Essential risk information for funders
Private credit opportunities offered by PlotPoint are complex and high risk by their nature. Funders must understand the potential for significant losses, including the complete loss of capital.
PlotPoint does not offer investments to the general public. Opportunities are available only to funders who have been vetted and admitted to the PlotPoint investor circle. Admission to the investor circle is not a recommendation that any opportunity is suitable for you, and does not reduce the risks described below.
Key risks to consider
1) Risk of losing your investment
When you fund an opportunity with PlotPoint, you lend money to PlotPoint Limited. PlotPoint then advances an equivalent loan to the borrower, usually a Special Purpose Vehicle (SPV) set up solely for that property project. These companies do not carry on any other business. PlotPoint makes loans both directly to borrowers and through introducing intermediaries such as brokers.
You retain the beneficial interest in your share of the underlying loan, which PlotPoint holds on your behalf. Repayments to you depend on the borrower repaying PlotPoint, and PlotPoint will only pass on amounts it actually receives from the borrower or from enforcing its security. If the borrower defaults or the project underperforms, you may lose some or all of your capital.
2) Advertised returns are not guaranteed
The projected returns are not guaranteed, and this is not a savings account. A higher promised return often means higher risk. If the borrower does not repay as agreed, you could receive lower returns than expected or lose your initial capital entirely. If an offer appears too good to be true, it likely is.
3) Limited protections
Opportunities offered by PlotPoint are not protected by the Financial Services Compensation Scheme (FSCS). The FSCS does not cover losses related to poor performance, and compensation is not available for high-risk investment failures. The Financial Ombudsman Service (FOS) also does not cover these investments or claims relating to poor performance.
4) Illiquid investments
Your investment may not be easy to sell, and you must be prepared to hold it for its full term. PlotPoint may offer a secondary market service, allowing you to transfer your loan to PlotPoint and your beneficial interest in the underlying loan to another funder, but there is no guarantee of finding a buyer. We may charge a fee for this service. You should carefully consider your liquidity needs before investing.
5) Complex structures
Private credit involves loans to property developers. Developers may misuse funds, fail to complete projects or encounter financial difficulties, which can lead to default and loss of your investment. Each opportunity also involves two layers of lending: your loan to PlotPoint, and PlotPoint’s loan to the borrower. This complexity makes it difficult to assess the risks accurately, though they are generally high.
6) Protection if PlotPoint fails
Security for each loan is held on behalf of funders by SEC PP Limited, a separate specialist security trustee. You also retain the beneficial interest in your share of the underlying loan. These arrangements are designed to keep funders’ interests separate from PlotPoint’s own assets if PlotPoint became insolvent. Even so, a PlotPoint insolvency could delay repayments to you, and the costs of appointing a replacement to manage, enforce and distribute loan proceeds could reduce the amount you receive.
7) Diversify your portfolio
Concentrating all your capital in one investment or business increases your risk. It is advisable to diversify your investments to reduce dependency on any one opportunity. A good rule is to limit high-risk investments to no more than 10% of your overall portfolio.
PlotPoint: your lender of record, not your advisor
PlotPoint Limited originates and manages property-backed loans, both directly with borrowers and through introducing intermediaries. PlotPoint carries out the underwriting, due diligence, documentation, monitoring and, where necessary, enforcement of each loan, and holds each loan on behalf of the funders who have funded it.
PlotPoint does not provide financial, legal, tax or investment advice. All decisions to participate in opportunities offered by PlotPoint are made independently by funders, and we strongly encourage you to seek professional financial, legal or tax advice before investing.
PlotPoint Limited is registered with the Financial Conduct Authority (FCA) under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (an “Annex I” registration) solely for anti-money laundering and counter-terrorist financing supervision. This registration does not mean PlotPoint is authorised or regulated by the FCA for any other purpose. The FCA does not supervise PlotPoint’s lending, the opportunities we offer or the protection of funders’ money.
Fees and conflicts of interest
PlotPoint earns fees from borrowers and may earn a margin between the interest paid by borrowers and the return paid to funders. Details of the fees relevant to each opportunity are set out in its terms. Where an opportunity is introduced by an intermediary, that intermediary may also receive fees.
Due diligence and no guarantees
Property-backed investments carry risk. PlotPoint and its solicitors vet every project before it is offered to funders. This review reduces but does not remove risk, and it is not a guarantee of the borrower’s ability to repay or of the value of the security. PlotPoint does not guarantee the performance of any loan or project. You should consider the information provided carefully and make your own assessment before committing capital.
Disclaimer
The information provided by PlotPoint is subject to change without notice. It is intended only for members of the PlotPoint investor circle, for informational purposes, and does not constitute professional advice. No warranties are made regarding the accuracy or completeness of the information provided. To the extent permitted by law, PlotPoint is not liable for any direct or indirect losses arising from the use of this information. Past performance is not a reliable indicator of future results, and your capital is always at risk.
By investing with PlotPoint and accepting our Funder Terms and Conditions, you acknowledge and accept the risks associated with private credit and property-backed investments, including the potential loss of capital and the possibility that returns are not achieved.