RELENDEX has launched an Innovative Finance ISA (IFISA) that will offer investors between six and 10 per cent returns per year.
The tax-free investment wrapper from the peer-to-peer property platform will be a non-flexible model, meaning investors will not be able to withdraw, replace or move new funds across other ISA accounts in the same tax year.
The move will allow the firm to keep the product charge-free, while still enabling investors to sell loans ahead of deadline on the platform’s secondary market.
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“Our lenders see us as a longer term investment,” said the firm’s chief executive Micheal Lynn. “A non-flexible ISA recognises this longer-term demand and allows us to offer the product without any fees.”
So far, the only P2P ISA providers that have said they are offering a flexible model are LandlordInvest and Landbay.
Relendex, which has returned an average annual yield of 8.78 per cent from its bridging and development loans to date, said it has built up a £20m pipeline of borrower demand, which it expects will allow its IFISA offering to snap up a place in the sun within the wider ISA market.
“Many people have built up a significant nest-egg in their tax-free ISA, but in the low-interest environment cash ISAs are only earning around 0.5 per cent and stocks and shares ISAs are potentially quite volatile and therefore investors’ capital is at risk,” Lynn said.
“A secured lending P2P ISA is the best of both worlds. There is considerable capital protection in the form of security over independently-valued UK property assets.
“Of course property values can fall, but since our average loan-to-value is around 60 per cent, the property concerned would need to fall 40 per cent on average before any loss would result.”
The firm set a minimum threshold of £10,000 for funds that are being transferred from other accounts, in which case investors will need to complete a “transfer authority form”. Lynn said the platform will handle the entire process so that investors will not need to resort to an ISA manager.