An Introduction to Investing Through Property Crowdfunding

An Introduction to Investing Through Property Crowdfunding

Traditionally, only those with access to large amounts of capital have been able to invest in the lucrative world of property. Managing a portfolio is normally time-consuming, business, which becomes increasingly more burdensome as the investor’s portfolio becomes larger.

However, in the last few years, a new method of property investment has emerged which has effectively democratised the entire investment process, allowing more people than ever to benefit from the financial gains that property investment can offer.

Property crowdfunding sprung onto the scene in 2012, and is now worth billions of dollars a year worldwide. The value of the industry currently doubles every two months, and is set to be worth $250bn by 2020.

The growth of the property crowdfunding industry has been catalysed, in part, by the relaxation of regulations over the last few years. The Government has identified the industry as being hugely beneficial to the economy, and has also begun investing in crowdfunding itself. Institutional investment is also coming into play at an increasing rate, and high net worth investors, attracted by the simplicity of the process, and the returns available, are also investing through property crowdfunding.

But why is investing in property crowdfunding proving so popular?

Offering the chance to build a diverse portfolio without all the legwork involved in traditional property investment models, and with the opportunity for significant gains, it’s no surprise that investing in property crowdfunding has grown exponentially in the last few years.

What’s more, as interest rates on savings continue to crawl along the seabed, and returns from both rental and sales continue to rise, more and more people are waking up to crowdfunding as a simple way to grow their money.

How Does It Work?

Property crowdfunding encompasses both equity investments and debt based investment (also known as peer to peer secured lending).

The concept itself is relatively simple.

Equity investments involve a group of people pooling their cash to buy a property as shareholders through a ‘Special Purpose Vehicle’ (SPV). The SPV is a limited company, set up solely for the purchase of that property. The SPV handles all the work, fees and maintenance of the property, whilst the shareholders receive their proportion of the rental yields, and/or share of capital gains when the property is sold.

People can invest even very small sums in buying shares in the property. On some platforms, this is as low as £50, but the average is between £500 and £1000 as a minimum. You can (and should) spread your investment sum over a number of different properties across the crowdfunding platform, to mitigate risk.

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Getting started is a very quick and easy process. You simply register on your chosen website – it is an FCA requirement that only registered and accredited investors may participate, and, once registered, you simply select the properties you wish to invest in.

Debt based investments again involve pooling resources, in this instance, to make micro loans through the platform to a third party borrower. The loan as a whole is secured against the borrower’s property and the platform appoints an agent to act on behalf of lenders and take any necessary enforcement action. These types of investment are usually short term (up to 12 months, and pay a fixed rate of interest with no capital growth).

Where Did It Start?

The House Crowd is the longest-established property crowdfunding platform. It began trading in 2012 and offers both debt and equity investments. Since then, other companies have followed in their footsteps, such as Property Moose in 2013, and Property Partner and Crowdlords in 2014. The industry continues to expand, with several new platforms emerging each year.

Is It Regulated?

Property crowdfunding firms are all regulated by the Financial Conduct Authority (FCA), which ensures that platforms are managed properly, and that risks are made completely clear to investors. As with any investment, there is risk to capital – but it’s worth comparing this risk against other investment classes, and seeing how property crowdfunding stacks up.

Before investing through property crowdfunding platforms, it is very important to do your research. Every regulated platform should have the FCA authorisation number clearly visible on their website. If you can’t find these details, it’s probably best to steer clear: without this regulation they are operating illegally.

Is It The Right Choice For Me?

As with any investment, you need to take into account your personal circumstances to establish whether it is the right one for you.

You can find out more about establishing whether property crowdfunding is the right investment for you here.

Ask yourself what you wish to achieve. Investors with a lot of professional experience and access to bank funding, may find the model less appealing than those who novice.

If, on the other hand, you don’t have a deposit available, or aren’t able to get a mortgage, then investing through property crowdfunding could be an ideal way for you to access this asset class. And, given the government’s recent attacks on landlords, which has severely undermined the profitability and viability of buy-to-let investing for individual investors, it may well be that crowdfunding remains the only sensible option available for most.

Risk

The same principles that apply to other forms of property investment also apply to crowdfunding. You should be aware that capital growth profits are speculative, and investing in properties that produce a healthy cash flow is key for minimising risk.

One of the major risks associated with cash flow positive properties is that of damage or non-payment of rent. As such, you should always factor this in as an eventuality that may affect your yields. As mentioned above, however, if you have a well-diversified portfolio, with your capital spread over several properties, any losses due to one bad tenant will be more bearable than if you had all your eggs in one basket.

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At the end of the day, it all comes down to your risk tolerance. You do lose a large amount of leverage by investing through property crowdfunding, and you will only benefit proportionately from the property’s capital growth but, at the same time, having no borrowing means significantly less risk as there are no mortgage payments and no danger of the property being repossessed (as shareholders own it outright).

If making crowdfunded debt-based investment, (aka peer to peer lending) you need to know what would happen if the borrower defaults and does not repay the loan. You should ask questions about how your investment would be protected, what happens in the event of a default – how easy is it to take control of the secured property? – and how much equity is available to enable you to recover your money should the worst happen. Unless there is sufficient equity in the property, you could risk losing some or all of your money.

You should ask questions about how your investment would be protected, what happens in the event of a default – how easy is it to take control of the secured property? – and how much equity is available to enable you to recover your money should the worst happen. Unless there is sufficient equity in the property, you could risk losing some or all of your money.

If you opt for debt-based investments, your investment will be secured by a legal charge. A critical matter to consider is at what LTV the loan is made. If, for example, a loan is made at ‘75% LTV’, it means that you will be at risk of losing some of your capital if the borrower defaults, the property has to be seized, and is sold for less than 75% of its current valuation.

Debt investments are generally considered to be lower risk than equity investments, as lenders are always paid out before shareholders, however, you do not get the potential upside of capital growth.

What About If I Want Out of My Investment?

If you need a liquid asset, then property is not the best choice.

Investing through property crowdfunding facilitates liquidity to some degree as it may be easier to sell shares in a property than the whole property. However, there is never any guarantee that you will be able to find a buyer, and, fi you cannot do so, you will have to wait until the property is sold.

Some platforms will help you to find a buyer after the expiry of a minimum term, but you should check the small print before you invest. If you’re looking for a short term investment, P2P secured lending may be the better option.

To Conclude

We hope that this has offered you some valuable insight into getting started investing through property crowdfunding. Of course, you should know everything about the ins and outs of any investment before you part with your money, and we are fully committed to helping you know all you need to.

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If you have any questions, you can always get in touch with us and we will be very happy to fill you in.

Traditional Property Investment versus Property Crowdfunding

Traditional Property Investment versus Property Crowdfunding

Property crowdfunding and traditional property investment have some significant differences. The main difference is to be found in the ease of management.

Whilst those who favour traditional property investment value the sense of control associated with full ownership of a property, along with the costs and time involved in maintaining their investment, others simply do not have the time, nor the resources, to keep up with the demands of a property.

There are also additional financial implications to consider, and we will go into these in this article.

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Responsibility

Property crowdfunding eliminates many of the responsibilities involved with traditional property investment. An investor wishing to create a properly diversified portfolio of properties will invest large sums on a smaller range of properties, and will be responsible for everything from biological disruptions (by infestation of plant or animal life), to managing tenants and weathering void periods on a rental property. With a crowdfunded property investment, none of these aspects apply, as they are taken care of by a third party.

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Furthermore, the due diligence, prequalification and vetting of an investment property are all handled by the SPV (Special Purpose Vehicle), the company behind the purchase property.

If, on the other hand, you have the skills and experience necessary to avoid mistakes and handle the investment on your own, then traditional property investment is a lucrative and engaging way to grow your money. That being said, you will need substantially more money in the first place in order to make your first investment purchase, which is not something that all those wishing to invest in property have to hand.

Fees and Costs

There’s also the matter of fees. A traditional property investor will have to contend with solicitors’ fees, mortgage broker fees, loan arrangement fees, and surveyor charges, for example. With property crowdfunding, these fees are included within the overall cost required to sell the property, as listed on the crowdfunding platform’s website.

It’s also worth learning from the mistakes many property investors made ahead of the 2008 property crash. Many found that their mortgage lenders had allowed them to leverage at a rate that exceeded their affordability. The banks then revalued people’s assets, leading to a swathe of repossessions, subsequent catastrophic loss, and bankruptcies.

Checking the small print and getting legal advice when investing with the traditional property investment model is wise. Then again, none of this applies to property crowdfunding.

This is, of course, a worst-case scenario for traditional property investors. It is, nonetheless, one that still bears some weight. If mortgage rates rise, those who have invested with a mortgage may find themselves out of pocket. Buy-to-let investors should take the obvious step of making sure that their monthly rental income covers, at the very least, their mortgage repayments. However, they may also benefit from factoring in potential mortgage rate rises.

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Buy-to-let landlords have also been hit by changes in Government legislation that have removed the ability for these landlords to deduct interest from profits from their tax liability, which can prove a further obstacle to ensuring the profitability of their investment. Again, there are no such risks with property crowdfunding.

Challenges and Rewards

Whilst there are challenges involved with investing in property in the traditional manner, there are also a great many rewards. First of all, rather than earning a percentage of returns based on your initial investment sum (as with crowdfunding), once all outgoings (such as loans and legal fees, for example) have been taken into account, an outright property investor will earn a potentially much higher return.

There is, however, a downside to this. Where a traditional investor leverages a lot of cash, the risks to the investment are increased dramatically. Should the investment value fall, they could stand to lose a very significant amount. Whilst risk is, of course, not negated with property crowdfunding, no mortgage is necessary.

Selling Your Investment

Another benefit of traditional property investment is the control over when to sell the investment. If you are able to sell at a profit, and as quickly as you require, then the power resides within your hands. Property crowdfunding, on the other hand, requires a majority vote from all shareholders if you wish to sell before the end of the investment term.

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To Conclude

Property investment, whether traditional or crowdfunded, has long been a profitable investment choice. Whilst both forms of investment carry risk, there are significant pros and cons on both sides, which potential investors need to factor into their investment decision.

Weighing up which type of property investment is right for your particular needs is key to ensuring that you are confident in where you have placed your money. At the end of the day, however, whichever path to property investment you choose, there is potential for great returns.

Property News Round-up 25/10/16

Property News All The Latest Updates

 

Hi guys and welcome to our property news round-up, as usual we give you a quick snapshot of the latest goings-on in the property world. This week we start by looking at property rentals will outstrip property sales in 2017 to focusing on planning approvals in the Northern Powerhouse and London. Missed our last blog news round-ups? If so, catch up here.

 

Property Rentals Will Outstrip Property Sales in 2017

Property Money

Forecasts have suggested that 2017 might be the first year in eight decades where property rentals will outstrip property sales.

Johnny Morris, research director at Countrywide, mentioned in a recent Guardian article : “As some would-be buyers and sellers sit on their hands, Brexit-induced uncertainty has continued to boost the rental market … September saw record activity, with increasing numbers of lets agreed and tenants choosing to renew their contracts. On current trends 2017 could be the first time since the 1930s that more homes are let than sold.”

A sobering thought – homeownership levels had fallen to their lowest levels in 30 years at the start of 2016, although recent figures from mortgage lenders showed a pick-up in the number of loans taken out for house purchases, the number of homes for sale remains near a record low and prices are rising. Recent events such as Brexit uncertainty as well as a lack of supply has also contributed to the dip.

Being able to get onto the property ladder is becoming even more difficult for first time buyers with prices going up steadily.

However, that’s only the beginning.The 3% stamp duty surcharge that the government introduced back in April has led to a boom in buy-to-let purchase, the ramifications have led to a bigger amount of rental properties available to tenants.

The rental market has grown at such a rapid rate that the property industry needs to start focusing on offering the right kind of property for an array of people from millennials to retirees. Many commentators have mentioned that the industry needs to move away from traditional small portfolio landlords renting out their old home to a more professional approach offering tenants the best value and services available.

 

UK Rents Growing Fastest in Manchester

Manchester Property

Rental rates have risen by 7.1% in the north-west city over the last 12 months, as more investors turn to Manchester in search of the highest yields. (Select Property Group, October 2016)

The Northern Powerhouse city was named last year by HSBC as the city with the highest yields in the country. A recent report from Countrywide outlines that rents in the UK are now rising the fastest in Manchester.

At a national level, the rate of growth in the 12 months to September 2016 was 2.2% (last year it was at 2.8%). However,in Manchester, the rent growth rose by 7.1%, more than any other city in the UK. In addition, it’s also worth noting, of the 20 largest cities in the UK, the five which recorded the largest rental rate rises were in the north and Scotland, including York, Glasgow and Liverpool.

In contrast, the south paints a different picture, for example, London and Cambridge had the highest proportion of landlords cutting monthly rates in the last year.

Both domestic and international investors are turning to Manchester to find a property asset that can deliver a strong and sustainable income.

Johnny Morris, research director at Countrywide (who we mentioned in the previous news item) mentioned that there’s a different type of two speed rental market that’s emerging, with falling stock and growing demand driving rental growth in many northern cities at a higher rate than those in the south.

 

Reasons Why Build-To-Rent is The Future of Rented Living

build to rent

This news item links with the first – in a nutshell, a new sector and product that’s on the horizon and one that syncs very well with a tenant’s lifestyle and eliminates compromise – I’m of course referring to build-to-rent.

So why is build to rent the future of renting? Firstly, build-to-rent has been constructed with today’s end-user in mind. Ideal amenities such as gyms and communal cinema rooms in the same building. Locations in the city centre close to friends and employment hubs are ideal for the likes of millennials.

A key point about build to rent that it creates a community. Having these build-to-rent apartments slap bang in the city attracts people with similar jobs and interests, with friendships and an array of activities, tenants will want to rent for a longer period.

To simply put it, it just makes sense. Tenants want it, the government agrees with the build-to-rent idea, and investors too want a slice of the share too.

Demand for rental accommodation has increased by over 17k per month over the last decade, as more people move away from homeownership and turn to the private rented sector instead. As mentioned in the first news item, with property rentals looking to outstrip property sales next year, build-to-rent is more than likely to become the number one rental product in the UK. It’s therefore an investment opportunity that cannot be ignored.

 

A Brief Look At China’s Passion For Foreign Property

China P2P

Many real-estate agents and property experts in east Asia believe a new wave of investment is just getting under way, as mainland investors develop a taste for international real estate, including postcodes up and down the UK. (The Guardian, September 2016)

When it comes to buying property, Chinese investors look at four main motivations: investment, lifestyle, emigration and education. Many seek a foothold in the UK and hope their children will go on to study at university.

In addition, cities such as London are seen as a secure place to store money that investors want to move out of China, to guard against the devaluation of the Yuan. It’s known that people in mainland China want to get their money out. They therefore use cities such as London as a safe-haven to store their hard earned cash.

However, it’s not just London, investment is now heading north and Chinese investors and hungry to invest in the likes of Manchester and Liverpool.

Manchester for example has had a lot of interest from China when president Xi Jinping visited the city last year to lend his support to George Osborne’s “northern powerhouse” project during his first state visit to the UK.

Since 2014, Chinese investors have been rushing to buy houses in the UK, the high rental yields and stable property prices have been key driving factors.

Also, the UK is very attractive to Chinese property investors because it does not have the high duties that have been introduced in countries such as Canada and Australia for foreign buyers.

Property industry commentators argue that foreign investment from countries such as China is helping to transform urban centres around the globe, they mention that it’s the only way to finance affordable new homes in cities such as London.

They also see foreign investment beneficial for helping to create jobs, improve infrastructure, and in general making the quality of life better.

However, London mayor Sadiq Khan has warned against the capital’s homes being used “as gold bricks for investment”, and has spoken out over how some new developments are given to foreign investors before locals.

Khan mentioned back in May that he sees no point in building homes in the capital if they are bought by investors from the Middle East and Asia.

He stressed that he didn’t want homes being left empty. He emphasized that he doesn’t want London to be the world’s capital for money laundering and wants to give first dibs to people who live in the capital.

 

Northern Powerhouse Outstrips London for Planning Decisions

northern powerhouse

New research shows that local planning authorities in the Northern Powerhouse deliver 22% more planning decisions per resident than those in Greater London.

Research published by the British Property Federation and GL Hearn revealed that 25 boroughs in the Northern Powerhouse made 11 major planning application decisions per 100,000 residents in comparison to nine decisions per 100,000 residents in the Greater London area.

Melanie Leech, chief executive of the British Property Federation, said: ‘It is really encouraging to see the North live up to its ‘powerhouse’ moniker, and to be powering ahead with its development pipeline. The development industry has an important part to play in ensuring growth across the country, and it is good to see that there is lots of activity in the North West. (LocalGov, October 2016)

What Are Your Thoughts?

Which of our chosen property 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.

 

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5 Ways To Find The Best Property Investment Areas

Whether you’re buying a property investment in the rental sector, or to sell on within the residential sales market, you’ll be looking to get the best return on your investment. So how do you go about ascertaining the best property investment areas to target?

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We take a look at the top five factors to consider before investing in property, and the questions you ought to be asking yourself to ensure you’re looking in the best property investment areas for your money.

  1. Local Trends

  • What are the current cost trends in the region?

  • Are housing prices here rising quicker than other regions?

  • What is the average cost within other neighbouring towns, and how does your town compare?

It’s worth starting with a broad area you’re hoping to target, and zoning in from there on the best property investment areas to focus on.

  1. Indications of Growth

  • What new infrastructure developments are being constructed in the area (schools, transport networks, shopping areas)?

  • What industrial growth is going on (businesses putting down roots, new job opportunities)?

  • What residential regeneration projects might you be able to get in on?

Spend some time in your desired area, and do plenty of research into what’s going on at ground level. Where there are concrete signs of development for the future, there is opportunity, as potential buyers (or tenants) flood to the area for work and leisure.

  1. Tax Implications

  • What is the tax charge likely to be?

  • How are property taxes likely to increase in the near future?

It’s a good idea to have a chat with a local tax assessor, and gain some trustworthy advice from a tax expert. Find out about tax structures, and any that will specifically apply to your area.

  1. Schooling

  • What are the OFSTED reports of local schools?

  • What do the GCSE and A Level results look like of catchment area secondary schools?

  • What family demographics dominate your desired area?

Any families looking to buy (or rent) a property are very driven towards areas in catchment for the best schools. In many cases, good catchment areas are reflected in the house prices in the area. Schools are a key factor that indicate the best property investment areas to focus on. Don’t underestimate the value that parents place on where their children will be educated.

  1. Outlying Regions to Cities and Towns

  • What are the transport networks like from outlying towns and villages into the main city/town?

  • Where are the job opportunities for those likely to buy in your desired area?

Whilst prices will be high, and supply low, within cities and affluent towns, some of the smaller towns and villages in the outskirts can be particularly desirable.

Rural areas where public transport is less freely available are actually more desirable for many buyers, where village schools are often well-appointed, and space and scenery make a pleasant contrast from working in the city, are very desirable. Such rural regions are very likely to see high value rises over time.

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Understanding the market will help you identify the best property investment areas to target.

These five factors to consider are perhaps the best ones to implement if you’re hoping to generate an income from investment in property. As always, it’s best to do as much research as possible, and to seek as much expert advice as you can.


 

UK Property Market Growth Slows

… but prices continue to rise!

The latest Hometrack UK Cities Index has shown that the annual rate of house price growth in twenty of the UK’s largest cities slowed to 8.2% in August 2016. In July, growth had been at 9.5%. The average house price in the UK, as a result, was £239,400. Prices are still rising, but just not as fast at the moment.

Why Is the UK Housing Market Slowing?

People are finding it increasingly difficult to buy a home whilst the UK housing market continues to inflate quicker than earnings, particularly in the south, where many potential buyers are finding themselves completely priced out of the market. This fact is what is probably most of the reason for the slowdown in house price growth over the last couple of months.

There’s also the factor of the shock outcome of the EU Referendum, which gave lots of potential buyers reason to pause for thought. And, of course, is also in part due to the recent interest rate cut by the Bank of England.

So What’s the Good News?

Nonetheless, these disruptions to the UK housing market don’t seem to have had a lasting effect, and we’re seeing the market begin to settle down again now. This is good news that suggests an underlying strength within the residential UK housing market, which will hopefully see us optimistically into the long term.

What Does this Mean for Investors in the UK Property Market?

There is still a massive imbalance between supply and demand of properties on the market. This goes some way to explaining the continuing growth of the rental sector, and why property investors are increasingly leaning towards buy-to-let investment, including HMOs, as their investment of choice.

If residential property as an investment is still on your radar, however, then it’s still a good time to buy. There are signs that house prices are going to continue to rise, and getting in whilst there’s a chance you can afford to could pay in the longer term.

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For investors in the property market wishing to take the sensible route of diversifying their portfolio, record low interest rates make the potentially higher returns of equity crowdfunding and P2P lending for Real Estate an appetising option.

So choose your weapon… all signs point to a continually promising future for the UK property market.

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Property News Round-up 22/9/16

Property News All The Latest Updates

 

Hi guys and welcome to our September property news round-up. As usual, we will be taking a look at the latest goings-on in the UK property market with five short stories. Today, we start our property news round-up by looking at the new housing minister’s views on ‘build to rent’ to focusing on the amount of rent that millennials will spend before they are 30. Missed our previous blog entries? If so, feel free to catch up here.

New Housing Minister Backs Build To Rent

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Housing minister Gavin Barwell backed the build to rent sector in his first speech since being appointed.

His first speech took place at Property Week’s RESI 2016 conference in Newport and a key takeaway was Mr. Barwell stressing to delegates that there is a need to build more homes of every single type and not focus on one single tenure.

Barwell, who is also the minister for London, said that a growing number of people and families are now preferring to rent, so the build to rent sector will therefore play an important role in providing for changing attitudes.

The recently elected housing minister concluded that in the UK we need to have a thriving private rented sector in place.

He praised Essential Living’s Vantage Point scheme in Archway, north London, the office conversion which has 118 homes has opened for lettings. The housing minister said this was a much needed start for the sector.

 

Manchester Property Prices Continued To Grow in August

Manchester Property

Reeds Rains and Your Move, released their monthly house price index a few weeks ago, and recorded an increase in both prices and transactions for August.

According to their research, the average house price in the north west had risen to £178,423, up from £178,089 in July.

Other commentators mentioned that the UK housing market is settling down from June’s Brexit vote and confidence has emerged from the Bank of England cutting interest rates.

Transactions across the country were also up, rising by 2.6 pc on the previous month, with over 70,000 sales going through.

 

Manchester and Liverpool Join Forces For Global Property Expo

Liverpool Property

Manchester and Liverpool will join forces to sell the region to a global audience of investors in October.

Both will send a combined delegation to London for MIPIM UK (the UK’s largest property and investment expo).

Filippo Rean, director of MIPIM UK organiser Reed MIDEM’s real estate division told the Liverpool Echo : Manchester, Liverpool and Leeds provide incredible investment opportunities and their presence at MIPIM UK will provide investors with a unique opportunity to see what these northern giants have to offer.

Mr. Rean added : “As the largest event for real estate in the country, we offer incredible opportunities for investors, developers and representatives from city regions across the UK.”

 

UK Property Remains The Highest Yielding Investment

Property Money

Despite the uncertainties of the Brexit vote, investors are choosing to invest in property, including investing in sectors such build to rent.

So why have these investors chosen property? The main reason is that they can outperform the likes of government bonds and stocks and shares.

There are still quite a few investors out there who remain very cautious about the ramifications of life outside of the European Union, however, there are many investors out there who feel confident that investing property in the current climate is an opportunity.

Quite a few European based investors have now started to take an interest due to the fall of the pound. The North West in particular has become even more attractive because of this reason, and investors are hungry to invest into a very appetising region.

If this is a topic that interests you we recommend reading our “Is Property Investment Really Better Than Pensions?” blog post and also “Why The UK Rental Market Is Surging“.

 

Millennials Will Spend £53,000 on Rent Before Age of 30

Millennials

A combination of falling homeownership levels and the rising cost of renting meant that people born between 1981 and 2000 would pay £53,000 in rent before their 30th birthday (Guardian, July 2016)

The Resolution Foundation mentioned in The Guardian article that this country’s housing crisis is one of the most visible examples of inequality between the generations.

Our very own research from last October found that a quarter of under 30’s say they need someone to die before they can afford to buy a property.

In addition, 36% of those surveyed said they felt they’d have to rent forever.

So while young people are spending more of their hard earned income on rent and finding it harder to save for a deposit, the baby boomer generation are the most likely to be landlords and benefit from the strong rental market, according to The Resolution Foundation.

However, it has been highlighted that the older generations are just as concerned about Generation Y’s struggle to own their home, and support for housebuilding is growing across a variety of age groups.

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What Are Your Thoughts?

Which of our chosen property 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 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.

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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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Property News Round-up 16/12/15

Property News – All The Latest Updates

Hi guys and welcome to another fortnightly edition of our property news round-up. As usual we take a look at an array of stories from the property industry, today we look at Yorkshire and the Northern Powerhouse to looking at some Christmas decorated homes (just don’t let Dave come round and put your decorations up – you’ll see why!), if you’ve been extremely busy like ourselves, they’ll hopefully give you some inspiration for when you do finally get round to putting your Christmas lights up!

 

Yorkshire Earns Its Place In The Northern Powerhouse

yorkshire northern powerhouse

In the past year the north of England has had a 30 per cent increase in construction and whilst Manchester and both Liverpool dominate, Yorkshire and Humberside are catching up with their north western rivals.

George Osborne’s Northern Powerhouse vision to give major northern cities their very own powers when it comes to planning, housing, transport, and policing, deals have already been discussed and agreed upon for Greater Manchester, Sheffield, and the North East.

However, when it comes to property, many analysts have stated that Yorkshire property growth is linked to simply supplying the housing that people want. Government schemes such as Help To Buy is one major factor that is helping to flourish “Gods Own County” when it comes to property, particularly for families who are starting out.

The county has definitely attracted people from the south, particularly from the capital, end of the day it’s no secret that you get more for your money up north compared with what you would get in the south. As the Examiner mention, the cash you part with for a two-bedroom flat in west London would get you a 10 bedroom, Grade II listed, detached house with three acres of land in Lindley, Huddersfield.

In addition, the vibrant and beautiful Yorkshire countryside and huge investment opportunities in retail, technology, and research plus its rich culture (which we mentioned about in a previous blog post).

With all these factors you can see why Yorkshire has become a crowded marketplace as it continues to compete with Manchester and Liverpool and this one reason why we have had quite a few projects in the region. If you are interested in Yorkshire, feel free to download our South Yorkshire guide.

 

Top Of The League – Manchester A Top Choice For Investors

manchester investment

Since 2010 no other place in the country has generated higher yields for property investors than the north-west city. (Select Property, December 2015).

Investors have gained annual average returns of 6.02%, compared to just 4.79% in London according to data which was generated from lending firm LendInvest.

2015 has been a great year for the city as it has cemented its place as the Northern Powerhouse leader to being named as the UK’s number one city for property investment by HSBC.

Last month a survey which was conducted by accounting firm RSM found that the north-west is the second highest UK region for overseas investment. With a vast amount of investment being poured into the Northern Powerhouse leader as well as having a huge demand for rented spaces, investors have been quick to snap up assets in the city ahead of a predicted growth curve.

 

Is The London Property Market Going To Crash?

London Property Crash

So what’s happening in the capital? To cut a long story short there’s simply too much supply and not enough demand. According to The Independent,  in the last financial quarter alone, 6,000 new apartments were finished, each costing more than £600,000. Currently there are 41,000 homes and flats under construction or being topped out in London priced at north of £1m.

People without children want to live in apartments, these include the  first buyers, buy-to-let investors, and people who’s main home is not in the capital. First-time buyers are therefore being prices out as they simply can’t afford a mortgage or afford to pay a deposit on a house.

In addition, foreign purchases from wealthy Russians and Chinese buyers has started to trickle. Vladimir Putin has put a crackdown on Russian citizens that hold cash overseas meaning that there has been less Russian buyers in London recently. Moving further east, China is also having a corruption purge as mentioned in The Independent.

So what does this all mean for the London property market? According to one property expert, it will take just one single developer not to sell, won’t be able to cover costs, and that’s when the crack will start to happen. He mentions that will be enough to send shockwaves through the market, and bring prices crashing down.

Are you looking for an alternative? If so, we recommend reading our crowdfunding process page to see if property crowdfunding is right for you.

 

Average Property Price Increases to £20,000 in 2015

stamp duty

Figures from Rightmove show that the average selling price for a home in December was £289,452, an increase of around £20,000 from the average house price a year ago. (Which, December, 2015).

The property portal mentioned that the seasonal 1.1% dip in property prices this month is the lowest December fall they have seen since 2006.

They have predicted that prices will reach new records next year and expects new seller asking prices to rise by 6% as the demand in excess of suitable supply continues.

As a result of prices remaining high in London, highly-skilled workers may look for other options and move to more affordable cities such as Manchester, Edinburgh, Cardiff and Leeds.

 

Decorated Christmas Homes – Let it Glow Let it Glow Let it Glow!

christmas lights UK

If you’re like me and leave your Christmas decorations to the last minute and if you are a big fan of Christmas lights you might want to take a look at some of the most Christmas decorated homes in the UK.

If you’re looking at decking up your front with fairy lights we think the 9th example is quite a good one to go for. If you like to go nuts with your lights and Christmas decorations how about the first example?

We’d love to see your creativity, feel free to tweet us your decorated home @TheHouseCrowd.

I hope you can do a better job than me! This is what it would look like if I was left in charge…

christmas decoration fail

 

Image Sources : Telegraph Heavy

 

What Are Your Thoughts?

Which of our chosen property 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

 

Property values can fall. Your capital may be at risk & returns may vary. Read our Risk Warning.

Property Still Holds Value Post Brexit

Following the EU referendum vote in late June, there has been a lot of uncertainty in the industry from homeowners, landlords, and housebuilders, all questioning what the future holds for the property market.

Examples such as a £40,000 price reduction in average prices in the capital have set alarm bells ringing.

However, in spite of these uncertainties, some good news is that the regional property market is looking up.

A lot has happened this year, not only with the result to leave Europe, but also in terms of legislation. We’ve seen changes to stamp duty on buy-to-let purchases, as well as changes to rules on multiple occupancy, both of which had an impact on local property markets.

The ramifications of George Osborne’s legislation, as expected, was a significant drop in the number of investors registering to purchase buy-to-let properties.

Moreover, whilst general applicant/buyer registration and property viewings also declined slightly, the number of offers being made were actually up, and sales were also on the up.

Turning our attention to our local area, predicted house price growth in Manchester for 2016-20 stands at 24.6% and rental income for the period is expected to rise by 22.8% (stats taken from MEN)

Examples (which we have recently blogged about) such as Moorfields and Glenbrook’s £40 million residential development and Yo! Homes luxury flats are not only exciting projects, but are are an essential part of the city’s residential strategy to deliver additional, high quality housing.
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So what does this mean for investors?

Firstly, because of the shortage of homes across the length and breadth of the UK, there is little alternative to continuing to invest in residential developments. Doing so will keep the residential property market strong.

In addition, Manchester has been identified as the top city for rental yields. According to LendInvest’s research, the average rental yield in Manchester reached 6.8% between 2010 and 2016.

Research from HSBC, conducted last year, showed that the northern city offered the best yields, with 26% of the population here living within the private rented sector.

Despite the uncertainty of the Brexit vote, the ramifications of leaving the EU could create opportunities for investors, particularly those who are experienced with property investing. Potential property buyers might be put off by the softening of recent house prices, but at the end of the day, they still need somewhere to live, which is great news if you’re a landlord. If property prices do cool – it’s fair to say that investing in property will be very tempting.

So to sum it up, property still holds value post Brexit. Bricks and mortar remain one of the stronger investment choices, as volatility in the stock market means that tangible assets at this moment in time are essential for any investor’s portfolio.

As quite a few commentators have mentioned, a lot of the media focus has been on the ramifications of Brexit vote in London and the South East. However, we strongly believe that the north is a strong alternative with entry prices significantly lower compared with the capital, as well a great place to obtain yields from the likes of student rented accommodation.

In the north we trust!

 
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Property News Round-up 3/8/16

Property News All The Latest Updates

 

Hi guys and welcome to our first property news blog of the month! As usual, we will be taking a look at the latest goings-on in the UK property market with five short stories. Today, we start our property news round-up by looking at Generation Y and their renting habits to focusing on Aegon’s research on homeowners and pensions. Missed our last round-up? If so, catch up here.

Millennials Like The Flexibility & Freedom of Renting

Millennials Property

Recently, a study confirmed something that most 18 to 30-year-olds already know: they can’t buy houses and also something we are familiar here at The House crowd from conducting our own research. As The Independent’s Thea De Gallier points out : “Millennials are abandoning their dreams of home ownership,” declared a damning report that revealed home ownership in the UK has fallen to 63.8 per cent (for context, it was 70.8 per cent in 2003).”

So why is it so hard for millennials like myself to become a property owner? Firstly, the average house price in this country is just over £200,000, (almost 10 times the average wage!) Secondly other regions are playing catch-up with London’s astronomical prices which has left us no choice but to rent.

But is renting necessarily a bad thing? Today, Generation Y are known for their fast paced life style and are constantly on the move, renting is surely ideal for them.

Research can back this claim up, for example, Deloitte found out that 44 per cent of millennials want to leave their current jobs in the next two years, in addition, Econsultancy found that 69 per cent of all graduates thought freelancing was a more attractive option than long-term employment. (Stats taken from The Independent)

On the other side of the Atlantic, many commentators have mentioned that millennials simply don’t want to own a property. One source in particular views that millennials are “[thinking] differently about what it means to “own” something”.

I totally agree with the commentator as we are currently living in a sharing economy. Moreover, I completely side with De Gallier’s points in her article that we need a similar renting cap that is used in European cities such as Berlin. It’s fair to say the current system isn’t working for us even though some of us like to rent. We definitely need to seek alternatives – the likes of property crowdfunding could be one of those methods, which you can read more about here.

Why Are Fewer People Purchasing Properties in Greater Manchester?

Property News North West

BBC News reported yesterday that home ownership has fallen more sharply in Greater Manchester than anywhere else in England.

The biggest question on everyone’s lips is why? Financial Analyst Louise Cooper says the issue stems from house cost to wage ratios. She told the BBC that : “The average house price in England in 1986 was £38,000, today it is £226,000,” she said. “Over the same period the average salary has gone up two and half times.”

She adds : “The price of property compared to salaries has gone up hugely. Everyone says it is a London problem. It is not. Manchester is one of the worst.”

Our very own Frazer Fearnhead mentions in the BBC article that Manchester has a large student population and young professionals in the city prefer to rent.

Frazer believes that the Greater Manchester area mirrors the rest of the UK in the fact there are not enough houses being built, fuelling a demand that pushes up prices.

Read more on the issue here.

 

Investors Pull £1.4bn From UK Property Funds in Brexit Month

Brexit

Retail investors withdrew £1.4bn from property funds in June, 6 per cent of the sector’s assets, as the Brexit vote sparked an exodus that forced some of the largest funds to halt trading. (FT.com, August, 2016)

Following to the leave the EU in late June, led to many moving money out of property funds which forced Standard Life’s UK Real Estate fund to suspend redemptions in early July.

Others followed suit, such as Aviva, M&G, Columbia Threadneedle, Henderson and Canada Life.

Senior analyst at the retail investment broker Hargreaves Lansdown, Laith Khalaf, told the FT : “The scale of the exodus from investment funds in June is quite extraordinary, with the Brexit vote eclipsing the financial crisis in terms of putting the frighteners on retail investors in the short term.”

At present, around £15bn of investors’ money remains trapped in suspended funds that lack enough liquid assets to meet redemption requests.

 

UK Construction Crashes At Fastest Pace Since Financial Crisis

UK Construction

Construction output in June has fallen at its fastest pace since the dark days of the financial crisis in 2009 according to a survey by Markit and the Chartered Institute of Procurement and Supply (Cips).

Purchasing Managers Index figures indicate that Slower demand has lead to a drop in purchasing activity for the first time in just over three years. The index dropped from 51.2 in May to 46.0 in June, with anything below 50 indicating a contraction, as The Independent’s Ben Chapman reports.

Despite having record house prices, it was revealed that the weakest performing sector was residential construction. In addition, commercial building work was also weak, as new projects did not start to replace those that were coming to completion.

The EU referendum has been linked to the slowdown as there are still many uncertainties. Senior economist at Markit, Tim Moore told The Independent : “Widespread delays to investment decisions and housing market jitters saw the UK construction sector experience its worst month for seven years in June.”

However, David Noble, chief executive officer at Cips mentioned that the only glimmer of light through the brickwork is the rate of decline was not as sharp as that experienced during the previous financial crisis.

A spokesperson for Home Builders Federation said recent figures should not be viewed in isolation and that long term trends for the sector were good.

 

Little Appetite For Using Property As Pension As Research Shows

Property News Landlords

Research conducted by Aegon revealed that majority of homeowners do not want to use their property wealth to fund retirement.

Their study showed 74% of homeowners would only use their home as a “last resort” to provide a retirement income or do not consider their home as a source of retirement income at all. (Professional Adviser, August, 2016)

Moreover, Aegon found out that more than half of the research respondents want to leave their home to their loved ones.

Only 3% of those surveyed said that they would sell their property and move in with family as a means of funding retirement. 21% of homeowners are hoping they can fall back on inheritance to assist them with their retirement plans.

 

What Are Your Thoughts?

Which of our chosen property 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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