This will see institutions become the principal capital source from now onwards, with the lender set to run off its retail investment loan book over an anticipated five-year timescale.

The change comes in response to prevailing market conditions caused by the rapid rise in the base rate and corresponding increases in bank savings rates, which has negatively impacted Assetz Capital's retail investment proposition.

After increasing interest rates in Q3 2022, the lender continued to see modest net outflows from its access accounts.

Following direct consultations with its investor base, Assetz Capital determined there was no longer sufficient demand from retail investors to continue this service. 

To date, the retail proposition has delivered more than £170m in gross interest payments earned by retail investors. 

The lender will now be 100% backed by institutional capital, which has provided 80% of Assetz Capital’s lending since 2020.

Assetz Capital confirmed its access accounts will remain gated to ensure all loans committed, but not yet fully funded through retail investor capital, are concluded as planned. 

Once committed loans are fully funded, the lender said it expects cash withdrawals from access accounts to commence on a pro-rata basis to people’s holdings.  

Despite the change, Assetz Capital emphasised this is not reflective of any kind of pause in lending activity or a reduction in planned future lending or appetite.

The finance provider confirmed it will continue to lend as normal through its institutional capital and carry on with its ambition to achieve its second billion pounds of lending.

In order to achieve this, new funding lines have been agreed with major institutions throughout 2022 and more partnerships are expected in 2023.

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Stuart Law, CEO at Assetz Capital (pictured above), said the retail platform was “critical” in achieving its first £1bn of lending. 

“We are incredibly proud of what we have achieved in partnership with our retail investors,” he said. 

“Given market conditions, retail investors now have more choice over bank savings products than at any time in the last decade and this has reduced their investment appetite as a result. 
 
“We have therefore taken the decision to make permanent the temporary pausing of new lending through retail investor capital. 

“We understand this might be frustrating for some retail investors and we will do all we can to support them, provide timely and clear information, and facilitate their withdrawals as quickly as possible. 

“We would like to thank all our retail investors for support over the last 10 years and have been pleased to be able to put their needs for investment returns first for all this time, always giving them as much volume of investment as we could originate for them for as long as they wanted that return.

“We will diligently safeguard investors’ capital and ongoing interest payments to ensure this part of their portfolio continues to deliver good returns for them as the loan book runs off.”   

Andrew Charnley, managing director at Assetz Capital, added: “Retail investment has been a crucial part of the Assetz Capital success story over the last decade, but equally we have futureproofed our business model by having multiple funding lines available to us and, in reality, we already funded around 80% of all loans through institutional capital. 

“Our focus now is on taking the institutionally funded part of the business forward to become 100% of all lending, continuing to build on our reputation as an institutionally funded lending business. 

“Our ambitions to increase our lending to SMEs, housebuilders and other key sectors have not changed at all, which means our focus next year and beyond will be continuing to work with institutional partners to drive loan book growth, while supporting retail investors still utilising the platform as we manage the retail investment loan book run off.”