Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose the money you invest

  • Many peer-to-peer (P2P) loans are made to borrowers who can’t borrow money from traditional lenders such as banks. These borrowers have a higher risk of not paying you back.

  • Advertised rates of return aren’t guaranteed. If a borrower doesn’t pay you back as agreed, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money.

  • These investments can be held in an Innovative Finance ISA (IFISA). An IFISA does not reduce the risk of the investment or protect you from losses, so you can still lose all your money. It only means that any potential gains from your investment will be tax free.

2. You are unlikely to get your money back quickly

  • Some P2P loans last for several years. You should be prepared to wait for your money to be returned even if the borrower repays on time.

  • Some platforms may give you the opportunity to sell your investment early through a ‘secondary market’, but there is no guarantee you will be able to find someone willing to buy.

  • Even if your agreement is advertised as affording early access to your money, you will only get your money early if someone else wants to buy your loan(s). If no one wants to buy, it could take longer to get your money back.

3. Don’t put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.

  • A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

4. The P2P platform could fail

  • If the platform fails, it may be impossible for you to collect money on your loan. It could take years to get your money back, or you may not get it back at all. Even if the platform has plans in place to prevent this, they may not work in a disorderly failure.

5. You are unlikely to be protected if something goes wrong

  • The Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover investments in P2P loans. You may be able to claim if you received regulated advice to invest in P2P, and the adviser has since failed. Try the FSCS investment protection checker here.

  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here. For further information about peer-to-peer lending (loan-based crowdfunding), visit the FCA’s website here.

A project we funded in Essex

News Case Studies 27 Jun 2024
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Take a look at a recent project we funded

At BLEND, we recently funded the conversion of existing agricultural barns to create two self-contained semi-detached dwelling houses in Essex.

The existing property comprised a vacant derelict barn sitting on an 0.81-acre plot of land located on the eastern side of a village centre close to Saffron Walden and Bishops Stortford. The property, having been previously used for agricultural and commercial uses including as a car repair business, was a Dutch barn of steel frame with corrugated metal clad walls and roof, excellent ceiling heights and measuring circa 8,000 sq ft on a Gross Internal Area basis. There was also a barn/storage building of basic construction in block rendered walls beneath corrugated asbestos cement sheet roofs, which was planned to be demolished as part of the development works to form a 6 bay cartlodge with additional storage.

The developer had secured full planning consent for 2 new semi-detached 5-bedroom barn conversion dwellings of modern executive standard: open plan kitchen and living areas, and sufficient bedrooms and bathrooms for family use. Plot 1 was planned to extend to 3,660 sq ft plus a 947 sq ft garage, while plot 2 was planned to have 3,925 sq ft plus a 947 sq ft garage. The developer was keen in providing a better than average specification and larger than average gardens in order to offer practical outdoor entertaining space.

Design Challenges

The roofs on the existing building had a three-section curved profile as shown in the pictures above and the existing structure was required to be retained by the planners. As a result, the developer was fully aware from the start of the project that there would be design challenges to overcome with the roof to ensure a cost-effective waterproof finish was achieved.

The original design provided for removal of the existing cladding and retention of the existing steel structure which was to be modified and extended to accommodate the new residential two-storey layout. On commencement of the demolition works however it was found that the existing steel structure was unsafe and could not be retained, and accordingly was removed.

The steel framework was never intended to be integral to the structure of the building and the decision was made to proceed with a conventional cavity construction structure formed off of new mass concrete foundations. Timber joists would then form the first floor. Timber joists and 22 curved steels weighing circa 15 ton would be used to create the curved roof profile between the existing and modified steel trusses. Cavity masonry would also form the party wall structure separating the two dwellings.

Externally the building would be clad with Scottish larch cladding boards and the roof would be covered with insulated aluminium sheeting with a standing seam profile. Doors and windows would be by Velfac who provide a composite aluminium clad timber double glazed unit.

This was a high specification development that incorporated many quality finishes both above and below the surface, such as standing seam roof finishes, curved vaulted ceilings, quality composite windows, a high level of bathroom and kitchen finishes, and fully integrated IT with specialist lighting, all within the large internal open spaces created by the voluminous barns.

Our appointed independent monitoring surveyors, C D Mountney Ltd., took a hands-on approach to assist the developer in putting the cost plan together to adequately address the particular design challenges that this development presented to make the draw down process as smooth as possible.

The result is as fantastic and impressive as it can be seen on the images below.

Blend is a specialist development finance lender that works with experienced mid-sized property developers in the UK.

For more information, please visit www.blendnetwork.com or email us at enquiries@blendnetwork.com

BLEND Loan Network Limited is authorised and regulated by the Financial Conduct Authority (Reg No: 913456).

BLEND Loan Network Limited is registered in England and Wales. Registered office: Evelyn House, 142 New Cavendish Street, London W1W 6YF.

Don’t Invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more.

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