peer lending.

 

Despite greater awareness among high net worth individuals the proportion who had actually invested in peer-to-peer lending stood at 7%, compared to 3% across all consumers questioned in the survey. ISAs appeared to be the investment of choice: 84% of those surveyed had invested in an ISA at some point and 49% identified this form of investment as “very safe”. However, stocks and shares were deemed to be more risky than peer-to-peer lending by 23% of respondents, compared to only 19% who considered peer-to-peer to be “very risky”.

 

Consumers are currently fearful of unregulated lending with 79% of individuals indicating that they were not prepared to invest in something that was unregulated only 2.1% proffered an unequivocal “yes” to considering an unregulated investment.

 

Stuart Law, Chief Executive of Assetz Capital, commented: “Our survey shows that peer-to-peer lending is still in its relative infancy and unregulated lending is still viewed with caution in spite of the loss of confidence in banks. This will no longer be the case when the peer-to-peer sector comes under the regulation of the Financial Conduct Authority in April 2014.

 

“Peer-to-peer is increasingly popular among high net worth individuals, eager to invest in something that will support budding entrepreneurs and give an excellent, often short term, return. As the big banks have lost credibility their monopoly will continue to be eroded and more creative forms of lending will prevail and blossom.”

 

For more information visit: http://www.assetzcapital.co.uk/

New peer to peer mortgage launches for buy to let investors

Peer-to-peer lender Assetz Capital has launched ‘Lend to Let’, the first P2P buy-to-let mortgage, providing loans for overseas buy to let investors struggling to secure mortgages on UK property.

There is strong demand from high net worth investors who live abroad and want to invest in UK property, yet find themselves unable to access the regular mortgage market due to their non-domicile status. Assetz Capital is offering borrowers 50% LTV buy-to-let mortgages at 7% for a five year term, with a 3% arrangement fee.

This presents peer-to-peer lenders with a particularly low-risk, high return opportunity, benefitting from an income of 6.5% per annum for five years, with 0.5% cash back in the first year. Assetz Capital has first charge on the property on behalf of the lenders and the rental income is also placed into a trust account which the owners can draw upon for repairs, ensuring the risk to lenders is extremely low.

Stuart Law, Chief Executive of Assetz Capital commented:  “The launch of Lend to Let represents an exciting new direction for the UK buy to let market, as well as the growing peer-to-peer lending sector. By bringing the two together we are able to plug a huge gap which has prevented good quality, high net worth individuals from investing in the UK property market since the withdrawal of lenders from this sector.

“This mortgage will meet this demand, while at the same time offering strong returns with added security for peer-to-peer lenders. It could have a significant impact on the UK buy to let market, particularly in the North of England where the loan is underpinned by exceptionally strong rental yields of typically 8% gross.”

Assetz Capital aims to arrange in the region of 50 buy to let mortgages per month by the end of this year, rising to 100 mortgages a month in 2014.

Assetz Capital raises loans from an established community of over 60,000 individual high net worth investors, linking investors directly with credit worthy borrowers. Assetz Capital has a ready made supply of buy to let investors wishing to take advantage of the peer-to-peer funded loan from the Assetz for Investors affiliated business, which sources buy to let investment opportunities. Loans will initially only be available on Assetz for Investors sourced properties that have been through detailed due diligence and have substantial rental cover for the interest payments.

For more information visit: http://www.assetzcapital.co.uk/

New peer-to-peer lender launches with largest loan raised in UK

Investment group Assetz has launched Assetz Capital, a new peer-to-peer lender delivering much needed loans to the UK economy. The new lender has just completed fundraising on its first property development loan with a value of £1.5 million, which is the largest peer-to-peer loan ever raised in the UK.

Assetz Capital raises loans from an established community of over 60,000 individual high net worth investors, allowing businesses to borrow cash through an online marketplace, linking investors directly with credit worthy borrowers. Lenders currently have an estimated lending capacity of up to £96m available through the Assetz Capital platform and this expected to grow substantially over the remainder of the year.

The company has launched with two products: finance for small and medium sized trading companies with tangible security; and property development funding at 50-60% loan to value for residential developers throughout the UK.

Several loans have been raised so far, the most significant being a £1.5 million loan to fund a property development project in Nottingham, with over 40 investors seeing a 10% return on their cash. In addition, this loan had what is thought to be the largest peer to peer lending bid to date of £200k. Further loans include a £180,000 trade finance loan for a small business importing Christmas stock for garden centres and supermarkets, which delivered in excess of a 10% return to investors.

A thorough credit report and risk profile is provided on each potential borrower, helping lenders judge risk.

The experienced team behind Assetz Capital includes Assetz Chief Executive Stuart Law, HBOS whistleblower Paul Moore as non-executive Chairman, accountant and business lending banker Andrew Holgate as Managing Director of Assetz SME Capital and property banker David Penston as Managing Director of Assetz Development Capital. Grant Thornton is the trustee for the lenders’ cash reserves and also acts as custodian for their loan security.

Stuart Law commented:

“Many traditional banks are now a spent force, throttling new lending whilst slowly recapitalising following previous losses, which continues to hold back growth in the UK economy. Meanwhile, investors are actively seeking new ways to deploy their cash that will deliver a decent income while bonds, money markets and savings accounts pay historically low rates.

“Peer-to-peer lending is now a well established funding avenue and the appetite from borrowers and investors continues to grow, encouraged by the prospect of regulation in April 2014. Our business model is to go back to the roots of banking, to have a fundamental policy of ‘know your customer’ and to employ a professional and experienced banking team.”

The Government is so encouraged by the growth of peer to peer lending that it has pledged £100m of government funding to peer-to-peer lenders and other alternative finance suppliers in a bid to help small businesses struggling to obtain credit via high-street banks. Assetz estimates that peer-to-peer finance will account for more than £500m of loans to individuals and small businesses this year, growing to £1bn of lending in 2014.

A survey of the existing Assetz database of 60,000 registered private investors in December 2012 found that 46% of investors would be interested in peer-to-peer lending opportunities.

For more information visit: http://www.assetzcapital.co.uk/