Proplend has seen a rise in buy-to-let investors selling their properties to become commercial property borrowers and lenders on the peer-to-peer lending platform.
Brian Bartaby (pictured), chief executive of Proplend, said that he has seen buy-to-let landlords who have purchased a mixed-use property, part residential and part commercial, on the borrower side, and has seen buy-to-let investors leave the space to lend on the platform.
He said landlords have been selling properties and leaving the buy-to-let sector due to increased taxation and frustrating tenants.
Since April 2020, mortgage tax relief has been completely phased out so landlords can no longer deduct any of their mortgage expenses from their rental income to reduce their tax bill. Instead, landlords now receive a tax credit, based on 20 per cent of their mortgage interest payments.
Bartaby said the taxation rules are different for commercial property borrowers and that it is easier to invest on the platform, rather than putting in the time and effort that being a landlord requires.
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“It’s very simple, it’s a change in government regulation on buy-to-let taxation and landlords are annoyed at getting called at 2am in the morning to sort properties out,” he said.
“There are definitely borrowers who understand commercial and generally started investing in mixed use properties and think this is a bit easier and there are very different taxation rules.
“And on the lender side rather than having the hassle of finding and buying properties with a legal mortgage, they can drop on a laptop in their bedroom and go online, not necessarily on Proplend, but any platform, and could earn returns.”
In October, Proplend revealed that it is operating profitably in the year to date after seeing strong demand from lenders and borrowers, as its latest annual results showed that it narrowed its losses last year, from £238,800 in 2019 to £193,244 in 2020.