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LANDBAY

Follow-on

A Specialist Mortgage Marketplace Lender.

EIS

Location
London, United Kingdom
landbay.co.uk

Categories: Finance & Payments Mixed Digital/Non-Digital Mixed B2B/B2C

Investment
sought:
£1,250,078
Equity
offered:
4.14%
Funded 28 Mar 2018
Investment
amount:
£1,622,756
Valuation
(pre-money):
£28,918,587

Team

Idea

Homepage

Introduction

Landbay is a Specialist Mortgage Marketplace lender. We direct-match retail and institutional investors’ money into BTL mortgages using p2p technology.

For borrowers, we aim to provide the fastest turnaround of any Buy-to-Let lender at pricing that can compete head-on with banks.

For retail investors, we provide the opportunity to invest in an ISA secured by an asset that people understand.

For Institutional Investors we provide access to a flow of whole-loan BTL Mortgages that can be securitised or held to term. Since July 2017 we have been funding a material percentage of our mortgages via our institutional programme.

We have completed over £100m of mortgages to date and over 25% of these have been originated in the last 3 months. We have had no defaults and no losses to date.

We believe we now have the mortgage funding, technology and capacity to grow significantly.

Lender app

Intended impact

We believe the framework we have developed has structural advantages over incumbent lenders.

We are using technology to deliver mortgages seamlessly, aiming to remove a significant pain point.

Using the data we collect and linking more products to our platform, we want to streamline the property investment process for the benefit of investors and tenants.

Substantial accomplishments to date

We have lent over £100m to date with no defaults and no losses.

Through the second-half of 2017 we grew originations from over £1m a month in June 2017 to £10million in Dec 2017.

Authorised by the FCA to operate a P2P lending platform and launched an ISA. Landbay is the largest FCA authorised Peer to Peer platform focusing on property in the UK (according to Altfi Data)

Current pipeline of £65m mortgages.

We are now completing mortgages as fast as 18 working days from full application to completion. One of 3 shortlisted lenders for Mortgage Introducers 2017 Awards as Best BTL Lender.

6,300 Registered Users on the retail platform.

Built team, including a Head of Intermediaries, underwriters, tech, customer support.

After Zoopla's strategic investment in 2016, we are one of two partners for their Invest Channel.

Launched our new cloud based micro-services platform (developed in-house) that was recognised as a case study by both Amazon Web Services and Dynatrace”.

Flag mockup

Monetisation strategy

Landbay charges borrowers a fee at the time of funds being drawn down, typically 1.75% - 2.00% of the loan amount. In addition we take an ongoing platform fee (the difference between the Lender and Borrower rate) ranging from 0.45% - 1.00% pa.

As our loan book grows, we expect to build significant annuity income in the business (as the platform fee we receive layers up month-on-month). We see this as a point-of-difference within P2P as most platforms have churning, short term loans.

On average, 75% of gross profit from each loan is generated by the ongoing platform fee.

Use of proceeds

We intend to use the proceeds of this funding round for general working capital purposes as we continue to grow the business. Our expenses are anticipated to break down as follows (approx):

• Technology - 50%.
• Marketing & Brand Development - 25%.
• General Operating Expenses - 25%.

Banner

Market

Brand book

Target market

Our core market are professional landlords borrowing £50,000 - £1,000,000 BTL Mortgages. We source borrowers via FCA authorised mortgage brokers.
We compete with challenger banks. We are one of only a handful of non-bank lenders to our knowledge.

We see significant opportunities for specialist lenders after recent tax and stamp duty changes. In addition the recent PRA guidelines on lending to portfolio landlords mean we believe that a greater percentage of BTL is moving towards specialist BTL lenders and away from high street banks.

Our approach has always been to use institutional funding to scale our operation, with our retail investor base growing organically in the background.

In 2016, we set out to secure major institutional funders that would enable us to compete more aggressively with the banks in the specialist BTL market. We funded our first loans with this institutional partner in July 2017 and this funding has been a key component of our growth.

Characteristics of target market

UK BUY-TO-LET MORTGAGE MARKET

• Outstanding BTL mortgage balances stood at £238bn at end of 2017*.
• BTL lending totalled £35.8bn in 2017*.

(*source: Council of Mortgage Lenders)

Landbay anticipates that the proportion of specialist lending (SPV, Portfolios, HMO, multi-unit) will grow significantly due to regulatory and tax changes.

P2P INVESTMENT MARKET

Cumulative P2P lending in the UK is close to £10 Billion (source: Altfi).

A large number of platforms exist in the UK – Zopa, Funding Circle, and Ratesetter are the largest of these.

Landbay operates at the vanilla end of of the mortgage market (ie prime residential mortgages over full terms). We believe this gives us a lower risk proposition compared to our peers. Importantly, BTL mortgages are a homogeneous asset which will help us scale on the back of institutional funding, whilst building a trusted retail brand organically at low cost.

Marketing strategy

BRAND & POSITIONING
Having established our brand well within the personal finance and with intermediaries independently, our focus is now to bring both sides of the brand together with one aligned purpose. Our challenge is to ensure consistency in our holistic brand voice.

BORROWER ACQUISITION
Our strategy relies on continuous broker relationship building through our Business Development team and increased brand awareness with regular PR, events, social media, email comms and opportunistic advertising.

INSTITUTIONAL INVESTOR ACQUISITION
As we continue to build a track record we will continue to discuss partnership opportunities with funds and banks with a view to further diversifying our funding over time.

RETAIL INVESTOR ACQUISITION
Our IFISA was launched 12 months ago and we expect the popularity of this to grow significantly over the course of 2018. We still enjoy strong results with PR, with our monthly Rental Index in particular.

Competition strategy

Landbay's goal is to build competitive advantages over time by striving towards the following key objectives:

OVERALL BUSINESS MODEL

• A business model with long-term structural advantages over incumbents.
• Diversified funding base.
• A tech-enabled distribution strategy.
• A annuity style revenue model. Lending as a Service,

MORTGAGES

• A simple, streamlined application process.
• The fastest 'bespoke' underwriting on the market (Getting to same day Mortgage Offer).
• Back-end processes heavily automated for efficiency.
• Fast-track valuations and conveyancing.
• Old fashioned customer service (brokers/borrowers can discuss deals with an underwriter).

PEER-TO-PEER INVESTMENTS

• The best credit performance in peer-to-peer.
• Simple 'one-click' e-commerce experience.
• Transparent with risk.
• Warm brand with strong connection to the 'security of home'.
• ISA expected to grow customer base.

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Investing involves risks, including loss of capital, illiquidity, lack of dividends and dilution, and should be done only as part of a diversified portfolio. Please read the Risk Warnings before investing. Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and is subject to change in future.

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This business is eligible for SEIS relief - providing qualifying investors with income tax relief of 50% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.
This business is eligible for EIS relief - providing qualifying investors with income tax relief of 30% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.