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The UK Alternative Lending Ecosystem

Peer-to-peer lending (P2P) in the UK has been growing at a rapid rate with the industry surpassing £15 billion in cumulative lending(1) . In the first half of 2017 the market experienced a 59% market growth rate when compared to the same period in 2016. An impressive figure considering the industry reached £3.2 billion of lending in 2016 alone(2) . Even despite Brexit woes, the market has continued to go from strength to strength with cumulative lending over the past 12 months reaching nearly £6 billion(3) .

banner_Yann Murciano, CEO de Blend Networ-01

The reasons for this buoyance are clear: P2P offers fixed returns that tend to be higher than fixed income or equity market returns and which are shielded from stock market volatility(4) , some platforms offer loans that are secured against a physical asset and the industry provides the opportunity to diversify a portfolio with an alternative investment which was previously only available to institutional investors. For example, the monthly returns on the FTSE 100, S&P 500 and Germany’s main index, the DAX, have shown a high level of volatility so far this year: in August the FTSE 100 was down by 4.6%, S&P 500 was down by 1.8% and the DAX was down by 1.7%. Yet yearto-date those indices are up by 7.5%, 16.6% and 13.5% respectively.

On the borrower side, the lack of access to traditional funding channels by Small and Medium (SME) experienced property developers has driven droves of borrowers to P2P platforms which lend across a range of lending sub-sectors including consumer, business and property. Indeed, according to a recent study by the UK Home Builders Federation(5) , availability and terms of financing for residential development has become extremely difficult for small housebuilding companies over the past decade or so as lenders have drastically changed their attitudes to the sector since the Global Financial Crisis.

This is what has led to P2P property investment emerging as a way to harness the power of technology to enable investors to obtain an inflation-beating, property-secured income and become a viable alternative to buy-to-let (BTL). From an investor’s point of view, it presents a hassle-free alternative to traditional brick and mortar property investment (no need to find tenants, no need to manage the property, no need to pay agent fees) while offering returns that are in line with traditional brick and mortar property investment. Investors can start investing in P2P property loans (in the form of a short-term bridging loan to a homeowner or to a property development project, for example) with a small amount such as just £1,000 or less depending on the platform. The interest rates are usually fixed and, in the UK, tend to range between 4%-10%(6) , although in some cases can be higher. Blend Network, for example, offers rates from 8%p.a. by lending in very niche pockets of the UK property market.

Of course, as with any investment, P2P lending comes with investors’ capital being at. That being said, I strongly believe that as long as prospective lenders do their own research and thoroughly assess the options available, P2P lending can form a healthy part of a diverse investment portfolio. After all, I believe P2P lending is simply a tool that provides investors access to a wide range of assets such as property loans, consumer loans or business loans.

The impact of Brexit

When looking at the UK market the main question that often comes up is the impact of Brexit. Brexit has clearly cooled off the prime London property market with property prices in the capital down by over 2.5% over the past 2 years(7) . However, as many familiar with the UK property market will know, the UK property market is a ‘two-speed’ market whereby the London market and the rest-of-UK market are driven and impacted by a set of very different factors. While the London market has been shaken by Brexit concerns, the new Stamp Duty Land Tax rule and international capital movements, the regional UK market has remained robust due to a structural shortage of housing across the UK regions. Northern Ireland, the strongest market in the UK over the past 12 months, was up by 5.2% in the 12 months to the end of Q2. And it also happens that markets such as the Northern Irish market are crucially under-serviced in terms of available lenders. At Blend Network, we focus on lending in such niche and under-serviced pockets of the UK property market which is why we are able to achieve higher returns for our lenders.

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All in all, I strongly believe that the fundamentals of P2P lending are extremely strong in the UK market and I have no doubt that exceptional growth will continue in the years to come.

Your capital is at risk if you lend to businesses. P2P lending is not covered by the Financial Services Compensation Scheme. Investments are illiquid (the inability to sell assets quickly or without substantial loss in value). Past performance is not a reliable indicator of future results.

About Blend Network:

Blend Network is a London-based peer-to-peer property lending platform where investors can lend from a minimum of £1,000 and can earn from 8%p.a on property-secured loans. All Blend Network loans are secured against first charge on the underlying property asset and the company only lends to experienced property developers who are looking to develop projects in the UK. As of September 2019, the average return for Blend Network lenders is 11.30% p.a. and there are 0 defaults.

Blend Loan Network Limited is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (FRN. 574048).

Yann Murciano, CEO of Blend Network


(1) (3) (6) Brismo

(2) Orca Money

(4) Source for year-to-date and monthly return on equity indices at

(5) ‘Reversing the decline of small housebuilders: Reinvigorating entrepreneurialism and building more homes’.

(7) Nationwide House Price Index

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