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Downing Crowd Review
Downing Crowd doesn't provide us with information, access or data, and the amount being lent has halved over the past five years
Downing Crowd's Property Development Lending & Wholesale Lending is unrated, due to lack of information.
These loans have been paying lenders around 6.25% interest before bad debts.
Visit Downing Crowd or keep reading the Downing Crowd Review.
What is Downing Crowd?
Downing Crowd currently focuses on providing you with opportunities to lend to property developers, as well as to lend to other lenders – which is called wholesale lending.
Downing Crowd restricts both kinds of lending to sophisticated or high-net worth individuals.
It has other types of business loans still outstanding, which smaller lenders are allowed to take part in. (Note that while the lending arrangements are called “bonds”, I call them “loans” in this review for simplicity. The distinction really isn’t important from a risk-reward perspective.)
Those other kinds of loans are either to trading businesses, such as pubs and care homes, or lending to fund renewable energy projects. However, all these kinds of loans appear to now be a very small part of overall lending and the limited evidence available suggests Downing Crowd might is winding them down.
You’re currently looking at typical lending interest rates before bad debts of 6.25%.
When did Downing Crowd start?
Downing has been lending investors’ money since 2010. Its online lending branch opened in 2016, where individuals have lent £240 million.
Over the years, the amount being lent has gradually halved to its current level under £30 million. I do not know what its plans are for the future.
What interesting or unique points does it have?
Downing Crowd is part of a much larger, highly profitable business that has existed since the 80s and that collectively manages around £2 billion in investments.
Your access to wholesale lending is not so common, so it gives you an option that is not so easy to get elsewhere.
Downing Crowd review: how good are its loans?
The wholesale lending can be either short-term property (bridging) lending or lending to small- and medium-sized businesses. So you’re lending to a lending business, which then lends on either to property owners or to smaller, but mostly profitable, businesses.
I agree with Downing Crowd that wholesale lending adds an extra layer of protection for the end lenders such as yourselves.
You’re funding the wholesale lending. You lend to wholesale borrowers, which lend your money on. A wholesale borrower is obliged to repay you even if its own borrowers fail to repay.
Furthermore, if its own borrowers fail to repay, it is you who has the first right to receive recoveries of any bad debt – and not the wholesale borrower.
With the wholesale bridging loans, you usually – but not always – benefit from a first legal charge, meaning that if the end borrower’s property needs to be forcibly sold, you get your money back first, regardless of the wholesale borrower’s own financial position.
And, as usual in property lending, the end borrower is not allowed to sell that property on its own, before the loan is repaid to you.
With the wholesale business loans, you also benefit from security from the end borrowers. This can be weaker, as it’s often based on whatever money, machinery or other assets that business happens to have left when it goes out of business, rather than bricks-and-mortar.
Most of what we once new about the strength of Downing Crowd loans is now out-of-date and the available evidence shows that Downing’s criteria have changed. What seems likely is that it generally caps amounts property developers are allowed to borrow at perhaps 70% of the hoped-for sale price. If that’s true then it’s a decent cap.
Historically, it has averaged something in the region of 60% on development lending.
It’s most likely its business loans are typically to help borrowers move their existing debts to cheaper rates.
Unfortunately, there’s not much more that I can tell you about its loans until Downing becomes transparent again.
How much experience do Downing Crowd’s key people have?
Downing Crowd has approved the same kinds of loans for over a decade and its people have complementary skills, including property loan approvals, development lending and renewable energy.
It was convincing about its experience when we conducted our interviews with it many years ago. However, with team changes and no successful contact with Downing for some time, there’s no-one left there who we have interviewed directly and we don’t have access to their key people any more.
Downing Crowd review: lending processes
Some years ago, we talked to Downing Crowd about many of its processes in lending, loan-monitoring and bad-debt collection, and we took information and data to back it up. We thought it had in place some capable and professional lending operations.
It also outlined its credit-risk modelling, which is a technique for containing risks that’s not always applied – and harder to do – for many of the types of loans that Downing Crowd does, but it’s good to see.
While we’re unable to get an update on its processes, it’s probably more likely than not that they have remained robust.
How good are Downing Crowd’s interest rates, bad debts and margin of safety?
Around 6.25% is not a lot of return when you have virtually zero information to assess the quality of what you might be lending in. Especially for something like property development lending. Lending interest rates are low at Downing Crowd compared to similar competitors.
Very, very old data we obtained showed good results, but we can no longer assume that its results have continued that trajectory as its online lending platform has matured. Nor we can assess whether it’s been kicking new bad debts down the road for later.
Has Downing Crowd provided enough information to assess the risks?
Downing Crowd was extremely open with 4thWay for our initial detailed assessment of it, providing all the data, information and interviews we requested, but we have lost touch and had no detailed data since 2018. Downing Crowd stopped responding to our requests.
Downing Crowd also doesn’t provide the general public with anything like sufficient information to do a home assessment of the risks or to understand the current status of loans through its online platform.
Is Downing Crowd profitable?
Downing Crowd is owned by Downing LLP, an investment manager that usually makes eight-figure profits. It has been profitable for all or most of the past 15 years at least. This provides lenders good safety in the event Downing Crowd needs to be wound down.
As we’re missing all the information we need to give any assessment of risk and performance, I’ve not recently gone through the company filings for every single company related to this group, as there are a large number of subsidiaries.
However, I read the most recently filed audited accounts of the parent company, which show over £13 million profit before tax in 2024. It has plenty of cash and assets outweighing debts.
Is Downing Crowd a good investment?
My best guess, if pressed, is that Downing Crowd is still a good investment, but guesses aren’t nearly good enough. Downing Crowd must provide more information for potential lenders to make a more sensible decision.
What is Downing Crowd’s minimum lending amount and how many loans can I lend in?
The minimum you can put in a loan is £500. You need to choose your own loans.
The last data we received – an age ago – showed there aren’t a huge number of loans to choose from and my best guess is that the number has shrunk substantially since then (although that might be offset by the fact you’re doing wholesale lending).
Does Downing Crowd have an IFISA?
Downing Crowd’s loans are available in an IFISA.
Can I sell Downing Crowd loans to exit early?
Not easily, but it’s technically possible.
There’s no online market for buying and selling. You need to find another Downing Crowd lender who wants to buy and ask Downing Crowd to trade the loan manually, for a £25 fee.
The amount that the buyer pays for your loan parts is agreed between you (e.g. if the buyer wants to pay less as the loan is now considered more risky.)
Is Downing Crowd truly P2P lending?
The legal structure is what protects you from seeing your money going off to pay the P2P lending company’s own debts, if it was to go bust. So long as the structure is legally correct, and the provider operates those structures correctly in practice, your loans are ringfenced from the likes of Barclays taking a slice from you to pay off what the provider owes it.
We only note legal structure for you when a P2P lending company doesn’t use the standard “P2P agreements”. While Downing Crowd has had permission from the regulator to offer those agreements in the past, it has never used them.
Currently, it uses permissions related to the FCA’s debt-based investments regime. Rather than being called loans, Downing Crowd’s bonds are technically known as “non-readily realisable securities”.
Cutting short the mumbo-jumbo, the important point is that Downing Crowd is so structured that it never has any right to the loan, or any part of your loan repayments or interest, except for receiving its fees and costs agreed with you.
The bottom line is that there’s no perceptible difference in risk between this and a standard P2P agreement in terms of protecting lenders from Downing Crowd going bust.
Visit Downing Crowd.
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