A guide to buy-to-let IFISAs
THERE are a number of peer-to-peer platforms enabling people to earn money from buy-to-let investments without buying a property.
These investors can now enjoy tax-free earnings as well, thanks to the Innovative Finance ISA (IFISA).
Here are a few of the IFISA providers on the market that allow you to invest in buy-to-let mortgages.
Assetz Capital is typically seen as an SME lender, but it also funds buy-to-let mortgages. It offers loans of up to £1m with a maximum loan-to-value of 75 per cent, over a period of up to five years.
All of Assetz Capital’s investment accounts can be given an IFISA wrapper. Returns vary depending on the account, going from 4.1 per cent to 6.25 per cent on its auto-invest products. Investors can transfer in any funds from ISAs from prior years and there is a minimum investment of £1.
The P2P lender’s parent company Assetz Group has just launched Assetz Exchange, a new buy-to-let platform. This is separate to Assetz Capital and will let investors fund loans via a special purpose vehicle which will buy and manage the properties. It is unclear whether these investments will be IFISA-eligible yet.
Landbay purely specialises in buy-to-let mortgages and launched its IFISA in February 2017.
There is a minimum investment of £5,000 and investors can opt for a fixed rate of return of 3.54 per cent or a tracker rate that follows LIBOR, currently priced at 3.25 per cent.
The IFISA is flexible and Landbay also offers a secondary market and a reserve fund to cover any defaults or missed payments.
It won’t charge any set-up or ongoing fees for the IFISA but there is a £50 charge for transfers out.
LandlordInvest funds buy-to-let mortgages and bridging loans. It launched its tax wrapper in January 2017, making it the first P2P lender to offer a property-backed IFISA.
The minimum investment for the IFISA is £100 and there are no fees.
You are able to sell loans on a secondary market and the product is flexible so you can withdraw and replace funds in the same tax year.
Shojin Property Partners
Shojin Property Partners started life focusing on the development finance space but last year it expanded into other types of property investments including buy-to-let.
It offers three buy-to-let products, which are eligible within the IFISA wrapper.
It offers a ‘standard’ buy-to-let product, which offers investors income plus a share of any profits when the property is sold, for a blended return of seven to 12 per cent per year over five years.
It has also launched a ‘capital growth’ equity product, which purely offers capital growth but no regular income, with target returns of nine to 12 per cent per year over five years.
Its third buy-to-let offering is an income-only, mezzanine product, secured by a second charge against the property. Investors will receive a fixed quarterly income but none of any future capital growth on the property, with target returns of four to six per cent per year.