Peer to Peer Lending

Risk Warning

The following risk warning refers specifically to the following product categories:

  • Peer to Peer Lending
  • Property Development Investing
  • Auto-Invest
  • IF ISA
  • 30 Day Access Product

A loan, even if secured against a property, contains risks. You may not get the returns expected and your capital is at risk.

Diversification

Any loans made secured against property should only be considered as part of a diverse investment portfolio which contains investments of different kinds and where you do not put too great a proportion of your capital into one particular type of investment.

Capital risk

The market value of property can go down as well as up and the return of your capital may be dependent upon the Borrower selling a property. This can never be guaranteed.

Default

Repayment of loans is not a certainty, and from time to time borrowers may default. THC try to mitigate this risk by having a full due diligence process to assess the project and the borrower before listing the investment on the platform. Unexpected things can happen and the due diligence process does not completely remove the risk inherent in lending. You may not receive all your capital back and the process to repossess and sell a property could alter the time your money is tied in.

Loan Types

Our two types of peer to peer loans, Bridging Loans (sometimes referred to on this site as simply 'Peer to Peer Lending') and Property Development Finance, differ in terms of their features and therefore in their risks. You should ensure that you read all relevant literature for each product type, such as the FAQs on this website and the product Documents (which become available when you click 'More info' next to a loan) so that you are fully informed before you consider investing in either manner. If you are investing in one of our products that spreads risks among several loans (e.g. Auto-invest) you should look at examples of our individual loans to ensure that you are comfortable with the types of loans you will be exposed to.

IF ISA-specific risks

As the minimum IF ISA term is three years you cannot access your money within this timeframe. The tax-free entitlement of an ISA depends on your circumstances and may be subject to future change. Any withdrawals or capital losses count towards your annual tax-free limit and cannot be replaced in that tax year. If The House Crowd was to become insolvent your IF ISA may lose its tax-free status.

Liquidity

A peer to peer investment made through this platform is illiquid – there is no ability to transfer the benefit to a third party. Once the loan is made you are committed to it for the period of the loan.

Our 30 Day Access product differs from our other products in this respect because there will be quicker replenishing of funds via further crowdfunding campaigns, meaning that there should be less of a need to wait for the repayment date for each loan. While this should lead to greater liquidity for the 30 Day product, it is not guaranteed because it is dependent upon further crowdfunding campaigns and investment. Therefore, you may not be able to withdraw your money within the 30 day notice period.

Additional considerations for Auto-invest, IFISA and 30 Day Access Product

While the diversification within these products is designed to reduce risk compared with investing in individual loans it should be noted that they are not savings products in the traditional sense. For the sake of treating everyone fairly, we cannot sell on peer to peer loans that are in default. There is therefore no guarantee that we will be able to return all of your capital within the notice period because some loans may have gone into default and the return of those monies is dependent upon the loans being repaid and various other factors (see T & Cs for each product for full details). Similarly, the biannual interest rate quoted may be subject to a lesser interest rate should a loss be made on a particular loan that you are invested in. As these products can invest in any combination of Bridging Loans and Property Development Finance you should ensure that you understand the features of both types of loans so that you are in a fully informed position (see Loan Types, above).

Financial Services Compensation Scheme

There is no ability to make a claim under the Financial Services Compensation Scheme (FSCS) should the investment fail for any reason or should The House Crowd become insolvent. There may be instances where uninvested money, when held in a segregated bank account, is protected by the FSCS up to £85,000. However, as the intention is for your money to be invested in loans for the majority of the time you should assume that FSCS protection generally does not apply.

Equity Investments

Risk Warning

The following risk warning refers specifically to Property Crowdfunding (i.e. equity investments)

An investment in property and unlisted shares contains risks. You may not get the returns expected and your capital is at risk.

Diversification

a diverse portfolio which contains investments of different kinds and where you do not put too great a proportion of your capital into one particular type of investment.

Dividend risk

Estimated returns are subject to risks around timescales, tenant risk and other costs.

Tenants may not pay their rent or properties may be untenanted for periods and such bad debt or void periods would impact on returns.

Purchases that do not complete, fees or other costs (including refurbishment) may be greater than anticipated all of which would impact on returns.

Capital risk

The market value of property can go down as well as up and the return of your capital would be dependent on a sale of a property which is not guaranteed.

Costs or tenant risk referred to in the section headed ‘dividend risk’ above could impact on capital returns as well as hidden defects or other unexpected costs relating to a property.

Dilution

Any further issue of shares by a company (which may be required for further fundraising) would dilute your investment.

Liquidity

The shares are unquoted, and there is no trading platform or quotation for them. You could sell shares, should you find a willing buyer, but such shares may constitute a minority holding in an unquoted company and as such may hold little value until a Property is sold.

Financial Services Compensation Scheme

There may be an ability to make a claim under the Financial Services Compensation Scheme (FSCS) established by the Financial Services Authority in the event that any investee company fails. Please contact the FSCS for details.