The following risk warning refers specifically to the following product categories:
- IF-ISA (held through Auto-Invest products January 2020 onwards)
- 30 Day Access Product
- THC Fusion Account
- Peer to Peer Lending
- Property Development Investing
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.
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.
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.
Our three types of peer to peer loans, Bridging Loans (sometimes referred to on this site as simply 'Peer to Peer Lending'), Property Development Finance and Mezzanine 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 a product. If you are investing in one of our products that spreads risks among several loans (e.g. our Auto-Invest products) 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
The minimum IF ISA term was three years for investments made prior to 15th January 2020 (HCISA-1, HCISA-2 and HCISA-3 products). From that date on as IF ISA investments are now made through the Auto-Invest products, the minimum term is one year. You cannot access your money within these timeframes, you are tied into the investment for the indicated minimum term (see also 'Liquidity' below). 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 (ability to withdraw or transfer out)
If you invest in individual P2P loans your investment 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.
Investing in one of our discretionary models (Auto-Invest, IF-ISA, 30 Day Access and THC Fusion products) means that, in normal market conditions, there should be increased liquidity because you would not have to wait for the full period of the loans to elapse when making a withdrawal request. This is because we should be able to transfer the outstanding loans to replacement P2P lenders who invest via the platform. However, this is not guaranteed. If there are insufficient further P2P monies received from further investors due to changes in market conditions you will need to wait for the full term of each loan to elapse, which may be significantly later than your preferred withdrawal date. You will also not be able to withdraw any part of your money that has been allocated to a loan that is currently in default until that loan has been repaid.
If you are considering investing via a SIPP or a SSAS you need to consider how such potential delays might affect your retirement planning (e.g. how would you be affected if there were delays accessing your tax free cash at age 55?) but it is of equal importance in any scenario where you require a return of capital by a certain date.
Additional considerations for Auto-Invest, IF ISA, THC Fusion 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 (note that Auto-Invest and IF ISA will also invest in Mezzanine Finance) you should ensure that you understand the features of each type of loan 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.