Equity Capital Markets Blog

The UK real estate online crowdfunding market

The UK real estate online crowdfunding market

Jul 30, 2015

While in the United States the real estate crowdfunding business hasn’t stopped growing both in services and competition, in the newest market of the United Kingdom there are many opportunities waiting for bold entrepreneurs.

Several UK online platforms offer diversified investments.

Companies such as The House CrowdProperty Partner, and others, attract investors into buy-to-let properties where investors can cash profits on rentals proportional to investment as well as on the capital growth of their equity share.

Other companies like Hab Housing use the platform Crowdcube to raise money to build residential housing at affordable prices and sells environmentally friendly custom-built homes.

In this last case, investment can also be seen as a way for potential homeowners to self-build, avoiding bank loans.

While in the UK real estate space there’re some crowdfunding platforms oriented to pool investments into commercial properties or social experiments (for instance, to fund a biodynamic farm to preserve it from being sold, leasing it to its current owners), the market of office buildings, high-end properties, retail and shopping centres remains almost untapped…

Syndicating real estate investments online can also attract foreign investors from around the world to enter into the UK market and take advantage of all these new and undeveloped real estate crowdfunding opportunities.

Since April 1st 2014, every Internet crowdfunding platform in the UK has to comply with the new rules of the Financial Conduct Authority’s (FCA). These rules allude to fair commerce and require platforms to underline potential investment risks.

Platforms have to fit with some technical features to be fully operative and, above all, they need to clearly separate the crowd investment assets from the platform assets.

There’s a requirement for a capital reserve and, most important, restrictions on what individuals can invest, which is fixed at no more than 10 percent of their net investible assets, that is, of the available money discounting primary residence, pension and life insurance.

This last rule is meant to protect the untrained investor who, in spite of this 10% limit in the beginning, after two crowdfunding investments will earn the authorization to invest as much as he or she likes.

Real estate online crowdfunding in the UK is at this moment one of the many brand-new markets in the world that serious real estate broker-dealers, sponsors and investors should consider to maximize profits and to export some of the United States successful investment ideas and instruments.

The real estate online crowdfunding markets around the world are main topic among the investors and the global real estate business is open and only looks forward to being enlarged.


Article also appeared on BanklessTimes:


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The well-kept secret of high returns in real estate investment

The well-kept secret of high returns in real estate investment

Jul 30, 2015

Until not so long ago, commercial real estate investment in the U.S. belonged to the limited class of accredited investors. Institutions and wealthy families were the only groups authorized to preserve wealth or speculate with real estate. Now, with the explosion of online crowdfunding and the slow but relentless legal opening of the market to smaller investors by the SEC, every person can join the wealthy and participate in what’s expected to become one, if not the biggest, of financial investment opportunities.

A real estate crowdfunding online platform matches investors with sponsors of real estate projects, whether single family homes, apartments, retail, hotels, office buildings, or else. It operates under two different models: the debt crowdfunding, which lends money to a company to buy the property and the equity crowdfunding, purchasing shares in the company that buys the property.

Benefits may come then from returns based on a traditional model of debt and interest, or from equity.

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