Frequently Asked Questions

Yes, anyone can invest in our projects and we welcome both individuals and companies.

Banks requirements have been getting higher, especially after the introduction of Basel III, which was developed after the financial crisis 2008-2009. This means for example that a project previously financed by banks up to 60 percent today maybe only get financing for 40 percent. In connection with this, equity requirements have become higher for construction companies in general.

Even though many companies today are sitting on good real estate projects with existing building permits, they are forced to build one project at a time. For each project they build, they can move profits forward into the next project. If they instead finance projects through several smaller lenders – they can often run multiple projects simultaneously. This is called leveraging your equity.

The leverage effect is the primary reason that property developers can pay the high interest rate. It is worth the high interest rate because they grow financially stronger faster. Many smaller companies are sitting on amazing projects and have the same collateral to offer as bigger companies but lack the capital resources. For these companies, private investors plays an important part to make sure more projects gets built. And more completed projects are what the UK needs today to reduce the growing housing shortage.

The security of the investment depends on the investment structure. For example, if an investor can provide the entire cost of the project, we can offer a first charge security on the asset, in this case the property. If the investor provides funds to cover the remaining part of costs above senior debt, a second charge security can be offered. This is proving that there are several and different models to use to find a sustainable and secure solution for the investment. But keep in mind that a security does not represent a guarantee that your money will be refunded in full – when investing, your capital is always exposed to risk. Don’t hesitate to contact us to discuss possible solutions further.

The different interest rates depends on several factors. A common saying it that interest is the price of risk. Higher interest rates therefore usually also mean higher risk. Real estate projects seeking finance are in general limited in terms of funding by the bank. The reason the bank says no is often due to the company’s short history or the banks general rules or not having enough equity.

A legal charge is a method by which a lender protects the money they have lent to an individual or company. It is a legal document signed by the borrower and which is registered against a property at the Land Registry so as to alert any potential buyer of the existence of the debt.

Whether a loan is a first, second or third charge describes the order in which the lenders can collect their money. The first charge lender will recoup their money, followed by the second charge lender, leaving the third charge lender last in line. This presents an element of risk for lenders who provide second and third charge loans. In the event that the property is repossessed and sold, they may end up losing out to the earlier lenders. Assets can only be secured for up to 100% of their sale value, which in theory means that every lender should make their money back.

However, if the property sells for less than its expected value this can easily lead to lenders further down the charge chain losing out.

The higher risk imposed means the interest offered to lenders will often be significantly higher.

A debenture in very simple terms is an agreement between a lender and a borrower which is registered at Companies House and lodged against your company’s assets. The debenture is sometimes called a ‘floating charge debenture’ and includes all company assets.

Put simply, a debenture is the document that grants lenders a charge over a borrower’s assets, giving them a means of collecting debt if the borrower defaults. … To register a debenture, a lender simply has to file it with Companies House. This can usually be done in a matter of days.

While this may vary slightly from property to property, funds are generally paid into the buyer’s bank account as each quarter. This is an automatic payment, so once you have provided your bank details, you simply need to wait for the money to arrive. The money invested will be payed back at the agreed date. You can also choose to get your total interest payed as a lump sum when you get your invested money back.  

You do not have to visit the UK as all parts of the transaction can be done by email, post, web chat and/or telephone. You are, of course, welcome to visit and meet our partners and view properties and we can help you arrange this if you wish.