LANDBAY is set to lend out a record £10m this month, thanks to new institutional investment into the peer-to-peer platform.
John Goodall, chief executive of the buy-to-let specialist, told Peer2Peer Finance News that Landbay will have lent out almost £40m this year, of which £23m was lent out in the last quarter.
The platform has lent out £80m in total since its launch in 2014.
“We have quite material institutional capital now which has enabled us to scale up our lending,” he said. “They deployed their first capital in July.”
Institutional money now makes up around three quarters of Landbay’s funding, but retail money is set to grow too thanks to the Innovative Finance ISA (IFISA).
Landbay launched its tax wrapper in mid-February last year, attracting an influx of funds during ISA season and a constant flow of transfers during the rest of the year, Goodall said.
The average balance of funds channelled into the IFISA is double that of non-IFISA investments on Landbay’s platform, he added.
“We expect quite a significant proportion of investment to come through the IFISA in the next quarter,” he said.
“The IFISA didn’t get much publicity last year as the largest platforms weren’t authorised, whereas now almost everyone has got approval and is offering the product.”
Landbay has been on an expansion drive this year, hiring a sales team and building up its lending team. It embarked on a fresh fundraising round on equity crowdfunding platform Seedrs, raising more than £2.4m in August.
Landbay’s loan origination is driven by intermediaries and it has recently unveiled a number of new distribution partners. It will be announcing several more in January, Goodall said, with an aim to be “effectively whole of market” by the end of 2018.
Looking ahead, Goodall expects Landbay to break a number of records next year – hitting the £10m monthly milestone again in the first quarter and achieving a £20m month of lending in the second quarter.
Another fundraising round is likely and the business is set to break even in 2018.
Goodall said that while regulatory and tax changes designed to cool the buy-to-let market have caused high street banks to reduce their lending levels, specialist lenders have conversely seen “quite material growth”.
“We haven’t had to loosen our credit criteria to grow; we’ve actually tightened it,” Goodall said, adding that the platform’s average loan to value is below 70 per cent.
Brexit is not a concern for Goodall, who predicts that the UK may see a surge of EU migrants looking to benefit from freedom of movement before the 2019 deadline.
“When people migrate they rent,” he said.
“Demand is outstripping supply in the rental market and I can’t see Brexit changing that substantially.”