CrowdProperty provides funding for property professionals and carefully curated, secured investments for all

Frequently Asked Questions

Borrowers

Do I need to be an experienced investor/developer to obtain a loan through CrowdProperty?

Yes. We will only consider projects from experienced investors and developers as we need to do everything we can to ensure the project is successful and that ultimately the lenders get the return of their funds along with all their due interest.

What factors do you consider when considering whether or not a Development should be listed on the CrowdProperty Platform?

The following parameters are considered;
  • Residential development type and related aspects
    a. Planning permission status
    b. Restrictions on the build i.e. grade II listing
    c. Difficulty of build i.e. hazardous waste disposal(asbestos)
  • Size - Square footage
  • Sale value by finish type – high, medium, low
  • Development location (reviewing in line with location/demographic of buyers)
  • Track record of developer
  • Loan size, loan term and Loan to Value (LTV at project start and projection through project, based on project status)

    We consider loans of between £200,000 and £2,000,000 for developments of between 6 and 24 months

    We will consider loans of up to 70% of the value of the property security and with a potential profit of 25% on cost.

  • Exit strategy
  • ‘Skin in the game’ – how much the developer is putting into the project on a % basis . We would expect at least 25%   
  • An assessment of Key Man risk

The decision to approve placing a project on to the platform is made by the CrowdProperty Investment Committee.

Projects that fall within these criteria are then reviewed in three aspects;

(i) The Project development team including the assigned contractors are interviewed to ensure that they have completed the project timetable and the proposed timeline for completion includes normal contingencies.
(ii) The contractual documentation is reviewed.
(iii) The planning and related regulatory requirements are being met

This documentary and experience review stage can take several weeks depending on the stage the project management team have reached when they propose a development for funding.

What will the process be if the Borrower does not repay the loan on time.

  1. CrowdProperty will appoint an LPA Receiver with the consent of the Borrower.
  2. The loan must be formally and objectively in default under one or more of the conditions in the loan agreement.
  3. The Borrower must be given a minimum of 7 days notice after being notified of the default to correct the default.
  4. Once the decision has been made to appoint a LPA Receiver;
  5. The letter of appointment is agreed between the Lender and the Receiver
  6. The letter of appointment is registered at Companies House
  7. The appointed LPA Receiver is sent all relevant legal and surveyor details of the property
  8. The Lender and the Receiver agree the best way to realise the value in the property for the protection of the Lenders interests
  9. The Receiver sends the Lender and Borrower a budget plan for associated costs; legal; insurance; maintenance; sales agent or auction fees.
  10. The Receiver Insures and arranges protection for the building.
  11. The Receiver considers whether the procurement of an Energy Performance Certificate and/or listing on the Asbestos Register is appropriate.
  12. Once the initial brief is agreed
  13. The Receiver reports on a “as events occur” basis but no less than once a week until the property is sold
  14. During the time between appointment and the eventual return of monies to the Lenders all monies are handled through the CrowdProperty Solicitors Client Account.
  15. Once the property is sold
  16. On sale of the property the proceeds are passed through the Client Account back to the Lenders. Any surplus after costs is passed back to the Borrower.
  17. CrowdProperty prepare final accounts and agree these with the Receiver before sending to Borrower and Lenders

What would happen if CrowdProperty goes into liquidation and is thereby unable to operate the Platform

All platforms and the companies who run them, such as CrowdProperty, are required by the Financial Conduct Authority to provide for companies to take over the responsibility of running the Platform is the current operator goes into liquidation.

CrowdProperty has arranged for such a facility ( known as a Living Will Service ) should the need arise, you can contact them via the existing CrowdProperty contact numbers and Platform email .

The Financial Conduct Authority require us to point out that in such circumstances there would be no recourse to the Financial Services Compensation Scheme

What security will I need to offer you?

We will always take a registered first charge on the property, which will be held in trust on behalf of the lenders. We usually also require a personal guarantee.

How much interest do you charge?

For Development Finance the interest rate is 10% per annum and is paid at the end of the project. We have fixed interest rates as its simple fixed rate annual interest, not compound and our due diligence process identifies only good lending opportunities rather than varying the rate for riskier ones.

How long are the loans for?

The loan will be for a set period depending on the product you chose and your requirements. For the Development Finance product, loans will be from 6 to 24 months. You will need to decide how long you require the loan for, as we need to make this very clear to the lenders how long their funds will be required for.

What are the costs associated with these loans?

We make our money by charging fee for the Development project once we have successfully raised your funding target. You will also need to cover your own solicitor’s costs and third party costs such as RICS valuations, and any monthly monitoring survey costs for draw down facilities.

Can I use my own solicitor?

Yes you are free to use any UK property solicitor you want to represent you, any costs incurred will be paid by you.

Can I repay the loan early?

There may be an opportunity to repay your loan early and this would be made clear in the loan offer letter if your application is approved.

What happens if I can’t repay the loan?

Our primary concern is to protect our lenders. If we think there is any chance of you not repaying the loan then we will not list the project in the first place. We will always require a legal first charge so that in the event of a default we could control the asset and manage the project until such time that we can return funds to the lenders.

How do CrowdProperty make their money?

We charge the borrower a fee on successfully funding their project. This includes an upfront application fee, which we charge to cover the cost of processing the application.

Lenders

What is the lending process?

The lending process is as follows:

  • Once a project has been made live on the CrowdProperty platform, registered lenders can view the opportunity and make a pledge if they wish. At this stage the lender does not send any money.
  • Your pledge can be increased, reduced, withdrawn or transferred to another available project at any time up to the point where your funds have been transferred.
  • Once all of the pledges from all of the lenders on that project totals the amount of the borrower loan then the lenders will be asked to send their funds to our solicitor’s secure client account.
  • CrowdProperty will indicate the date on which the loan (and therefore lender interest) starts, however, we will start to ask for funds to be transferred in the week leading up to the expected project start date. This means that your money may sit in your designated client account for a short period before you start to earn interest.
  • Once the project commences your interest will be accrued until the end of the project when both capital and interest will be paid back by the borrower.

How is my money held pending disbursement to the Borrower?

We arrange for you to open a designated client account with our money transfer agent. The terms and conditions of this account are sent to you when we accept your pledge. Your money is held in this designated client account with a UK Clearing Bank. This account will be covered by the Financial Services Compensation Scheme (FSCS), as the administrator of the UK's Deposit Guarantee Scheme (DGS).

Who are we lending to?

Loans are to experienced property professionals either as part of a property business or as individuals.

How do you decide which projects to approve and which to reject?

We put all of the individuals and projects through an extensive screening process to make sure they meet our tight criteria. With years of hands on experience in property development and investing, one of our unique advantages is that we have a robust and proven understanding of what makes a great property deal.

How much interest can I earn?

The amount of interest you can earn is up to 8%

The term of the loan is typically between 6 and 24 months. We have fixed interest rates as its simple fixed rate annual interest, not compound and our due diligence process identifies only good lending opportunities rather than varying the rate for riskier ones.

How much money can I lend?

You can lend as much as you want with the minimum being just £500.

How long are the loans for?

Each project will clearly state how long the loan period will be for. We agree a fixed loan period with the Borrower. However, property development is a business which cannot always be planned to a fixed timetable and there will be times when it is in both the lenders and the borrowers interest to agree an extension to the loan period. When we do agree to such an extension we advise lenders within 7 days.

This will be a set amount of time. Usually between 6 to 24 months for a development project.

Can I access my money early if necessary?

Sorry, no. When you make a loan, your money will be tied up for the duration of that loan and you will not be able to access it early. Before making any loan please make sure that you are happy to leave your money in for the specified amount of time.

How can I minimise my risk?

At CrowdProperty we do everything we can to “de-risk” the loans as much as possible, but there is always going to be an element of risk. We do not offer any advice to the lender on a particular project. We do recommend that if you are not sure about something that you seek independent 3rd party advice. To assist you with this process we include the RICS valuation report on the Platform. However we must stress that the Valuer limits their liability to individual lenders and you should not consider that this information gives you any legal rights.

How are the loans secured?

Loans are always secured with a registered first legal charge on the property, which will be held in trust on behalf of all the lenders.

What happens if the developer/investor goes bust?

Whilst we do everything to assess the project and the borrower before offering up the opportunity sometimes unexpected things happen. We will always secure a first legal charge against the property in case we have to repossess it. In this instance, CrowdProperty and our solicitors would take the necessary steps to control the property in order to complete the project using our experience and property contacts, to allow us to return funds to the lenders.

Do I need a solicitor?

CrowdProperty will appoint a solicitor to represent us, and all of the lenders, in dealing with the developer’s solicitor. The solicitor will collect funds from all of the lenders and ensure that they are used appropriately and secure the first charge on behalf of all the lenders. CrowdProperty will pay for this solicitor so you don’t have to.

Do CrowdProperty charge the lenders any fees?

We do not charge the lenders any fees for this service. Instead we charge a fee to the borrower when the crowd successfully fund their project.

Do lenders get any equity or share of profits from projects?

There is no equity or profit share. This is a simple loan secured with a first legal charge on the property. Before the borrower can extract any profits from their project, they have to return your funds and pay you the agreed interest.

How is CrowdProperty different from other peer to peer platforms?

What makes CrowdProperty different from any other peer to peer lending platform is that our team have years of hands on experience of property investment and development, which means that we have a robust understanding of what makes a great property deal. We utilise an extensive screening process to ensure that we only give the “CrowdProperty Approved” stamp, to the very best projects and hence “de-risking” the loans as far as possible, to protect against default and enable the safe return of funds plus interest to our lenders.

Do I have to pay tax on my interest?

The interest you earn from your loan is liable to income tax at whatever level you currently pay. It is your responsibility to declare any income and pay the appropriate tax on your tax return.

Where can I find the loan agreement?

We can supply lenders with a generic copy of a project contract when requested.

Can I pledge as a company?

Yes. We will need you to email CrowdProperty the following information:
  • Company name & Companies House number.
  • Names, addresses and dates of birth of any directors.

Can I change my pledge?

Once you have transferred your funds to our solicitor, you may not change your pledge. Before this time, pledges can be reduced, increased, cancelled or moved from one project to another. In order to do this, contact CrowdProperty and we will do this on your behalf.

Do you accept international lenders if they have a UK bank account?

Lenders need to be UK residents.

Can I transfer funds from a joint account?

Yes. We will need anti money laundering (AML) documents to check both members of the bank account

How do I close my account?

Contact CrowdProperty. We will do this on your behalf

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