Invest and Fund has mooted a change in the role of peer-to-peer lending platforms as the market sees increasing corporate ownership of housing assets.
In its most recent blog, the platform predicted a V-shaped recovery in house prices as rates come under control, with money obtained by the wealthiest percentile over the pandemic era poised to flood into the housing market.
“Income inequality in the UK, as measured by the Gini coefficient, increased by 1.3 percentage points to 35.7 per cent in the post-pandemic era,” the lender’s blog said. “We believe this is a better metric for judging house prices, than the availability of affordable retail mortgages.”
Meanwhile, a “massive underestimation of the supply shortage” will underpin prices in real estate, the firm said.
As a result, Invest and Fund foresees a considerable rise of corporate ownership, with housing assets moving from the middle classes to corporate ownership over the coming decades.
“The beginnings of this shift are already visible,” the firm said. “This would be a significant change in the dynamics of housing investment, as historically structured products like Real Estate Investment Trusts were a way to aggregate illiquid commercial properties into one investable business; this new way of thinking is on a much bigger scale, rightly or wrongly, it’s setting off on a road that leads to entire housing markets becoming structured.”
As such, Invest and Fund believes P2P lending is set to evolve into a structured product for investors to get exposure to property development “in the same way the significant Wall Street funds will expose them to ownership”.
The firm sees P2P becoming the accepted method of investing in housing development, bringing significant wealth and major players into the sector.
“P2P platforms will be the custodians of that opportunity, in the way that the funds will be the custodians of real estate investment by being best placed and experienced to pick up the torch,” it added.
Invest and Fund has returned more than £140m of capital and interest to lenders with zero losses since it launched in 2015.