We helped property investors awaiting long-term finance
The Challenge
Our clients are well-established property investors with in excess of 35 years’ experience between them, who have a substantial investment property portfolio. They wanted to purchase a further investment property for £1,300,000 and required £455,000 for the deposit.
The clients were already in discussions with a mainstream lender to arrange long-term commercial finance, however, they required finance quickly to complete the purchase.
The Solution
Kuflink worked closely with the clients to agree a loan of £455,000 for a three-month term, secured against a First Legal Charge on another investment property.
The client’s exit strategy is to re-finance using a mainstream lender and they were already in discussions in this regard when the Broker approached us for the loan.
Deal Breakdown:
Funds required: £455,000
Loan duration: 3 months
LTV: 70%
Security: Semi-Commercial Property property in Twyford, Berkshire
Charge: 1st Legal Charge
90 Day Valuation: £650,000
Why our client chose Kuflink
Kuflink has a long-term relationship with the Broker who knew that we would be able to provide the finance in the timescale required, whilst the clients finalised their long-term finance, with a main stream lender.
Kuflink helps a client to complete renovations The Challenge
The Challenge
Our client and his brother incorporated their company in June 2014. The nature of their business is the development of building projects. They own the commercial property but reside in different parts of the UK some 250 miles apart. They required a loan of £155,000 over a nine-month period in order to refurbish the office conversions and pay their outstanding invoices to the builders who had completed the works on the commercial units. For this they needed the funds quickly.
The Solution
We arranged for the clients to visit our office based in Gravesend, enabling us to complete all the formalities without any delays. This meant we could release the required funds to the client in just 14 days. In order to repay the loan, the client plans to sell the commercial units.
Deal Breakdown:
Funds required: £155,000
Time taken to complete: 14 days
Loan duration: Nine months
LTV: 30%
Security: 4x Grade 2 listed former Victorian Sheds next to Upnor Castle.
Charge: 1st Charge
90 Day Valuation: £624,000
Why our client chose Kuflink
The clients required speed, and they knew Kuflink is known for speedy completions on our Bridging Loans.
3 Reasons Why You Should Consider Alternative Property Investments for 2018
Buy-to-let has traditionally been one of the most popular ways to invest in property, and can offer high returns. However, a number of significant changes to landlords’ financial and maintenance responsibilities are due to come into effect this year, some of which are likely to make buy-to-let a less attractive investment.
If you already own rental property, or were considering it for your next investment, here are 3 things you need to be aware of:
1.) Landlords are losing buy-to-let mortgage tax relief
Until April 2017, landlords could deduct interest payments against rental income thus reducing their tax bills.
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However, from April 2017, this relief is being gradually phased out in favour of a 20% tax credit against the interest element of the mortgage:
From April 2017, landlords can claim 75% of mortgage tax relief.
From April 2018, landlords can claim 50% mortgage tax relief
From April 2019 landlords can claim 25% mortgage tax relief
From April 2020 onwards, landlords can claim 0% mortgage tax relief and will instead receive a 20% tax credit for mortgage interest
2.) The Tenant Fees Bill will protect tenants from paying referencing or renewal costs
A first draft of the Tenant Fees Bill was submitted to Parliament in November 2017, with the intention to ensure that tenants ‘should no longer be hit by surprise fees they may struggle to afford and should only be required to pay their rent alongside a refundable deposit’.
In practice, the bill will mean that landlords and letting agents have sole responsibility for covering the cost of referencing and renewing a tenancy etc. It will also introduce a deposit cap and a £5,000 fine for those in breach.
3.) It will soon be illegal to let properties that don’t meet minimum energy efficiency standards
As of April 2018, landlords will no longer be allowed to let properties with an F or G-rated energy performance certificate. Those found doing so will face up to £4,000 in civil penalties. This year, the rules will only apply to new tenancies but will extend to cover existing tenancies in April 2020.
Are there simpler ways to invest, without all the hassle?
Peer-to-Peer Investing
Peer-to-peer investing, sometimes called p2p lending, brings borrowers and lenders together to secure funds for a variety of projects. For Kuflink investors, all opportunities are backed by UK-property loans and underwritten according to our strict lending criteria. Investors can earn up to 7.2% interest pa gross* and get started from just £100. Kuflink co-invests up to 20% in every opportunity and, what’s more, our investors have never lost a penny!
Innovative Finance ISAs
The UK Government launched the Innovative Finance ISA (IF-ISA) in 2016, offering investors the chance to use their annual tax-free savings allowance to invest in peer-to-peer lending. As a HMRC-approved ISA manager, Kuflink offers flexible term, property-backed IF-ISAs with returns of up to 5.35% interest pa!** To find out more about what we have available and how an IF-ISA could make your money work harder for you, check out our blog post on why 2018 is the year of the IF-ISA.
Find out more about alternative ways to invest in UK property with Kuflink
*Capital is at risk. Rate correct as of 31/01/18. Past performance is not necessarily a guide to future returns. Independent financial advice is recommended.
**Capital is at risk. Rate based on a 5-year fixed-term investment.
Tech Innovations Revolutionising the UK Property Market
In recent years, the UK property market has seen huge periods of well-publicised growth, but this has not been the only significant change; the way in which consumers interact with property is transforming. A huge number of entrepreneurs, from ex-CEOs to former Dragons’ Den contestants, have raced to launch their PropTech start-ups in time to bechtome an established part of this emerging sector. From digital mortgage brokers to property-backed peer-to-peer investment platforms, PropTech innovations are fast becoming an integral part of the UK property industry.
What is PropTech?
‘PropTech’ is short for Property Technology.
The term encompasses technology such as websites, apps and online platforms that are revolutionising the way consumers buy, sell and invest in property.
Who are the market leaders?
You may be surprised to learn how many PropTech companies you’re already familiar with, or perhaps even use.
Property websites Zoopla and Rightmove have dominated the UK PropTech Market since they launched over a decade ago and, for many people, are two of the most recognisable examples of PropTech. Rightmove receive 120 million visits to their website per month!
Online estate agent Purple Bricks have also established their position in the mainstream market, reporting a 150% increase in revenue in the 6 months to October 2017.
Who should you look out for in 2018?
As well as the major players, the PropTech sector is home to a huge number of exciting new ideas with potential to completely change the game! Companies worth watching in 2018 include:
No Agent, an online solution for landlords wishing to find tenants and manage their rental properties. They aim to overhaul the traditional rental market by offering a more affordable, internet-based solution for landlords to find, reference and credit check tenants as well as organising property maintenance as needed.
Kuflink, an online peer-to-peer platform where you can invest in loans secured against UK property. Investors can register an account, transfer as little as £100 to their online wallet, choose which loans they would like to invest in and earn up to 7.2% interest pa gross!*
Reposit, that offers a deposit service for tenants who wish to avoid the usual deposit of one to two months’ rent, by offering them the option to pay a non-refundable amount equal to one weeks’ rent. The firm want to make renting more accessible whilst still offering security for landlords.
Appear Here, which links retailers in need of a short-term rental spaces with landlords who can provide exactly that. Their service mainly facilitates pop-up shops and stalls, and clients so far include big brands such as Dior.
If you’re keen to be a part of the PropTech revolution, peer-to-peer lending could offer you an accessible way to share in the success of this emerging market. To find out more about how it works and what’s on offer, visit the Kuflink website.
*Capital is at risk. Rate correct as of 21/12/2017. Past performance is not necessarily a guide to future returns. Independent financial advice is recommended.
Kuflink reports £5m of inflows since end of February
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Meet Rawinder Binning, Trustee at the Kuflink Foundation
Rawinder Singh Binning, co-founder of Kuflink and a passionate trustee of the Kuflink Foundation, opens up about looking after those in need, investing locally and making investment options accessible to the public.
My journey into property investment started right when I got out of uni. With a law degree in my pocket, 
I joined the family business. I started buying small houses and apartments and took a keen interest in working with architects and building technicians. I started to understand the dynamics between different areas of expertise such as planning law, architecture and building technology.
With this newly found interest, I got into commercial development as well as buying commercial assets. I did a whole series of property courses and read all the books – Rich Dad, Poor Dad being one of my favourites.
Moving into Commercial Property Development
Commercial property development is way more challenging than private property development as it’s not guaranteed that a property is going to be rented. Private properties tend to sell regardless. With commercial property there is definitely more risk involved, so you need to play it smart.
“The secret to successful commercial property investment, in my opinion, is to invest locally.”
If you want to ensure that a commercial property will get rented, you need to invest locally. This enables you to speak to agents, connect with the council and really understand the assets that you’re working with.
This is something I appreciate about Kuflink – those who use the platform are armchair investors relying on local people who understand the local market. What’s more, we make sure we look into the person in charge of the development, not just the asset. You really want to invest in someone with experience, especially on the bridging side of things. After all, there is a lot involved in managing and marketing a commercial property project.
“When we select an investment, we look at the person as well as the asset: do we think they can manage this project?”
Giving Back to the Community Through the Kuflink Foundation
We founded the Kuflink Foundation charity in 2008, when my sister passed away. She had a fondness for kids and my entire family already had a long-standing tradition of financially supporting local football clubs. With the Kuflink Foundation, we wanted to formalise our desire to invest in future generations and help those in need.
“Our family has always looked to see who is in need. If no one is there to help them, we will.”
My family consists of very caring people. From the moment my parents set foot in this country, they were always ready to help out the vulnerable and provide opportunities. With the Kuflink Foundation, we find initiatives that are underfunded and invest in them. When a project has heart, you’ll see that people start turning up for it. Once the projects get strong enough, we let the community take over.
Making Investing Accessible to the Public
Our family tradition of opening up opportunities translates into the Kuflink platform, too. With a minimum investment of just £100, we try to make investing accessible to Joe Bloggs and his family, too. Most of our £100 investors are just starting out, but with Kuflink’s monthly payments, they’ll slowly start seeing a return on their modest investment. This is when their returns start becoming more tangible and they begin to think about investing another £100.
“The rise of accessible investment platforms over the past few years has been a welcome change.”
I love how over the past few years more and more finance apps and investment platforms have come into existence with the aim of making saving and investing easy and accessible. Canopy, Monzo and other companies like them help people capitalise on opportunities they might not have been aware of before and keep track of their spending better. P2P platforms like Kuflink help people who want to make money but don’t know how to make high-return investments. All these initiatives work together to make everyone just a little bit smarter and a little bit better at managing their money.
It’s my dream to one day to write an educational book about property investment and development, sharing everything that I’ve learnt on my journey and more.
My Own Investment Strategy
Kuflink has always taken a stake in every investment made. This used to be a 20% share, but as we made more and bigger investments, this stopped being financially viable. We’ve now lowered our share to 5%, but we intend to always stay personally invested in the projects we finance.
“Having a stake in each investment makes us work that little bit harder.”
I personally invest through the Kuflink platform as well. I’ve taken a keen interest in the technology behind the platform, and I recently moved the tech team into our office. One day, we sat together with CTO, the tech team and the developers and played around with an investment return calculator that we’ve been making.
We found out that, if you invest £20,000 a year in an ISA, you could make a 237% return over the span of 30 years! The return percentage would be the same with smaller investments as well. Calculations like these illustrate just how profitable an ISA investment strategy can be.
The Future of Investing
I remember when I took out a mortgage with a bank, and realised that what makes that loan profitable for a bank is basically compound interest. That is a viable business model that works for peer-to-peer platforms as well, only we can typically offer better rates than most banks.
In my opinion there is nothing wrong with banks, but they are slowed down by legacy systems in a way we aren’t. Newer lending platforms such as Kuflink have much more agile technology.
“Before the financial crisis of 2008, a bank could lend a single pound up to ten times without any repercussions.”
The way I see it, P2P lending platforms and banks are part of a financial ecosystem where we all help each other. In two or three years, I believe banks will catch up with the services spearheaded by newer financial entities – the services that investors have grown to expect. This way, we all work together to make our financial services collectively better.
Nattalie-Weeks-Journey-From-Banks-To-P2P
Nattalie Weeks started her career in banking during the “Big Bang” – the sudden deregulation of financial markets in 1986. Witnessing some significant changes in regulation from inside the banking sector, as well as the crisis of 2008, she now occupies a crucial role as Head of Collections at Kuflink.
My career in the banking sector started right after grammar school at the early age of 16. It was the start of the “Big Bang” – a sudden deregulation of the financial markets by Margaret Thatcher – and banks were expanding really quickly. The abolition of fixed commission charges and the significant changes in how the stock markets worked resulted in a surge of market activity and banks were taking on a lot of staff. I was amongst those newly hired staff.
The Start of My Career in Banking
My first ever job in banking was in what is now known as the Wealth Management Division of NatWest. I worked as a Financial Services Officer, overseeing the settlement of our customers’ share trades and thus helping them achieve their investment goals. In 2000, after a period managing share portfolios for Corporate entities including large charities, I moved into a part of the bank that was looking after Sterling and USD bonds – here I became the Securities Settlement Officer.
In March 2000, NatWest was acquired by the Royal Bank of Scotland (RBS) in a £21 billion deal. At the time, this was the largest takeover in the history of banking. My colleagues and I got the option of redundancy, but I redeployed as a Mid Corporate Credit Committee Assistant. My job role included arranging all logistical aspects of Committee meetings, collating papers, and taking and agreeing minutes – most of which I didn’t understand at all at that stage.
“Instead of managing portfolios of stocks and shares, I’d suddenly entered the realm of corporate and commercial banking, lending money to companies.”
It was a very steep learning curve, but I’ve always been of the mind that if I don’t know something, I’ll ask. By continuing to learn and ask questions, I finally made it to Operations Manager at the Royal Bank of Scotland.
The 2008 Financial Crisis
In 2008, the deregulation of 1986 had started taking its toll. It became apparent that many of the mortgage-backed securities that banks and private securitisers had been lending amongst each other actually had very little underlying capital. Especially in the United States, loans and mortgages had been made available to pretty much anyone, regardless of whether they would be able to pay off their debt. This very unethical practice harmed countless individuals as well as the banking system. Once the mortgage bubble burst, it resulted in a full-blown international banking crisis.
Inside the Royal Bank of Scotland
2008 was a horrible year for the staff at the Royal Bank of Scotland. Our team was working very hard to look after our customers, but we sometimes felt like a lot of things were out of our control.
“Initially, lots of people lost their jobs. Then, the lay-offs came in waves.”
In London, the crisis was keenly felt, as it’s an expensive city in which to operate, and many of our offices moved to other UK cities such as Birmingham. From 2008 onwards, underwriting standards of mortgages tightened, and banking regulations became stricter again. Borrowers and banks had to prove that their mortgages were viable – something which I feel they should have been doing all along.
I was lucky to keep my job for eight more years, and finally left the Royal Bank of Scotland in December 2016.
Switching from Banking to the P2P Sector
By the time I left my job at the RBS, I had been working in the banking sector for over 30 years. I was keen for a new challenge and started looking for opportunities closer to home, near Gravesend. I put my CV out there, and when a role became available at Kuflink, I applied. As the peer to peer lending sector works differently than the banking sector, the role constituted another learning opportunity for me. That said, the nature of my role is pretty much the same: in the end, it’s just adding up numbers.
“The work environment at Kuflink is very friendly. It’s a family-run company, where everyone is very much part of a big team.”
When working in the banking sector, you are a small cog in a big machine – you never get to see the whole process that you’re part of. Here at Kuflink everyone is in one building, which changes everything. I sit right next to Sales and Investor Relations, and I can easily walk over to colleagues of any department to ask a quick question.
More Accessible Finance
When compared to banks, Peer to Peer lending services are much more accessible to investors as well as borrowers. Although we have strict underwriting processes, we are open to borrowers that a high-street lender might not consider – for example, loans for property investors with limited experience and loans for different kinds of properties (commercial, residential, buy-to-let).
“We’re passionate about helping people who might want to start their portfolio.”
Getting a loan from a bank can take a long time. Peer to Peer loans can bridge the gap, allowing borrowers to get up and running. We offer short-term loans and can deliver quickly. This makes our lending services more agile than those of traditional banks.
Accessible Investing
Investing in small business loans is much more transparent and accessible in the P2P sector as well. At Kuflink, our minimum investment is as low as £100, allowing inexperienced investors to dip their toe in and start seeing the benefits. With the rise of innovative finance ISAs – otherwise known as IF-ISAs – investors don’t pay any tax on the interest they make via peer to peer lending. This helps them to maximise their earnings.
Making It Work Together
In my job as Director and Head of Collections, I welcome new investors and onboard new loans, working with borrowers to ensure they meet their commitments. We have clear written-down rules around loan servicing, repayments and (in the worst-case scenario) asset recovery to keep our investors safe and follow the Financial Conduct Authority’s rules and regulations.
That said, we offer a much more personal service than a bank would. Our Collections team makes contact with borrowers throughout the term of the loan, and checks in when a payment is late. If a borrower is struggling to service their loan because of unexpected circumstances, we will work together with them to find a suitable solution. It’s in the best interest of everyone – investors as well as borrowers – to get the borrower to where they need to be. I really like the attitude at Kuflink of making it work together.
“At Kuflink, we want to make our borrowers succeed.”
P2P fights back as coronavirus chaos threatens UK economy
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An Illustrated Guide to the UK’s ISA Allowance History
Individual Savings Accounts (ISAs) have a rich history in the UK. Over 20 years have passed since they were first introduced as a replacement for the Personal Equity Plan (PEP). While the sceptics were out in full force initially, ISAs have managed to stay relevant throughout a relatively complex political and economic climate.
Learning more about their history, while touching on how the ISA allowance has changed over these two decades, can help us to better understand their continued relevance. It also paints a clear picture of how ISAs have grown over time, reiterating their ability to continue to be a good choice for people looking to earn additional returns, tax-free.
ISAs Explained: From 1999 to 2020
In 1999 – the year in which the Euro became the new monetary unit of the European Union and the global population passed the six billion mark – British Labour politician Gordon Brown took up the position of Chancellor of the Exchequer and launched the Individual Savings Accounts to replace the previous Personal Equity Plans and Tax-Exempt Special Savings Accounts. From there onwards, the arrangement – which exempts UK residents from income tax and capital gains tax on their investment returns – has developed significantly.
Source 1: gov.co.uk (table taken from https://www.tpllp.com/isas-20th-birthday-part-1-the-history-of-the-isa/)
Source 2: https://www.isaco.co.uk/isa-history
Introduction to the market
People were not particularly quick to warm to the ISA at first. Six months after the launch of the investment arrangement, businessman Lord Saatchi even admitted to the House of Lords that the ISA had failed as a product as it was ‘too complicated’. However, over time, the product would gain popularity as it became better tailored to the needs of British savers and investors.
Early adoption and initial changes
The first formal change to the ISA allowance was announced by the Chancellor in 2007. In the 2008 – 2009 tax year, investors would be allowed to start putting an extra £600 a year into Cash ISAs, raising the allowance from £3,000 to £3,600. On top of that, the overall ISA allowance was raised from £7,000 to £7,200 from the second quarter of 2008. Although relatively minor, these initial changes to the ISA allowance marked the start of a series of increases over the course of the next 10 years.
The new allowances coincided with the highest number of subscriptions in the history of ISAs up until that point. In the 2008 – 2009 tax year, over 15 million people opened an ISA.
New types of ISAs introduced
Over the years, new types of ISAs were introduced to help meet the needs of different lifestyles and consumer saving goals, such as buying a house or retiring well. When ISAs were first launched in 1999, potential investors could only choose between Cash or Stocks & Shares ISAs. Since then, four additional types have been launched: the Junior (2011), Help to Buy (2015), Lifetime (2017) and Innovative Finance ISA (2016).
In 2015, the Additional Permitted Subscription (APS) was introduced, meaning an ISA can be inherited by a surviving spouse or civil partner in the form of an increased ISA allowance. This was a big, positive change in the history of ISAs.
In 2019 it was estimated that more than £870 billion had been invested in ISAs since their introduction 20 years prior, with more than £30 billion in income tax being saved in the process.
UK ISA Allowance History
As the number of ISA products expanded, so did the maximum amount consumers could invest across these accounts each tax year. You can see these increases visualised in the following graph.
ISA limits between 1999 & 2009
For the first nine years, the ISA allowance across all products remained remarkably stagnant at £7,000. The first minor change came in the 2008 – 2009 tax year, and from 6th October 2009, the ISA allowance was raised more considerably. Initially, the overall allowance was raised to £10,200 for those aged 50 and over, of which £5,100 could now be held in Cash ISAs by this same demographic. These changes rolled out to the rest of the population in the 2010 – 2011 tax year.
ISA limits from 2010 to 2020
From 2010 onwards, ISAs became a prominent feature in the Chancellor’s annual budget speech. Steady increases saw the ISA limit rise to £11,520 in the 2013 – 2014 tax year. Major changes came on 1st July 2014, when the cash and overall subscription limits were raised to £15,000 alongside the introduction of new rules for flexibility and better transfer options between ISAs. In the Spring Budget of March 2017 it was announced that the limit would increase from £15,000 to £20,000 within a given tax year, and it has stayed consistent at this rate ever since.
Starting Your ISA Journey
Today, the process of opening an ISA is more accessible than ever. Modern technology has made it significantly easier to make ISAs a part of your investment portfolio than it was in 1999.
IF-ISAs, for example, link lenders and borrowers to each other via online Peer to Peer networks. Different IF-ISA providers allow you to invest your money in different products, such as property or small businesses. IF-ISA rates vary per provider, but you could typically earn anywhere between 3.8% – 15% pa** over the term.
A combination of new ISA products and steady increases in allowance limits has allowed British investors to make their hard-earned cash work for them, free of income and capital gains tax.
Download our Beginner’s Guide to IF-ISAs and see if this investment type is right for your investment goals.
**Rates checked online, correct as of 11 March 2020
Kuflink provides blogs for your general information only. Blogs do not constitute advice and should not be relied upon by you for making investment decisions. Products and services referred to will not be suitable for all investors and appropriate independent financial advice should always be sought where necessary.
If you invest in any of the products mentioned in this blog, you do so at your own risk. Capital is at risk, losses from an ISA are not covered by the Financial Services Compensation Scheme and past performance is not a guide to future performance. Tax treatment is dependent on individual circumstance and is subject to change.
