Glossary of Property Investment Terms

There are a lot of terms unique to the investment world that will be new to those just embarking on building a property portfolio. That’s why we thought it would be very useful for you to have a thorough Glossary of Property Investment Terms to help you to thoroughly understand some of the finer points of investing. We hope you find it useful!

Glossary of Property Investment Terms | The House Crowd

A Shares 

A class of shares which have specific rights attached to them, as set out in a company’s articles of association.

Angel Investors

Investors who provide investment and other support to early-stage businesses. Traditionally angels are wealthy individuals who have a significant amount of entrepreneurial, industry or investment experience.

Angel Network (or Angel Syndicate)

A group of angel investors that pool together money and other resources to invest in, and provide support to, early-stage businesses.

Annualised Return

Average return each year over the minimum term, based on the total of rental income and estimated capital growth.

Find out more about Annualised Returns here.

Articles of Association

A company document that sets out its management and administrative structure.

The articles dictate the internal affairs of the company such as director and shareholder rights, the issue and transfer of shares, and the organisation of meetings.

Asset Class

A class of economic property that has similar characteristics. Listed shares, government bonds and real estate are all asset classes.

Glossary of Property Investment Terms | The House Crowd

B Shares

A class of shares which have specific rights attached to them, as set out in the company’s articles of association.

Below Market Value (BMV)

Properties are sometimes sold at below the market value, meaning they are offered at lower prices than comparable properties.

Beneficial Shareholder / Owner

An investor who owns the economic value and other shareholder benefits attached to shares, such as dividends and tax reliefs, but the registered title to their shares is held with another person or entity often for administrative convenience.

Bridging Finance

Bridging loans are a short-term funding option. They are used to ‘bridge’ a gap between a debt coming due – primarily for property transactions – and the main line of credit becoming available. Alternatively, they can act as a short-term loan in pressing circumstances.

Glossary of Property Investment Terms | The House Crowd

Capital Employed  

The sum of shareholders’ equity and debt liabilities; can be simplified as Total Assets – Current Liabilities.

Capital Growth

The increase in value of an asset or investment over time, measured on the basis of the current value of the asset or investment, in relation to the amount originally invested in it.

Convertible Equity

An equity investment where money is invested in a company in exchange for shares to be issued at a later date. The share issue is generally triggered by the company raising finance from other investors. In return for investing early, the convertible equity investors receive a discount on the price of the shares issued to the other investors.

Convertible Note

A debt investment where money is invested in a company with the expectation that the debt will “convert” into shares issued at a later date. The share issue is generally triggered by the company raising finance from other investors. Before the conversion, the investor is paid interest.

Crowdfunding

The funding of projects or ventures by raising money from a large number of people, usually online. The three main types of crowdfunding are equity, debt and rewards/donations.

Glossary of Property Investment Terms | The House Crowd

Damp Proof Course (DPC)

A barrier through the structure by capillary action such as through a phenomenon known as rising damp.

Debt

Money owed by one person/company to another. The borrower has to repay the money at a later date and generally also has to pay interest.

Dilution

A reduction in the ownership percentage of a share in a company caused by the issue of new shares.

Diversification

An investment strategy that involves mixing the amount, values and kinds of investments within a portfolio to spread risk and minimise losses.

Dividend

A dividend is a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.

Dividend Distribution

The distribution of a portion of a company’s profits to investors.

Drag-Along Right

A contractual obligation that allows majority shareholders to force minority shareholders to join in the sale of a company on the same terms, valuation and conditions of the majority shareholders.

Glossary of Property Investment Terms | The House Crowd

Enterprise Investment Scheme (EIS)

A UK tax scheme offering income tax and capital gains tax reliefs to qualifying private investors who invest in eligible businesses.

Equity

Shares or other securities that represent an ownership interest in a company.

Equity Crowdfunding

A type of crowdfunding that enables multiple investors to a buy shares, or other equity interests, in a company, usually through an online process.

Exit

An event when investors may be able to cash in and sell their shares, such as an initial public offering (IPO) or trade sale.

Glossary of Property Investment Terms | The House Crowd

FENSA Certificate

Documentary evidence that the installation work has been self-certified to comply with the Building Regulations

Financial Conduct Authority (FCA)

The financial services regulatory body in the UK, formerly called the Financial Services Authority (FSA).

Fully Diluted

All the shares of a company in issue, plus all shares which are the subject of options or other contractual rights to be issued in the future (regardless of whether the right has vested).

Fund  

An investment opportunity that seeks to raise money to be invested across multiple businesses. Fund campaigns are commonly used to invest in businesses participating in accelerator programmes and competition winners.

Glossary of Property Investment Terms | The House Crowd

Gas Safety Certificate

By law, landlords must have all gas appliances serviced regularly, normally once a year, by a Gas Safe registered engineer.

Gross Development Value (GDV)

The estimated value that a property, or new development, would fetch on the open market if it were to be sold in the current economic climate.

Gross Rate of Return

The total rate of return on an investment before deduction of any fees or expenses. The gross rate of return is quoted over a specific period of time, such as a month, quarter or year. It is often quoted as the rate of return on an investment in marketing materials.

Growth-Stage

The stage that a business is at when it has passed its ‘seed’ or initial stage and has established proof of concept and looking to grow.

Gross Yield

The yield on an investment before the deduction of taxes and expenses (such as management fees and maintenance costs). Gross yield is expressed in percentage terms. It is calculated as the annual return on an investment prior to taxes and expenses divided by the current price of the investment.

Glossary of Property Investment Terms | The House Crowd

High Net Worth Investor (HNWI)

A classification used by the financial services industry to denote an individual, or a family, with high net worth. If you earn more than £100,000 a year or have net assets of more than £250,000, you may qualify as a High Net Worth Investor.

HMO (House in Multiple Occupation)

A house occupied by more than two qualifying persons, being persons who are not all members of the same family. A “qualifying person” is a person whose only or principal place of residence is the HMO.

Glossary of Property Investment Terms | The House Crowd

Initial Public Offering (IPO)

The first time that a company’s shares are available for public purchase by means of a listing on a stock exchange. This process is also known as ’going public’ or ‘floating’.

Glossary of Property Investment Terms | The House Crowd

Know Your Client (KYC)

The regulatory process that financial services firms and certain other businesses must perform to verify the identity of their customers to help prevent against money laundering and other financial crimes.

Glossary of Property Investment Terms | The House Crowd

Loan to Value (LTV)

A term commonly used by banks and building societies to represent the ratio of the first mortgage lien as a percentage of the total appraised value of real property. For instance, if someone borrows £130,000 to purchase a house worth £150,000, the LTV ratio is £130,000 to £150,000 or £130,000/£150,000, or 87%. The remaining 13% represent the lender’s ‘haircut’, adding up to 100% and being covered from the borrower’s equity. The higher the LTV ratio then the riskier the loan is for a lender.

More on Loan to Value here

Local Housing Authority (LHA)

The main provider of social housing (or housing authorities) for people who cannot afford to buy their own homes. Local authority housing is allocated according to eligibility and need. Rents are based on the household’s ability to pay.

Glossary of Property Investment Terms | The House Crowd

Net Profit

The actual profit after deducting expenses, such as management fees, letting fees, maintenance costs which are were not included in the calculation of gross profit, have been paid.

Net Yield

Net yield is everything after expenses. It takes into account all fees and expenses associated with owning a property. It is a far more accurate way of calculating actual yield. It is also much harder to calculate as most costs are variable.

Nominee

A person or firm that holds assets, such as shares on behalf of another, enabling the nominee to handle complicated administrative matters.

Glossary of Property Investment Terms | The House Crowd

Open Market Value (OMV)

The realistic price that could be achieved for a property if marketed for sale.

Option

A right granted which gives the receiver an option, but not an obligation, to buy (or sell) shares in a company, or other securities, at an agreed price within a certain time frame.

Ordinary Shares  

Shares which represent normal equity ownership in a company. Ordinary shares generally entitle the owner to vote at shareholder meetings, receive dividends, and receive distributions on the winding up of a company, but do not carry preferential treatment.

Glossary of Property Investment Terms | The House Crowd

Pre-Emption (Also called Anti-Dilution)

A contractual provision which requires the company to offer its shareholders the chance to purchase additional shares to maintain their percentage of equity in advance of further shares being issued.

Portfolio

A group of financial assets such as shares, property or bonds, held by one person or entity.

Portable Appliance Testing (PAT)

The name of a process by which electrical appliances are routinely checked for safety.

Post-Investment

The period of time after an investment has been made in a company.

Preference Shares

A class of shares which have specific preferential rights attached to them, as set out in the company’s articles of association. Typically the preference will be a dividend paid in priority to other shareholders, or priority to distributions on the winding up of the company.

Professional Investor

A classification used by the financial services industry to denote an individual or family.

Property Yield  

A calculation to give an indication of annual returns based on the rental income against how much the property cost: Property Yield (%) = Rental Income/(Property purchase price + Refurbishment Budget).

Glossary of Property Investment Terms | The House Crowd

Registered Social Landlord (RSL)

Registered providers that own and manage social housing.

Return on Capital Employed (ROCE)

The return on capital employed is, considered by some, a better measurement than return on equity, because ROCE shows how well a company is using both its equity and debt to generate a return.

RICS Surveyor

Building surveyors, like all surveyors, inspect property or land. RICS (Royal Institute of Chartered Surveyors) is a professional body for chartered surveyors, which includes chartered building surveyors. RICS sets standards and guidance for surveyors and provides training and professional development opportunities for surveyors to comply with changing standards and legislation.

Risk

The potential for losing something of value. With equity investment the main risk to the investor is losing the money invested.

Glossary of Property Investment Terms | The House Crowd

Secondary Market

A market where investors purchase shares from other investors rather than from the company that has issued the shares directly.

Shareholder Agreement

An agreement between a company’s shareholders detailing certain rights and obligations of the shareholders.

Shares

An ownership interest in a company which entitles the shareholder to certain rights, for example a share of profits or dividend payments from the company. Shares are also referred to as “stock”.

Sharia Compliant

Investments that comply with Islamic law and principles, eg. ethical investments with no borrowing where investors share in the profits and losses.

Solicitors Regulatory Authority (SRA)

The regulatory body for solicitors in England and Wales.

Sophisticated Investor

A type of investor who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity. This category is for people who have invested in shares in more than one unlisted company (including via The House Crowd) in the last two years or have been a member of a business angel syndicate or network for at least six months including The House Crowd’s Investor group.

Special Purpose Vehicle (SPV)

A Company set up for a particular purpose. In the case of The House Crowd, SPV’s are set up for the purpose of purchasing/owning a property on behalf of the investors.

Subscription Agreement  

An agreement between a company and investors purchasing shares in the company. It sets out the terms of the share purchase and details certain rights and obligations of the company and the investors as shareholders.

Glossary of Property Investment Terms | The House Crowd

Tag-Along Rights

A contractual obligation which gives minority shareholders the right, but not the obligation, to join a transaction where shares are sold by majority shareholders, on the same terms, valuation and conditions of the majority shareholders.

Term Sheet  

A non-binding agreement addressing the basic terms and conditions under which an investment will be made in a business. A term sheet often serves as a template to develop more detailed legal investment documentation.

Glossary of Property Investment Terms | The House Crowd

Unencumbered

An asset or property that is free and clear of any encumbrances such as creditor claims or liens. An unencumbered asset is much easier to sell or transfer than one with an encumbrance. Examples of typical unencumbered assets are a house without any mortgage or other lien on it, a car where the automobile loan has been paid off or stocks purchased in a cash account, rather than a margin account.

Glossary of Property Investment Terms | The House Crowd

Valuation

The monetary worth of a business or property as determined by considering both qualitative and quantitative factors.


We hope you found this useful. If you have any questions, then please don’t hesitate to get in touch with us. We’re always here to help you with anything you might want to talk about, so do drop us a line!

 

Newton Heath and Marple Development Updates

Newton Heath and Marple Development Updates

Newton Heath Manchester
It has been a few weeks since our last update for the new build development of townhouses in Newton Heath Manchester.
In fact in the last blog it really did look like a building site.
A few months later and the interior designers have worked their magic and the contemporary living spaces are starting to look like homes.

10-10-newton-lounge

 

As you can see from the photographs, the light open kitchen dining areas should prove very popular for those modern families who enjoying entertaining.

10-10-newton-kitchen

The spacious lounge area and bedrooms certainly make these properties stand out from other townhouses in the area.
The bedrooms have been decorated and dressed in soft neutrals to ensure the light airy feel continues throughout.

10-10-newton-bedroom

The team have worked hard to ensure that the finish and specification in the bathrooms have certainly kept our promise of contemporary high specification housing.

10-10-newton-bathroom

Station Road Marple.

Just a few miles away in the leafy village of Marple our project at Station Road is now looking absolutely stunning.

10-10-marple-front
This extensive renovation has ensured that we have kept the character of the property along with the stylish contemporary extension to the rear (photographs to follow of the internal living space).
The property looks incredible and the external landscaping to the rear certainly looks a bit different in these two before and after snaps!

10-10-marple-rear

The photograph above shows the new decked area and extensive living room extension. The removal of the tarmac driveway and old fencing has enabled us to extend the lawn and garden.

marple-garden-1

‘Before’ photograph of the garden requiring a bit of TLC and some turf.

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The Latest Crowdfunding News – 6/10/16

The Latest Crowdfunding News

 

Hi guys and welcome to another crowdfunding news edition, as usual, we will be travelling around the UK and around the globe in order to give you a snapshot of the latest goings-on in the crowdfunding world. Today we start our round-up and focus on The FCA and Cambridge University partnership, both have teamed up to review the current state of alternative finance, to ending our round-up in China. Missed our previous blog round-ups? If so, catch up here.

 

FCA & Cambridge University Team Up to Review UK Alternative Finance

hands

The Financial Conduct Authority (The FCA) and the Cambridge Centre for Alternative Finance (CCAF) have teamed up to assist in the review of the UK alternative finance industry. The joint project will inform the FCA’s ongoing post-implementation review of crowdfunding regulation which is currently in process.

There’s a consensus that the UK is a global leader when it comes to alternative finance regulation.

Moreover, The Cambridge Centre for Alternative Finance is a global leader in research on disruptive finance. The pair will be working on a program of research that will identify any changes in the nature of the industry,clients’ expectations, plus its overall place in the financial services landscape.

The unique partnership will be primarily looking at what the crowdfunding investor population really looks like and how it is evolving, another research area that they will be investigating is how investors on the platforms understand the risks involved, as well as how they use the information provided to them by fundraisers. In addition, their research will look at the types of investments crowdfunding platforms are competing with for investors’ money, plus how these platforms and investors share the burden of due diligence and whether an expectation gap exists between the two.

 

Santander UK Strikes a Partnership With an Alternative Finance Company

Santander

Santander UK has struck a partnership with an alternative finance company to fund social enterprises in a deal that marks the first tie-up between a large British high-street bank and a crowdfunding site. (FT.com,October 2016)

The banking giant is joining forces with Crowdfunder to provide £200,000 to community projects, charities and enterprises that are focused on social change across the country.

The bank will donate half the funding target of a project once it raises 50 per cent from the public online.

This headline has gained attention because the partnership further closes the gap between mainstream and alternative finance, it also paves the way for closer collaboration between a well known high-street lender and the crowdfunding sector.

Back 2014, Santander UK paired up with Funding Circle referred small business customers looking for loans to the P2P lender when the bank was unable to serve them.

However, the deal with Crowdfunder is different because equity crowdfunding involves raising money from the public who each gain a share in the company.

Managing director of Santander Business Banking, Sue Douthwaite, told the FT : “Our purpose is to help people and businesses prosper and we recognise the important role social enterprises and charities play in helping communities to thrive.

“With the power of the crowd, our £200,000 Changemaker Fund will help bring great ideas to life and enable social enterprises and community ventures to grow.”

Image source : FT.com

Africa : Has Crowdfunding Potential but Regulatory Laws need to Catch Up

Africa Crowdfunding

Last year crowdfunding platforms in Africa raised $32.3 million for various projects, data from the Afrikstart Crowdfunding in Africa report reveals. However, that figure could be much higher over the coming years if governments across the continent developed crowdfunding regulations.

As Nigerian journalist Yomi Kazeem mentions in his article for QZ.com, despite its rising popularity, the most common limitation of crowdfunding across most African countries, is a lack of legal and regulatory framework.

The Afrikstart Crowdfunding in Africa report states : “The absence of regulation limits the expansion of equity-based or debt-based crowdfunding platforms in Africa.”

Therefore, having a lack of regulation in place is likely to deter investors from using online platforms as there is no investor protection in place.

However, despite having regulation limitations, with cost of access to internet dropping in parts of Africa and smartphone penetration deepening, on the plus side, more Africans are taking advantage of crowdfunding platforms to finance projects ranging from start-ups to social causes.

South Africa comes out on top when it comes to crowdfunding, The Rainbow Nation’s platforms have raised $30.8 million, it’s worth noting that $32.3 million was raised by crowdfunding platforms from all over Africa, so it just goes to show how well South Africa is championing the concept.

The country’s dominance in crowdfunding on the continent is not accidental. According to a report, the popularity of crowdfunding in South Africa is down to the country’s “sophisticated business market, a robust and reliable regulatory credit system and supervision.”

Although not 100% perfect, other African countries can learn a lot from South Africa and adopt a more robust crowdfunding strategy.

 

Restaurant Chain “M” Secures £1.2M Just Hours After Seedrs Campaign Debut

M Crowdfunding

Just hours after restaurant chain M launched its equity crowdfunding campaign on Seedrs, the London-based company has successfully secured £1.2 million out of its £1.3 million funding goal. (Crowdfund Insider, October 2016)

Since its launch back in 2014, the chain has received numerous awards such as : Best Use of Technology The Cateys 2016, Best Young Chef UK & Ireland 2016, San Pellegrino Awards, Best for Steak and Seafood, and many more.

For those that invested in the campaign, starting with the investors that put £10k into the campaign, they will receive 25% discount at M until January 2019, a copy of Executive Chef Michael Reid’s M: a 24- Hour Cookbook, free membership of M DEN, our luxury private members lounge plus, 15% off online wine purchases.

The investors that put in between £1,000 – £9,999 will receive a 15% discount at M until January 2019, a copy of Executive Chef Michael Reid’s M: a 24- Hour Cookbook and free membership of M DEN,  their luxury private members lounge.

Lastly, those who invested between £200- £999 get 0% discount at M until January 2019 and a copy of Executive Chef Michael Reid’s M: a 24- Hour Cookbook.

You can read more about the crowdfunding campaign here.

Image source : Crowdfund Insider

Crowdfunding The Great Wall of China

great wall of china crowdfunding

Heritage officials have launched a crowdfunding campaign to help pay for restoration work on the Great Wall of China.

China Radio International has reported that more than 16,000 people have donated online since the campaign started at the end of August, raising almost 300,000 yuan ($45,000; £34,000) so far (stats taken from last month).

Dong Yaohui, who’s in charge of the fundraising effort, mentioned on the BBC website : “By pooling the contribution of every single individual, however small it is, we will be able to form a great wall to protect the Great Wall.”

The funds made will go towards restoring the Xifengkou section, which runs through a reservoir, and all of the project spending will be made public.

 

What Are Your Thoughts?

 

Which of our chosen crowdfunding stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it.

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Bank Chambers, Stockport, Sales Update

Bank Chambers Stockport.

We have just sold another apartment off-plan (the third of nine) at our Bank Chambers, Stockport development. Work starts on the conversion next week (3rd October 2016) so please keep an eye on these blog pages and our social media for project updates.

The CGI images below show the kitchen, living space and contemporary bathrooms.

thc002-_bank_chambers_kitchen_lo-res       thc002_bankchambersint_bathroom_hr    thc002_bankchambersint_apt7_hr

 

Stockport Market has become the latest place to be with its historic market hall and popular teenage market and is also becoming a foodie hotspot with new eateries popping up along the cobbled streets.

We are looking for a good quality restaurant operator to take the ground floor. It’s in a great location directly opposite the market hall, so if you know of a restaurant owner looking to expand ask them to get in contact.

 

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The Latest Crowdfunding News – 12/9/16

The Latest Crowdfunding News

Hi guys and welcome to our first September crowdfunding news edition. As usual we will be taking a look at the latest goings-on in the world of crowdfunding and today we start our round-up by focusing on Kickstarter who have headed east and launched in Asia to looking at how European alternative finance performed in 2015. Missed our recent round-ups? If so, catch up here.

Kickstarter Launches in Asia

Kickstarter Asia

Kickstarter, one of the most well known crowdfunding sites has launched in both Hong Kong and Singapore respectively, and are their first ever sites in the continent.

Prior to launching in Asia, Kickstarter only operated in Europe, North America, and Australia.

In the past, entrepreneurs from Singapore and Hong Kong had to co-operate with overseas partners if they wanted their ideas published on the site.

With the crowdfunding giant now launching in Hong Kong and Singapore, people can present their projects from a local network as well have their fundraising goals set in Hong Kong/Singapore dollars.

Kickstarter will now compete with local sites such as FringeBacker from Hong Kong as well as the likes of OurCrowd and MoolahSense from Singapore.

Just like other crowdfunding sites, Kickstarter gains a cut from each project that has been pledged by its backers.

Well known Kickstarter projects include the Oculus Rift, which received its first funding via Kickstarter back in 2012 to the Pebble smartwatch.

Image Source : BBC News

Finnish Crowdfunding Act Updated

Finland Crowdfunding

From Asia to now travelling to Scandinavia! A few days ago in Finland, the government updated its crowdfunding act, the new legislation makes it easier to register, for example, until now, equity crowdfunding in the Scandinavian country has required an investment firm license from the Finnish Financial Supervisory Authority (FIN-FSA). However, the license slowed the market entry for new players.

Registration is a considerably more affordable alternative to the investment firm license, and this therefore allows new players into the market.

Investor protection is still at a good level under the new act, despite the fact that the registration process is a lighter form of regulation than a license.

In addition, the new Finnish crowdfunding act does not cover rewards or donations based crowdfunding models. For example, rewards-based models that are used by the likes of Kickstarter fall under consumer protection acts. In contrast, donation based crowdfunding in Finland is legal, anyone who wishes to create a donation based campaign must obtain a special fundraising permit from the police.

To sum it up briefly, Whilst the overall market size of alternative finance in Finland is relatively small, the government and industry bodies are hopeful that a balanced regulatory approach will help boost the up and coming sector.

Native equity crowdfunding company Invesdor’s CEO Lasse Mäkelä recently told Crowdfund Insider that the new Act should increase growth of the Finnish crowdfunding market. He stated :
“On a European level, crowdfunding volume is expected to double this year. We believe that with the new legislation Finland will be able to reach similar numbers.”

Crowdfunding in a tub! A brief insight into Oppo Ice Cream

Oppo Crowdfunding

At The House Crowd we love a good crowdfunding story and thought this was worth a mention (especially if you love ice cream!).
Back in 2015 Oppo Ice Cream at the time, was the most the “most overfunded” offer ever on Seedrs.

The London based company had originally set out to gain £150,000, however, they received triple the specified amount. Earlier this year they was again returned for further funding via Seedrs and smashed their £150,000 in just six hours!

Just like us, they too went on Dragon’s Den, they might not of had much of a slaying as what Frazer experienced, but again just like us being on the show helped propel their product.

Although they came out of the den empty handed, they revealed that they had no intention of taking The Dragon’s money as they had already funded the business by offering shares to their fans which they felt was a much better way of growing their brand. Going on the show for them was about spreading their message to the British public that you can indeed indulge in luxury ice cream… without looking like you have.

As we know, gaining business success is not a walk in the park, and it is something that takes hard work to cultivate. Oppo is also a great example of a small company that leveraged investment crowdfunding to take their business and product to the next level and a tasty investment it turned out to be!

Image source : Crowdfund Insider

FCA Calls for Input on Equity Crowdfunding Regulation

Crowdfunding FCA

Upon releasing the new rules in 2014, the FCA promised a post-implementation review of the crowdfunding market and regulatory framework in 2016 (the “Review”). (Lexology, August 2016)

The financial body has released a ‘Call for input’ which describes the results of their initial market research and sets out a number of questions. The questions are linked to a range of areas and the document contains some hints on the future direction of investment based crowdfunding regulation.

Firstly, one key area that they will be taken into consideration is due diligence. Current regulations do not set a minimum standard of due diligence, the regulations cite concerns relating to financial crime and stresses the importance of protecting the interests of investors. They therefore suggest that minimum standards may be introduced.

Secondly, they’ll take client assessment into consideration. The regulator wants to review the extent to which firms are meeting these requirements and whether clients are sufficiently informed to understand the risks that are involved. In addition, they may consider publishing further advice on how to ensure retail investors meet certain criteria as well as introduce sanctions for companies who do not abide by the rules.

Lastly, the FCA will be looking at disclosure. As Lexology mention in a recent blog article, equity crowdfunding platforms are required to provide potential investors with sufficient information so that they are reasonably able to understand the nature of the product and its risks.The Review will look at whether this high-level rule is sufficient to protect investors.

So what happens now? There are currently no proposals to change the regulatory framework for crowdfunding platforms. However, anyone with an interest in equity (or loan-based) crowdfunding has to submit their response to the FCA before 8 September 2016. The feedback will then be used to inform the FCA’s continuing review of the current market. After the Reviewing process, the financial regulator will consider publishing a new consultation document which will include any proposed rule changes.

 

European Alternative Finance Jumps to €5.4 billion in 2015

Europe Alternative Finance

One news story in particular that we stumbled across this week and everyone in the alternative finance community was talking about was Europe.

A report published by the Cambridge Centre for Alternative Finance (CCAF) entitled “Sustaining Momentum“, looks at the rapid growth of alternative finance across Europe.

In a nutshell, the CCAF reports on the ongoing growth of alternative finance including peer to peer lending, crowdfunding and more. Their findings show that alternative finance jumped 92% year over year to €5.4 billion in 2015.

In addition their research revealed that the UK continues to dominate the continent at €4.4 billion in aggregate funding. France and Germany are second and third with €319 million and €249 million respectively. The Dutch also performed well with €111 million. If you remove the UK out of the picture, European alternative finance increased by 72% year over year going from €594 million in 2014 to €1.019 billion in 2015. While the overall rate of growth slowed, the industry is gaining momentum as new regulations from across the continent take place as well as an array of platforms start to mature.

Interested in the CCAF’s research? If so, read their research embedded below.

CCAF Europe 2016 Sustaining Momentum – Final by CrowdfundInsider on Scribd

 

What Are Your Thoughts?

 

Which of our chosen crowdfunding stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now For More Information

The Alternative Finance Marketplace: How is Real Estate Shaping Up?

We’ve been eagerly poring through NESTA’s 2015 UK Alternative Finance Industry Report, ‘Pushing Boundaries’, since it was published in February this year. The report offers a fascinating, in-depth look at all areas of the alternative finance industry, including – crucially – the Real Estate Alternative Finance (crowdfunding and Real Estate P2P lending) market.

If you like data, you’ll love it. But if you’d prefer something a bit more readable, you’ll be pleased to hear that we’ve put together our own guide to the state of the alternative finance industry, keeping the emphasis squarely on Real Estate Alternative Finance, of course.

Things have changed since NESTA published its report, ‘The Rise of Future Finance’ in 2013. At that time, the alternative finance industry was worth £939m.  In 2015, NESTA reported its value at £3.2bn. The market is on course to surpass the £5bn mark in 2016.

Real Estate Alternative Finance - QUOTE 1

It’s not just financially that the alternative finance sector has grown. It has evolved taxonomically, too.

In the 2013 report, NESTA identified a range of distinct funding models operating in the sector. Two years later, 28% of alternative finance platforms surveyed reported that they were operating a ‘mixed’ or ‘other’ business model, which does not fit into the existing taxonomy.

Real Estate Alternative Finance: Crowdfunding and P2P Lending Tops the Tables

The 2013 report has no mention whatsoever of the terms ‘real estate’ or ‘housing’. And yet, by 2015, NESTA’s report segments data on Real Estate Alternative Finance into its own category, such is the proportion of the industry it covers.

In 2015, Real Estate and Housing was the most popular sector for the alternative finance market.

  1. Real Estate and Housing
  2. Technology
  3. Manufacturing and Engineering
  4. Food and Drink
  5. Retail and Wholesale
  6. Leisure and Hospitality
  7. Community and Social Enterprise
  8. Finance
  9. Construction
  10. Education and Research

Combined debt and equity-based funding for Real Estate Alternative Finance amounted to nearly £700m in 2015, with P2P business lending in Real Estate (for mortgages and property development) taking the lion’s share: £609m – 41% of the total volume of P2P business loans in 2015.

The market volume of equity-based crowdfunding is much more modest, coming in at £87m for 2015, still a very significant sum.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 2

P2P Business Lending in Real Estate

In 2015, P2P real estate lending financed over 600 commercial and residential developments, mostly by small to medium sized property developers.

Of that hearty £609m funding sum for 2015, Real Estate P2P lending saw increased growth throughout the year:

Q1 → £120.78m

Q2 → £146.81m

Q3 → £152.96m

Q4 → £188.12m

Perhaps some of this extraordinary success has something to do with institutional funding in the P2P Real Estate lending sector? Institutional funding was around 25% in 2015, and up to 75% on some platforms.

P2P business lending for Real Estate comprises a range of financing models and products. There are the short term bridging finance loans, which run for a 12 to 18 month period. Them, there are the longer term (3-5 years) commercial and residential mortgages, and construction/development debt finance.

In 2015, the average size of P2P loans for Real Estate came in at £522,333, slightly under 2014’s £662,425 average. The figure for 2015 was more in line with the average UK house price than the previous year. This may be due to the growing use of P2P lending in funding residential and commercial mortgages, rather than the larger developments focused on in 2014.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 3

Just a quick clarification point here: regulatory constraints mean you cannot use P2P Real Estate lending for your own residential mortgage.

It’s also not a done deal to apply for a loan for a Real Estate development: in 2015, 27.5% of loan applications in P2P Real Estate lending were accepted.

The average number of lenders required to fund a typical P2P Real Estate loan? 490.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 4

Equity-Based Crowdfunding for Real Estate

This model enables investors to acquire ownership of a property asset, via the purchase of shares, either of a single property, or a number of properties as part of a portfolio.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 5

In 2015, equity-based crowdfunding for Real Estate raised a total of £87m, for 174 development projects. This is how the annual quarters looked:

Q1 → £13.09m

Q2 → £23.16m

Q3 → £35.70m

Q4 → £14.63m

Equity-based crowdfunding for Real Estate had a great year in 2015. The record for fastest funding for a development project was set: £843,100 was raised in just 10 minutes and 43 seconds, from a total of 319 investors!

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 6

Unlike P2P Real Estate lending, with equity-based crowdfunding, there is scarcely any institutional involvement. Of the 10,626 funders participating in Real Estate crowdfunding, NESTA found that only 3% were categorised as institutional investors by the platform. This contrasts with the 77% of sophisticated or high net worth investors in the model.

Yes, equity based crowdfunded property investment is much more grass roots in many ways than the P2P Real Estate sector. The recent inclination to lower minimum investment thresholds in this area, with the aim of enticing more retail investors attests to this in a very clear way.

Whilst 27.5% of loan applications in P2P Real Estate lending were accepted in 2015, in equity-based crowdfunding for Real Estate, platform acceptance rate was much lower. Only 2.9% of deals made it onto the platform, on average.

However, deal success rate for those who did make it onto the platform was pretty high: 87%. There are also far fewer investors required for an equity deal – NESTA reports an average of 150 per deal. The average deal size for 2015 in the crowdfunding sector for property was fairly high, too: £820,042.

Real Estate Alternative Finance and Manchester

Of the 58 alternative finance platforms surveyed by NESTA for their report, 62% were – unsurprisingly – London-based. However, a significant 5.2% hailed from our home city of Manchester.

Manchester is also one of a number of regional and local authorities that have either partnered with online alternative finance platforms to fund local SMEs, or have used alternative finance methods to fund community projects.

NESTA’s data shows that the most active regions receiving funds from Real Estate crowdfunding were London (of course), the North East, and the North West. The North West was also found to be one of the top 3 regions actually providing funds.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 7

This isn’t terribly surprising given the growing trend for emphasising Real Estate crowdfunding within areas in need of regeneration. Manchester has, as we know, come a very long way. The economy of the North West has been transformed over the last few years, in no small part due to the heavy investment in regeneration projects, in the form of development funding from both the public and private sectors.

It is these regeneration areas that are being identified as some of the potentially best investment opportunities. Not only do they cost investors less than prime locations, but these areas are also the ones that will experience the highest growth over coming years.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 8

Real Estate Alternative Finance and The Government

Direct investment from the government has helped support the growth of both peer-to-peer and crowdfunding markets. In 2015, £60m was lent by the British Business Bank via P2P lending platforms, specifically for SMEs.

Tax incentives have also been applied, including the EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme). These schemes have been widely used, by a large proportion of investors using alternative funding platforms, and have been especially popular within the equity-based crowdfunding market.

The launch of the IFISA (Innovative Finance ISA) in April 2016 is also an exciting development in the alternative finance sector.

In particular, P2P business lending platforms for Real Estate expect the IFISA to generate a whopping 51.9% growth in transactional volume this year, whilst equity-based crowdfunding platforms for Real Estate predict 30.31% growth as a result of the IFISA.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 9

The figures for Real Estate Alternative Finance outmatch those elsewhere in the alternative finance market. P2P consumer lenders, for example, expect a 26% increase in total volume as a result of the IFISA. It’s clear that Real Estate lending stands to benefit the most.

In anticipation of the influx of retail investors expected by the onset of the IFISA, some P2P Real Estate lending platforms are even lowering their investment thresholds.

What is the IFISA?

At its most basic, the Innovative Finance ISA allows UK investors to lend money using P2P lending platforms to invest up to 100% of their £15,240 annual ISA allowance, and to receive any interest and capital gains tax-free. You can find out more here.

Institutional Investment in Real Estate Alternative Finance

Catching the scent of a good thing, institutional investors are also muscling in on the peer-to-peer real estate lending market, as they are across the alternative finance industry.

It is estimated, based on platform reporting, that in the UK in 2015, 1,031 institutional funders were at the bottom of financing loans and equity deals in alternative finance.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 10

45% of all alternative finance platforms reported institutional involvement in 2015. In 2014, this was 28%, and in 2013, just 11%.

For P2P business lending, in 2015 26% of total funding was attributable to institutional funding. In peer-to-peer Real Estate lending specifically, a total of 25% institutional funding was reported, with significant increase between the 3rd and 4th quarters of the year, in particular:

Q1 → 22%

Q2 → 22%

Q3 → 23%

Q4 → 31%

By contrast, however, in equity-based crowdfunding, 2015 saw just 8% of funding coming from institutions.

With institutional funding growing in the alternative finance market, as well as the influx of more high net worth investors, there is some discussion about whether the disruptive force of the alternative finance market is at risk of being stemmed.

Banking institutions have found themselves burdened with heavy regulatory compliance, cumbersome legacy systems and bureaucratic complexity. Since the debacle at the end of the last decade, the general populous has been hungry for new alternatives to the traditional financial system. Confidence has been lost, and – at the retail end of the investment spectrum at least – making one’s savings grow within the received systems has less potential for gains than what’s promised by alternative finance.

Alternative finance has become a key player in the development of a whole new generation of financial products. Along with a range of other FinTech solutions to saving, banking and investment, this revolutionary rumble has got the banks concerned.

It’s no wonder that, as such a disruptive movement grows, it finds itself on the precipice of being co-opted into the corporate world. But all the time that interest rates on savings accounts remain shockingly low, and first-time buyers view getting on the property ladder as likely as a winning Euromillions ticket, the prospect of a less suffocating alternative for growing money will continue to be thoroughly desirable.

And, focusing on Real Estate specifically, research conducted by Crowdstacker found that 44% of retail investors would like to increase their exposure to the UK property market, not only owning their own home, but also by investing through P2P lenders, like The House Crowd. Investor reluctance was found to centre around the time consuming nature and costs of property management, as well as affordability. The alternative finance model of crowdfunded property investment and P2P lending in Real Estate removes those factors from the equation.

2015 also saw the emergence of self-managed, platform-owned listed investment trusts, funds and vehicles: a sure sign that platforms are preparing to challenge the fund management space.

And as the alternative finance world continues to evolve, we are also seeing the emergence of a number of independent online aggregators, such as Informed Funding, FinPoint and ABF. These are rising up to provide additional channels and services for connecting business fundraisers to alternative finance platforms.

That being said, corporate interjection into the alternative finance space should not be considered a negative. It is this involvement that is allowing the industry to grow and evolve.

A number of P2P consumer lending platforms have struck high profile partnership deals with some big-name corporates.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 11 - THE HOUSE CROWD

Corporate partnerships have been witnessed between alternative finance platforms and large brands such as Virgin, Amazon, Uber and Sage. As NESTA puts it, these partnerships are “fusing the traditional corporate world with the disruptive models of alternative finance”.

It is these partnerships that will aid in increasing public awareness of the alternative finance sector, but not only this. Corporate partnerships will also attract high quality borrowers, reducing default rates on P2P loans, and also offers the potential for data gathering, which will enhance the industry’s credit scoring capabilities, and inform risk management.

The increasing involvement of high net worth investors, along with institutional funding and corporate partnerships is what is allowing alternative finance to push boundaries, blur definitions, and limit the dangers of orthodoxy: it is a catalyst for rapid evolution.

Conclusion

The extraordinary growth of the industry that we have witnessed over the last few years has begun to level out.

In 2015, the UK’s alternative finance industry facilitated investments, loans and donations totalling £3.2bn. In 2014, this figure was £1.74bn – a YoY growth rate of 83.91%, which is not to be sniffed at. But when you compare this to the 161% growth between 2013 and 2014, it looks positively small.

REAL ESTATE ALTERNATIVE FINANCE REPORT - QUOTE 12 - THE HOUSE CROWD

In 2014, 24 new alternative finance platforms began trading. This was down to 14 in 2015. Fewer new entrants are joining the market, whilst existing platforms continue to increase their total volumes at a steady rate.

Up until now, the industry appears to have been actively pushing its boundaries, both in its evolution, and in its rate of growth. Whilst the figures continue to be staggeringly impressive – with the market on course for a £5bn year in 2016 – plateauing figures are a good sign that the industry is maturing.

Alternative finance is coming of age with intelligence and dignity. It is listening to influential voices from big corporates, accepting helping hands where they are offered, and maintaining its grass roots persona. Most of all, however, it’s making money, not just for a few, but for a large body of investors all along the wealth spectrum. In Real Estate, it’s helping to regenerate run-down neighbourhoods, keeping a stagnant housing market moving, improving living standards across the board.

REAL ESTATE ALTERNATIVE FINANCE REPORT - QUOTE 13 - THE HOUSE CROWD

In short, alternative finance may have been a disruptive teenager, but it’s growing up to be a real force for good in the middle of a blighted financial landscape. The future of finance is looking promising.

 

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The Latest Crowdfunding News – 10/7/16

The Latest Crowdfunding News

 

Hi guys and welcome to our first crowdfunding news edition for August. As usual we will be taking a look at the latest goings-on in the world of crowdfunding and today we start our round-up by focusing on London’s most exciting crowdfunding campaigns of the summer to looking at why equity crowdfunding matters to small business. Missed our last crowdfunding round-up? If so, catch up here.

 

London’s Most Exciting Crowdfunding Campaigns This Summer

London Property Prices

Turning to the crowd to fund the latest expansion plans or business venture as we know is becoming an increasingly popular option for businesses of all shapes and sizes, and last year crowdfunding in the UK reached £245m.

This year it continues to go from strength to strength with the likes of SyndicateRoom, Seedrs, and Crowdcube dominating alternative investment.

So what campaigns have excited those in the capital? Starting with Revolut, the London fintech launched a crowdfunding campaign last month in order to top up its oversubscribed £7m Series A funding round.

The fintech startup, which allows users to spend cash abroad on a fee-free Mastercard in conjunction with its app, experienced overwhelming demand with a record £12m pledged by interested parties within 10 hours of its launch according to Business site Bdaily.

We briefly mentioned about Crowdcube being a main player when it came to alternative investment, they too got in on the act and aimed at reaching a 5m raise which they exceeded. Crowdcube attracted £6.2 million of investment on its own platform, 124% more than it originally targeted.

Another exciting campaign that we have stumbled across is from Hire Space.

The London startup that has had big client names such as Facebook and Red Bull, closed its 500k crowdfunding campaign back in June. Their funding came from over 200 venues, event professionals and private investors respectively.

According to Bdaily : “Co-founder Edward Poland has some ambitious plans for the firm following the investment drive, with plans to ‘revolutionise the events industry’ both in the UK and abroad as Hire Space entrenches its position at the forefront of the market.”

We will definitely be watching this space (no pun intended!) for more future crowdfunding campaigns in the capital, here are two more from the Bdaily article that might be of interest, view here.

 

Crowdfunding App Tilt Adds P2P features

tilt crowdfunding p2p

We would normally add a P2P based story in our P2P news round-ups (if you missed our last one a fortnight ago you can catch up here), however, we previously mentioned Tilt in a December post and thought we would keep you updated about the app.

For those of you who have never heard of Tilt, in a nutshell the app is for groups of friends to pool money together for a group goals such as fundraising or funding a trip for example.

Tilt is now focusing on P2P features, the platform’s owners have opted to launch a formal P2P transfer function through the addition of “pay” and “request” buttons according to Business Insider.

Their 18-24 user base falls directly into the audience most attuned to digital P2P payments. Mainly because of the social nature of the app itself and many users know each other. This could definitely help the application thrive, because P2P applications benefit from engaged users bringing new users into the mix, who continue to refer additional customers and help expand Tilt’s network.

Image source : Tilt Twitter

Brexit Blamed for Fall in Crowdfunding Deals

Brexit crowdfunding

According to research by Beauhurst, they found out that crowdfunding platforms raised £87.4m in the first half of 2016, a drop of just over 4 per cent from the £91.3m raised in the previous six months. (FT.com, August, 2016)

In addition, their findings concluded that the uncertainty around the vote to leave the EU and the nature of the UK’s relationship with Europe has contributed to having deals being delayed or even abandoned.

UK Crowdfunding Association (UKCFA) spokesman Bruce Davis mentioned in the FT that the dip in deals is just a pause. In addition he stresses that the market has slowed down due to recent events, however, the UK is still taking a large share of the market.

Mr. Davis said that The UKCFA are confident that the number of deals will grow again, he stated in the FT : “The key to that will be strong signals from the government on strategy to see where it wants to see growth and investment.”

 

Dave Goes to Rio Thanks to Crowdfunding

RIO 2016 Crowdfunding

This one is for all you Olympics fans out that there! Dave Leach, a coach at Lewes AC has had a string of successful athletes at the Sussex based athletics club, including Rob Mullett who was selected to Represent Team GB at the Rio Olympics for the Men’s 3000m steeplechase.

Dave’s dream was to travel to Rio with Rob (who he has coached Rob since he was 12 years old), thanks to crowdfunding, Dave’s dream came true!

Club members, friends and colleagues used crowdfunding to raise the money to send Dave to the Brazilian host city; sponsors have kitted Dave and Rob from head to toe in Olympic fashion to be ready for all weather conditions there. In fact the funding was so successful, the target was reached and beaten (the initial target was 3k, however, 5k was raised for Dave).

For a coach who hasn’t been paid for 25 years and has never been on a plane before, this is another example of how crowdfunding has saved the day once again!

Image source : The Telegraph

Why Equity Crowdfunding Matters to Small Business – A View from The U.S.

Equity Crowdfunding USA

For those of you who follow our various blog round-ups know that we look at quite a few viewpoints and stories from all over the world, this time we turn our attention to across the pond.

A series of recent laws and regulations have opened the door to three new vehicles for raising investment dollars for small businesses through equity crowdfunding. These new forms of investment crowdfunding may well transform the nature of small business capital raising in the United States, by enabling individual investors to take equity stakes in new companies as Entrepreneur and Yahoo Finance both explain.

Last September, Title IV on the JOBS Act went into effect modifying regulation A of the Securities Act. In layman’s terms this piece of legislation has a very important meaning – growing companies in The States can now go public in a small offering and raise up to $50,000,000 dollars through a streamlined, low-cost alternative to a full public offering.

Companies can now test the water so to speak, meaning that small companies can let the public know that they are thinking of raising investment dollars. In America this form of announcement has been illegal since the 30’s, however, due to transparency levels and openness that these array of online platforms provide, it has now been made legal.

As a result of the legislation, many small business in America have learned to leverage small early stage investments via crowdfunding to increase their bargaining power and get more money from venture capitalists later as Richard Swart mentions in his article and these new rules give multiple financing options available to small businesses across the country.

 

What Are Your Thoughts?

Which of our chosen crowdfunding stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

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July Update-a Month in Numbers

 

As many of you know we started offering peer to peer secured loans in 2015 in addition to our equity investments.

Here’s a few stats to show how we are doing (correct as of 31st July 2016)

 

  • Total sum loaned                             £8,339,734
  • No. of loans made                           22
  • No of loan repaid                             5
  • Returns Paid to date                       £ 95,028
  • Av. loan period                                  10 months
  • Av. loan size                                       £379,079
  • Default rate                                        0%
  • Av. Loan To Value                            68%
  • Av. interest rate                               8.95%

To learn more about our secured peer to peer loans download our free guide here

You can always read more about our new peer to peer loans, equity investments and Property Crowdfunding by simply registering on our website

 

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The Latest Crowdfunding News – 20/7/16

The Latest Crowdfunding News

 

Hi guys and welcome to another crowdfunding news edition, as usual, we will be giving you a snap shot of the latest news from the crowdfunding world, this week we predominately stay in the UK, however we end our round-up in Africa and look at the latest crowdfunding start-ups to keep an eye on. Missed our last crowdfunding news update? If so, catch up here.

Why Fintechs Are Turning To Equity Crowdfunding For Investment

fintech equity crowdfunding

Quite a few UK fintechs such as GoHenry, Mondo, and Tandem (who have all raised over £1 million from using equity crowdfunding) – but why have they used this approach?

Firstly, using equity crowdfunding is great for brand awareness and customer acquisition, UK fintechs have attracted significant attention in the media and as a result have raised awareness of their innovative ideas and products. From raising awareness, a majority of fintechs have gained potential investors to sign up for their products.

Moreover, due to the fact that scene continues to produce more and more start-ups by the day, it’s become increasingly hard to stand out. Therefore, offering customers the chance to become shareholders, (like Mondo and Tandem did), companies can drive customer engagement and loyalty.

Start-ups also use equity crowdfunding because it gives them control. This is because they can gain a higher valuation compared with traditional methods. According to research by Beauhurst, direct investors seem willing to accept lower equity stakes for the same investment than VCs or Angels. (Business Insider, July, 2016)

They beauty of using this approach is the diversity of investment sources. Crowdfunding offers an alternative to traditional sources of funding, which could be very beneficial if economic turbulence negatively affects VCs’ willingness to invest. Because of the Brexit, we might see more fintech start-ups turn to crowdfunding.

Read more here.

Crowdfunding : A New Era on The Cards?

Crowdfunding News Crowdfunding Finland

Two months ago, new rules* came into play which allow average people to invest in start-ups through crowdfunding sites that reward investors with equity. The new rules usher in a new era of crowdfunding that is accessible to individuals of all economic backgrounds, as mentioned by Crowdfund Insider’s Christian Catalini.

As part of the federal JOBS Act, Title III rules allows the average investor the opportunity to share in the returns of the “next big idea” as Catalini mentions in his recent article.

President Obama has said he sees it as a game-changer, these set of regulations will help all investors—regardless of income or net worth—will be able to invest in high-potential startup companies.

Title III will therefore help funding for small businesses, an essential vehicle for marketing and branding as well as a tool for building a committed user base for new ventures.

*Rules in the USA.

 

London-Based Crowdfunding Platform Goes Dutch

Seedrs Netherlands

London-based crowdfunding company Seedrs has expanded its international presence with a new office in Amsterdam. (City A.M., July 2016)

Seedrs, which does already has links elsewhere on the continent, a software development office in Portugal, and back in October it announced a new partnership with Benelux-based bank ING.

Chief executive and co-founder of Seedrs told City A.M. : “We have always had a pan-European vision for Seedrs, and the launch of our Amsterdam office brings that vision one step closer to reality.”

 

Khan Backs Twenty Crowdfunded Projects Across London

London Property Prices

The London mayor is helping to crowdfund 20 ‘citizen-led’ projects aimed at improving local communities across the capital.

The crowdfunding projects include: ‘Kitchenette Karts’ in Tower Hamlets, a healthy, sustainable fish and chip truck, ‘Old Kent Road Studios’ in Southwark, a project which aims at transforming 60 vacant garages into workshops and studios, and ‘Pengelicious’ in Bromley, a food festival. (KCW Today, July 2016).

Sadiq Khan recently mentioned that: “Our crowdfunding initiative is a chance for all Londoners to take part in the regeneration of their neighbourhoods from the grassroots up. Today I’m pledging support to an extraordinary range of local groups, for projects that will help strengthen their local communities and make London an even greater city.”

Interested in the projects? If so, check them out here.

 

5 African Crowdfunding Start-ups To Keep An Eye On

Africa Crowdfunding

Africa has seen a plethora of start-ups from all over the continent and crowdfunding has bags of potential to solve the continent’s lack of access to finance challenges.

Here (in no particular order) are five of the most innovative African crowdfunding startups to keep an eye out for.

Usizo – Bitcoin startup Bankymoon from South Africa has announced it will launch a crowdfunding platform, Usizo, that allows public schools in the continent to use blockchain technology to crowdsource utility credits.

This revolutionary concept means that anybody from around the world can make a payment directly from using their preferred crypto-currency, and help fund the energy or water needs of the school.

Realty Africa – Is the first crowdfunding platform that’s dedicated to property investments in Sub-Saharan Africa. The company was launched last year, in a nutshell, allows investors from all over the world to invest in the growth and development of the region.

Realty Africa provides investors with access to markets that have been historically out of reach, allowing them to invest amounts from US$1,000 upwards. Moreover, the platform allows communities and project developers to raise capital, without high interest payments or collateral requirements.

ABREC.FinanceUtile – Originally developed by the African Biofuel and Renewable Energy Company (ABREC) and in partnership with French crowdfunding platform FinanceUtile, is a dedicated crowdfunding platform for SMEs operating in the Sub-Saharan African renewable energy sector.

ABREC.FinanceUtile supports entrepreneurs in the renewable energy space by facilitating the transfer of know-how and technology, while also boosting access to reliable electricity generation in sub-Saharan Africa.

Lelapa Fund – Is a niche crowd investment platform dedicated to African companies (as described on their website). Investors can buy shares online in pre-vetted start-ups and small businesses whose products and services are sold on high growth consumer markets across the continent.

Thundafund – The South African start-up is one of the crowdfunding veterans on the continent, launched back in 2013, Thundafund has raised over ZAR5.7 million (US$396,000) from various crowdfunded projects.

They have recently put together work shops to educate fellow South Africans about how the crowdfunding process works.

 

What Are Your Thoughts?

Which of our chosen crowdfunding stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

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The Evolution of Buy To Let Investment

Until recently, the only builders of rental homes for low income tenants were the council, and social landlords.

Previously, those who found themselves ineligible for social housing were reliant on private landlords: low-level buy-to-let investors with accumulated property portfolios, and those simply renting out their former homes. What’s more, for those forced into private rentals with ‘amateur’ landlords, there has long been a real problem of the landlords simply failing to maintain the property, leading to unacceptable living standards for the poorest in the community.

But now, private investors are seeking to bring movement, and higher quality accommodation, to rentals for those at the bottom end of the ladder.

Not For Sale

On a small suburban estate in Salford, private investors have constructed red brick family homes, very much in keeping with thousands that families in the UK buy each year. The only difference with these ones is that they are not for sale. The investors behind them are keeping these houses for the long term.

buy to let investment

Taking their example from the thriving rental markets in both the US and Germany, investors are now taking action on the potential of buy-to-let developments as a large scale source of steady income.

A Growing Rental Market

Considering the state of the market at present, these investors seem to have tuned into a space where demand is high. Families, as we know, are finding it increasingly difficult to buy homes in the current climate of rising house prices and a dearth of wage increases.

With mortgages less accessible, and house prices laughably out of reach for many (they’ve risen 7% a year since 1980), the number of owner occupiers in the UK has dropped from 71% in 2003 to just 63% at present.

buy to let investment

Whilst critics are warning that renters will remain poorer in the long run, without the asset of a property of their own, this is, nonetheless, an opportunity that has benefits for both parties. Investors are recognising the potential for good rental yields, whilst families in need of decent rental accommodation get their wish.

They may not do better in the long run, without that property asset behind them, but renters living for the ‘now’ find themselves with more disposable income than their owner-occupier peers. With better options open to them, renters will surely enjoy better quality of life, and with that disposable income, benefits to the wider local economy may also be noticeable.

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The Rental Market Developers

One of the principal investor companies currently operating in this area is Sigma Capital, who have an impressive range of backers behind them. The creation of large, rental estates, where monthly rent also covers tenants’ utility bills and some maintenance (such as a grass cut twice a month), is part of a move to professionalise the rental business.

Countryside Properties works with Sigma as a listed housebuilder, and has so far created over 600 homes of this type, with a further 550 expected for 2017. They are targeting northern cities, such as Salford on the outskirts of the city of Manchester, where local authorities are keen to open doors to new house builds on the large banks of land they own.

buy to let investment

The majority of these homes by Sigma are set alongside other houses by Countryside Properties that are available for sale, with all being built to the same design. So there is no distinguishing between the blocks of sale versus rental properties.

Along with all the other benefits of this little housing revolution, another plus is that these new builds will relieve pressure on council house waiting lists. Oldham, for example, currently has over 11,000 people on its list, and only 3,300 of these are eligible for public housing.

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But these new developments signal a light at the end of the tunnel. The number of properties emerging (from planning to completion) has more than doubled in the last six months. According to British Property Federation figures, from 21,400 to 57,000. About 30,000 are in London.

Sigma has announced plans to construct a whopping 10,000 rented homes over the next five years, which will leave them with a £1bn portfolio.

It’s not just Sigma leading the market, however. Quintain, a London based developer, has plans for 7,000 rental homes in one single development near Wembley Arena.

Stonegate Developments in Newcastle are building 162 apartments for this purpose, whilst Placefirst, another developer, is in the process of refurbing hundreds of dilapidated homes.

Then, of course, there’s us.

When we started out, back in 2012, it was with the traditional buy to let model, from which we have evolved. We are now proud to be champions of the use of crowdfunding monies to create badly needed new homes, whilst providing excellent returns for investors.

buy to let investment

On the investor side, too, we are levelling the playing field, allowing those for whom the idea of a property investment portfolio was once out of reach, to enter the game. Our consistent, predictable returns through simple, transparent investments are suitable for all levels of investor.

Currently, we have over 100 properties being built over 7 developments in the North West, with about 180 more on the cards as we negotiate deals on buying the land. It is a philosophy of creating a more egalitarian property market, where investors can get excellent rates of return, whatever the level at which they operate, whilst tenants in buy-to-let properties get an outstanding home that they can afford.

buy to let investment

The work of The House Crowd represents part of the same matrix of philanthropic capitalism behind the work of developers like Sigma and others mentioned in this post. We are working to similar aims: a better future property market for everyone involved. And, particularly for us, with the aim of seeing our beloved Manchester, and its surrounding areas, reach its considerable potential.

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