Britons have a long-standing love affair with bricks and mortar, one that has only intensified in recent years. That isn’t hard to understand, given that property has been one of the most successful investments of the last two decades.
At Wellesley & Co we understand how tricky it currently is to find investment options that offer increased rates of return whilst maintaining a level of security that you are happy with. Our model has been shaped by the demand from investors seeking the opportunity to invest in the UK housing market, without the additional work and expense of physically buying property, or setting yourself up as a buy-to-let landlord.
We offer investors the chance to earn fixed rates of return of up to more than 6% a year in today’s low interest rate landscape.
When investing in Wellesley we believe it is important for each customer to understand how we operate. Wellesley Finance, the sister company of Wellesley & Co, lends money predominately but not exclusively to commercial property developers. Many of them use the borrowed funds to refurbish properties which they plan to let out on the private rental market or sell on. This is a strong growth area, as the UK housing shortage and soaring population has led to sky-high demand from tenants.
We typically offers small-scale developers loans of between £750,000 and £15 million, a corner of the market that the high street banks have neglected in the wake of the financial crisis. The demand for finance for redevelopment is certainly out there. Since June 2013, we have lent £230 million against property worth £360 million.
Initially we began lending through the capital injected by Wellesley’s main shareholders, who are all experienced investment professionals. Now we are offering ordinary investors the chance to profit from lending their money to developers as well. By doing this, we hope to facilitate further building to assist the housing crisis by simply getting Britain building again.
We aim to give investors the opportunity to achieve far higher returns than they could get from a standard deposit account, but with less volatility than stocks and shares. Current rates include an attractive 4.10% a year over 18 months and 6.32% a year over five years. The offered terms also give the investor the opportunity to have their interest paid either on a monthly basis or paid on maturity of the term pending on the initial selection.
The rates offered are clearly more appealing that rates offered by high street lenders however there is risk involved. Investments made through Wellesley & Co involves lending to individuals or companies and therefore your capital is at risk and interest payments are not guaranteed if the borrower defaults. The prime dangers of investments made through the Wellesley & Co Platform are that the developer will default on their loan, or the property market tumbles.
As stated, there are risks involved with investments made through our platform however, we aim to minimise the risks involved through our innovative business model. Wellesley’s business model has built-in a margin of safety in both cases, as it averagely lends up to a maximum 65% loan-to-value (LTV). Plus we only participate in asset-backed lending, which means that we have to first call on the asset, which we can sell to recoup any losses if a default occurs. This system works in conjunction with the property market and pending no market downturn would work seamlessly.
Further to this, we also have an experienced Credit Committee that assesses all loan applications before accepting them as cases. We fund experienced professionals with proven track records, such as property managers, builders and architects.
Finally, each investor’s exposure to any one loan is limited, because investors’ money is split across every loan on Wellesley’s books and is reevaluated each week though the process of Auto-Matching. Auto-Matching runs once a week, matching lenders to every single loan on a volume weighted basis. During the same weekly process it will re-match existing lenders allowing them to have the best diversification at that present moment in time, but also an improved diversification as the Wellesley loan book grows.
You have to accept that Peer-to-Peer lending is riskier than leaving money in the bank. Your capital is at risk and isn’t protected by the government-backed Financial Services Compensation Scheme (FSCS), although Wellesley does run its own provision scheme to protect customers.
Higher returns always come with higher degree of risk. As an investor, you have to decide this type of investment suits your criteria.
For further information about Wellesley’s products, please contact Wellesley’s Customer Service Team on 0800 888 6001 or [email protected].