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Crowd Funding: A Novel Approach to Property Ownership – By Richard Greenby

lease enfranchisementCrowd funding over the internet is a popular recent phenomenon involving a group of investors that team up for a financial opportunity and pool their resources together.

Crowd funding has grown in stature over the last few years, with investors providing funds for an increasing array of investment opportunities, typically in return for either equity in the borrower’s company or based on debt repayment plans. The added draw for investors is that they can invest in projects for relatively small sums of money, such as a £500 minimum entry.

In the property context, crowd funders become the shared owner of a property investment or the registered (i.e. secured) charge-holder in exchange for their financial backing. Projects can vary from short-term funding to longer-term matters.

As with all investments, the merits of each project need to be carefully reviewed. Crowd investment is also subject to the general drawback of generating sufficient interest from other potentially likeminded investors.

As with all investments, potential investors should therefore carry out sufficient due diligence in order to form a balanced assessment of their proposed investment. However, some investors may decide to rely on the investment platform organisers’ expertise and knowledge of specific property market areas and opportunities.

Once sufficient interest and funding is generated for a particular project, the conveyancing process commences in the usual fashion, with the added structuring of a Special Purpose Vehicle (‘SPV’) for the post-completion ownership of the property or in relation to the corporate loan arrangement over the property.

A Special Purpose Vehicle is a company set up for the sole purpose of a particular property investment and is, by its nature, intended to be legally separate from the crowd funding organisers.

Following completion, the investor will hold a specific share allotment in the SPV.

If the SPV is for property investment purposes, tenants are sought and lease arrangements are entered into with personnel from the investment platform organisation coordinating with lawyers and managing agents. Rental income is accordingly received and the platform organisers deduct their commission fee.

Furthermore, at the relevant time, it may be decided by crowd funders on a particular project to sell the property acquired. The subsequent pricing of the said property would be a matter for the crowd funders to agree collectively. In addition, investment platform organisers would charge a fee on the capital growth in the value of the property asset.

If you require any assistance with a matter such as the above, please contact Richard Greenby on 020 7387 2032, or complete our online enquiry form here.

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New Conveyancing Instructions

for saleRichard Greenby:

  • The purchase of a two-bedroom house in the Islington area for £1.3million.
  • The purchase of a house in the Crouch End area valued at £1.15million.
  • Advising freeholders on variations to leases for a residential building in Central London.

Janak Bakrania:

  • The purchase of a substantial family home in Whetstone, N20.
  • Acting for Hong Kong-based entrepreneurs in connection with the sale of a one-bedroom flat in Holborn for £1.2million
  • Acting for an investor client in connection with the acquisition of commercial property subject to long residential leases from a court appointed receiver in North London.

Richard McConnell:

  • Acting for estate agents purchasing new premises in South London.
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Enfranchisement: One House, Not Two – by Richard McConnell

lease-enfranchisementFrom time to time we are instructed by clients who are tenants of leasehold houses in London, to acquire/purchase the freehold. The right to acquire the freehold of a house is conferred by the Leasehold Reform Act 1967. Given the value of properties in London and the difference to market value between a leasehold and freehold interest, this right is invaluable.

The right extends not only to ‘the house’, as it is defined under the Act, but also to ‘the house and premises’. Sometimes interesting issues arise: what happens if within the curtilage of the house there is a separate annex or living accommodation capable of being a house in its own right? To be part of ‘the house and premises’, the premises must be ‘any garage, outhouse, garden, yard and appurtenances’. The right applies to one house only so there is a danger that the other building would be considered outside of the claim, which would mean that the freehold interest for that part would have to be separately negotiated and purchased. Each case will be factually different and certainly great care should be taken in considering the factual background before proceeding with the formal claim.

Lewis Nedas Specialist Property Solicitors

If you are interested in learning more, please contact our experienced property lawyers on 0207 387 2032 or complete our online enquiry form here.

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Recent Property Department Instructions

  1. for saleExchanged on the sale of an Embassy in Central London for more than £2million.

  2. Completed on the purchase of commercial premises in the Peckham area for more than £1million. The client was a developer who proposes to redevelop the premises.

  3. Instructed on the sale of a Victorian residential property in Primrose Hill for more than £2million.

  4. Instructed on the creation of a new lease and the sale of the upper floors of a residential property in the Waterloo area.
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Property Experts Predict Excellent Growth in Kentish Town, Finsbury Park & Kensal Rise

In its newsletter dated 6 January 2014, gives an excellent summary of the UK property market in 2013, and in its predictions for 2014.

It states that Kentish Town, Finsbury Park and Kensal Rise can look forward to excellent growth, and that each of these areas has seen marked regeneration, and new young families/professionals moving in. There are excellent facilities, schools and transport links in each of these areas.

If you are considering buying or selling residential property you will need top rated specialist conveyancing solicitors. Contact us on 0207 387 2032 or complete our online enquiry form here.

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