Frequently Asked Questions (FAQ)

Lending

IFISA

Borrower

Lending Questions

Basics

What does Relendex do?

Relendex is a peer-to-peer exchange which operates in the UK commercial property sector. Relendex matches Lenders to Borrowers and facilitates loans that are secured on commercial property.

What is peer-to-peer lending?

Peer-to-peer lending is a form of direct lending which matches Lenders with Borrowers via an online platform. It allows Lenders to take control of their own investment decisions and lend directly on self-selected lending opportunities. It provides funding to Borrowers without the involvement of a bank or other financial institution.

Who can invest through Relendex?

Anyone can invest through the Relendex exchange, with the exception of US citizens. Lenders must be able to pass our Anti-Money Laundering and Know-Your-Customer checks.

Current Lenders who invest through Relendex are varied and include individuals, High Net Worth Individuals, Family Offices, Corporates, Investment Funds, Wealth Managers, Private Banks, Corporate and Private Pensions Funds and Trusts.

How much can I earn on Relendex?

Loans on Relendex pay Lenders interest rates of 7-10% p.a. Please visit the Statistics page to see the current average blended interest rate.

How safe is my money?

Money that has not yet been invested in a Loan Part: is held by Relendex’s Custodian Bank, NatWest Bank plc, in a segregated Client Bank Account. This includes all money held on the platform, whether it is in your Main Account or held as a bid in an on-going auction

Sums Invested in Loan Part: Any sums invested into Loan Parts through the Exchange are loans and not deposits. Your capital is at risk. There is no guarantee that Lenders will be repaid the amount of their original loan, nor any interest on that loan. The past performance of loans (including the rates of default) made to borrowers via Relendex should not be viewed as a guide to future performance. Lenders who lend to a single borrower, or a small number of borrowers, should particularly bear in mind the risks of a borrower default and the resulting need to enforce and realise security. You will not be able to bring to a claim for compensation from the Financial Services Compensation Scheme (FSCS).

Lenders should consider an appropriate spread of risk. If you are in any doubt as to whether lending or borrowing via the Relendex platform is suitable for you, you should seek independent advice from a financial adviser or other professional.

What is the risk?

As with all investment products, peer-to-peer lending carries a degree of risk. Relendex carries out extensive legal and commercial due diligence and requires a formal independent Valuation to be carried out on all assets offered as security. Nearly all of our loans are secured by First Legal Charges over the subject asset or assets.

In some cases, Relendex takes additional collateral and/or Personal Guarantees. Interest is often retained in escrow. Loan to Value on each loan is set at a level that the Credit Committee regards as prudent (to safeguard repayment of capital and interest) having regard to the nature of the loan, asset and other factors associated with a particular loan.

Does Relendex offer an ISA?

Yes. Relendex offers an Innovative Finance ISA (IFISA) allowing Lenders to earn tax-free interest on loans. Please visit the IFISA page , which has its own FAQ section, for more information.

About Relendex

What does Relendex stand for?

Relendex stands for Real Estate Lending Exchange.

Is Relendex regulated?

Yes, Relendex Limited is fully-authorised and regulated by the Financial Conduct Authority and entered on the Financial Services Register - FRN 723117 for Peer to Peer lenders. Relendex also has ISA Manager status granted by HMRC, which enables it to offer UK taxpayers an Innovative Finance ISA.

How does Relendex make its money?

Relendex makes its money through charging fees to Borrowers. These fees cover Relendex’s operating, transaction, management and monitoring costs. At no point does Relendex take any fees from Lenders.

What will happen to my Loan Parts if Relendex ceases to trade?

Should Relendex cease to trade, it has an agreement with a third party administrator to manage all Loan Parts on behalf of the Lenders. This administrator will administer the payment of interest and the return of capital to Lenders in accordance with sums collected and repayments of principal received from relevant Borrowers.

Lending Guide

Getting started

Ok, so I want to lend with Relendex, what do I need to do?

First you will need to register with Relendex by completing the Lender Registration Form. You will need your passport to hand as it will be used to carry out the standard Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.

Once you have passed all the checks, agreed to the online Lender Terms & Conditions, and signed the online limited Power of Attorney, your account will be approved. You can then fund your account and start lending on the exchange.

I don't have a valid passport, can I still be a Lender?

Yes. You can still be a Lender, provided Relendex is able to verify your identity through other documents such as your driving licence, utility bill or bank statement.

Do you accept international Lenders?

Yes, we accept international Lenders, with the exception of US citizens. As Anti-Money Laundering (AML) and Know Your Customer (KYC) checks differ for international lenders, a member of the team will contact you once you have registered, to complete the process.

What is the minimum amount I can invest into a loan?

The minimum amount is £500.

How long can I lend money for?

Loans on the Relendex platform are typically from 12-36 months. However, Relendex’s Resale Marketplace (RMP) allows lenders to both sell their Loan Parts (for an early exit) or buy existing Loan Parts on already fully funded Loans, on a matched-bargain basis.

Can I access my money at any time?

At any point during the Loan period you may sell your Loan Part at par and currently without charge on Relendex’s fully automated Resale Marketplace.

Please note, whilst, the RMP is active, there is no guarantee that you will be able to sell your Loan Part on it. When bidding on an auction you should be prepared to hold your Loan Part to term.

Do I need to transfer funds to Relendex before I can start lending?

Yes, funds will need to be lodged with the Custodian Bank (Natwest Bank plc), before you can start bidding in auctions.

It is important to include your client number on the bank transfer, so that Relendex can correctly allocate your funds. Failure to do so, may result in a delay before you are able to bid in auctions.

Is there a charge for depositing funds?

There is no charge for depositing funds. However, you may incur banking charges for International transfers. To the extent Relendex incurs such charges such amounts will be deducted from the balance transferred.

Is there a charge for withdrawing funds?

There is no charge for withdrawing funds to the UK bank accounts for next day settlement. You may incur charges for International transfers. To the extend Relendex incurs such charges the amount will be deducted from the amount withdrawn or taken from your account with Relendex.

How are my funds allocated to loans?

Once you make a bid, your bid amount will be blocked at the Custodian Bank pending the outcome of the auction. When the auction is fully funded, your funds will be allocated to the lender group associated with that particular loan.

In the unlikely event that a Loan Request does not raise all the necessary capital, the Loan is deemed unsuccessful and all your funds will be unblocked and available to you to bid in other loan auctions.

Do you charge any fees for lending?

No, we do not charge Lenders any fees for lending on the platform.

Am I liable for tax on the interest I receive?

Yes, in the UK you are liable for income tax on interest that you receive as a Lender. As part of its service, Relendex makes available online reports of income and deductions in each tax period. Relendex is not currently required by the UK tax authorities to deduct withholding tax (WHT) on interest paid to individual lenders, nor to companies that are subject to UK Corporation Tax. Lenders should seek independent professional advice in assessing their liability to taxation in their relevant jurisdiction.

UK Taxpayers do not pay any tax on interest earned on Relendex’s IFISA.

You can find more information here.

Loan Tranches

What are Loan Tranches?

Loan Tranches are a way of dividing up a single loan.

Why has Relendex introduced Tranches?

This process allows Lenders with different risk appetites to participate in the same loan. This means that those lenders placing security of their investment as their major consideration can now invest in the least risky part of each loan. Lenders looking for higher returns can now invest in the riskier portion of the loan.

How do Tranches work?

The loan to a single borrower is split into two parts by reference to the Loan to Value (LTV) as determined by the independent professional valuation of the asset security provided at the time of the loan auction.

Relendex will offer these different parts of the same loan described as:

Secured Senior Ranking Tranche
Secured Junior Ranking Tranche

Both tranches share in the First Charge security held over the asset(s) pledged by the Borrower.

Can you provide an example of how Tranches work?

Say for example Relendex has received a valuation on a property or development of £2,000,000 and the Borrower wishes to borrow £1,200,000. The Loan to Value (LTV) on this loan would be 60%.

Now let’s say that security-minded lenders are only happy to lend up to 50% of the value. By dividing the loan into 2 tranches, the Senior Ranking Tranche would have an LTV of 50%, (in this case £1,000,000) and it would pay a rate of return of say 7% per annum.

The Secured Junior Ranking Tranche would cover the last 10% of Loan to Value (in this case £200,000) but as it is riskier the interest rate might be 10%.

If both Tranches have the same security, why is the Junior Ranking Tranche riskier?

In normal circumstances, both Tranches carry the same risk, they are both secured on assets in the same way. However, in the case of a default lenders are repaid their capital according to their ranking. So, if (in this example)the assets secured on the loan realise at least 60% of the original valuation then all lenders would be repaid their principal in full.

But if the asset realises less, so long as they are worth at least 50% of the valuation the Senior Tranche would be repaid his principal in full. But the Junior Tranche could lose all or part of their investment in the ratio 10% of their investment for every 1% below 60% Loan to Value that is achieved on the sale of the assets.

The Junior Tranche sounds very risky. Why would I invest in it?

The first and main reason is that defaults are rare. Relendex usually takes not only a First Charge on the assets but also Personal Guarantees from Borrowers and sometimes additional collateral security. This means that Borrowers have a powerful incentive to honour their obligations and that even if the amount realised on a forced sale of the secured asset falls below 60% Loan to Value (per the example), the shortfall would normally be made up by other collateral.

The second reason is that whilst shortfalls can occur due to unforeseen circumstances or changes in market conditions, Relendex underwriters approve loans at conservative Loan to Values. Independent valuations are carefully scrutinised and valuers assumptions are often challenged. These measures ensure that the likelihood of the security being worth less than the loan amount advanced are limited.

If you are unsure about Senior v Junior Loan Tranches you should consult an independent financial adviser or other relevant professional.

So if they are really quite secure, can anyone invest in the Junior Tranche?

The answer depends upon personal circumstances. However, so long as a Lender takes the time to build a portfolio of Loan Parts, even the cautious Lender may wish to maximise returns on their investments by including some Junior Tranches without taking on too much risk.

Is this all there is to know about Tranches?

The Senior Ranking lenders will be repaid their principal and contracted interest before the Junior Ranking lenders are repaid their principal and contracted interest. Penalty interest due to Senior Ranking lenders will be paid after Junior Ranking lenders have been repaid their principal and contracted interest.

There is more detail contained in the Lender Terms & Conditions (see particularly Clause 10) which sets out the order of priorities of payment of the Secured Senior versus Secured Junior Loan Tranche lenders in the event of a default.

How our loans work

What types of loans are available on Relendex?

Relendex arranges secured funding for commercial real estate investments, developments and bridging loans.

How do I begin to lend?

When you are ready to start lending you can visit the Auction Marketplace, where you will see a list of live auctions. Auctions are loans that are in the process of seeking funding. If you see a loan that interests you, you can click on the listing and see in-depth details about the property and the terms of the loan.

If you decide that you would like to lend on the loan, click on ‘Make a Bid’. It is here that you are able to decide how much you want to lend on that particular loan. After entering the amount you want to lend, click the ‘Place Bid’ button. Please note, although we use the word ‘Bid’, other Lenders will not be able to outbid you as Relendex only runs Set Rate Auctions; so as soon as you bid that Loan Part is allocated to you.

How much should I lend on each loan?

How much you lend is up to you, however it is a good idea to make multiple bids on a loan, so that if you want to sell part of your loan you can offer it on the Resale Marketplace. It is also prudent to spread your lending over a number of different loans.

You may also buy available Loan Parts in the Resale Marketplace for loans that have already been funded and drawn down. Learn more about how our Resale Marketplace works here

Who are the Borrowers that come to Relendex?

Our Borrowers are mainly experienced property investors and developers all of who have been thoroughly vetted by Relendex.

How does Relendex decide which loans to list?

Relendex’s Lending Team carries out an extensive due diligence process on each loan application. [Due Diligence page link] The process and methodology with which we review loans was designed by the former head of banking at the Rothschild Banking Group.

What information is provided about each loan?

Detailed information is provided on every loan. Particulars include: The property name, risk rating, loan amount, term, Loan to Value ratio, average interest rate, and other salient details. Relendex provides loan information tabbed separately as Loan and Key Property Details; Location and Description Details; Tenancy Details.

Anyone can view the Loan and Key Property Details. However, only Approved Lenders can also view all detailed documents such as Executive Summaries and Valuation Reports in the Virtual Data Room.

Can I choose which loans I lend my money on?

Yes. Only you can bid for the amount you want to lend in loan auctions that you choose, which means you have direct control over which loans you participate in.

What is the Loan-to-Value (LTV) on the loans?

Loan to Value is the loan amount expressed as a percentage of the value of the property asset provided as security. The Loan-to-Value varies from loan to loan. New loans are capped at a maximum LTV of 70%.

How does Relendex monitor drawdowns on development loans?

Relendex employs Monitoring Surveyors who ensure that the current value is always sufficient to justify the relevant drawdown taking into account the remaining costs to complete the development. Relendex ensures that at no point during the loan period can a Borrower draw more than the covenanted Loan to Value percentage.

When is my interest paid?

Interest is normally paid quarterly and is credited to your Lender Account. You may then either make a withdrawal request or re-lend the funds in another loan.

What happens if the borrower doesn't pay?

In this unlikely event Relendex will notify Lenders immediately if there is a borrower interest or capital payment shortfall and will provide a reason for it, to the best of its knowledge and ability. Where the delay is temporary and can be resolved, no default will occur. In the event of a more serious problem Relendex will, acting as Lenders' agent and based on advice, exercise its security and appoint a Law of Property Act (LPA) Receiver and, where appropriate, will sell the secured property.

What happens if a borrower repays their loan early?

If a borrower repays their loan before the end of the loan period, as a Lender you will receive your proportion (based on the original value of your Loan Part) of the sum repaid. The Borrower may also be charged an early repayment penalty depending on the time that remains until the loan end date. These penalties are loan specific and are set out in the Loan Facility Agreement. Lenders receive a proportion of the penalty amount to compensate them for early termination of the loan. Lenders’ share of the penalty sum received is calculated by reference to their contracted interest rate as compared to the Borrower interest rate plus the Service Fee.

Do Relendex employees invest in loan?

Yes. All Relendex employees and directors are encouraged to have a Relendex lender account. Many of them, together with their friends and family are lenders.

Do Relendex employees get special treatment?

No. All Relendex personnel invest alongside other investors in the same way. They bid on loans and buy and sell loan parts in the Resale MarketPlace.

Does Relendex invest in loans?

Yes. Relendex invests in loans. This allows Relendex to give borrowers certainty that their loans will be filled, as Relendex can invest in loan parts. It also allows Relendex to ensure there is always a stock of loan parts in the Resale MarketPlace so that new lenders can build balanced portfolios.

Does Relendex profit by investing in loans?

Yes. Relendex makes exactly the same return as all other investors and takes the same risks.

Legals

What contractual arrangements do I have with the Borrower?

Relendex operates a direct lending model, which means you lend directly to the Borrower. The terms of this arrangement are set out in the Terms & Conditions in the Loan Facility Agreement (LFA).

This direct relationship with the Borrower is established following the successful completion of an auction in which you have placed a bid. Relendex novates the Loan Facility Agreement (LFA) in favour of each of the individual Lenders in order to create a direct lending contractual relationship between the Borrower and each Lender, once the auction is fully funded and closed.

What does Novation mean?

Novation means replacing a party to an agreement with another party In respect of the Loan Facility Agreement the novation replaces Relendex Lending Limited (RLL), acting as Facility Provider, with each successful bidder or purchaser of a Loan Part in that particular loan. This creates the direct contractual relationship between the Borrower and the individual Lenders.

Why is Novation necessary?

Current UK legislation requires firms engaged in peer-to-peer lending to ensure that individual Lenders have a direct contractual relationship with the Borrower. However, as the Loan Facility Agreement (LFA) has to be negotiated prior to the loan auction, it is essential that the Borrower initially contracts with RLL (the Facility Provider). Following completion of the loan auction, the process of novation allows Relendex to transfer this contractual relationship with the Borrower to individual Lenders.

What is the Loan Structure?

Each Lender is a party to the Loan Facility Agreement in the capacity of a Lender. Security is held on trust for the benefit of each Lender group by Relendex Security Trustees Limited (Trustees) under a Trust Deed.

What are the roles of Relendex Limited and Relendex Lending Limited?

Relendex Limited (Relendex) is the platform operator; it also acts as the agent for all individual Lenders. Relendex Lending Limited (RLL) is a wholly-owned subsidiary of Relendex Limited and acts as the Facility Provider.

Relendex, on behalf of the Facility Provider, identifies Borrowers and their Loan Requests. It then negotiates Loan Facility Agreements with Borrowers. The LFA contains the Key Contract Terms. Once these terms have been agreed, the Facility Provider enters into the Loan Facility Agreement. The Loan Facility Agreement makes it clear that the Facility to be made available to the Borrower is provided not by the Facility Provider itself but by prospective Lenders who bid, via the Relendex Platform, to participate in the relevant loan.

How does the security work?

The Security Trustees take security on behalf of the Lender group. This could be a First Charge (mortgage) for senior loans, or a Second Charge in the case of mezzanine loans, over the property asset. Relendex Security Trustees Limited takes security over the Borrower's asset and holds it on trust for the benefit of the relevant Lenders, both as a group and as individuals in proportion to their participation in the loan, under the Trust Deed.

Resale Marketplace (RMP)

What is the Resale Marketplace (RMP)?

The Resale Marketplace is Relendex’s secondary market where Lenders can buy and sell Loan Parts on a matched bargain basis. The RMP allows Lenders flexibility over their loans and the opportunity to sell their Loan Parts (currently at no cost), when they want access to their cash.

The RMP also offers Lenders a way to diversify their portfolios, as they can spread their investments over a wide range of loans listed on the RMP.

What’s the difference between Loan Parts bought in a live auction and Loan Parts bought in the Resale Marketplace (RMP)?

There is no difference between the underlying loans sold on the Resale Marketplace and the ones sold during a live auction. Loan Parts appear on the RMP only because their owner wishes to sell them before the loan period expires. Relendex will not, so far as it is aware, allow the listing of any Loan Part that is subject to any form of default, or in any way has been compromised. The RMP also provides an opportunity to new Lenders, who missed out on completed auctions, to buy Loan Parts on the same terms at which they were initially offered and start earning interest on them immediately.

All Loan Parts for sale on the RMP are ‘Approved’ by Relendex.

What does ‘Approved’ mean?

Approved is the designation given to all Loan Parts that can be sold on the RMP. They are Approved because they have complied with a checklist of criteria which demonstrate that they are performing well and that buyers of these Loan Parts on the RMP can be as confident about their future performance, as the original Lender.

See below for Relendex’s checklist for the criteria loans must meet for their Loan Parts to be ‘Approved’.

Checklist for Approved Loan Parts offered through the RMP:

The Loan has completed and drawn down and formal valuation and security are in place.
Borrower interest has been paid up to date.
Borrower Loan Covenants are compliant (including current valuation).
There is no known loan-specific information that would adversely affect the loan or its security.
The relevant loan has at least 1 month until expiry.

What are the benefits of buying from the Resale Marketplace?

The Lender starts to earn interest straight away and does not need to wait for the loan to close and be drawn down. The RMP offers an effective way to diversify a loan portfolio.

Will I definitely be able to resell my Loan Parts?

Our Resale Marketplace operates on a ‘matched-bargain’ basis; this means that whilst it allows Lenders to resell Loan Parts someone else has to be willing to buy them. The RMP is active and to date all Loan Parts have sold within 10 days of listing.

Please note that Relendex offers no guarantee that you will be able to sell your Loan Parts in the RMP.

Do you charge any fees on the Resale Marketplace?

There are at present no fees for either buying or selling Loan Parts in the Resale Marketplace.

Do I have to buy the full amount of a Loan Part listed on the Resale Marketplace? Is it possible to buy a smaller portion of that Loan Part?

Unfortunately not, at present you must buy a whole Loan Part. ‘Auto-partitioning’ of Loan Parts is however a feature that we hope to introduce in the future.

Why is the Total Purchase Amount greater than the Outstanding Principal of the Loan Part?

The extra cost is the interest that has been accrued by the seller on the Loan Part since the last interest payment date. Relendex loans pay interest on a quarterly basis. To ensure Lenders selling their Loan Parts on the RMP do not miss out on interest they have accrued since the last interest payment, the buyer compensates the seller for the accrued interest from the last interest payment date up to the date of sale of the relevant Loan Part. For this reason, Relendex adds the accrued interest amount to the Outstanding Principal Amount to calculate the Total Purchase Amount.

On the date of the next interest payment the buyer receives the full interest amount for the quarter, this reimburses the buyer for the extra interest amount paid when the Loan Part was purchased.

Am I able to delve deeper into loan details before buying?

Yes. All approved Lenders have access to our Virtual Data Room where they can see the Executive Summary and Valuation Report for each loan available on the Resale Marketplace. You are also of course welcome to email Relendex at lender-support@relendex.com should you have any further questions.

How long before I start earning interest on Loan Parts bought in the Resale Marketplace?

There is no delay on earning interest on Loan Parts bought in the Resale Marketplace as the loan has already drawn down and the Borrower is already paying interest.

Are there times when a Loan Part cannot be listed on the Resale Marketplace?

Yes. Loan Parts cannot be listed until; i) the loan is drawn down; ii) just before a quarterly interest payment; iii) within the last month of the Loan Part’s term or iv) in the event that the Loan Part has not met our Approved Loan Checklist criteria.