PEER-TO-PEER property platforms are rapidly overtaking non-property platforms in terms of the returns available. And when these returns are invested within an Innovative Finance ISA (IFISA) wrapper, they can quickly mount up.
Many platforms are now offering double-digit returns as standard, although these higher returns generally come with a higher degree of risk. However, for growth-focused investors, it would be tough to find a better deal on tax-free returns.
So in alphabetical order, here are the top five highest-paying P2P property IFISAs available for the 2018/19 tax year…
Target returns for IFISA: 8.7 per cent on average, before bad debt
Unlike other property platforms, Crowd2Fund allows its investors to access a range of funding opportunities, including direct lending to businesses, corporate bond investments, and – of course – property financing.
The platform’s first IFISA-friendly project was with Carbon Dynamic, a modular construction firm which creates low energy buildings from its Scottish base. The campaign was overfunded, and its investors are already earning nine per cent APR in returns.
Since then, a number of other property-related loans have been floated on the platform, with IFISA investors netting an average of 8.7 per cent, before bad debt.
Target returns for IFISA: up to 12 per cent
LandlordInvest was the first platform for residential mortgages to offer a property-backed IFISA. Investors can choose from a selection of commercial and residential projects they want to back, then they invest directly in their chosen landlords.
By keeping its business model simple, LandlordInvest can afford to maintain lower fees. This means that its investors can access higher returns, which are then collected tax-free through the IFISA.
According to its most recent loanbook, LandlordInvest lenders have earned an average of 13 per cent, per loan since the platform’s inception – with one project netting 19 per cent for investors in October 2017.
Read more: LandlordInvest hits £2m IFISA subscriptions
Target returns for IFISA: up to 13 per cent
With more than 4,690 registered lenders, MoneyThing is already proving popular with IFISA investors. The platform offers asset-backed bridging loans and commercial property loans, with investors getting returns of up to 13 per cent, paid monthly.
New accounts can be opened with as little as £1, making the platform particularly appealing to IFISA newcomers who want to test the waters before committing more money into the P2P property sector.
Target returns for IFISA: 8-13 per cent
Eligible for both ISA investments and SIPPs, Property Crowd specialises in property-backed bonds which pay between eight and 13 per cent across a relatively short period of time. Most bonds have an investment term of 6-24 months, although some have been completed within as little as four months.
Every IFISA investor can also access a full transparency report on each loan, which will explain why higher returns may be on offer, and gauge the level of risk to retail lenders.
Target returns for IFISA: 5-12 per cent
Proplend has been offering P2P property IFISAs since May 2017, with investors earning between five per cent and 12 per cent, with no investor losses to date.
As well as IFISA investments, Proplend also offers a non-ISA ‘Classic’ account, which is taxable, and a SIPP-friendly investment option for pension savers. Three tranches of debt are offered, with the higher returns available only to those investors who are comfortable taking on a higher level of risk.
Last year, Proplend’s Tranche A investments earned average returns of 7.33 per cent, while Tranche B returned 9.38 per cent and Tranche C returned 10.98 per cent.
Read more: Majority misunderstand benefits of IFISAs