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 started to take off 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 typical minimum is between £500 and £1000. One of the advantages of property crowdfunding is that you can spread your available capital 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, you should steer clear as they are not operating legally.

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 novices.

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 the more sensible approach.

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.

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, if 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 nature of managing the investment.

Whilst those who favour traditional property investment value the sense of control associated with full ownership of a property, there are significant costs and time commitments involved in maintaining their investment, Property crowdfunding on the other hand is to a very large extent a passive investment with thord parties managing everything on your behalf. So if you do not have the time, nor the resources, to keep up with the demands of building a property portfolio it can be a very attractive option.

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.

Find out more by registering here.

Furthermore, the due diligence, prequalification and vetting of an investment property are all handled by the SPV (Special Purpose Vehicle), the company behind the purchased 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 will probably be a lucrative 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.

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 by at least 130% and should factor in potential mortgage rate rises.

Find out more about our current property investment options.

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, which usually buys properties for cash with no or minimal borrowing.

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 could 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 is in your hands. Property crowdfunding, on the other hand, usually 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 to place your money. At the end of the day, however, whichever path to property investment you choose, there is potential for great returns.

Property Crowdfunding: Is It The Right Investment For Me?

Property Crowdfunding: Is It The Right Investment For Me?

Property crowdfunding is becoming an ever-more popular way for people to invest in property, often with significantly less money than investing the traditional way. However, before you jump in, it’s a good idea to assess whether this is the right investment choice for you and your circumstances.

You can view our current property investment options here.

What Do You Want To Achieve?

The first question to ask yourself when considering property crowdfunding is what you wish to achieve from your investment.

If you are looking for an investment that requires less ongoing attention than owning a property for either development or rental, or you personally have more faith in the property market than the stock market, then it could be right for you. Nonetheless, plenty of investors in property welcome the sense of control that owning a property outright brings.

Though there is more additional financial outlay involved in the purchase and maintenance of a property owned this way, some people would rather be involved in all aspects of their investment than leave it to another party.

You can find out more by registering here.

What Experience in Property Investment Do You Have?

This follows on to the second question you need to ask. How experienced are you as a property investor?

If you’ve been a full-time, outright property investor for some time, and have access to the bank funding required to own and develop a property yourself, then property crowdfunding may be less appealing.

For those who know how the market works, and perhaps already have all the necessary contacts they need for the properties they invest in, benefitting from more of the profits (after paying off loans), as opposed to their share percentage, may be a more attractive investment option.

If none of this applies to you, then you could be the sort of person who would benefit from property crowdfunding, depending your circumstances.

What Are Your Circumstances?

For novice or less experienced investors, or those who have less access to bank funding, then property crowdfunding can offer an opportunity to invest in property that is unavailable through other means. For those who are interested in the prospect of weathering the risks of property investment, rather than earning scarcely any interest on their savings accounts, again, property crowdfunding may offer an alternative path.

Whenever you consider an investment, whichever form this may take, you need to ensure that you are covered in the event that the investment takes a turn for the worst. You should only ever invest what you can afford, so make sure your calculations are correct, and you won’t cause yourself financial harm if, for any reason, the value of your investment falls.

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To Conclude

As a final note, if you decide to invest in property crowdfunding, there is further investigation to be undertaken. You will need to choose the right crowdfunding platform. It is very important to do your research, and to only settle on the platform that meets all your needs and requirements. Make sure they are regulated by the FCA, that they have a good reputation, and that their customer service and complaints procedures meet your standards.

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Entrusting your money with any investment vehicle is a decision that should never be made lightly. Ensuring that you are confident with all aspects of the investment is crucial, including the issue of risk. Property crowdfunding is no different to most other investment types, in that there is always a risk of loss. Knowing everything you can, and choosing the right investment for you, is the key to investing happily, smartly, and – hopefully – profitably.

 

Our Track Record For Rental Properties

Our Assured Rental Portfolio: Statistics For The Last 12 Months

The House Crowd started off in March 2012 buying small terraced houses for around £50,000. As our database grew, it became easier to raise funds and the company has evolved to financing multi-million-pound developments; however, the familiarity of the original buy to let concept, is still popular with many of our developers.

We found during our first four years that renting at the low end of the market is met with some difficulties. Despite our best intentions to provide good quality homes for people, with the expectation they would respect and look after the property, in too many cases (around 20%) non-payment of rent and damage to the property, were undermining the returns we could pay. Our plan was to find a way to satisfy the demand for this type of property, whilst delivering predictable and consistent returns for our investors.

And, I am pleased to say that we found a solution that has proven to work very well in delivering both exceptionally high gross yields and net returns.

That solution is our Assured Rental Product.

We launched our first one in January 2016 and over the course of 2016 purchased 16 more. They have all performed exactly as detailed in our financial forecasts for each project and delivered an average of 9.2% gross yield and 5.6% net return to investors after all costs, fees and corporation tax. This should make it ideal for those who want a long-term, income-producing investment backed by bricks and mortar.

The only real disadvantage to these investments is that the criteria of the corporate tenant we work can be very precise. It is time-consuming to find and convert properties according to their specifications and therefore we pay a premium for that.

The properties are treated and valued by surveyors as commercial properties. This means to achieve an uplift on a sale in the future, it will probably be necessary to sell the property to an investor, which undoubtedly limits the exit market; however, we believe high yielding properties with assured rental agreements in place will be attractive to many prospective investor purchasers.

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

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

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

2017 Property Market Forecast

Is Buy to Let Dead?

The buy to let market in the UK really gained traction in 1996, with the opening of the mortgage market. This made property investment accessible to millions who had been previously prevented from seeking better returns through property, as opposed to the pitiful rates provided by their institutional pensions.

It proved immensely popular, and many people found the idea of property as a way to provide a retirement income preferable to putting their money in a traditional pension. However, over the last two years, these people have been ruthlessly stabbed in the back by the government who have crippled the ability of small landlords to make any sort of profit.

Not only has there been an increasing amount of red tape and financial burden placed upon landlords in recent years, but George Osbourne saw fit to increase stamp duty and, in an astonishingly cynical move, he decreed that landlords should be treated differently than every other type of UK business and would not be able to offset loan interest payments against revenue.

What this means for the large majority of landlords who have mortgages and do not operate under a limited company structure, is that they will incur heavy losses and could potentially be forced into bankruptcy, as their increased tax bill exceeds their rental income. What’s worse is that research indicates only a small percentage of landlords are aware of this cataclysmic change and the effect it will have.

It seems clear to me that the traditional way of investing in buy to let property that has thrived over the last 20 years is, as far as most people are concerned, no longer an option. Property, however, is destined to remain the nation’s favourite asset class but the types of property, and the way people invest in it need to change.

We, at The House Crowd, find the Government’s attack on, and lack of concern for small landlords, utterly reprehensible, but fortunately, we are in a position to help. Crowdfunding and peer to peer secured lending, have emerged as very popular ways people can build their wealth through property. Given the legal and tax changes, they now seem set to replace traditional buy to let as the best and perhaps the only way, ordinary investors can still benefit from direct property investment.

If you want a longer-term investment, secured with the ownership of real bricks and mortar, we have a steady stream of properties with assured rental – thus removing many of the risks and variables associated with property investment. These properties also produce a very decent return – a gross yield of 9.5% which should produce a net return to investors of at least 5.5% after all fees and costs. Investors will also benefit from any capital growth on sale.

So whilst buy to let may not be completely dead, it will really only be viable, after April 2017, when the tax changes take effect, via a company structure and payment of large deposits or through crowdfunding platforms.

What Will Replace Buy to Let?

Buy to let may have been killed off but the PRS (Private Rental Sector) has grown apace over the last few years, with property funds and other institutional investors pouring money into the sector. PRS, for those unfamiliar with the term, generally refers to purpose built blocks owned by institutions – generally with a high standard of communal facilities designed to attract and keep tenants long term.

The government is also now throwing its support behind PRS and the build-to-rent sector with large urban developments being financed by institutional funds and managed by large companies to cater for Generation Rent. For example, the government has announced that £45 million of its new £3 billion Home Building Fund will go towards kick-starting a deal involving 2,000 new build-to-rent homes. This includes 995 new purpose built units in Manchester, currently the city with the UK’s highest yields. Combined with the recent attacks on buy to let, it is likely that this will consolidate build-to-rent as the future of rented living and property investment in Britain.

Given the scale of the developments, and the money required to finance them, it is clearly not something readily accessible to individual investors. And, here again, is where crowdfunding comes into its own.

The House Crowd is ideally placed to help those people who are seeking a lower risk, longer term investment with build-to-rent. We are currently financing the building of over 100 units in the Manchester area and, whilst most have been built to sell, we will be introducing build-to-rent developments shortly with the intention of providing our investors with the ability to earn a steady annual return with the upside of long-term capital growth. Being a part owner of larger developments will also help mitigate risk.

We are, in effect, giving the individual investor, the opportunity to benefit from the growth of the build-to-rent sector and earn returns on par with institutional investors.

Best Places to Invest In 2017

It will come as no surprise to learn that I think Greater Manchester is the best place to invest, and I am not the only one, as many pieces of research forecast the same.

It’s not difficult to see why – Manchester offers the ideal combination of high yields and decent capital growth, something that London cannot. Predictions are that rents will increase by 5% in 2017, with capital appreciation to reach 4-5%.

The city has benefited from successive governments’ attempts to invest more money outside of London. Thousands of overseas students now come to Manchester each year, and it has fast established itself as an international talent pool with a booming rental population.

Manchester’s reputation as a property hotspot was recently reaffirmed by research from Lambert Smith Hampton, which revealed that 68% of property investors see it as the best place to invest.

I also see Stockport, in Greater Manchester, as a particularly strong area and think it should be at the top of the list for any investor hoping to achieve strong, consistent returns through property. Seven miles south-east of Manchester city centre and eight miles from Manchester Airport, the commuter town boasts direct rail services to Manchester, Liverpool, Birmingham and London. With a £42 million transport interchange under construction and £1 billion being invested across retail, residential and commercial sectors over the next five years, Stockport is establishing itself as a regional business hub.

Over the past year, property prices in Stockport have increased by 15.9%, and 1,100 new homes will be built over the next five years to cope with increasing demand. Properties in the area offer investors strong, consistent yields – a safer bet than relying on speculative capital growth.

http://www.manchestereveningnews.co.uk/news/local-news/timetable-1bn-regeneration-stockport-revealed-12292326

Reasons to Invest With The House Crowd in 2017

  • Specialists in Greater Manchester property – forecast by many experts to be the best area to invest
  • We offer traditional high yielding properties with assured rental
  • With over 100 new build properties either completed or in development, we are committed (in our own small way) to helping build the houses Britain needs
  • We are ideally placed to capitalise on both build to sell and the build to rent sector – which, backed by the government, is believed to be the future of the rental market
  • We enable access to individuals to participate in large scale developments investments with security and returns on par with those institutional funds receive
  • Choice: we offer
    • Short-term fixed-rate debt investments for those who want high returns and liquidity,
    • Longer term equity investments where investors share in both income and capital growth
  • No borrowing on property purchases means lower level of risk and less vulnerability to fluctuations in interest rates
  • Crowdfunding provides perhaps the only viable option for most people to continue to invest in property

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The UK Housing Crisis: Supply and Demand

The UK Housing Crisis: Supply and Demand

2016 has been full of shaky times for the UK property market. However, there have been no actual signs of prices dropping, despite the Brexit naysayers’ warnings. Negative headlines about the UK housing crisis are still milling about, but there is one aspect of the property market in particular which is promising to keep the market afloat. That aspect is the continuing lack of supply.

The lack of properties for sale has helped to support the market, and to push prices higher. That’s before we even take the undersupply of newbuilds into consideration. This undersupply has been going on for decades, whilst successive governments have sought to garner good feeling among voters with artificial support of property prices. There is no end to this situation in sight at the moment.

There was a small fall in prices after the Brexit vote, reigniting hysteria over the UK housing crisis. Nonetheless, the UK continues to be a popular target for overseas investors, indeed, there was a surge in overseas interest following the referendum result. Indeed, looking at the state of the pound at present, it’s clear as to why we are gaining attention from overseas.

Along with the lack of supply, we are seeing a growing state of pent-up demand for property in the UK. A scarcity of properties, combined with high competition between buyers, is a recipe for further property price inflation. This, too, will affect the rental market, as more households find themselves priced out of the purchase market than is already the case.

UK Housing Crisis Affects Rental Market

Higher demand for rental accommodation, combined with a reluctance of investors to approach buy-to-let following the stamp duty hikes and other attacks on landlords in 2016, may push rent higher. Great news for investors, and build-to-let in particular; not such good news for tenants – those who feel the brunt of the UK housing crisis hardest.

The answer is new builds. However, we are struggling to meet demand in this area too. Currently, 200,000 new properties are required per year, and we are still falling desperately short of that. The population is growing, and everybody needs to live somewhere. Something, clearly, has got to give.

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Could Property Crowdfunding Help the UK Housing Crisis?

Property crowdfunding may offer a partial solution to this conundrum. Pooled funds being pumped into development of properties, particularly in areas like the in-demand North West, alleviates the buy-to-let problems that outright-ownership landlords are facing, as everything is managed through the SPV (Special Purpose Vehicle) in which the shareholders’ funds are invested.

Though property prices and rent will not be directly lowered by these developments, it may alleviate a small portion of the supply shortage. After all, every little helps.

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Government Promises Investment in UK Property Development

Good News as Government Promises Heavy Investment in UK Property Development

The UK Government has recently announced plans to invest billions of pounds into the creation of new residential UK property development.

UK Property Finance, one of the UK’s leading Development Finance firms, is understandably excited by the news:

“With the Treasury itself providing serious financial support for those in the property development sector,” they state. “It seems that the disconcerting issue of the lack of affordable housing across the UK is finally being taken seriously by those in power.”

The investment plan is expected to assist in the creation of 225,000 new homes across the country, with at least 15,000 anticipated to be ready and habitable by 2020. There’ll be, it seems, a £3bn injection to the Home Builders’ fund, with a further £2bn going directly to residential property developments on public land.

Insufficient Funds for UK Property Development?

However, despite this news, there are plenty of voices in the property development sector who don’t believe the figures to be sufficient to overcome the extent of the housing crisis.

“Although the amount of suggested investment is significant,” UK Property Finance goes on to say. “It still seems to fall short.”

Whilst these steps by the Government are, of course, a step in the right direction, the extent of development simply does not match the volume of population expansion. This is particularly the case for affordable housing, as increasing numbers of people are priced out of the property purchase market altogether.

Without sufficient Government backing, some affordable financial backing tailored to the needs of each development is necessary.

Enter Property Crowdfunding!

Property crowdfunding and peer-to-peer secured lending may just be the answer. Allowing investors to build a diverse portfolio of property investments across a range of property types, as well as smaller financial input requirements, the alternative finance sector is promising. A more diverse variety of investors, from high net worth to private individuals can get together to fund development projects that will help towards providing some of that much needed new housing stock.

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Despite numerous setbacks, from Brexit to tightening on mortgage lending, the UK property market seems to be remaining buoyant, with optimistic reports for the future.

The property crowdfunding and peer-to-peer secured lending market is one of the major players making a significant difference in keeping the property market moving in the UK. It’s this kind of innovation, as well as the perseverance in the face of challenging times, that is key to building a successful future for the UK property market, and the economy at large.

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The Future of Property Demand in the UK

Sheree Foy, founder of Source Harrogate, has told the Yorkshire Post her predictions for the future of property demand in the UK.

Firstly, she dismissed ideas that Brexit will have a long term effect. On the supply side, she says, not a great deal will change. Demand, however, may be affected. Growth forecasts show reductions over the next two years, and there are rumours amongst financial analysts of a 50-50 chance of recession.

Along with base rate reductions by the Bank of England to a record low of 0.25%, cheaper mortgage rates, and the prospect of further interest rate plummets, property demand may be a bigger issue.

But Foy is less interested in these matters, looking to the longer term.

So what are the big issues around property demand in coming decades?


Property Demand by Demographics

Over the next ten years, we will see a significant rise in the over 65 age group, combined with a dramatic rise in over 85s. One in five people in the UK right now will live to see their 100th birthday, according to the Department of Work and Pensions.

From this, Foy predicts a rise in property demand for bungalows, and other homes suitable for later life living. Foy labels these properties as “rare asset[s] with a guaranteed increase in demand” – and notes that those who plan ahead with their investments to meet this upcoming property demand are set to reap rewards.

Homes with smaller gardens, close to towns, with adapted kitchens and bathrooms, are all winners.

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Property Demand by Location

Over the last ten years, farming has become increasingly more automated, leading to an inward flow to towns, which are more attractive than ever.

On the other hand, public transport is becoming less available, with journey times taking longer and longer. Without a drastic overhaul of the public transport network, property demand in cities and towns could continue to rise.

Nonetheless, Foy is banking on a return to the country facilitated by technology. Better broadband connections and speeds are making home working an increasingly available option for many, whilst the predicted adoption of driverless cars in coming years will also relieve much of the strain of commuting. With this eventuality on the horizon, country living could equally be set to rise in popularity.

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Property Demand By Energy

As we move further away from dependence on huge power stations in favour of multiple source and sustainable energy sources, EPCs (Energy Performance Certificates) are set to become crucially important to the desirability of a property.

More locally generated power, from solar powers to wind turbines, are growing in use in domestic settings. Homes with adverse EPCs, Foy states, just aren’t selling like they used to.

To increase the desirability of your property, Foy recommends staying on top of energy efficiency in the home. Replace old boilers, insulate walls and roof spaces, double/triple glaze those windows, and look into home power generation options.

 


Planning ahead for future property demand is a key factor to take into account when investing in property. Choose your weapons wisely, and build a portfolio that will stand the test of time.


 

Property News Round-up 20/4/16

Property News All The Latest Updates

Hi guys and welcome to another fortnightly property news round-up, today we once again take a look at the latest goings-on in UK property from looking at why Manchester is a city for Generation Y to looking at how commuters can save £3,000. If you missed our previous property round-up, catch up here.

 

Manchester Is A Generation Y City

Manchester

Manchester is rapidly becoming a place where young people migrate to for work and also to study. 22% of the city’s population are Millennials (aka Generation Y), which is more than four times the national average.

Due to an increase in young people, there is now an emphasis for build to rent property investment in Manchester. So what exactly is attracting Generation Y to live in the city?

According to the Complete University Guide, “Manchester is a thriving, prosperous northern hub and considers itself the commercial and cultural capital of the north of England. The city is also probably the most fashionable student location in Britain.” (Select Property Group, April 2016)

Manchester is also known for its universities and is synonymous with higher education. Moreover, over 50% of graduates stay in the city and around 20,000 are enter the job market in Manchester each year. Since Manchester is the country’s second largest economy, Manchester is one of the biggest regional employers.

In addition, with thousands of graduates looking for work, they also need to somewhere to stay and the city attracts Generation Y as accommodation costs are significantly lower compared with London prices. Latest figures from the Expatistan Cost of Living Index show that everyday amenities in the north-west are 37% cheaper than inside the M25.

A graduate living in Manchester would pay around £700-800 a month for rent, in the capital, they would pay over three times the amount for a rented property.

Millennial’s fast paced lifestyle and the need for everything in an instant makes the likes of buy to rent a perfect solution in the city. This also makes the city a great place to invest, not only because of its large millennial population but also being at the forefront of the Northern Powerhouse.

Want to know more about the city? If so, why not check out our free guides (North and Central).

 

Housing Market ‘To Cool’ As BTL Rush Dies & Brexit worries Increase

UK Property

The UK’s housing market is set for a slowdown as the buy-to-let rush of the first three months of the year dies away, according to the Royal Institution of Chartered Surveyors. (Telegraph, April, 2016)

A lot of confidence with regards to the UK property market has fallen due to uncertainties that surround the Brexit vote, stamp duty charges, a weaker pound, plus the devolved elections in May.

Despite these political uncertainties, in the long term, the imbalance between demand and supply will still exert a strong influence on the market, with house prices expected to rise by close to 25pc over the next five years as Simon Rubinsohn (chief economist at Rics) mentions in a recent Telegraph article.

Halifax recently reported that confidence in the housing market was at its lowest in more than a year and its housing market confidence tracker indicates that 65% of the general public believe that the average UK property prices will be higher rather than lower in 12 months’ time.

 

Railway Stations ‘Will Deliver Thousands Of Jobs & Homes’

Railway Stations UK

 

Thousands of jobs and homes are set to be created on what has been dubbed “the biggest programme of rail improvements since the Victorian age”, the government has stated.

Up to 10,000 new homes could be built across the country as part of new railway development scheme. York, Taunton and Swindon councils have already looked at proposed sites that could used for new builds.

Communities Secretary Greg Clark recently mentioned that : “With record numbers of people travelling by train, it makes sense to bring people closer to stations and develop sites that have space for thousands of new homes and offices.” (Yorkshire Post, April 2016)

He also mentioned that railway stations are hub for local communities, connectivity, and commerce and we should be making the most out of their unique potential to attract investment.

 

More Affordable Homes Needed According To Manchester Businesses

House Buyers UK

From millennials in Manchester to looking at local business views on property.

A recent survey which was conducted by Housing The Powerhouse revealed that the majority of Greater Manchester businesses see building more family and affordable homes as a priority.

Greater Manchester Chamber of Commerce’s Steve Burne told Manchester Evening News that : “Over the past few weeks we’ve seen concerns raised about transport links for the Northern Powerhouse – but the provision of suitable housing is equally as important.”

He stressed that the city is witnessing a boom in business across the city but a focus is needed on providing homes for families. The northern powerhouse needs to cater for families otherwise there will be a major set-back and could see this workforce disappearing down the M56, M6 and M62.

Matthew Good of the Home Builders Federation and member of the Housing the Powerhouse coalition told MEN : “These results show us that the provision of family and affordable housing in the region is already a real issue for businesses.”

The survey results have an eye-opener, and a result, as Matthew explains, the likes of the Housing the Powerhouse coalition are making the case for local councils to take this once in a generation opportunity to set ambitious targets for the mix of homes that the engine room of the Northern Powerhouse desperately needs.

 

Commuters Save £3,000 On Property Each Minute They Are Further Out Of London

UK Trains

House prices in the London commuter belt fall by more than £3,000 for every minute further away the property is by train from the capital, research has found. (The Guardian, April 2016)

Savills conducted research property prices around 314 stations in places surrounding the capital on direct commuter lines into the city.

They found that average property prices within half an hour’s train ride from the capital were £458,000, compared with £606,000 in inner London.

Moreover, Land Registry data revealed the cost of housing fell sharply to £337,000 for journeys of one hour to 69 minutes, with the saving averaging £3,048 per minute!

However, the research also show that the correlation between distance and price is uneven. For example, an average property in Oxford costs £730,000 for a 57-minute commute. In contrast, an average property in Welwyn Garden City costs 430,000 and takes 21 minutes to reach the capital by train.

Families moving to areas outside of the capital have had to factor in journey times, house prices, quality of life and the high cost of commuting in and out of London, Sophie Chick, who led the research for Savills said savings on house prices usually outweighed the increased travel costs. Read more on the story here.

Image source : The Guardian

 

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Property News Round-up 9/3/16

Property News Round-up 9/3/16

 

Hi guys and welcome to another fortnightly edition of our property news round-up. As usual we will be looking at the latest goings-on in the domestic property market from looking at various house prices around the country to the sobering prospect of Brits having to face on average a three year wait before they can afford a property. If you missed our last property round-up, feel free to catch up here.

Average London Home Is Worth Nearly Triple Those Across England & Wales

 

London Property

New figures reveal the change in house prices over the past year and highlight the regions with the fastest growth in Britain. (Homes and Property, February 2016).

It was revealed that house prices in the capital have risen by nearly 14% with the average house worth three times that of houses in the rest of the country.

In other parts of England and wales, an average property price is around £192,000, in contrast, in London, the average cost will set you back over £530,000.

According to the Land registry, London and the South East have performed strongly with capital figures at 13.9 per cent and 10.7 per cent for the South East respectively.

In addition, the South West prices rose 6.2 per cent this year, cities such as Bristol saw house prices rise to over £220,000.

Moving onto the north, the North East showed the smallest price increase of just 0.2 per cent, cities such as Sunderland fell by 3.2 per cent.

However, on Tyneside, Newcastle had the highest monthly price rise in the north east, with an increase in January of 2.1 per cent to just over £123,000.

In the North West prices grew by 2.1 per cent, Manchester once again showing signs of buoyant growth at 5.6 per cent.

 

Study Shows Third Of £1m-Plus Homes Paid For In Cash Since 2011

Expensive Homes UK

According to research, about a third of homes sold for £1m or more in the UK have been paid for in just cash in the last five years.

Cash buyers have spent more than £63bn in total on £1m-plus homes in England and Wales since 2011, spending on average £1.75m for a property. (Guardian, March 2016).

The research comes after a report from a high street lender predicted that the number of properties in the UK worth £1m or more would more than triple by 2030. Currently, less than 500,000 homes across the country are valued at £1m plus.

The house price analysis which was conducted by Bower Private Clients (BPC) also found out that almost two-thirds of cash buyers bought in London where the average spend per property hit £1.89m, but southern and eastern England also saw high numbers of cash buyers for £1m-plus homes.

Moreover, the Essex based company revealed that their research showed that in London, 22,852 properties costing £1m-plus have been bought for cash since 2011, and 7,864 elsewhere in the South-East. Heading north, there were 641 properties that were priced at £1m-plus and 239 in Yorkshire and Humberside respectively.

Property Investment Is Growing At A Greater Rate In The North East Than Anywhere Else In The UK

North East Investment

Investment in property is growing at a greater rate in the North East than anywhere else in the UK, with investors snapping up more than £1bn worth of commercial property in the last year. (Chronicle Live, February, 2016).

Commercial property experts CoStar revealed that investment volumes within the North East grew by 32% – the largest percentage increase of any UK region.

Gavin Black, chairman of the G9 Group of chartered surveyors told Chronicle Live the North East 2015 total of £1.06bn was almost double the £524m annual average over the last eight years.

He went onto to say that by any judgement this is impressive and that investors are increasingly searching beyond the capital for value and within the North East there is good value as well as asset management opportunities. Investors are always keeping a close eye out on lucrative deals in the region.

 

Property Sales In Scotland Up 4% In 2015

East Renfrewshire Property

We now leave the North East and travel to the north of the border to look at the Scottish property market.

A new analysis report points out that residential sales in Scotland increased by 4% in 2015, which were well below the 11% recorded in the previous year.

The report which was conducted by Savills indicates that tougher mortgage lending conditions during the first half of 2015 impacted the recovery of Scotland’s housing market, but the property market adjusted during the second half of the year due to a recovery in mortgage lending for house purchases across Scotland, which increased by 9% from 59,500 in 2014 to 64,800 in 2015. (Property Wire, March 2015)

East Renfrewshire (pictured) witnessed the strongest annual growth in the number of transactions during 2015 at 13% due to the good schools effect. Glasgow, West Dunbartonshire and West Lothian also performed well and experienced high transactional growth during 2015.

The number of transactions at £1 million and above reached its highest level since 2008. Savills report showed that Prime markets in suburban and commuter areas across the country’s Central Belt performed strongly last year, with growth spreading out from core urban hotspots.

Faisal Choudhry, director of Savills Scottish Research mentioned in Property Wire that the upturn in demand is driving an improving development land market. Sentiment for development land in Scotland’s cities remains a positive one.

Are you interested in Scottish property investment? If so why not visit our property investment in Scotland page.

 

Brits Face Waiting An Average Of THREE YEARS Before Buying First Home

House Buyers UK

A sobering thought… BRITS have to wait an average of three years before they can afford their first home, according to new research. (Express, March, 2016)

The biggest barriers involved include high prices, saving for a deposit and other costs associated with buying or moving house.

Recent research shows that one in two people want to buy their first home or move up the property ladder.

Moreover, six in 10 say they will have to wait 12 months, while 21 per cent worry they may never afford to buy or move home.

Price comparison site GoCompare found out that those who were thinking of buying or moving home have been doing so for an average of 3.2 years.

The sheer lack of availability in the area they want to live, job insecurity and the costs such as mortgage payments, as well as bills have been the main barriers for people. Also, saving for a deposit has been a huge hurdle for many.

GoCompare’s product development manager Matt Sanders told The Express : “Affordability is a big concern for both first-time buyers and those wishing to move-up the property ladder. House prices are increasing due to rising demand and lack of supply. (Express, March 2016)

He also mentioned that with house price inflation exceeding wage growth it’s even tougher to save enough money for a deposit – as a result has potentially put homeownership out of reach for many people.

Are you looking for an alternative and an accessible way into the property market and are thinking about getting involved in property crowdfunding? If so, why not take a look at our Property crowd funding- how it works page for more info.

 

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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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