A crowd funding platform for property investment in the UK
- Bury St Edmunds, United Kingdom
Categories: Finance & Payments Digital B2C
Property Regions would allow people to invest in property in the UK. The platform would provide investors with another asset to diversify in and we offer a way for people to get onto the property ladder.
Target areas will be East Anglia and the East Midlands, which we consider as growth regions, before branching out to other regions in the UK.
Minimum investment will be £250 and residential property will be the initial focus.
The crowd funding platform will be used to offer investment in specific properties. Investors will benefit from any rental income and from the potential capital growth of the property. There will be a mechanism in place should investors wish to exit early.
Once we have traction we envisage purchasing portfolios in the chosen regions as well as individual properties, allowing the platform to grow faster.
Initially the properties will be fully funded with equity. After 9-12 months we would look at employing leverage for some properties in order to increase the possible returns on equity.
We intend to offer a way for people to invest in property in regions of the UK where property can cost less than new build cost, and prices can be below pre-crash levels. Investing in these regions of the UK diversifies away from the economies of the main cities, and we believe helps these economies grow further.
We believe this offers people a chance to invest in property in regions they would not otherwise be able to due to a lack of local knowledge and resources. The platform also allows people in these regions to invest in their own areas with small sums of money.
The English Housing Survey found that people are finding it harder to afford to buy property. It states that between 2003/4 and 2013/4 the percentage of owner-occupiers in the 25-34 age range has dropped from 59% to 36%.
The Property Regions platform will allow these people who cannot afford to buy their own home to keep track of the property market by investing smaller sums in property via our platform.
According to The Council of Mortgage Lenders 64% of first time buyers required help from “Mum and Dad” which is up from 30% pre credit crunch. Property Regions can provide people with a first step on the property ladder in order to build sufficient equity to put down a deposit on their first home.
We also enable people to diversify over a number of properties with a small amount of money, and we offer people the chance to invest more widely in their own region.
Property is generally viewed as an illiquid asset, which inhibits some people from investing. Our platform is being designed to enable investors to trade their shares in a property, creating liquidity, prior to the property being sold.
Investment into property via Property Regions will allow people to benefit from any income and capital growth that is generated. We believe that this can offer an attractive alternative to holding cash in a bank.
Substantial accomplishments to date
The founder has spent the last 5 years researching, purchasing, and investing in his own properties in these regions. He has developed strong local networks and knowledge, and believes he has a deep understanding of property in these areas. Having invested in properties in the regions himself, he is putting this knowledge into Property Regions to grow a unique business so others can also benefit from these opportunities.
Property Regions has a strong team that has experience in property, investment, and tech.
We have instructed a team of professionals in order to create the business, platform and its related infrastructure.
Property Regions are in the process of developing the technology platform and have a pipeline of properties to invest in once the platform launches.
We have a strong press strategy in place, and a track record of successfully getting mainstream press coverage in the past.
Property Regions derives its income from raising money, and investing it successfully. We believe that our low investment threshold of £250 will encourage more investors to use our platform.
Our aim is to scale from individual properties in East Anglia and the East Midlands, to regional portfolios, and then to other similar regions of the UK. We intend to be the leading UK equity crowd funding platform for property investment, with a local reputation in our investment regions as a reliable long term purchaser and landlord.
Our belief is that purchasing portfolios, as well as individual properties, and subsequently investing in new growth regions, will enable us to grow the business quickly.
Property Regions will charge an upfront placement fee of 5% of money raised on the platform and a 20% performance fee on investor profits on exit.
With our local knowledge and expertise we believe that we will be able to out perform the average property within these markets.
Savills have forecast growth for 2015-2020 of 25.2% for East of England, and 19.3% for the East Midlands, whilst London is only 10.4%.
Use of proceeds
Funds will be used to build the front and back end of the technology platform, and complete the legal work necessary to launch a crowd funding platform.
We will create the templates and contracts for the companies (SPV’s) that will purchase the properties, and their respective Information Memorandums, as well as verification that all the wording on the website fits within FCA regulations.
A small portion will go towards working capital which may also include some PR and marketing costs.
The front and backend will be built in a way that maximises user experience, and user friendliness. Our CTO has extensive experience in supervising major tech projects specialising in User Interface and User Experience and will advise the tech design and construction work. As with the legal documents, we will be investing in the tech infrastructure thoroughly at the beginning to build a scalable platform that can attract as many customers as possible, whilst benefitting from economies of scale.
Our target market includes:
People who cannot afford the deposit for a first property purchase but who want to get onto the property ladder.
By 2014 64% of first time buyers were purchasing with help from their parents. We envisage families using Property Regions to invest into a diversified portfolio of property which can be used in the future as a deposit for a first home for their children or grand children.
Property investors or owners in the UK wanting to diversity into different regions of the UK.
People who live in or have links to our investment regions wanting to invest in and support these areas.
Existing property investors wanting a more diversified property investment portfolio.
Investors looking for possible better returns on their money than they would get by holding cash in the bank.
People who want to invest in property but do not want to own and manage the property directly themselves.
People looking for a hedge against inflation, whilst having the potential to benefit from income and capital growth.
Since the recession, the rich are 64% richer and the poor 57% poorer. In part this is because those that are wealthier often have a portfolio of investments and assets. Property Regions will allow those who might not already have such a portfolio to invest in property and try to keep their wealth in line with inflation.
Small and mid-sized investors are caught in a gap between buying property directly, which is too expensive, or investing in a property fund, which have large minimum investments. Property Regions aims to provide a solution to this.
Further regulation of the buy-to-let mortgage market is likely, which would make it harder for people that want to invest in property directly themselves. We believe that the solution for these individuals would be to invest through the Property Regions platform.
We are exploring whether we can expand in the future to target investors abroad wanting exposure to the UK property market.
Characteristics of target market
We believe that the potential market for a product such as Property Regions has increased significantly since 2007 due to increased mortgage regulation, and the need for greater deposits.
The Office for National Statistics stated that in 2014 the average home in England and Wales cost 8.8 times the typical local salary, up from 6.4 times local salaries in 2002.
The English Housing Survey states between 2004-2014 the percentage of owner occupiers in the 25-34 age range has dropped from 59% to 36%.
Before the 2007 crash 30% of first time buyers were helped by their parents, whilst by 2014 this had increased to 64%.
The UK government in 2015 announced it is looking to implement measures that will make it harder to obtain a buy-to-let mortgage. This would inhibit many people from directly buying residential investment property themselves.
Savills forecast that over the next 5 years property values in the East of England would grow by 25.2%, the East Midlands by 19.3%, whilst London is only 10.4%.
In the target investment regions the team have extensive family and business connections. The founder’s family has been a major property investor in these regions for generations. Through these existing networks we aim to target clients from the East Midlands and East Anglia, who have not previously had an opportunity to invest in their region.
The founder feels he has strong regional press contacts, who have previously supported other projects of his. We anticipate regional press coverage as a result.
Based on this, we aim to use national media coverage to source clients from across the country. This will focus on the opportunity we offer for people to invest in regions of the UK, and how the Property Regions platform enables people to get on the property ladder with small sums of money.
PR and social media will be used to reach the market. Online and social media marketing strategies will be implemented which specifically target those that fit our core investor profiles.
We believe that the low investment entry point of £250 will incentivise many more new investors to “dip their toe in the water” after which we feel they may become repeat investors and invest more money. This will also create a larger and more diverse pool of investors. Our investors will be incentivised to make referrals to new investors and to promote the platform on social media.
Property Regions creates business for companies selling property, and property service companies. We will look at ways of working with these companies to promote the platform.
We will aim to incentivise individuals and companies that have access to potential clients for the platform, such as accountants, and financial advisors.
The equity crowd funding model for direct property investment, such as ours, is a less mature model than the peer-to-peer lending model. In that respect we are amongst the early entrants in this sector.
At present, it is our understanding that existing equity crowd funding property platforms either focus entirely on London and its surrounding area, or else have a scattered approach of buying properties all over the UK.
We will be investing in regions where we have strong local knowledge and contacts, and where we aim to become known as a reliable purchaser and landlord committed to that region. This will help enable us to secure the best available properties at the best prices. We believe we can grow fast in targeted regions by following such a sustainable and community based approach. We aim to become a strong active local partner and positive contributor to the local economies.
The regions we choose have growing economies and what we consider to be undervalued properties. This is a strategic targeted approach rather than just investing in London or investing in randomly selected property across the UK. We are building a technology platform that makes the investment process transparent, efficient and easy. We feel that other property equity crowd funding platforms appear to focus mainly on front-end design, whilst neglecting the back-end infrastructure. We believe that this creates significant administration costs, which inhibit their ability to grow fast and benefit from maximum cost efficiency.
Due to the design of our technology platform we are able to take investments as small as £250. This low investment entry point should significantly help increase our investor base, and speed of growth. We believe the majority of those that choose to initially invest the minimum, will make repeat investments. We feel that these investors are then likely to make referrals to new customers.