Established in 2014, peer-to-peer lending (P2P) platform LandlordInvest was granted full FCA authorisation in December 2016 and has now announced that it has been approved by the HMRC for ISA manager status, meaning the company will become the 'first peer-to-peer lending platform that is able to offer a property-backed IFISA' according to CEO, Filip Karadaghi.

We spoke with the P2P provider's CEO to find out more.

What is LandlordInvest?

LandlordInvest is a UK-based peer-to-peer lending platform that facilitates investment in UK buy-to-let and bridging loans. The platform will offer the first property-backed IFISA by the close of the month, it is expected.

• BorrowersProfessional landlords that are looking to borrow £30,000-£750,000 up to 5 years on a buy-to-let basis. They would also be able to raise short-term financing, bridging loans with a maximum term of 12 months.

• InvestorsAnyone who has at least £100 will be able to lend across LandlordInvest. The P2P lender offers investors risk-adjusted returns between 5%-12% per annum.

Interviewed by Orca, Filip (CEO) explains the process of becoming authorised and approved, and, importantly, what the Innovative Finance ISA will mean for LandlordInvest lenders.

1. When can investors expect the LandlordInvest IFISA?

We aim to launch our IFISA by the end of January this year and have the necessary infrastructure in place.

Once launched, it will be one of the first, if not the first, property-backed IFISA. It will indeed be a historic moment for us and investors, and we are all very excited.

2. What did the process entail and how long did it take to receive full FCA authorisation?

The process included testing the infrastructure, including the platform, to ensure that we will by compliant with the ISA regulations once we launch the IFISA. Also, ensuring that our customers receive a good and efficient service.

It took us almost two years to obtain full FCA authorisation. The process itself was quite straightforward: the FCA reviewed our internal policies and procedures (to ensure that they are FCA complaint), looking into agreements with third parties, reviewing the lending platform, checking financial promotions and other.

I feel that the process could have been quicker but understand that the FCA was probably not prepared for the amount of applications from firms wishing to become authorised. We were very happy once we became authorised as we could finally put all preparations into practice.

3. Why did LandlordInvest decide to go for full FCA authorisation opposed to interim permissions when setting up the platform?

When we set up the company, October 2014, it was no longer possible to apply for an interim permission, so our only choice was to apply for full authorisation. We submitted our application on the 18th December 2014 and became authorised 1 December 2016.

4. What can retail investors expect from LandlordInvest?

Ability to build a diversified portfolio across buy-to-let and bridging loans with market leading risk-adjusted returns. Being fully FCA authorised, we have a fully compliant infrastructure in place and have higher requirements than platforms operating under an interim permissions.

We put our service to customers at the highest standards and treat all customers, regardless of portfolio size, in the same manner.

5. Why should an investor subscribe their annual allowance to a LandlordInvest IFISA?

Our IFISA will offer substantially higher returns than Cash ISAs, which are currently yielding less than 1% per annum, and much less volatile than Stock ISAs. Also, our IFISA will be secured by property, adding a layer of protection if a borrower defaults.

However, investing through a P2P platform carries various risks and I recommend that all investors should understand those risks prior to investing.

Conclusion

With a new property-backed Innovative Finance ISA imminent, LandlordInvest is set to experience an influx of investors who are seeking an alternative investment that provides a higher-yield than an average Cash ISA and uncorrelated to the stock market - something investors wouldn't get with a Stocks & Shares ISA. The UK ISA market is c£500billion in value, compared with peer-to-peer lending which is roughly 50x smaller - cumulative current total value is £9.4bn. With more IFISAs set to launch in 2017, they could hold the key to P2P lending rising to a mainstream asset class.

Peer-to-peer lending does not come without its risks. The industry is not covered by the Financial Services Compensation Scheme. Investors could lose their capital.