Lendy was one of the UK's largest peer-to-peer lending platforms, specializing in property-backed loans. Investors lent money to property developers through the platform, earning 7-12% annual returns—far above bank savings rates. At its peak, Lendy had facilitated over £600M in loans and had 20,000+ active investors.
Company Data
- Founded: 2012 — Liam Brooke
- Total Loans: £600+ million
- Investor Losses: £160+ million
- Failed: May 2019 (administration)
The high returns were high for a reason—the loans were extremely risky. Many were made to property developers with poor credit histories on projects that were behind schedule or over budget. When the UK property market softened, defaults cascaded. The FCA investigation revealed poor underwriting standards and conflicts of interest. Investors who thought their money was safely invested in "property-backed" loans lost everything.
Key Lesson
If returns are dramatically higher than bank rates, the risk is dramatically higher too. "Property-backed" means nothing if the underlying loans are poorly underwritten and the properties are worth less than the debt.