麻豆传媒

NEED a mortgage? In the near future you may find yourself canvassing strangers online for a loan instead of your bank. The rise of a new kind of crowdfunding website is opening up the potential for everyone to take part in 鈥� and profit from 鈥� financial services, without a bank in sight.

Peer-to-peer (P2P) lending, which connects those who need money with those looking to grow their own, has enjoyed a dramatic rise in popularity in recent years, fuelled by a shortage of credit at one end and lacklustre interest rates at the other.

The trend began in earnest when sites like began helping people secure personal loans through crowdsourced funding. But now an increasing number of peer-to-peer investors are looking to get a slice of the property market.

The system works by allowing people from all walks of life to pool their money and act as a lender to a home buyer. Investors sign up through a website where loan requests are published alongside details about the applicant. Once you have decided who to lend money to, you can invest as little as 拢100 in the mortgage. In the UK, there are rarely limits on the maximum investment you can make, and interest is typically paid back to you monthly. Regulatory oversight for the area is growing too, with bodies such as the now enforcing rules on its members.

Growing enthusiasm for the model is giving the companies who manage peer-to-peer lending arrangements big ideas. 鈥淧2P is a large part of the current strategy, but it鈥檚 really about opening up the mortgage market to be accessible purely online for people,鈥� says Ian Thomas, co-founder of , which offers P2P mortgages. 鈥淭hat鈥檚 the real power of what we鈥檝e created.鈥�

LendInvest users can choose from a range of high interest, short-term loans requested by residential and commercial mortgage seekers. Loan repayments net those investors a monthly fee, which the company says sits at an average of around 6.5 per cent.

聯I鈥檓 getting a 6 per cent return. If you go to the bank you鈥檒l end up with 0.5 per cent聰

Danny Cox, a spokesman for financial services company , says that the UK鈥檚 rock-bottom interest rates since 2009 have encouraged the rise of such 鈥渁lternative finance鈥�. This is now leading some to question the need for banks for certain financial transactions. 鈥淭he amount of money spent on P2P is still small, a little over a billion pounds in the UK, though the market is growing very rapidly,鈥� Cox says.

There are risks, however. Cox points out that commercial properties generally carry a higher risk of buyers defaulting on their payments. 鈥淭he key to the continued success of P2P is the correct assessment of risk,鈥� he says.

If P2P firms aren鈥檛 transparent about the risks facing investors, that could create a situation in which expected returns fail to materialise. Some also worry that the credit score demands on P2P borrowers might be relaxed to encourage market growth.

Crowdfunding is also making it easier for investors to enter the buy-to-let market (BTL) without needing to buy a property outright (see 鈥�Buying houses by the brick鈥�).

Last year, the Royal Institution of Chartered Surveyors (RICS) expressed concern about the 鈥渓iquidity shock鈥� that BTL crowdfunding posed to the housing market by making the purchase of a share in a house 鈥渁s easy as ordering a book on Amazon鈥�.

An internal paper shared with 麻豆传媒 estimates that if 5 per cent of household savings in the UK were invested in these schemes, it would add an extra 拢50 billion to the country鈥檚 housing market over three years, probably exacerbating house price volatility. As well as the danger that greater access to property investment collectives will drive houses prices even higher, the RICS report notes that the schemes will require policymakers to rethink how they manage the property market.

But buying property through crowdfunding could also limit the dominance of big-time investors. Aifuwa Ehigiator is the founder of a start-up called Our Street, which hopes to allow the people of Brooklyn in New York a chance to invest in local properties. They will jointly provide the money to buy the houses, which will then be refurbished and made more eco-friendly before being rented out for profit.

Ehigiator says he has nearly 200 locals who are interested in investing and, provided additional commitments can be secured, he hopes to launch the venture in the coming months.

Thomas believes crowdfunding initiatives could change the face of the housing market. LendInvest looks set to focus on financing mortgages, but with over 拢200 million invested through loans listed on the site so far, the race to upset the banks has only just begun.

鈥淓veryone is picking a different segment of the market, whether it鈥檚 business loans or mortgages,鈥� he says. 鈥淏anks will eventually become more like transactional providers, and specific products will be done more and more by P2P.鈥�

However, traditional banks aren鈥檛 on the ropes yet. It鈥檚 possible that as confidence in the economy grows, they will begin retaking their lost share of the market. This would leave P2P lenders with the less desirable assets, and their risk spread thinly across a pool of borrowers with an uncomfortably high default rate.

This article appeared in print under the headline 鈥淪hared housing鈥�