Frazer’s Industry News Update – August 2017

The proposed legislation regarding the banning of selling houses on a leasehold basis continues to make headlines.

As usual this is a campaign led by scaremongering press and an attention seeking politician that ignores the fact there is nothing wrong in principle with selling houses on a new build development on a long leasehold.

In my opinion, the practice itself is perfectly legitimate – it is the simplest way to ensure that the communal areas are maintained via the appointment of a management company. Where the problem lies is that, as usual, some parties (in this case mainly large housebuilders) have put onerous and inequitable terms into the leases which have severe financial consequences for the home owner.

HCD our associated development company have been selling houses on a leasehold basis but our contracts have always been fair and reasonable to the home owner. For instance, the ground rent in our contracts only increases every 5 years in line with RPI rather than doubling as in some other developers’ contracts. Clearly, it will have an impact on the overall GDV if we are no longer able to sell the houses to home owners on a leasehold basis, as previously we have been able to sell the freehold on to a ground rent purchaser at a multiple of c23 times to the annual value of the ground rent – a not inconsiderable sum.

However, most, if not all this amount, can be made up by increasing the price of each plot sale to allow for the fact it is being sold freehold and it should not therefore have a material effect on the GDV of our housing developments.

House Crowd News Update – August 2017

July saw the introduction of our Loan Note Product which provides a fixed interest rate for two years, a 10% extra layer of security to loans made, a more robust exit and enables investors to earn a regular income without having to invest in individual loans.

We also introduced an exclusive product for those who have a minimum of £60,000 to invest. It is forecast to deliver an annualised return of around 26% including both return from rental income (14.5% p.a.) and forecast capital growth.  If you have the available capital and would like information please contact [email protected]

Manoj has completed his recruitment for his tech department and we now have an inhouse ‘geek team’ of five staff supported by an external team of ten developers. Improvements to our website and processes should happen at a much quicker rate now we are not reliant on a small external company to make requested changes.

Neil Baker, previously of Tote Sport, joined us as our new marketing director and will be working to improve our client communications and marketing.

I’ve run out of fingers (and toes) trying to keep track of new recruits – I think total team members are now about 23 with plans to recruit several more people in finance, marketing and client accounts in the new year.

We also had a great team building day clay-pigeon shooting out in the Cheshire countryside followed by the a heavy drinking session by certain staff members (tut tut ?).  Visit our Facebook page if you would like to see photos.

Development Update – July 2017

Please find below the latest updates on all our ongoing developments as of the start of July 2017.  There are also links to the latest images for the developments – lots of fascinating photos of building equipment and big holes in the ground!

Please note these updates are for keeping you informed re the progress of the development itself.  Most of our development loans have estimated repayment dates, and most also have more than one round of funding, repayable at different stages of the build.  For information on the estimated repayment date of the phases of development loans you are invested in, please refer to the investment pack you downloaded when you invested, and to the last page of the P2P and development deals schedule, also available on the project status page on the website.

HCP156 – 103 Station Road, Marple

After 6 weeks’ back on the market we have had 3 viewings, one of which has just turned into an offer of £545,000 which we have accepted and we will be looking to complete on the sale within 28 days (fingers crossed).  There are a few bits of work we have agreed with the purchaser to carry out before the sale can go through.

HCD1 – Regent Street

All units are now reserved so none are on the market anymore, and are moving through the conveyancing process.   They are all at different stages of this process.

HCD2 – No. 10 Alderley Edge

Since receiving full planning permission for the 4 luxury apartments we have really upped the pace on the build with the appointment of a new site manager, and we have also extended the workforce in order to further speed things up. We are also meeting with various interior designers to acquire some input into the overall design of the project. The site isn’t without its challenges; for example, we are currently seeking approval to have two more garages added to the scheme, which requires some creative thinking on the landscaping design. Positively, without even going on sale formally, we have interest building through personal channels.

Completion of the build is expected to be March 2018, if not earlier. We are aiming to start officially selling in 6 weeks, as our appointed sales agent thinks the development needs the roof to be completed in order to give it the wow factor before showing potential purchasers.

Click here to see the latest Alderley Edge photos

HCD3 – The Woodlands

Following the change of contractor, the site has progressed massively. By the end of this week we should have 20 of the 28 foundations in and we are beginning to build up to DPC. We are now close to exchanging on our first two plots and have taken further reservations for plots 28 and 26. This is all been done through our preferred agent Sebastian’s of Cheshire. Following a change in design of the bottom floor internal layout by one of our team we have been able to add bi-fold doors, which has really created a buzz in the area about the development. New CGIs will be released in about 2 weeks.

We’re currently anticipating the entire build will be complete by December 2018 but we have the option of speeding that up if sales come in quicker than expected.

Click here to see the latest The Woodlands images.

HCD4 – Gratrix Park

After months of to-ing and fro-ing we have finally had a decision from United Utilities about going ahead with the sewer diversion. This has caused an unforeseen delay with the build, but something we have unfortunately not been able to resolve any sooner.

First occupation should be in August and then the plan is to have everyone else moved in by ideally Christmas, but all things considered early 2018 is more realistic. We have currently sold 15 out of 19 homes.

Click here to view the latest Gratrix Park images.

HCD5 – Bank Chambers

Following the change of contractor, we seem to be pushing on at a good pace again. We have put all the major steel work into the building and the new floors are starting to be formed. We have a few challenges to overcome with the roof and the old lift, however the build is progressing nicely. Stockport council planning and building control have been at loggerheads about allowing us to proceed which has caused delays. All apartments are now sold again, after the re-sale of apartment 8. Allowing for the delay caused by the contractor being changed, we believe we are looking at mid-October 2017 for completion of the build.

Click here to view July 2017 Bank Chambers images.

HCD10 – Bollin Heights

Planning permission has been granted for the changes to the balconies. Planning permission is expected to be granted 8 weeks from 26/05 for the proposed additional 8 extra apartments (phase 3)– once approved completion for these apartments is provisionally scheduled for April 2018. On site for the start of phase 3 (8-unit extension) should be the first week in August 2017. Major scaffolding is going up over the next 2 weeks, so we can start work on the roof. We also have multiple new utilities connections to complete, which require major civils works. Sales have continued steadily and now only 6 out of phase 1 & 2 (24 apartments) remain to be sold; however there is plenty of interest.  We have exchanged on 10 of the apartments currently reserved.

Expected completion for Phase 1 (24 original apartments) is currently expected to be mid-November 2017. This is clearly a few months later than originally envisaged. If any investor does not want to stay in until that time please let us know and we will see if we are able to return your capital earlier.

Click here to view the latest Bollin Heights pictures

HCD13 – Coppenhall Way

Completion finally took place on June 21st 2017, after a protracted legal process.  The delay involved execution of the Section 106 Agreement for off-site works contribution by the local authority (turns out they had a locum solicitor with no staff which wasn’t particularly helpful).

We are now at the value engineering stage with our chosen contractors in order to fix the price and transfer any cost overrun liability to the Contractor.

Preliminary works have started on site, with the removal of a large tree, erection of boundary fencing and establishing ongoing site entrance points for personnel (from the adjacent public car park) and deliveries via Coppenhall Way.

We envisage a full start on the site at the beginning of August 2017.

Meetings have been held with local sales agents and draft particulars have been prepared.  We already have two parties seeking to reserve their chosen plots.

Brundred Farm

We are still awaiting the planning appeal decision.

Bollin Heights – Show Flat

As we like to keep you as up to date as possible, we thought we would share the latest photos of our development at Bollin Heights.

Bollin Height is the conversion of a contemporary office block in Wilmslow town centre, to 24 luxury apartments in a secured gated complex with fitness studio, business lounge and concierge service. Set in an ideal location and attractively presented, local agents anticipate there will be extremely high demand and expect to sell all apartments off plan within a few months.

The investment is by way of a fixed interest loan which is secured against the property.

See below the pictures from the show flat:

View all of our investments here

Assured Rental Statistics

We launched our assured rental projects in January 2016 and have purchased 19 assured rental properties so far. The main reason for us focusing on these types of properties wasn’t the great yields, but the fact that they can be relied upon to deliver consistent, predictable returns and I am pleased to say that the situation is pleasantly boring in that they have all performed exactly as forecast, with no loss of rent or maintenance issues eating into our investors’ returns.

The assured rental product is ideal for those who are looking for a long-term, income-producing investment.

Click here for a detailed financial summary of all properties purchased to date

For those not familiar with the assured rental product, here are the key facts:

  • The properties are let as HMOs to a large corporation (with a government contract) on a five-year assured rental agreement
  • The corporate tenant is responsible for all maintenance costs up to £5000 per year
  • There are no void periods
  • Rent is paid two months in arrears but to date has been paid on time every time
  • The properties produce a gross yield of 9-10%
  • The average net yield is 8.5%
  • The average net return to investors after all costs is 5.6%
  • Dividends are paid quarterly
  • All properties purchased to date have delivered returns as forecast

View our latest investments here

HMOs: Targeting Young Professionals in Shared Accommodation

Specialist commercial lender, Shawbrook Bank, has released a report highlighting HMO Investment Growth as a result of the increasing popularity of shared accommodation.

Young professionals, as you may already be aware, are focusing more on the rental sector. Of course, this is partially down to high house prices. However, the report notes that this demographic are sticking to the rental sector, and shared accommodation in particular, due to the capacity for higher levels of disposable income.

A further survey undertaken by Spareroom.co.uk, which studied 10,000 tenants living in shared accommodation, found over 70% of participants to be under the age of 30, with over 50% identifying as ‘single’.

The combined factors of high house prices and desirability of higher disposable income is compounded by the importance of social life to this group. The Millennial generation is one where friends and fun are key to life satisfaction. It’s no wonder then that living with a group of friends is the accommodation choice for young professionals and recent graduates.

HMO Investment Growth Fuels Landlord Interest

From the property investor’s point of view, HMOs, therefore, are becoming an increasingly popular choice of investment. Compared to other buy-to-let investments, HMOs yield an average of 10% per annum. This compares favourably compared with the 6-7% rental yield to be expected from standard buy-to-lets and blocks of flats on a single freehold title.

With HMO Investment Growth fast coming under the radar of landlords, competition is stiff. As such, investors seeking to cash in on these high rental yields are increasingly finding ways to set their property apart from the rest.

Higher spec HMO properties are springing up, particularly in the popular urban centres favoured by shared accommodation-loving young professionals. Included wifi, flat screen TVs in communal areas of the property, high quality fixtures and fittings, and other features perceived as appealing to their desired tenants, are outlays investors are prepared to make in order to reel in those 10% yields.

Shawbrook’s report concludes with these words:

“Demand for this asset class is on a consistent upward trend… with the supply/demand challenges across the UK housing landscape, and the resulting importance of the Private Rented Sector, HMO property is and will remain an essential and affordable source”.

That being said, local authorities are quickly catching on. Licensing schemes for HMOs are being considered and implemented in some areas, which will limit the number of such properties available in particular districts. As such, anyone considering HMO investment will need to look into this before deciding on their purchase.

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10 Key Facts About Property Crowdfunding and P2P Lending

Whether you’re a seasoned investor, or are just getting started in the world of property investment, property crowdfunding should already be on your radar. Allowing yourself the opportunity to build a diverse portfolio of properties with a significantly lower outlay (not to mention a lot less work!) is shaping up to be the investor’s model of choice.

The buy-to-let market seems to be on the rise, particularly in cities like Manchester where rental yields are the highest in the country. However, becoming the landlord of a buy-to-let property comes with a range of challenges that you might not fancy. From dealing with tenants, who can sometimes be problematic, to maintaining the property and dealing with management company fees.

That’s probably the main reason that aspiring investors are turning to crowdfunding and P2P lending as a way to get on the property ladder. You can create a diversified portfolio and cash in on potentially lucrative returns for less than the cost of investing in whole properties, and without the additional costs associated with it.

If you’re new to crowdfunding, then you might have some questions. No problem! At The House Crowd, we’re always here to keep you in the loop. So, with that in mind, we’ve put together ten key facts about the world of property crowdfunding and P2P lending in Real Estate! You can thank us later.


  1. In 2015, Real Estate and Housing was the leading sector in the alternative finance market.
  1. Equity and debt-based funding for Real Estate Alternative Finance amounted to nearly £700 million in 2015. That far surpassed any other industry.
  1. Equity crowdfunding in property investment means that pooled investment from a number of individuals comes together to fund the purchase of a property development.

A management company then purchases the property, once the full amount has been raised, and each of those who have invested receives a proportion of rental income corresponding to the value of their investment.

  1. Over 600 developments in both commercial and residential property were financed through P2P real estate lending last year.
  1. At present, it’s not possible to use P2P real estate lending to finance your own personal residential mortgage.
  1. The House Crowd was formed in 2012, and was the first property crowdfunding investment company in the UK.
  1. By using the new Innovative Finance ISA (IFISA), any returns you receive from your crowdfunding or P2P lending will be tax-free, up to the amount of £15,240 (at time of writing).
  1. The Government are totally behind the Real Estate Alternative Finance sector. Tax incentives, such as the EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme), are all part of Government backing that’s helping the industry to grow.
  1. The IFISA is a real winner for the Real Estate Alternative Finance industry. P2P Real Estate lending platforms expect over 50% in transactional growth this year, as a result of the IFISA’s launch in April 2016, and over 30% for the property crowdfunding sector.
  1. Whilst there is often a lack of support for investors in the case of a property crowdfunding platform going bust (this form of investment is not covered by the FSCS), at The House Crowd you’d still continue to own your proportion of the property, and would get together with the other investors to decide what to do. You’d collectively decide to either sell the property, or get someone else to manage it.

Also, if you want to exit from your investment term early, The House Crowd will help you find a buyer for your shares (in which case, you’ll get back what you invested, plus your dividend payment), or you are free to find your own buyer (and make a private arrangement regarding the financials).


These are some of the key aspects of the property crowdfunding and P2P alternative finance market for Real Estate. These should give you some idea of what the sector looks like, and help you decide whether this form of investment is right for you. Of course, as with any investment, you’ll have to take a good look at your risk tolerance, as there are risks involved.

If you want to learn more about the sector within which The House Crowd works, take a look at our in-depth report into the industry here.

The Latest Crowdfunding News – 2/6/16

The Latest Crowdfunding News

 

Hi guys and welcome to our first crowdfunding blog post of the month. As usual, we will be travelling around the world for the latest crowdfunding updates. Our journey starts in the capital and we take a look at digital challenger bank Tandem who smashed their crowdfunding target in minutes to ending our journey in the Åland Islands. Missed our last crowdfunding updates? If so, catch up here.

 

Tandem Smashes Crowdfunding Target In Minutes

Crowdfunding News Tandem

Digital challenger bankTandem smashed its crowdfunding target in minutes. The London based company raised £1m in just 20 minutes via crowdfunding platform Seedrs.

Due to the high demand from investors to get involved with this London Fintech company, Seedrs experienced a glitch on their site. Another digital challenger bank, Mondo experienced something similar when it raised £1 million in just 96 seconds!

Tandem revealed ahead of their crowdfunding campaign that it has so far raised £22m from high profile investors such as eBay founder Pierre Omidyar and several Silicon Valley venture capital firms.

The surge in investor interest in challenger banks just goes to show how people still have a distrust of high street banks and are seeking an alternative. A fintech revolution could be upon us.

The EU Referendum & The Property Market: What We (Don’t) Know

It seems that everywhere you turn at the moment, someone is talking about the EU referendum. Feelings are running high on both sides, and yet it feels like there’s very little in the way of straight-up, unspun facts.

We’ve set out on a quest to try and pin down some objective answers. After all, there’s an awful lot of discussion of how a potential exit from Europe will affect the property market. So, we thought it only right that we should try and clear things up for you guys.

However, with our crystal ball sadly out of order, we’re sorry to say that we’re none the wiser. Turns out, no one really knows for sure what will happen if we leave Europe, nor even how things are likely to go if we stay. That’s not to say a little guesswork couldn’t be beneficial… Frazer has offered a ‘Referendum Martini’ to the person with the most accurate prediction when we review the impact of the referendum in twelve months’ time.

Register Now For More Information

So, how do you like yours? Shaken, not stirred? On the rocks? We’re afraid straight-up seems to be off the menu right now.

A poll back in November by Greenberg Quinlan Rosner identified Founder of MoneySavingExpert, Martin Lewis, as the most trusted voice in the EU debate. So, let’s see what he has to say.

Property News Round-up 8/6/16

Property News All The Latest Updates

 

Hi guys and welcome to another property news round-up this week we start off by focusing on the EU referendum and look at whether house prices will go down if we have a Brexit vote. We end our round-up in France for the Euros and take a look at the winners and losers of the tournament if it was based on property. Missed our last property news round-up? If so, catch up here.

 

Will Property Prices Go Down If There’s Brexit?

Property News Brexit

With less than three weeks to go until we cast our votes at our local polling stations on whether we should leave or stay in the European Union, one question that stands out in the property industry is whether property prices will go down if we leave.

So will it? Well, not exactly. Recent stats from National Statistics indicate that house prices are still rising fast. They increased at a rate of 9 per cent a year in the year to March 2016.Prices are predicted to increase by roughly a further 10 per cent by the end of 2018.

In addition the treasury have mentioned that the Brexit would bring about an increase in the general cost of borrowing across the economy. This, in turn, would crush demand for housing and lead to fewer transactions. (The Independent, June 2016). This would therefore have a negative effect on price growth. Some analysts have even said that leaving the EU would also have a negative effect on foreign investment – this causes problems for the top end of property investments in London and the ramifications would lead to reduced investments.

But we all want cheaper homes right? Some have argued that we should welcome lower prices because that will help make homes more affordable, especially for first time buyers. Pro-Brexit Tory Lead of the House of CommonsChris Grayling, has tried to expand on this topic, and mentioned that staying in Europe will make it even harder for young people to buy a house due to immigration from the Continent which, he claims, is driving up domestic demand for housing (as mentioned in a recent article by The Independent).