Negotiation, Negotiation, Negotiation

UK Property Investment news and comments from Mark Harrison of

Where’s the Zopa?

Posted by Mark Harrison on November 5, 2009

Zopa is one of those terms from negotiation theory that you come across from time to time.

It means “Zone Of Possible Agreement” – basically, it’s the area between the lowest offer they’ll accept, and the highest price you’re prepared to pay. As a property investor, you end up making lots of offers, and hope that some of them end up in the ZOPA (though most don’t.)

For the last six months or so, however, I’ve been investing with a company called They have nothing to do with property negotiation, but use the term in a different area.

They are basically a forum where you can either register as a borrower (for loans up to a few thousand quid.) However, rather than lending their own money they match you up with lots of small lenders.

  • As a borrower, you give some information about yourself, and basically say what interest you’re prepared to pay.
  • As a lender, you transfer them some money, and basically say what interest rate you’re prepared to lend that money out at.

It’s a bit more complex than that – based on a borrower’s loan application, zopa allocate them into a risk group, and as a lender you can choose which risk group, or groups, you’re prepared to lend to, and set different interest rates for each. Zopa sort things out so that, rather than lending the whole amount to a single borrower, they break it up into small chunks, so you end up lending a tenner each to lots of borrowers (there are ways that you might lend more to one borrower, but the default is a tenner a pop.)

A little while ago, I thought I’d try my toe in the water, and just transferred in £250 to see how it worked. Since then, I’ve been earning 8-10% on the loans that have paid… which has been all of them!

I was expecting a few defaults -but  so far I’ve made 30 loans, each of a tenner (as the interest has come in, and capital’s been partially repaid, I’ve set up my account so Zopa will re-lend it automatically.)… and none have defaulted. Clearly, if you become a lender, you might get different results, but to my mind limiting my exposure to only £10 per loan, rather than making a single bigger loan fits my investment goals better.

Oh, and I chose mainly to lend to the youth market…. so it’s win/win. I get to lend to people who pay a better rate than I could earn with other short-term sources, young people get to borrow at a lower rate than a bank would charge them, get their fees… and the only “losers” are, I guess, the banks who otherwise might have sold a loan at 15-20% interest… I can live with them lending.

If you’re interested, as either a borrower or a lender, then

I’ll be updating my own experiences with them 3-4 times a year, but so far, it’s been excellent.



DECLARATION OF INTEREST: They run a “recommend a friend” scheme, so that if you take out a loan, or invest a reasonable sum, I will get a commission. This does not affect the interest rate you pay as a borrower, or that you receive as a lender.


6 Responses to “Where’s the Zopa?”

  1. James said

    I love the concept of zopa – I’ve yet to lend or borrow any money but if i was going to do either I’d definately give it a go. I think there would also be scope for private landlords looking for buy to let mortgages to borrow from theiur peers rather than the banks – especially as the proposed regulation of BTL mortgages and reduced availability pushes private landlords to look for alternative financing.

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  2. We choose our joys and grieves long before we experience them.

  3. I’ve been using Zopa for a little while now and although I have had more defaults than your experience to date I would still recommend it to people with some “risk” monies. For some Zopaholics it does get a little obsessive, tweaking rates to get the next 0.1%, but hey, it’s better than mugging or being an investment banker

  4. AnonW said

    I’ve been using Zopa for a year and a half now. If I take an honest appraisal of the interest rate I get it’s about 5.3% or so, assuming none of the bad debts get paid and unlent money counts in the interest rate calculation.

    The thing I’ve found though is that Zopa seems to be better at getting decent clients. Or I must just have been lucky. But my level of arrears is the same as it was a year ago, despite having a lot more money in the system.

    Will I continue to use Zopa?

    I certainly won’t be quitting yet!

  5. florida01 said

    Great post, very interesting concept. You make a good point that all the factors need to come into play. Selecting a good property agent is most important for property management who helps you throughout the buying process and beyond to completion.

    Florida property for sale

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    […]Where’s the Zopa? « Negotiation, Negotiation, Negotiation[…]…

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