Lending Against Buildings: How Property P2P Differs

Why property loans exist on P2P platforms

A developer needs EUR 500,000 to finish twelve apartments in Wroclaw and will repay the loan when the units sell. A landlord in Vilnius wants to refinance a buy-to-let mortgage at a lower rate than the bank will offer. A Spanish homeowner requires a six-month bridge loan while waiting for a buyer. Each of these is a property loan, but the risk profile is entirely different.

Platforms bundle them under one category because the collateral is real estate. The loan is secured by a charge on the land registry, which gives the lender a claim on the property if the borrower defaults. That security is why property P2P lending pays less than unsecured consumer lending: you hold a tangible asset, not just a promise.

EstateGuru, the oldest property platform under an ECSP licence, has roughly 60% of its portfolio in recovery as of early 2026, with workout timelines stretching into years. InRento, which lends only against tenanted buy-to-let apartments in the Baltics, reports zero capital losses across five years. The label "property lending" covers both outcomes.

Loan-to-value and what it actually protects

Loan-to-value compares the amount lent to an independent valuation of the property at origination. A EUR 70,000 loan on a property valued at EUR 100,000 is a 70% LTV. The remaining 30% is the equity cushion; it absorbs the first losses if the property sells for less than expected.

Valuations are snapshots. They assume a willing buyer in a stable market and a reasonable time to sell. A forced sale during a property downturn can realise 20% to 30% below the valuation. Legal costs and holding expenses during workout eat another 5% to 10%. A 70% LTV that looked safe at origination can turn into a capital loss if the market turns before the loan is repaid.

Platforms publish the LTV for each loan. Treat anything above 75% as thin coverage. Development loans often sit at 60% to 65% LTV on the completed value, which sounds conservative until you realise the building is not yet finished. If the developer goes insolvent halfway through, the lender owns an incomplete structure with no immediate buyer.

First charge versus subordinated positions

A first-charge mortgage is the senior claim on the property. If the loan defaults and the property sells, the first-charge lender is paid in full before any other creditor sees a euro. Most buy-to-let and bridge loans on P2P platforms are first charge.

Development loans are often split into senior and subordinated tranches. The senior tranche holds the first charge; the subordinated or mezzanine tranche sits behind it. If a EUR 1 million development loan is structured as EUR 700,000 senior at 9% and EUR 300,000 mezzanine at 14%, and the project sells for EUR 800,000 in workout, the senior lender recovers the full EUR 700,000 plus accrued interest. The mezzanine lender gets EUR 100,000, losing two thirds of the capital.

Platforms do not always disclose the structure clearly. If a loan offers 14% on a property project, check whether you are buying the senior or the subordinated piece. The subordinated piece pays more because it absorbs the first losses.

The three property loan types

Buy-to-let

A loan against a completed, tenanted residential property. The rental income covers the loan repayment, and the property has an established market value. InRento operates entirely in this segment, lending at 60% to 70% LTV on apartments in Vilnius, Riga and Tallinn with tenants already in place. The platform reports zero capital losses since 2020.

Buy-to-let carries re-financing risk if the borrower cannot roll the loan at maturity, and tenant risk if the rental income stops. It does not carry construction risk, and the collateral has a liquid resale market in normal conditions. Advertised yields run 10% to 12%.

Bridge loans

Short-term loans, normally six to eighteen months, on a completed property awaiting sale or refinancing. The borrower expects a specific exit event and will repay the loan when it happens. If the sale falls through or the buyer cannot get a mortgage, the loan rolls over or enters workout.

Bridge loans on residential property in Western Europe have performed better than bridge loans on commercial property in frontier markets. The resale market matters. A bridge loan on a Madrid apartment can find a buyer within six months of repossession. A bridge loan on a hotel in rural Romania can sit on the market for two years.

Development loans

Loans to fund the construction or refurbishment of a property. The building is incomplete at the time you lend, and the loan is normally repaid when the developer sells the finished units. Development loans pay the highest yields in property P2P lending, commonly 12% to 16%, because they carry construction risk on top of market risk.

If the developer goes insolvent before finishing the project, the lender owns a partially built structure. Completing it requires fresh capital, and selling it incomplete means a steep discount. Profitus and Crowdpear both specialise in development lending in the Baltics; Profitus holds EUR 273 million in funded loans and reports zero losses, though its 2024 accounts showed negative equity. Development loans are the highest-risk segment within property P2P lending.

What workout means in practice

Workout is the process of recovering capital from a defaulted loan. The borrower has missed payments, and the platform takes legal action to enforce the charge on the property. The process runs in stages: formal notice, court proceedings, auction or private sale, and distribution of proceeds.

A straightforward foreclosure in Poland or Spain takes twelve to eighteen months from the first missed payment to cash in your account. Complex cases with contested valuations, incomplete title or cross-border jurisdiction can stretch to three years. The platform usually covers interest during workout on first-charge loans, so the loan continues to accrue yield, but the capital stays locked.

EstateGuru holds roughly 60% of its portfolio in recovery as of early 2026, with many loans overdue by more than twelve months. The platform has stated that it expects to recover most of the capital on senior loans, but the timeline is uncertain and the sale prices will determine the final loss rate. Investors who need liquidity within a year should not hold property loans in workout.

Secondary markets for property loans are illiquid. Unlike consumer loan notes, which can sell within days on Mintos or Twino, property loans rarely find a buyer on the secondary market unless you offer a steep discount. If a loan enters workout, assume the capital is locked until the property sells.

Why property pays less than consumer lending

Real estate crowdfunding in Europe pays 9% to 12% on average. Consumer P2P lending pays 14% to 16%. The gap exists because property loans carry collateral with liquidation value. A first-charge mortgage on a completed building gives the lender a claim that survives the borrower's bankruptcy. Consumer loans rely entirely on the borrower's ability to repay; there is no physical asset to seize.

The platform takes less credit risk with property, so the yield is lower. That does not mean property lending is safer in all conditions. A consumer loan portfolio diversified across 500 borrowers can lose 3% to 5% per year and still deliver the advertised return because the losses are predictable. A property portfolio with ten loans can lose nothing for three years, then lose 40% of one loan when a development project fails, and the loss is concentrated.

Property lending is binary. Each loan either repays in full or enters a multi-year workout. Consumer lending is actuarial. The losses happen every month, but they are small and spread evenly. Neither model is inherently better; they suit different investors.

Who should lend against property

Property P2P lending suits investors who understand that lower yield reflects lower expected loss, not lower risk. If you need liquidity within twelve months, property loans are the wrong choice. If you can lock capital for two to four years and you want exposure to a tangible asset class, property loans with first-charge security and conservative LTV offer a rational alternative to unsecured consumer lending.

Check the loan type, the LTV, the charge position and the platform's workout record before you commit. Treat development loans as higher risk than buy-to-let, and weight them accordingly in your mix. InRento's zero-loss record demonstrates that property lending can work; EstateGuru's recovery phase demonstrates that it can also go wrong when the market turns.

Capital at risk. No compensation scheme covers borrower defaults. Property values can fall, workout timelines can stretch, and platforms can misjudge the LTV. Nothing here is investment advice.