CrowdProperty is the only platform offering property project loans (including bridging, auction, refurbishment, conversion and development loans) that is a member of the Peer-to-Peer Finance Association (P2PFA), a self-regulatory body for peer-to-peer lending which aims to provide increased transparency around loan book performance.
To date, the platform has funded over 150 property project loans with a 100% capital and interest payback record to investors. In order to reduce risk, CrowdProperty takes first charge security on all loans listed on the platform, typically offering investor returns of 7.0-8.0% per annum.
Minimum investment: N/a for cashback; £500 minimum investment per loan for SelfSelect; £500 minimum to setup investment in AutoInvest (that can be spread over up to 10 loans, so £50 per loan)
- Time in business
- Hands-off investing
Summary of key features
The key features of the CrowdProperty investment account are listed below.
|Estimated annual returns||7.0 - 8.0%|
|Loan security||Exclusively first charge security against the subject property assets|
|Early exit||No, as all loans are short term (6-24 months, average 14 months) and there is no secondary market|
|Auto re-investment||Yes, the platform features an AutoInvest and AutoReinvest feature.|
|Minimum investment||There is a £500 minimum investment in each project loan. However, if you invest a minimum of £500 via the AutoInvest feature, you can spread this cash across multiple loans as low as £50 per loan for easy diversification.|
|Innovative Finance ISA||Yes, investments can be made via an IFISA.|
|Pension investments||Yes, investments possible from SSAS and SIPP pensions.|
|FCA regulation||Directly authorised|
Detailed CrowdProperty review
CrowdProperty Limited (‘CrowdProperty’) was incorporated in November 2013. The business launched in 2014 and became FCA authorised in 2017. The largest shareholder is currently Simon Zutshi, who controls 47.1% of voting rights at the time of writing (November 2019). Simon co-founded the business (with Mike Bristow and Andrew Hall) and currently holds the role of Chairman. Mike Bristow is Chief Executive and Andrew Hall Property Director. The business raised £1.1 million of external funding in March 2019 via the Seedrs platform, which valued the business at £15.7 million (pre-money).
What type of loans are offered?
CrowdProperty exclusively offers property project loans (including bridging, auction, refurbishment, conversion and development loans) which are always secured with the first legal charge against the subject property assets.
What are the key lending criteria?
Borrowers and their teams are required to have a proven track record in property development. You can find out more information about the borrowers prior to making any investment in specific loans and there is the opportunity to ask questions to the borrower on pre-launch webinars held for every project.
The maximum LTV accepted by CrowdProperty is 70% (i.e. the value of the loan, plus all rolled-up interest, shall not exceed 70% of the RICS-certified value of the property). Certain loans for larger projects are phased – in these circumstances, an LTV value is calculated for each phase of the project.
Aside from LTV, CrowdProperty also considers ‘Profit on Cost’ (‘POC’), ‘Loan to Cost’ (‘LTC’) and ‘Loan to Gross Development Value’ (‘GDV’) when analysing deals. Where POC exceeds 25% and planning is in place, a borrower would qualify for the maximum 70% LTV if LTGDV is less than 70%. If the POC is less than 25%, CrowdProperty also considers the LTC formula (loan amount divided by hard construction costs) in determining the maximum amount to be loaned, again with a maximum of 70% LTGDV.
A maximum of 100% LTC is accepted when providing development finance, provided the expected POC exceeds 25%, typically when the initial asset is owned.
What is the typical duration of loans on the platform?
Loan terms for individual loans vary between 6 months and 2 years in length, with an average of 14 months. This information is clearly stated within the specific loan details.
How frequently is interest paid?
No interest is paid throughout the term of the loan (unless the borrower makes a partial repayment). Both capital and interest repayments are due back at the end of the loan term.
Interest on occasional serviced bridging loans, which are clearly labelled on the project page is paid monthly.
Can I sell my loan investments early?
No, CrowdProperty does not operate a secondary market. It is important to understand that your funds are committed until the end of the loan term (and potentially later if the project(s) you invest in are subject to delays).
What different products does CrowdProperty offer?
You can either invest in individual loans of your choosing, or via the AutoInvest feature which will automatically invest your funds across new loans on the platform (subject to rules set by you i.e. maximum pledge per loan).
When investing in individual loans, the minimum investment is £500. This same limit applies to AutoInvest, however, the £500 minimum investment is spread across 5 or more loans with a minimum individual loan investment of £50, meaning you can enable greater diversification without needing to invest quite as much money on the platform.
Both the SelfSelect and AutoInvest options are available via an IFISA account (Innovative Finance ISA) or Pension (SIPP Self-Invest Personal Pension and SSAS Small Self-Administered Scheme).
How frequently are new lending opportunities offered?
The frequency of new lending opportunities varies, however CrowdProperty aims to average two new loans per week. A short term pipeline is provided on the home page to give a view of upcoming investment opportunities.
How good is the reporting on CrowdProperty performance?
The reporting via the dashboard is simple and easy to follow. Once logged in, all investments can be found on your investment portfolio dashboard.
This will show all of the key information relating to your investments (i.e. project name, amount invested, interest rate applicable, loan start/end date, current status and expected interest).
Loans held within your Standard, Pension or IFISA portfolio will be shown within a separate portfolio page.
The page is split into ‘funds not received’ (where cash has not yet been received for pledges made), ‘Not yet started’ (funds invested, but the loan has not commenced), started (loan has commenced, interest generated from the specified start date) and completed (a record of all loans repaid via the platform). Expected capital repayment timing is also helpfully laid out and the entire lending and transaction histories can be downloaded in csv format.
CrowdProperty also features a statistics page which provides a detailed view of historical investment performance.
What happens if a borrower does not repay on time?
If a borrower does not repay on time, CrowdProperty would consider granting an extension on the loan, though this is dependent on the specific circumstances. If a loan is not repaid by the loan end date the borrower would be subject to penalty interest and the lenders would receive additional interest for the extended period. CrowdProperty retains first charge security on each underlying property – this enables the business to initiate proceedings to take possession of the property if the loan is not repaid when due. In these circumstances, CrowdProperty would be the first to be paid out and would have control over the recovery processes.
What are the key risks in investing in CrowdProperty?
The two key risks are 1) borrower default and 2) platform insolvency. The risks of borrower default are present across all forms of peer-to-peer lending and are partially mitigated by the due diligence conducted by the platform, set lending criteria (outlined above) and the first charge security taken on each loan. To date, the platform boasts 100% investor capital and interest payback record (though as always, there can be no guarantees regarding future performance of loans made via the platform).
With regards to the second risk, peer-to-peer investors should continually monitor P2P platforms for any early warning signs. At the time of writing, CrowdProperty made a small profit in FY18 (year ending March 2018) and raised further investment in FY19 (see further info below).
CrowdProperty has a publicly available and rather comprehensive wind-down plan. In the event that CrowdProperty were to go into administration, Smith and Williamson (a top 10 ranked accountancy firm) would be appointed as administrator. The plan quotes Smith and Williamson as believing the businesses cash flows would provide sufficient cover for the wind down period of the loan book. It’s important to remember that investors maintain the rights to the underlying loans. The wind down plan is required to ensure that the business has sufficient cash flow contingency plans to ensure the business can be operated until such a point that all loans offered via the platform are administered with funds returned to investors.
Is CrowdProperty financially secure?
The business last filed accounts in October 2018 for the year ending 31 March 2018. In this year, the business broadly broke even (£1,178 profit) and had net assets of £615,000. These accounts are unaudited. Given the business raised additional funding in March 2019 (£1.1 million via Seedrs), there are no current signs of financial unease. We will update this page with commentary when the FY19 accounts are filed.
How easy is the CrowdProperty sign-up process?
The sign-up process is quick easy. You will need to provide proof of identity and proof of address to complete checks. Once provided, your account should be verified within 24 hours.
How good is the feedback online?
Feedback online appears strong, with a TrustPilot rating of 4.8 out of 5 at the time of writing.
Visit the website to invest/learn more – http://www.crowdproperty.com/