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We bring together borrowers in need of short term lending with funding investors who are willing to lend on residential or commercial property.
Our investors select the specific loans they want to contribute to, rather than investing in a fund which is then allocated to underwritten loans. Investors can therefore manage exposure, asset allocation and risk profile.
West One Loans enter into short term loans (often called 'bridging loans') with borrowers where the loan is secured on real estate property.
West One Loans raises the capital required to make the loans from private investors. It is generally the case that West One Loans receives funding contributions from a number of different investors in respect of a single loan. A group of investors contributing to a single loan do not need to know each other and do not need to enter into an agreement with each other. Subject to its fees and charges, West One Loans will pay any interest it receives in relation to a loan and the repayment of the capital sum borrowed, to the investors who contributed to the funding for that loan. An investor's entitlement is proportionate to the amount their contribution bore to the amount of the overall loan.
West One Loans enters into a loan agreement with the borrower and makes the loan to them.
Investors do not make the loan themselves.
Regulated lending is subject to a number of rules and regulations in terms of how loans are made and administered. West One Loans will need to comply with these requirements in relation to its regulated loans. These rules are too numerous and specific to cover in this FAQ, but they relate to issues such as responsible lending, distribution, disclosure and arrears management. In particular, West One Loans will need to:
It is important that investors bear in mind:
Yes, the minimum investment sum for a particular loan is set out in the loan's term sheet. Typically, the minimum investment is £25,000.
Yes, both West One Loan and West One Capital take steps to take security over the relevant real estate when they make a loan. Details of who is making the loan (and therefore who will be taking security) and details of the particular security for a loan will be set out in the loan's term sheet. Both West One Loans and West One Capital accept responsibility to act to a good industry practice standard in taking steps to take out security over the relevant real estate. This duty may be discharged through the engagement of appropriately qualified and experienced solicitors with West One Loans and West One Capital instructing them to effect the security on their behalf.
Neither West One Loans nor West One Capital can guarantee that every borrower will meet all of their obligations to repay capital and interest due. From time to time some borrowers will default and an important ultimate protection in this regard is the security taken over the relevant property.
Industry standard identity and credit checks will be conducted in order to assess the borrower's identity and credit standing to the reasonable satisfaction of the lender. In addition, the relevant lender will confirm that the borrower has a repayment plan (the nature of which will be noted in the relevant Term Sheet provided to the investors for their assessment). In confirming the existence of a repayment plan the Lender is entitled to rely on statements made or information provided by the borrower about the plan and the Lender will not be obliged to assess or verify the viability of the plan, provided the statements, information and what it is told about the plan do not manifestly (i.e. on the face of it) lack credibility.
The lenders will take reasonable care in assessing or as relevant confirming the above, but do not accept liability to investors for any loss caused by a failure to meet this standard of care unless the loss has been directly caused by the lender's negligence, wilful default or fraud.
Examples of the industry standard identity and credit checks which a lender may, in its reasonable discretion, undertake if considered appropriate include:
West One Loans may distribute details of potential loans to investors who have entered into a Participation Agreement and who indicate they are interested in making a contribution towards the funding of a loan. Given the number of registered investors and the need to respond to borrower requests in a business-like timescale, it is impracticable for West One Loans to offer every opportunity to all of its registered investors. Accordingly West One Loans is not obliged to inform every registered investor about loan opportunities. West One Loans will endeavour to contact all registered investors from time to time to inform them of an opportunity, but if you are actively interested in contributing to a loan we suggest you contact West One Loans.
West One Loans does not operate a loan opportunity allocation policy and does not undertake to offer loans of a particular profile to registered investors. Each loan offered will differ in terms of the identity of the borrower, amount to be borrowed, interest rates and property to be secured against. West One Loans does not advise on or make any representation as to the merits of a loan either on its own account or relative to another loan.
No, West One Loans provides information for you to make a decision, but does not provide advice. You should not rely on communications with or from West One Loans as being advisory in nature. It is always the investor's responsibility to ensure that any loan funding they want to participate in is suitable for them and that they have considered and are satisfied with all the details about that loan.
West One Capital does not provide investment advice.
When considering making a contribution, investors may indicate to West One Loans that they have preferences in terms of the characteristics of the loan, the borrower or the real estate security. West One Loans is under no obligation to take account of such preferences when offering participations to such investors. Where West One Loans does seek to take account of an investor's preferences, West One Loans is in no way advising or recommending a contribution in that particular loan and takes no responsibility for ensuring that the loans meets the investor's preferences.
Investors must inform West One Loans immediately in writing upon becoming aware of any actual or potential conflict of interest between the investor and a borrower. It is, however, West One Loans' decision alone as to whether to proceed with the investment to the borrower. If the investor has already agreed to make a contribution, and then notifies West One Loans that it is aware of an actual or potential conflict of interest affecting the contribution, West One Loans will (in its sole discretion) decide whether to proceed with the investment.
West One Loan and West One Capital fees comprise a percentage of gross interest payments received on a loan before distribution to investors, which are detailed on the loan term sheet for each particular loan.
Unregulated loans typically have two rates of interest (see FAQ – 'What interest is charged on a loan?'), a reduced rate (also termed lower/concessionary rate) and a standard rate (also termed higher rate). In both cases the percentage fee will be set out in the loan term sheet.
65.01% - 70%
60.01% - 65%
* The above fees are indicative only and could vary from loan to loan. The applicable fee when the reduced rate of interest applies will be set out in the loan term sheet.
** LTV (Loan-to-Value) is the ratio of loan to the value of an associated real estate property expressed as a percentage.
Regulated loans only have a single rate of interest as detailed on the individual loan term sheet. The fee in respect of such loans is determined on the same basis as the fee when the reduced rate of interest applies in the context of unregulated loans.
The split of the fee as between West One Loans and West One Capital is agreed separately.
West One Loan and West One Capital will typically receive fees due from the borrower and that are deducted from the loan made to them, such as a loan administration charge and arrangement fee. West One Loans and West One Capital will keep the administration charge. The arrangement fee is typically paid to or shared with an introducing broker but may be retained by West One Loans or West One Capital on rare occasions where no broker is involved. West One Loans and West One Capital may also deduct from a loan legal fees, insurance processing fees, broker fees and audit fees.
You will not be required to contribute any further funds to fund the loan amount without your prior agreement. However please note: you may be required to contribute towards the cost of collecting or recovering sums due from a borrower in the event that West One Loans, acting in the best interests of investors collectively, considers that it is necessary to do so. These costs may include costs or disbursements arising in connection with the appointment of third party providers (such as lawyers, auction houses, LPA receivers or debt collectors) or the reasonable costs of West One Loans or West One Capital taking steps that are additional to or outside the normal course of their recovery process. Investors will be required to pre-fund these costs in proportion to their contributions. West One Loans and West One Capital will be entitled under the loan agreement to seek to recover these costs from the borrower. If an investor does not pre-fund these costs West One Loans will be entitled to set-them off against any sums recovered and due to that investor.
When you make a contribution alongside other investors in respect of a particular loan, you are considered to be participating in an unauthorised alternative investment fund. You do not have a specific interest in the loan itself (see the FAQ 'Who actually makes the loan?'). Instead your entitlement constitutes a contractual right, under the Participation Agreement, and a beneficial right, resulting from the trust terms, against West One Loans or West One Capital to be paid your share of any interest and capital collected in respect of a loan you have contributed to (see the FAQ 'How does West One Loans hold investors' funds?').
The Participation Agreement is between you, West One Loans and West One Capital in order to ensure that there is an appropriate level of direct rights between you and West One Capital. However, West One Loans takes responsibility for implementing and managing your investment and providing you with information about it.
Potential investors should consider carefully the details they are given about the terms of a proposed loan, the borrower and the associated real estate property as these details vary on a case by case basis. West One does not advise investors and it is the responsibility of the investor to ensure that any loan funding they want to participate in is suitable for them and that they have considered and are satisfied with all the details about that loan.
The risks include but are not limited to the following:
There is a risk that a borrower will not repay some or all of the interest due or capital borrowed and/or may make some payments late. This will have an effect on how much of a return an investor receives and when they receive it. West One Loans or West One Capital will take steps to recover payments due including by enforcing against the security it has in respect of the borrower's obligations. Note however particularly with regulated loans that reasonable steps to find solutions other than enforcement need to be taken (See FAQ 'What is the difference between a regulated and unregulated loan?'). The debt recovery process typically takes additional time and cost and it cannot be guaranteed that all debts will be recovered. See Could I be required to contribute more money after my initial investment? for situations where you may need to contribute to this collection cost.
Value of the security:
West One Loans or West One Capital will take security in respect of a loan against real estate property and will obtain an independent estimate of the valuation of that property. The 'loan to value' ratio is stated in a term sheet regarding a loan and indicates the extent to which the value of the property is estimated to exceed the amount of the loan. Property values may however fall and a property sale may not recover the estimated value of the property.
No secondary market or ability to redeem early: An investor's interest in relation to a loan is not assignable or sellable to a third party and there is no secondary market on which the value in a contribution to a loan can be realised. Investors cannot redeem their interest from West One Loans early. Accordingly a contribution to the funding of a loan should be regarded as illiquid and investors should assume that the only way to realise the value of their investment is for the borrower to repay the interest and capital.
It is possible that a borrower or a person acting for them such as a solicitor could act fraudulently when borrowing funds. West One Loans and West One Capital and through their conveyancing solicitors will take commercially reasonable steps consistent with industry practice to mitigate against the risk of fraud but the risk cannot be completely eliminated.
Default of West One:
It is possible that West One Loans or West One Capital could suffer a default event and be unable to distribute entitlements. This is a potential risk that investors should take into account along with a number of factors that mitigate against this risk, including:
West One Loans would be pleased to work with you and your SIPP provider if you wish to fund a contribution through your SIPP. However, please note that neither West One Loans nor West One Capital provides any tax advice or representation as to how an investment under the Participation Agreement will be treated for taxation purposes. There may be adverse tax consequences to investing in a loan through a SIPP and we would suggest that you speak to your SIPP provider and/or tax adviser before making such a contribution.
The interest to be charged on a particular loan will be set out in the loan's term sheet.
Typically for unregulated loans, there are two interest rates applicable to a loan. The higher rate of interest is the default rate of interest to be charged on a loan. However, this rate is reduced to the lowest rate (otherwise known as the concessionary rate) if the borrower complies with certain obligations such as making payment on time. It is therefore possible that for a particular loan the higher rate of interest would never be applicable. Even in cases when the higher rate is applicable, West One Loans may acting in the best interests of investors collectively consult with West One Capital to exercise its discretion to continue to apply the lower rate. For example, this could arise where the breach of obligation giving rise to the right to the higher rate is a minor or technical breach, or where in West One Capital and West One Loan's view waiving the higher rate is preferable in order to encourage the swift return of capital and regular payments of the lower rate of interest.
For regulated loans a single interest rate will be applied.
Interest will typically be applied to a loan on a daily basis, not monthly, so if for example a loan is redeemed part way through a month investors will receive a reduced monthly payment in respect of that month.
Investors are entitled to receive their share in the interest earned on a loan that they have participated in during the lifetime of the loan. As payments of interest are typically due from borrowers on a monthly basis, West One Loans distributes the interest it or West One Capital receives from borrowers on or around the 10th day of each month. An investor will only receive interest if the borrower of the loan they have participated in has paid it. The investor's share in any such interest paid by the borrower is proportionate to the amount their funding contribution bore to the amount of the overall loan.
When funds are initially received (client money):
If West One Capital or West One Loans accepts an investor's proposed contribution, the investor will be asked to transfer the funds to a client bank account in the name of West One Capital or West One Loans.
When received, these funds will be held as client money in accordance with the Financial Conduct Authority's Client Money Rules. The funds do not pass through any other account of West One Capital or West One Loans.
Up until funds are released directly to the borrower or West One Capital or to West One Loans' or West One Capital's solicitor, pending an advance (meaning a loan made or to be made by West One Capital or West One Loans to a borrower), West One Loans continues to hold investors' funds as client money with a UK regulated bank pursuant to the rules of the Financial Conduct Authority.
While the funds remain as client money, they will be beneficially owned by the investors and in the unlikely event that West One Capital or West One Loans become insolvent, the funds would remain the property of the investors and not be available to West One Capital's or West One Loans' general creditors. On a failure of West One Loans (and if certain circumstances are met) these monies receive protection under the rules of the Financial Conduct Authority – see the FAQ 'What claims are protected by the Financial Services Compensation Scheme ("FSCS")?'.
After funds are released (trust terms):
When West One Loans or West One Capital releases the funds to the borrower or West One Capital or to West One Loans' or West One Capital's solicitor, the funds cease to be client money and the trust terms automatically apply.
The purpose of the trust terms is to ensure that West One Loans or West One Capital respectively hold certain rights and property arising in connection with their loans on trust for the investors who contributed to the funding of that loan. Under the trust terms, whilst West One Loans and West One Capital will have legal title to investors' funds, they will not have beneficial title. This means that in the unlikely event that they become insolvent, these interests will be held on trust for the syndicates of investors into each loan, and will not form part of the insolvent estate available for distribution to West One Capital's or West One Loans' general creditors.
Any interest or capital West One Capital receives will also be transferred into this Client Money Account and held on investors' behalf by West One Loans as client money. Funds may be held prior to completion of the loan for up to 10 working days. Any further delays investors are notified with the option of having funds returned.
All amounts received or recovered by West One Capital or West One Loans in respect of a loan to a borrower, or pursuant to the enforcement of all or any part of the associated security in respect of a loan, or any related rights shall be held by West One Capital and West One Loans as client money in accordance with the FCA's Client Money Rules.
When a borrower defaults West One Loans or West One Capital acting in the investors' best interests taken together will take steps to recover the sums due. The lender will investigate the circumstances and determine in its sole discretion how best to recover sums due from a borrower. It is possible that West One Loans or West One Capital will decide that a term extension or other restructure of the loan is the best option. Enforcing against the security over the relevant real estate property is generally a tactic of last resort once it is clear that other steps to recover the funds have failed. West One Loans and West One Capital are obliged to act in the best interests of investors taken together who have advanced funds towards a loan when determining how best to recover funds on a borrower default.
For regulated loans certain rules and principles apply to how arrears can be recovered and West One Loans will need to comply with these as a priority. See the FAQ 'What's the difference between a regulated and unregulated loan?'
West One Loans and West One Capital respectively will be the sole administrators of their loans and are not obliged to consult the investors who funded a loan or take account of any investor instruction in terms of how a loan is administered.
It is generally the case that more than one investor participates in contributing towards the funding of a loan. West One Loans or West One Capital will act in accordance with what it, in its sole discretion, determines is in the best interests of investors in a loan collectively.
For regulated loans certain rules and principles apply to how loans can be administered and West One Loans will need to comply with these as a priority. See the FAQ 'What's the difference between a regulated and unregulated loan?'
On occasion a borrower may seek to increase the term for repayment of the loan. In circumstances that do not amount to borrower default, West One Loans will only agree to such an extension if all investors who have participated in the loan are in agreement and West One Loans' or West One Capital's origination process is satisfied in respect of the request. If one or more participants do not wish for the extension to be granted West One Loans will either seek to find replacement participants or not proceed with the extension.
Please see the FAQ 'What happens when a borrower defaults?' for information regarding the agreement of term extensions in the event of a borrower default.
What is the purpose of the schedule of loan participation?
Within five working days of the advance made by either West One Capital or West One Loans, West One Loans will provide the investors with a schedule of loan participation. This document will set out details such as the loan completion date, loan redemption date and the investor's proportion of the loan.
West One Loans and West One Capital maintain professional indemnity insurance.
It is a requirement for every loan made that the borrower insures the property to be used as security to its full reinstatement value and that the interest of West One Loans or West One Capital as lender is noted on the policy.
In addition West One Loans and West One Capital have in place a buildings contingency policy which only applies in the event that the borrower's policy lapses (the contingency does not address the adequacy of the borrower's insurance).
Additionally, West One Loans and West One Capital may take out insurance specific to a particular property (e.g., title insurance) if it becomes specifically aware of a problem in connection with that property and in their sole discretion feel the problem could be mitigated by insurance. Neither West One Loans nor West One Capital gives any assurance that it will always identify problems in connection with a property and will rely on searches conducted by conveyancing solicitors.
It is important to note that any insurance taken out will be in West One Loans' or West One Capital's own name and investors will not be a beneficiary under the policy. Nonetheless, if West One Loans or West One Capital suffers a loss and recovers under an insurance policy, where appropriate West One Loans will look to use these funds to recompense relevant investors if they have suffered a corresponding loss.
The FSCS covers claims in respect of certain business carried out by financial services firms. Where West One Loans is in default the FSCS would protect a claim made by an eligible claimant in respect of a civil liability owed to that claimant by West One Loans in connection with its regulated investment business, where West One Loans is unable to pay the claim against it. Loss suffered as a result of borrower default will therefore not be covered by the FSCS, unless it can be shown that West One Loans has in some way incurred a civil liability to the claimant for that loss by failing in its duty or contract to the claimant.
Only eligible claimants can claim under the FSCS and this means it generally only accepts claims from individuals and small companies or small charities. Compensation limits are per person per firm (i.e., not per claim) and for West One Loan’s business the maximum compensation limit is £85,000.
In the event of the failure of the UK regulated bank with whom West One Loan holds investor's client money prior to their release to either West One Loans' solicitor or the borrower or borrower's solicitor, such funds should be covered by the FSCS. A compensation limit of £85,000 will apply.
Please note that where an investor funds a loan by themselves without any other participants the FSCS may determine that that investment does not form part of West One Loans' regulated investment business and is not covered by the FSCS.