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Frequently Asked Questions

We're here to help you

1.1 Commercial Investors

1.1.1 Is it more beneficial for me to invest as a company?

This is a common question we receive. In order to see the difference and whether it is more beneficial for you, we recommend seeking the advice of an accountant before making any decision.

1.1.2 Can one company purchase shares in another company?

Yes it can.

1.1.3 How can I invest as a company?

In order to invest as a company, all you need to do is to fill in the appropriate boxes in the registration process. You are treated the same way as if you were an individual investor and need to follow the same route.

1.1.4 Can I invest using a non-UK company?

Yes. You can invest as any legal entity incorporated outside the UK.

Remember that you will still have to meet all our requirements in the same way as if you were an individual investor.

1.1.5 What about Tax implications?

The SPV is a UK incorporated company and is subject to corporation tax. If you invest as a company, you need to pay corporation tax in the country your company is incorporated.  Again, you should seek the advice of an accountant for a comprehensive summary of tax implications.

1.2 Individual Investors

1.2.1 Who can invest?

Anyone can invest in Crowdfunding Place subject to satisfying all regulatory and documentation requirements. 

We currently cannot accept investors from the USA and Japan.

1.2.2 Can I invest jointly with members of my family?

You cannot invest together with members of your family or friends. If you wish for your family to invest, then they need to do so separately in their individual names.

1.2.3 What are the requirements to invest?

In order to invest on the Crowdfunding Place portal, you need to complete the registration process. You are also required to provide your proof of ID and residence to obtain accreditation.

1.2.4 Can I put shares in a Trust?

Yes. You can put your shares in a Trust.

1.3 Non-UK Investors

1.3.1 I live outside the UK – can I invest?

Yes, however, each investor is treated in the same way as a UK resident and needs to provide proof of ID and residence before making a investment. 

We currently do not accept investors from the USA and Japan. 

1.3.2 Can I invest via my company which is based outside the UK?

Yes you can. However, you still need to provide proof of ID and residence before making an investment as you are treated in the same was as a UK resident.

We currently do not accept investors from the USA and Japan.

1.3.3 Do I need to pay tax in any different way if I am a resident outside the UK?

The SPV is a limited company incorporated in the UK and subject to corporation tax in the UK. Dividends are paid directly to you as the shareholder and subject to income tax in the country which you are a resident of.  Your accountant will be best placed to advice you of your tax obligations.

1.3.4 Does Crowdfunding Place accept investors from other countries outside the UK?

We are currently unable to accept investors from the USA and Japan.

We pay particular attention to investors from countries on sanction lists, however, this does not mean they will not be accepted, but stringent documentation requirements may be imposed.

1.4 Investment Terms

1.4.1 How do I invest?

In order to invest you first need to obtain accreditation. Then you simply select the property and the amount you wish to invest. Once the property is fully funded then you become a beneficial shareholder of the SPV, which owns the property of your choice.

1.4.2 What is the minimum and maximum investment allowed?

The minimum investment amount is £500. We reserve the right to increase the minimum investment amount for specific offerings.

There is no maximum investment amount for the majority of offerings, however, we reserve the right to set a maximum investment for specific offerings.

1.4.3 How can I get accreditation?

In order to make any investment each investor needs to obtain accreditation. The accreditation is obtained once all personal details and questions are completed and satisfactory proof of ID and proof of residence are verified.

1.4.4 Gearing - what is it?

Gearing is a debenture (can also be called a mortgage) used to fund part of the property and it is secured against the property. Each mortgage has specific fees and interest rates which will be explained in detail in the offering.

How much can property be geared?

We conservatively will not finance more than 50% of the value of the property. Typically we finance between 40%-50% of the property. It gives us security that even in the event of a huge property price drop; we will have enough equity to not be in negative equity. It also gives relative security that interest rates are unlikely to be higher than rent, even with significant interest rate rises.

What is the term of the gearing?

We take gearing on a fixed interest rate basis over the investment term. However, the full term of the finance will be at least 10 years which gives us further guarantee that in the unlikely event of not proceeding with the sale of the property on a number of occasions, we still have ability to keep gearing from the same lender.

Does gearing affect me in any way?

No. The gearing is secured against the property only and you as the investor and shareholder have NO LIABILITY for any debt. Gearing is also not included in your credit report in any way and therefore does not have any effect on your ability to secure any finance (car loan, mortgage, Buy-to-let) in the future,

What are the advantages?

There are two potential advantages:

1. With typical interest rates at 4-5% and rental yields exceeding 6%, it gives you an extra income for the portion of the property which is financed. This is due to the rent (received) for the financed part of the property being greater than the interest rate (paid).

There is a risk of interest rates exceeding rental yields which can possibly lead to a negative cashflow.

2. In the event of sale of the property in the future you can benefit from geared capital growth (or in fact geared capital loss). If you purchase 10% shares of the property for £100,000 and we sell it for £120,000 in 3 years time your profit is 20%. If you do the same with 50% finance for £50,000 then your capital growth is twice as high. It is because your 10% share of the property represents 20% of the growth.

What if we decide not to sell property?

We typically take a fixed term gearing over the investment term. If we decide against the sale of the property, then we will renew the terms with the lender for additional investment term possibly on a fixed rate basis.

 

Why do we gear properties?

The answer is simple. Because there is better chance that YOU will make even more profit based on rising property prices.

1.4.5 How does gearing work?

Example: 

Mike made an investment of £20,000 and purchased 40 shares in CP SPV LTD investment, which is a 6 bed HMO property in Greater Manchester. 

  • This investment is 50% geared and the total value of the property is £200,000.
  • Underwritten rent for this investment is 8.5%
  • Property was purchased 15% below market value
  • Gearing interest rate is 5%
  • Investment term is 3 years 
  • Projected property valuation increase is 5% per year 

 

PROJECTED RETURNS:

Year 1  

Rental income from 40 shares which Mike purchased - £3,400 

Gearing costs on Mike's investment - £1,000 for interest owed to the bank. 

Total £2,400 - 12% gross return which is underwritten as rental income.

Year 2 

Rental income from 40 shares which Mike purchased - £3,400 

Gearing costs on Mike's investment - £1,000 for interest owed to the bank. 

Total £2,400 - 12% gross return which is underwritten as rental income.

Year 3 

Rental income from 40 shares which Mike purchased - £3,400 

Gearing costs on Mike's investment - £1,000 for interest owed to the bank. 

Total £2,400 - 12% gross return which is underwritten as rental income.

PLUS

Property was sold for the market price of £266,000 which reflected a 5% annual increase and initial 15% below market value purchase price. 

Property was sold as a guaranteed buy back option with an 8% fee and an 18% capital growth fee due to Crowdfunding Place portal. 

Amount from proceeding with the sale after the deduction of fees and selling costs is:

£237,000 which represents capital growth of 18.4% over 3 years. 

Capital growth for 40 shares which Mike purchased is £3,640 

Capital growth from amount  geared on Mike's investment is £3,640 

Total is £7,360 which represents 36.8% return of gross capital growth on investment.

Total calculation of figures for Mike's investment is: 

Year 1: 12.0% 

Year 2: 12.0%

Year 3: 48.8%

Gross return is 72.8% in money terms from £20,000 investment return with capital is £34,560* gross. 

This represents over 24% return per year. 

*This is the gross amount from which will be deducted costs of transactions, taxes, Crowdfudning Place initial fees, gearing fees, valuation fees and other related to property purchase and sale fees. 

1.4.6 How do I cancel my investment?

As per FCA guidelines, which we are obligated to follow, we provide you with a cooling off period during which time you are free to cancel your investment within 14 days of making a transfer. You need to complete a Withdrawal Form and send it scanned in PDF format to; payments@crowdfundingplace.co.uk

All money will be returned to your MangoPay e-wallet and we will not charge you any extra fees. If you invested in a currency other then GBP (Great British Pounds), you will receive your funds in your domestic currency into your bank account which will reflect and currency rate changes, providing you with either a profit or loss. 

1.5 Projected Returns

1.5.1 Rent

Rent is collected by the letting/management company and paid to each SPV every month. The SPV will pay rent in the form of dividends to investors every 3 months in arrears. Rental yields vary across all properties. The typical rental yield for a single let property in the North of England is 6%. For Houses of Multiple Occupation (HMO's) it is typically 8% after all management costs.

1.5.2 Capital growth

It is impossible to predict exact capital growth. It can differ across property types and location as well as prevalent market conditions.  

Generally, we expect an annual price growth of 5%.

Most of our properties are purchased below the market value in the region of 10%-15%, which gives investors profit from day one on top of any future profits from property valuation increases. 

1.5.3 Dividend

Dividend is a company's net profit which is paid equally amongst all shareholders.

Net profit is typically rent minus all expenses.

Dividend is paid to investors every 3 months to UK bank account holders and every 12 months for international bank account holders.

1.5.4 Secondary Market

At any time you are able to sell your shares in the SPV via the Crowdfunding Place portal. You decide the price you are selling your shares for. Therefore the sell price can be higher than the purchase price and generate extra profit. We have a 30 days cooling off period for the sale of shares. 

1.5.5 Currency fluctuations

If you invest in a currency other then British Pounds, you can make extra profit or generate extra loss. The currency exchange rate changes all the time and if your currency is stronger at the time of sale, that provides you with an extra profit.

1.5.6 Underwritten rent

All our multi-let HMO properties, hotel rooms, serviced apartments, and some single let properties, have rent underwritten by a trustworthy third party. This means that your investment is risk free during void periods, management issues and minor property repairs. All you do is receiving a set rent as the dividend.

1.6 Investment Security

1.6.1 Is Crowdfunding Place regulated by the Financial Conduct Authority

Crowdfunding Place is a trading style of Place 4 Financial Crowd Ltd, which is an Appointed Representative of Financial Brokers Ltd, who are directly authorised and regulated by the Financial Conduct Authority. Registration Number 706245

We are currently in the process of becoming directly authorised by the Financial Conduct Authority. We decided to go for direct authorisation to provide even more security to our investors and partners and to make sure we have full control over our conduct of business and open, honest relations with the regulator.

1.6.2 Registration and my personal details?

To comply with Anti Money Laundering (AML) regulations, investors are required to submit their personal information and prove their identity and residence. You are also required to demonstrate some knowledge and understanding of the crowdfunding process, and therefore required to select an "Investor Profile" and complete an appropriateness test. Participants will be categorized accordingly which will further determine the types of investment opportunities available to them.  

1.6.3 What determines property valuation?

All our properties are valued by an RICS (Royal Institute of Chartered Surveyors) valuer.  This gives a guarantee that the price which the property is purchased for is true and fair. We aim to buy all properties below market value in the region of 10%-15% so you can be sure that you make a profit from day one.

1.6.4 Legal obligations

All our investments are legally looked after by PLS Solicitors who are one of the biggest solicitors practise in the UK. Their work includes mainly conveyance and money laundering. As well as PLS Solicitors, we also use a Chartered Accountancy Practise to audit and manage all accountancy work needed during the process of share distributions within all SPV's.

You can feel 100% secure that you are a legal beneficial shareholder of the SPV who is the owner of the property and that all legal matters are handled by the right people.

1.6.5 Due Diligence

Our investment team has many years of experience in the property market. Their expertise includes both legal and financial skills as well as project management and property letting. We treat each investment as if it were our own money.

1.6.6 Restriction on title

Each property investment, for extra security for investors from around the globe, has a restriction on legal title that states the property cannot be sold without majority shareholder acceptance.

1.7 SPV and Legal Aspects

1.7.1 What is an SPV?

A Special Purpose Vehicle (SPV) is a UK incorporated limited company and is formed for the purpose of holding crowd funded property assets. 

1.7.2 Share nominee arrangement

Your shares are held under a nominee arrangement, with a nominee being the legal shareholder of the relevant SPV. The nominee holds those shares on your behalf and you will be entitled to all the economic benefits as the ultimate beneficial owner.

The purpose of this arrangement is to facilitate the electronic transfer of shares and for ease of administration and it is a widely recognised approach when dealing with crowdfunding properties as well as stock market investing.

1.7.3 Who is the nominee?

The nominee is Place4Financial Crowd Nominee Ltd.  The nominee is a UK limited company wholly owned by Place4Financial Crowd Ltd.

1.7.4 Property purchase costs

As with any property transaction there are certain expenses: valuation fees, legal fees, broker fees and mortgages/debenture costs.  Additionally, as the nominee and SPV are limited companies, there is an accountant fee for setting up and administering business.

The costs are clearly explained in each offering placed on the Crowdfunding Place website and are funded by investors.

1.7.5 Shareholders agreement

Each SPV has a Shareholders Agreement specifically created for crowdfunding. It gives each investor extra security as the investment has to be run in the way explained in the Shareholders Agreement.  It also specifically says that no sale of the property can complete unless there is a majority of shareholders acceptance.

1.7.6 Articles of Association

Each SPV has a dedicated Articles of Association and we highly recommend each investor to get familiar with the terms. You can find them in the documents section in each offering on our portal. 

1.7.7 Companies House

You can find each SPV details on the Companies House website.

Investments Exit Strategy

1.8 Secondary Market

1.8.1 How does it work?

If you wish to sell your shares at any time you can do so on the Crowdfunding Place portal.

All you have to do is contact us by either email or phone. We will then place your shares on the portal for sale and all proceeds will go directly to you.

So you can sell your shares at any time without needing to wait for an exit plan.

1.8.2 How much does it cost?

A platform-based crowdfunding fee of 3.4% is payable for all transactions in the secondary market where SPV shares are being put back on the market. This fee is split 50/50 between buyer and seller. 

1.8.3 Investment terms

You can sell part of your shares if you wish. The sale of shares will only take place once full funding is achieved and the transaction is closed by our solicitor. We have a 30 days cooling off period for the sale of shares.

1.8.4 Can I choose the price?

Yes. You can sell your shares for more or less than purchased for. Effectively you can make profit by just selling your shares to other investors.

1.8.5 Can I sell outside the portal?

Yes.  You can sell shares outside of the Crowdfunding Place portal but this needs to first be approved by us.

Can I reinvest after sale of my shares

Yes, you are more then welcome to reinvest your money after you sale your shares on our platform. 

1.9 Payments & Tax

1.9.1 Payment charges

You do not pay any charges for bank transfers. Crowdfunding Place cover all costs from our funding fee. 

All Debit and Credit card payments are subject to a MangoPay tariff. Currently the fees are:

1.9% plus £0.20 for Credit Card Payments

1% plus £0.20 for all Debit Card Payments

For updates about current MangoPay tariff please visit the MangoPay website

Bank transfers are the recommended payment method for Crowdfunding Place to avoid extra charges for our investors.

1.9.2 Making payments in a currency other than British Pounds?

We use a well established foreign exchange broker for all overseas transactions. This gives us and investors a guarantee that exchange rates are lower than in any high street bank. We support most international currencies: EUR, USD, Dirham, IRR, PLN, CHF, CAD, AUD and many others.

1.9.3 Stamp Duty Land Tax

When the SPV is created and is buying the property, then Stamp Duty Land Tax is payable. Tax is included in the offering amount and is collected by Crowdfunding Place and paid to HM Revenue and Customs via our solicitor.

The current rates for of tax payable for residential properties are as follows:

Up to £125,000 - zero tax payable

The next £125,000 (the portion from £125,001 to £250,000) - 2% tax is payable

The next £675,000 (the portion from £250,000 to £925,000) - 5% tax is payable

The next £575,000 (the portion from £925,001 to £1.5mln) - 10% tax is payable

The remaining amount (the portion above £1.5mln) - 12% tax is payable

There is an additional 3% Stamp Duty surcharge for each Buy-To-Let investment.

1.9.4 Stamp Duty Reserve Tax

When the property is already owned by the SPV, and shares are being sold to investors, then Stamp Duty Reserve Tax is payable.

When you buy shares, you usually pay a tax or duty. The current rate is 0.5% of the transaction.

The tax amount is collected by Crowdfunding Place and paid to HM Revenue and Customs via our solicitor at the time of completion.

1.9.5 Dividend

Dividend is paid from company net profit and effectively it is rent minus all expenses connected with the property and the SPV.

Dividend is paid to investors every 3 months for UK bank account holders and every 12 months for international bank account holders.

Each investor has to pay tax on dividend received (if any) in the country where they reside.

1.9.6 Corporation Tax

Each SPV is subject to corporation tax in the UK. Dividend is payable to investors after tax is deducted.

Current corporation tax rate in the UK is 20%.

1.9.7 Our Fees

  1. Crowdfuding Place will charge a 4.2% transaction fee for arranging the issue and/or placement of securities at completion of the property acquisition to be undertaken by each SPV; such fee to be calculated on the Total Investment Required and to be invoiced to the SPV at that time. For example, the fee due to Crowdfunding Place on a property with a purchase price (including acquisition and related costs) of £200,000 will be £8,400.
  2. 18% share of capital growth based on the difference between the purchase and sale price of the property after all costs associated with both purchase and sale,
  3. A platform-based crowdfunding fee of 3.4% is payable for any transaction in the secondary market where the SPV shares are being put back on market. This fee is spilt between buyer and seller 50/50. 
  4. 0.5% annual Management Fee of SPV. It is taken out from rental income - so if gross annual rental yield is 8% then 0.5% is deducted which leaves 7.5% net rental yield

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