IFISA and property investment, what do you need to know?
In a nutshell?
UK Alternative finance platforms are making significant changes to their product offerings as they look for market share. Real estate crowdfunding and P2P property lending businesses are showing flexibility and fluidity in the alternative finance market. Data compiled by the Cambridge Centre for Alternative Finance (CCAF) confirms the trend.
A concrete example of this comes from UK property crowdfunding platform CrowdLords, which is adjusting its offering to reflect new regulatory and market conditions, says Richard Bush CrowdLords Co-Founder. In April 2016 the UK government introduced the Innovative Finance ISA or IFISA. This allows you to transfer existing ISAs or use annual allowances of £20,000 to earn tax free returns.
UK Alternative finance platforms are making significant changes to their product offerings - and even fundamental business models – as they vie for market share.
And real estate crowdfunding and P2P property lending businesses are leading the way, showing "flexibility and fluidity" in an area that is relatively new, even for the alternative finance market.
Details of this have emerged in data compiled by the Cambridge Centre for Alternative Finance (CCAF) as part of its 5th UK Alternative Finance Industry Report, an annual deep dive into the nation's current and future prospects for the sector.
The report said that 12 per cent of platforms which took part in the survey reported they have "significantly altered" their business model in the last 12 months. A further 40 per cent said they "slightly altered" their business model.
Many crowdfunding platforms also reported that they had altered their products in 2017, even if this didn't affect the overall business model. A total of 43 per cent of platforms "significantly altered" their products and a further 33 per cent "slightly altered" their products.
Innovation in real estate and property crowdfunding platform business models in particular saw a three-way split – with 33 per cent said there had been "no significant change", 33 per cent said they had "significantly altered" their model, and 33 per cent "slightly modified" their business model.
A concrete example of this approach comes from UK property crowdfunding platform CrowdLords.
"We adjust our offering to reflect new regulatory and market conditions as and when they arise."
Explained Richard Bush, Co-Founder of crowdfunding platform CrowdLords, Mr Bush also expanded:
"For example, in April 2016 the UK government introduced the Innovative Finance ISA, or IFISA for short. This allows you to include CrowdLords' bonds and bonds like them in the scheme so that you can profit from your investment in a tax-free manner.
"We've opened up to investors wanting to transfer their existing ISAs or use their annual allowance of £20,000 to earn tax free returns and created a clear and transparent system to show investors how to do this. We are actively on the look-out for further regulatory changes – something that the high street banks are much too slow to be able to do. This is what gives us the edge."
Innovations like this are rapidly becoming the norm in the alternative finance industry, says the CAFF report:
"This continued trend in making business model adjustments and innovating product offerings points to an alternative finance market that remains highly fluid and dynamic."
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