Crowdfunding investment regulation in the UK

The approach in Britain to the regulation of crowdfunding is widely admired around the world, according to the UK Crowdfunding Association (UKCFA and the sector wants to maintain that position globally and be involved in shaping the future outlook of this part of the financial services industry.

Most crowdfunding platforms in the UK are regulated by the Financial Conduct Authority (FCA), and platforms must obtain FCA authorisation before commencing regulated activity.

However, platforms in other countries may be governed by local regulators, and there may also be regulations for non-resident investors.

New rules are expected soon to update the current regulations which date from April 2014. These will come out of a review into the sector carried out in 2016 with the aim of making sure that crowdfunding firms meet all requirements to be ‘clear, fair and not misleading’ with customers.

The UKCFA believes that there needs to be some clarification of the rules to meet recent growth and that must also take into account the need to balance and to promote competition and ensure investor protections are proportionate to the risks.

The current rules are regarded as being robust for equity property crowdfunding investment platforms as under FCA rules investor money is held safely by the authorised firm until the target amount for the crowdfunding investment has been raised, and that the crowdfunding investment platform will be able to substantiate claims made in its investment memorandums.

The FCA has indicated, in an interim report published at the end of 2016, that ‘tougher rules are required to protect investors in crowdfunding platforms and it should be easier for investors to compare crowdfunding sites with each other, or with other asset classes, and this is not always easy due to ‘complex and often unclear product offerings’.

It is not unreasonable from this to expect that the FCA will demand that the crowd property investment platforms consider the best interests of their users by making relevant data more transparent, more consistent, and therefore more comparable.

Andrew Bailey, the FCA’s chief executive, has indicated that it is in the peer to peer lending sector as an additional source of capital that rule tightening is being considered as this is the section that has changed most. ‘What we are trying to do is strike the right balance between enabling innovation and protecting consumers,’ Bailey said.

Bailey has also indicated that stricter regulations are most likely to facilitate tougher rules on wind-down plans, additional requirements or restrictions on cross platform investment and extending mortgage lending standards to loan based platforms.

Investment in property comes with risks as well as the possibility of rewards.

For more information visit here https://crowdlords.com/full-risk-disclosure

Making property investment easier and more accessible

CrowdLords was one of the first property crowdfunding property investment platforms, launching in the UK in 2015. The founders could see the attraction of the start-up crowdfunding model used by CrowdCube, Seedrs, and others, where in return for their investment, investors received shares in a new business with the hope that one day, there would be an exit that would provide significant profits.

What they didn’t like about investing in start-ups in this way was that the valuations that formed the basis of the investment were, at best, unverifiable and in many cases downright ridiculous. In addition, the likelihood is that most start-ups go bust and even if they don’t the likelihood of the company being bought or listed is very low indeed.

So, by taking the same proven model and applying it to property they could address all the weaknesses. The value of a property investment can be verified by an independent RICS valuation. The property’s ability to generate income, and therefore distributable profits, can be accurately estimated and the likelihood of finding a buyer, and therefore enabling your investors to recover their investments, along with a capital gain, is much higher than with a business.

They launched what they described as the first, true property investment platform in that they had a ‘two sided’ model. On the one hand they served landlords and developers seeking investments for their projects and on the other provided would be investors a choice of pre-screened, pre-packaged investments with varying risk/return profiles.

‘We set out to make property investment easier, more accessible, and more productive for more people, initially through buy to lets. However, almost immediately the Government announced the additional stamp duty on buy to let properties and that made it harder to source properties that fitted our model,’ said founder Richard Bush.

As a result, CrowdLords now offers short term investments into residential developments as well as buy to let investments. ‘Because property crowdfunding was very new at the time, investors preferred short term investments and the move to include developments was very well received.

Historically, the only people given the opportunity to make money from residential developments were super high net worth individuals with hundreds of thousands of pounds to invest. We have lowered the entry point to as little as £1,000,’ Richard explained.

Richard and his team take their responsibility for their crowd investors’ funds very seriously. ‘We were adamant from the outset that we had to do everything we could to protect our users’ investments and so we created a framework, whereby, the ultimate control of the funds was in the hands of an independent director, appointed to the Special Purpose Vehicle (SPV) Limited Company that facilitates the investment.

It is an additional cost that might lower the returns by a percentage point or two, but it provides reassurance way beyond the cost. As far as I know, we’re the only true crowdfunding platform that provides this extra layer of protection,’ Richard pointed out.

Currently CrowdLords is, on average, funding a new investment every month as the number of users increases, largely through referrals from existing users. Their growth has been much slower than that achieved by others. ‘Building a sustainable marketplace takes time and patience.

As long as our investments continue to perform to plan, our investors receive a good return and are happy with the service, then we are content to grow at a slower rate,’ Richard added.

The team at CrowdLords are continually looking to enhance their proposition and plan to launch debt and even ISA based products in 2018 so that they can, if required, provide the full range of finance needed by developers and landlords removing the need for bank finance altogether.

Investment in property comes with risks as well as the possibility of rewards.

For more information visit here https://crowdlords.com/full-risk-disclosure

Investing in the UK? You Should be Looking at These Places

Every UK property investor who is aware of market conditions such as Brexit negotiations, construction sector changes, buy-to-let laws, and so on, will be asking themselves, “Where is the best place to invest now?”

Not long ago, Barclays conducted a research to discover which areas have the most promising returns for landlords, and what locations will record the strongest price growth by 2021. It is based on the following key performance indicators:

• Previous trends on property price and increase in rentals
• Current trends on job market levels
• Community patterns
• Income levels
• Expected future trends for employment growth and population growth

If you are interested in specific areas like the South, you would want to know the best property Investment areas in London 2017. This post will guide you.

1. Camden, London

According to the report, house prices in this northern borough of London will increase by 33.9% by 2021. Among all participants in Barclay’s landlord survey throughout the UK, 1 in 5 people claimed to own a property in London.

2. Westminster, London

In Barclay’s report, it was revealed that by 2021, the price of housing in this central London borough will rise by 31.9%. London property investors own an average of 4 properties and the average total valuation of a property portfolio in the capital more than £2.2 million. The survey further revealed that 79% of property investors in the capital intend to buy a new property in the next 3 – 5 years.

3. Cotswold

Cotswold, which covers Cirencester in Gloucestershire, is touted to experience the biggest house price increase in the South West by 2021. The figure, which will rise by 31.8%, is attributed to the city having the most business start-ups in the region, says Barclays.

4. Albans

St. Albans is expected to see the largest property price increase in the East of England, in the coming 5 years at 38.8%- the 2^nd largest in the UK. Part of this is due to the higher than average income (46% more than the national average) and strong expected growth

5. Elmbridge, Surrey

In Barclay’s report, it is predicted that the price of housing here will catapult to 26.4% by 2021, because of the growing number of people letting in the area. It also accommodates Walton-on-Thames. The report also revealed that property investors in South East England own an average of 3 properties valued at a sum of over £1.5 million.

These 5 cities represent only a handful from the Barclay’s survey, but they present a promising future for investors who want to make a financial killing in the next few years. The first two are listed among the best property Investment areas in London, for 2017. It pays to start planning early. Cotswold, for instance, is a fast-growing hub of start-up companies, which might soon trigger an influx of business talents and Venture Capitalists, who knows it could be the next Silicon Valley.

Investment in property comes with risks as well as the possibility of rewards.

For more information visit here https://crowdlords.com/full-risk-disclosure

 

London Property Investment Stable In Spite Of Political and Economic Uncertainties

According to the results of a new research, the London property market slid down from number one to number three on the index of the most invested-in property markets in the world.

The latest world rankings put property investment in London behind New York and Los Angeles, just as total investments in real estate across the globe dipped for the first time in New York.

London has slipped from its position as the most invested-in property market to be overtaken by New York, as total investment in buildings across the globe fell for the first time in seven years.

Property advisory firm, Cushman & Wakefield, conducted the study, and stated that property investments in London dropped from a previous value of $39bnin 2015 to $25bn as at June 2016, pushing it to third on the rating of the most preferred property investment destination in the world.

It said despite growing by 0.5pc to a value of $1.35tn in the past year, excluding land purchases for development, the global investment market dwindled by 5.7pc to record $919.7bn in total investment as property investors reacted to political and economic uncertainties around the world.

Although the global investment market grew by 0.5pc to $1.35tn in the 12 months to June 2016, when transactions to buy land for development were excluded, the market actually shrank by 5.7pc to $919.7bn as investors reacted to greater volatility and political and economic uncertainty.

The advisory firm stated that with the level of change anticipated in the macro environment such as the Middle East crisis, to Brexit and a Donald Trump presidency in the Unites States, a good number of investors are struggling to predict the market and where they would find value.

Relative normality

The report also shows that property investment in London has remained relatively stable, when viewed against initial fears about how the Brexit vote would impact on the UK property market, even though London’s property market felt the aftershock of UKvoter’s landmark decision on June 23 to exit the EU.

Investors had instructed their agents to put negotiations to buy prime properties on hold, financial services firms on the search for new office spaces halted their hunt, and developers across the UK’s capital froze new planned projects, while prospective tenants began to reconsider if they really needed to relocate homes. That early panic forced property funding companies holding assets valued at £15bn to close the gate on the rush to redemptions by anxious investors, echoing the property crash thatfollowed the credit crunch crisis of 2008-09.

It would now seem that the Brexit vote has not had any negative impacts on the market as some had forecasted.  Cushman & Wakefield said although the Brexit vote disrupted a third of planned commercial property investments at the time, property investment in London recorded a higher number of completed deals compared to other UK regions.

Investment in property comes with risks as well as the possibility of rewards.

For more information visit here https://www.crowdlords.com/full-risk-disclosure