Bridging Loans: What You Need To Know

A mixture of growing availability and booming housing market have made bridging loans an attractive choice for both individual property investors and businesses alike.

In spite of growing popularity, as more people become wise to the sheer flexibility that bridging loans offer, there are still plenty of potential investors who are still unaware of the benefits of bridging loans and how they can be used.

It is now possible to invest in products which deliver returns to investors by making bridging loans to borrowers. Once considered wholly a specialist product for high net worth investors and well-funded specialist finance companies, bridging loans are increasingly being used for a wider range of UK property investments. It’s now much more possible for lower level investors to take advantage of the benefits offered by bridging loans, particularly via development loans and P2P secured lending in property investment.

As borrowers begin to recognise the applications of the short term finance that bridging loans can offer, more are using the funding for their property investments or businesses.

Bridging loans can be used for a number of functions, including the support of residential or commercial property transactions, development or renovation projects, and also purchases through property auctions. Likewise, business buyers are using bridging loans when a quick cash injection is necessary.

What Are Bridging Loans?

Bridging loans are usually short term loans, generally 12 months or less. They can be used as a “bridging” solution until next stage or permanent funding becomes available, or until they sell a property.

Bridging loans are also, typically, quicker to secure, whilst retaining security and flexibility for the borrower. Where a quick financial boost is required, a bridging loan can come in very handy.

This financial option is used by businesses where short term funding is necessary in order to:

  • Raise capital
  • Settle tax liabilities
  • Deal with emergencies
  • Meet business obligations
  • Purchase necessary items

Where an investor is purchasing a property or raising funds for refurbishment, bridging loans come in handy.

They’re suitable for:

  • House Builders
  • Landlords
  • Home Buyers
  • Property Investors
  • Developers

How Do Bridging Loans Work?

The principal difference between a regular loan and a bridging loan is organisational time taken to push the funding through. With regular lenders, it can take months to complete, but with a bridging loan, the finance can be ready in 24 hours or less.

Why Use Bridging Loans?

Bridging loans allow property investors to take advantages of opportunities as and when they arise. For example, to secure property deals, like with discounted asking prices, and also in the resolution of emergency situations where the funds would not otherwise have been available.

On the downside, bridging loans have higher interest rates than on regular loans. That’s why they’re principally used as a short term solution.

Businesses may use bridging finance for:

  • Tax: if a tax demand is made, and the required amount can’t be accessed within the necessary timeframe.
  • Raising capital: where a company needs to raise a sum in a short timeframe, bridging loans can be secured against property or land.
  • Business Obligations: To overcome financial difficulties or meet obligations of the business, a short term bridging loan can provide a solution.

Property Owners/Homeowners may use bridging finance for:

  • Repairing a broken property chain: where a homeowner is at risk of losing the home they’re set on purchasing, if a buyer in the chain drops out.
  • Temporary Cash Flow: during a property transaction where a short term influx of cash is necessary.
  • Downsizing: for owners who are downsizing, and therefore don’t need a mortgage, a bridging loan can help them to buy before their existing property is sold. This allows them to move independently, and quicker than if they’d had to wait.
  • Quick securing of property: to prevent a buyer from missing out on the property they want to buy before their existing one is sold.
  • Building a home.
  • Property conversion: for those wishing to convert a barn or other property, or for developers looking to turn a profit.

Developers or Investors may use bridging finance for:

  • Development and renovation projects.
  • Fast access to funds (as above).
  • Un-mortgageable properties: for fixing up dilapidated properties for which a mortgage wouldn’t be approved, a bridging loan can give investors the chance to renovate and sell at a profit.

So How Much Could I Borrow With A Bridging Loan?

As with any loan, it depends both on your circumstances and on the lender themselves.

Generally, the minimum you could borrow would be about £10,000. At the upper end of the scale, the limit is usually £1,000,000, though some lenders can go significantly higher than the £1,000,000 mark.

Payments

The structure of bridging loans does differ from one to another. Some bridging loans allow the borrower to just pay off the interest each month, and repay the loan at the end of the term. This structure is generally most suitable for those who will have access to regular cash flow throughout the duration of the loan, enabling them to meet the monthly interest payments. Alternative options include retained interest or “rolled up” interest.

  • “Rolled Up” Interest

This means that, rather than paying the interest every month during the term, the interest is effectively “rolled up” and paid at the end of the term. This is an option usually considered by borrowers who won’t be able to make interest payments monthly during the term, until the lump sum comes in at the end allowing them to pay back the loan and interest in full. In this case, however, the interest is typically compounded, meaning the repayment at the end of the term will be larger.

  • Retained Interest

Sometimes, it’s possible for a borrower to retain an amount from the loan representing a number of monthly interest payments, to help them meet those monthly interest payments. This option allows the borrower to choose the number of months, dependent – of course – on their affordability criteria. As the retained interest is still a part of the capital loan sum, interest will be charged on this amount. Equally, the total loan must be within the loan to value figure.

By the time the loan is redeemed, if there remains any unused retained interest, the lender tends to offer the borrower credit for this amount.

Interest Rates

This, again, depends on the lender. The actual rate of interest a borrower will pay also depends on:

  • The borrower’s credit score
  • The Loan to Value (LTV) – typically 70% – 75%
  • Whether it’s an open or closed bridging loan (see below)
  • The type of security the borrower can supply

The reason that the interest rates on bridging loans are usually higher than on mortgages is that the lender engenders more risk through bridging loans.

Typically, you can expect to pay between 1% and 1.5% interest per month, plus a 1%-2% arrangement fee or broker fee.

The Process

Whilst the process of funding with bridging loans can take as little as a few hours, depending upon the circumstances, it usually takes between a week and a month. In the case of a complex development loan, for example, it could take even longer. This is because these sort of complex loans need to meet a number of conditions, which will have to be discharged by the LPA (Local Planning Authority).

Paying It Back

You will, as with any loan, be expected to pay it back by the end of the term. The interest payments can be paid in whole when the total sum is repaid, retained from the loan at the commencement, or simply made via monthly installments.

Bridging Loan Periods

As mentioned, bridging loans are usually lent over a maximum 12 month period. It’s more practical for these higher interest loans to be simply short term solutions. Nonetheless, you can usually pay it off at any time within the given time period, if your finance comes in sooner.

It’s important, with bridging loans, to look at the overall cost of the loan, including all fees, rather than focusing solely on the interest rate charged.

The Two Types of Bridging Loan

  • Open Bridge

In this type of bridging loan, the borrower is required to set out a proposed exit plan for the repayment of the loan, but at the outset there’s no definitive date set. With an open bridge, a cut-off point is defined by which the loan must be repaid.

  • Closed Bridge

As above, the borrower has to meet a set date for the repayment of the loan. If the borrower, for example, has already exchanged on the sale and has a fixed completion date. The bridging loan will be repaid by the sale of the property.

Will I Need Legal Advice?

It’s always recommended that, when instigating a bridging loan application, the borrower engages an independent solicitor before signing any legal documents. This will ensure that both you and the lender are protected.

Finding A Reputable Lender

It’s important to ensure you are dealing with an accredited, reputable lender when obtaining a bridging loan. Make sure that the one you choose is:

  • A Member of the Council of Mortgage Lenders
  • Is both authorised and regulated by the Financial Conduct Authority (FCA)
  • Has experience working on similar projects to yours
  • Has a proven track record in the field

Increasing numbers of property buyers and investors, both business and individual, are recognising the usefulness of bridging loans for short term funding. If it sounds like an option that might be useful to you, then make sure you do plenty of research before getting involved!

As always, don’t forget to check out our current investment opportunities, and register with us to find out more about investing with The House Crowd.

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Glossary of Property Investment Terms

There are a lot of terms unique to the investment world that will be new to those just embarking on building a property portfolio. That’s why we thought it would be very useful for you to have a thorough Glossary of Property Investment Terms to help you to thoroughly understand some of the finer points of investing. We hope you find it useful!

Glossary of Property Investment Terms | The House Crowd

A Shares 

A class of shares which have specific rights attached to them, as set out in a company’s articles of association.

Angel Investors

Investors who provide investment and other support to early-stage businesses. Traditionally angels are wealthy individuals who have a significant amount of entrepreneurial, industry or investment experience.

Angel Network (or Angel Syndicate)

A group of angel investors that pool together money and other resources to invest in, and provide support to, early-stage businesses.

Annualised Return

Average return each year over the minimum term, based on the total of rental income and estimated capital growth.

Find out more about Annualised Returns here.

Articles of Association

A company document that sets out its management and administrative structure.

The articles dictate the internal affairs of the company such as director and shareholder rights, the issue and transfer of shares, and the organisation of meetings.

Asset Class

A class of economic property that has similar characteristics. Listed shares, government bonds and real estate are all asset classes.

Glossary of Property Investment Terms | The House Crowd

B Shares

A class of shares which have specific rights attached to them, as set out in the company’s articles of association.

Below Market Value (BMV)

Properties are sometimes sold at below the market value, meaning they are offered at lower prices than comparable properties.

Beneficial Shareholder / Owner

An investor who owns the economic value and other shareholder benefits attached to shares, such as dividends and tax reliefs, but the registered title to their shares is held with another person or entity often for administrative convenience.

Bridging Finance

Bridging loans are a short-term funding option. They are used to ‘bridge’ a gap between a debt coming due – primarily for property transactions – and the main line of credit becoming available. Alternatively, they can act as a short-term loan in pressing circumstances.

Glossary of Property Investment Terms | The House Crowd

Capital Employed  

The sum of shareholders’ equity and debt liabilities; can be simplified as Total Assets – Current Liabilities.

Capital Growth

The increase in value of an asset or investment over time, measured on the basis of the current value of the asset or investment, in relation to the amount originally invested in it.

Convertible Equity

An equity investment where money is invested in a company in exchange for shares to be issued at a later date. The share issue is generally triggered by the company raising finance from other investors. In return for investing early, the convertible equity investors receive a discount on the price of the shares issued to the other investors.

Convertible Note

A debt investment where money is invested in a company with the expectation that the debt will “convert” into shares issued at a later date. The share issue is generally triggered by the company raising finance from other investors. Before the conversion, the investor is paid interest.

Crowdfunding

The funding of projects or ventures by raising money from a large number of people, usually online. The three main types of crowdfunding are equity, debt and rewards/donations.

Glossary of Property Investment Terms | The House Crowd

Damp Proof Course (DPC)

A barrier through the structure by capillary action such as through a phenomenon known as rising damp.

Debt

Money owed by one person/company to another. The borrower has to repay the money at a later date and generally also has to pay interest.

Dilution

A reduction in the ownership percentage of a share in a company caused by the issue of new shares.

Diversification

An investment strategy that involves mixing the amount, values and kinds of investments within a portfolio to spread risk and minimise losses.

Dividend

A dividend is a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.

Dividend Distribution

The distribution of a portion of a company’s profits to investors.

Drag-Along Right

A contractual obligation that allows majority shareholders to force minority shareholders to join in the sale of a company on the same terms, valuation and conditions of the majority shareholders.

Glossary of Property Investment Terms | The House Crowd

Enterprise Investment Scheme (EIS)

A UK tax scheme offering income tax and capital gains tax reliefs to qualifying private investors who invest in eligible businesses.

Equity

Shares or other securities that represent an ownership interest in a company.

Equity Crowdfunding

A type of crowdfunding that enables multiple investors to a buy shares, or other equity interests, in a company, usually through an online process.

Exit

An event when investors may be able to cash in and sell their shares, such as an initial public offering (IPO) or trade sale.

Glossary of Property Investment Terms | The House Crowd

FENSA Certificate

Documentary evidence that the installation work has been self-certified to comply with the Building Regulations

Financial Conduct Authority (FCA)

The financial services regulatory body in the UK, formerly called the Financial Services Authority (FSA).

Fully Diluted

All the shares of a company in issue, plus all shares which are the subject of options or other contractual rights to be issued in the future (regardless of whether the right has vested).

Fund  

An investment opportunity that seeks to raise money to be invested across multiple businesses. Fund campaigns are commonly used to invest in businesses participating in accelerator programmes and competition winners.

Glossary of Property Investment Terms | The House Crowd

Gas Safety Certificate

By law, landlords must have all gas appliances serviced regularly, normally once a year, by a Gas Safe registered engineer.

Gross Development Value (GDV)

The estimated value that a property, or new development, would fetch on the open market if it were to be sold in the current economic climate.

Gross Rate of Return

The total rate of return on an investment before deduction of any fees or expenses. The gross rate of return is quoted over a specific period of time, such as a month, quarter or year. It is often quoted as the rate of return on an investment in marketing materials.

Growth-Stage

The stage that a business is at when it has passed its ‘seed’ or initial stage and has established proof of concept and looking to grow.

Gross Yield

The yield on an investment before the deduction of taxes and expenses (such as management fees and maintenance costs). Gross yield is expressed in percentage terms. It is calculated as the annual return on an investment prior to taxes and expenses divided by the current price of the investment.

Glossary of Property Investment Terms | The House Crowd

High Net Worth Investor (HNWI)

A classification used by the financial services industry to denote an individual, or a family, with high net worth. If you earn more than £100,000 a year or have net assets of more than £250,000, you may qualify as a High Net Worth Investor.

HMO (House in Multiple Occupation)

A house occupied by more than two qualifying persons, being persons who are not all members of the same family. A “qualifying person” is a person whose only or principal place of residence is the HMO.

Glossary of Property Investment Terms | The House Crowd

Initial Public Offering (IPO)

The first time that a company’s shares are available for public purchase by means of a listing on a stock exchange. This process is also known as ’going public’ or ‘floating’.

Glossary of Property Investment Terms | The House Crowd

Know Your Client (KYC)

The regulatory process that financial services firms and certain other businesses must perform to verify the identity of their customers to help prevent against money laundering and other financial crimes.

Glossary of Property Investment Terms | The House Crowd

Loan to Value (LTV)

A term commonly used by banks and building societies to represent the ratio of the first mortgage lien as a percentage of the total appraised value of real property. For instance, if someone borrows £130,000 to purchase a house worth £150,000, the LTV ratio is £130,000 to £150,000 or £130,000/£150,000, or 87%. The remaining 13% represent the lender’s ‘haircut’, adding up to 100% and being covered from the borrower’s equity. The higher the LTV ratio then the riskier the loan is for a lender.

More on Loan to Value here

Local Housing Authority (LHA)

The main provider of social housing (or housing authorities) for people who cannot afford to buy their own homes. Local authority housing is allocated according to eligibility and need. Rents are based on the household’s ability to pay.

Glossary of Property Investment Terms | The House Crowd

Net Profit

The actual profit after deducting expenses, such as management fees, letting fees, maintenance costs which are were not included in the calculation of gross profit, have been paid.

Net Yield

Net yield is everything after expenses. It takes into account all fees and expenses associated with owning a property. It is a far more accurate way of calculating actual yield. It is also much harder to calculate as most costs are variable.

Nominee

A person or firm that holds assets, such as shares on behalf of another, enabling the nominee to handle complicated administrative matters.

Glossary of Property Investment Terms | The House Crowd

Open Market Value (OMV)

The realistic price that could be achieved for a property if marketed for sale.

Option

A right granted which gives the receiver an option, but not an obligation, to buy (or sell) shares in a company, or other securities, at an agreed price within a certain time frame.

Ordinary Shares  

Shares which represent normal equity ownership in a company. Ordinary shares generally entitle the owner to vote at shareholder meetings, receive dividends, and receive distributions on the winding up of a company, but do not carry preferential treatment.

Glossary of Property Investment Terms | The House Crowd

Pre-Emption (Also called Anti-Dilution)

A contractual provision which requires the company to offer its shareholders the chance to purchase additional shares to maintain their percentage of equity in advance of further shares being issued.

Portfolio

A group of financial assets such as shares, property or bonds, held by one person or entity.

Portable Appliance Testing (PAT)

The name of a process by which electrical appliances are routinely checked for safety.

Post-Investment

The period of time after an investment has been made in a company.

Preference Shares

A class of shares which have specific preferential rights attached to them, as set out in the company’s articles of association. Typically the preference will be a dividend paid in priority to other shareholders, or priority to distributions on the winding up of the company.

Professional Investor

A classification used by the financial services industry to denote an individual or family.

Property Yield  

A calculation to give an indication of annual returns based on the rental income against how much the property cost: Property Yield (%) = Rental Income/(Property purchase price + Refurbishment Budget).

Glossary of Property Investment Terms | The House Crowd

Registered Social Landlord (RSL)

Registered providers that own and manage social housing.

Return on Capital Employed (ROCE)

The return on capital employed is, considered by some, a better measurement than return on equity, because ROCE shows how well a company is using both its equity and debt to generate a return.

RICS Surveyor

Building surveyors, like all surveyors, inspect property or land. RICS (Royal Institute of Chartered Surveyors) is a professional body for chartered surveyors, which includes chartered building surveyors. RICS sets standards and guidance for surveyors and provides training and professional development opportunities for surveyors to comply with changing standards and legislation.

Risk

The potential for losing something of value. With equity investment the main risk to the investor is losing the money invested.

Glossary of Property Investment Terms | The House Crowd

Secondary Market

A market where investors purchase shares from other investors rather than from the company that has issued the shares directly.

Shareholder Agreement

An agreement between a company’s shareholders detailing certain rights and obligations of the shareholders.

Shares

An ownership interest in a company which entitles the shareholder to certain rights, for example a share of profits or dividend payments from the company. Shares are also referred to as “stock”.

Sharia Compliant

Investments that comply with Islamic law and principles, eg. ethical investments with no borrowing where investors share in the profits and losses.

Solicitors Regulatory Authority (SRA)

The regulatory body for solicitors in England and Wales.

Sophisticated Investor

A type of investor who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity. This category is for people who have invested in shares in more than one unlisted company (including via The House Crowd) in the last two years or have been a member of a business angel syndicate or network for at least six months including The House Crowd’s Investor group.

Special Purpose Vehicle (SPV)

A Company set up for a particular purpose. In the case of The House Crowd, SPV’s are set up for the purpose of purchasing/owning a property on behalf of the investors.

Subscription Agreement  

An agreement between a company and investors purchasing shares in the company. It sets out the terms of the share purchase and details certain rights and obligations of the company and the investors as shareholders.

Glossary of Property Investment Terms | The House Crowd

Tag-Along Rights

A contractual obligation which gives minority shareholders the right, but not the obligation, to join a transaction where shares are sold by majority shareholders, on the same terms, valuation and conditions of the majority shareholders.

Term Sheet  

A non-binding agreement addressing the basic terms and conditions under which an investment will be made in a business. A term sheet often serves as a template to develop more detailed legal investment documentation.

Glossary of Property Investment Terms | The House Crowd

Unencumbered

An asset or property that is free and clear of any encumbrances such as creditor claims or liens. An unencumbered asset is much easier to sell or transfer than one with an encumbrance. Examples of typical unencumbered assets are a house without any mortgage or other lien on it, a car where the automobile loan has been paid off or stocks purchased in a cash account, rather than a margin account.

Glossary of Property Investment Terms | The House Crowd

Valuation

The monetary worth of a business or property as determined by considering both qualitative and quantitative factors.


We hope you found this useful. If you have any questions, then please don’t hesitate to get in touch with us. We’re always here to help you with anything you might want to talk about, so do drop us a line!

 

Annualised Return: What Does It Mean?

You may have heard the term Annualised Return come up in your research into property investment. And you’re not alone in wondering what on Earth it is.

With that in mind, we thought it’d be a good idea to give you a bit of an in depth look at what this term means, and how you can apply it to analysing your property investment portfolio.

What Are Annualised Returns?

An annualised return is the return that an investment provides over a period of time. It is expressed as a time-weighted annual percentage.

Annualised returns are calculated based on adding first year returns to the principal amount for calculation of next year’s returns, and so on.

The rate of annual return is measured against the initial investment amount. It is calculated as a geometric average to show what you, as an investor, would earn over a period of time if the annual return was compounded.

What is a Geometric Average?

A geometric average (or mean) differs from a simple arithmetic mean. A geometric mean must be used when working with percentages (which are derived from values), whilst a standard arithmetic mean works with the values themselves. In short, a geometric average simply means that, because investment returns are compounded, they are dependent on one another.

A simple arithmetic average just doesn’t do the job when it comes to calculating investment returns, because it doesn’t account for compounding.

Calculating a Geometric Average:

To calculate the mean of an investment over a period of years:

  • Remove any extraneous variables, such as mortgage payments, maintenance expenses, and so on.
  • Add 1 to the % returns for each calendar year (to get them all to be positive).
  • Then multiply them all together, and take the Nth root of the product of n numbers. (“N” depends on the number of years you want to annualise.)

So, a formula for calculating geometric average might look like this:

Year 1: Investment loses 37% of its value. The £1,000 you invested at beginning of year was only worth £630 by year end.

Year 2: The investment gained 26.5%. Taking into account the final value at end of Year 1, your 26.5% gain leaves you with £796.95.

Year 3: You gain 15%, but because you began the year with just under £800, you finish on about £920.

As such, your three-year annualised return comes to negative 2.86%

The sum looks like this:

(0.63 x 1.265 x 1.15)1/3 – 1

The factors in the equation are found by adding 1 to the yearly return % expressed as a decimal (so, 1 + (negative 0.37) = 0.63, and so on).

A geometric mean is sometimes defined as the “n’th root product of n numbers”, which – we’ll admit, does sound horribly complicated. Essentially, its main benefit is that the actual investment amounts don’t actually need to be known: instead, the calculation focuses on the return figures themselves, which allows you to draw direct comparison when looking at two investment options over more than one time period.

Find out more about Geometric Means here.

What’s The Difference Between Annualised Return and Cumulative Return?

A cumulative return demonstrates the aggregate effect of price change on the value of your investment, effectively telling you what exactly the investment has done for you over a period.

In order to calculate a cumulative return, you’ll need the initial price and the current price. Your formula will look like this.

Rc = ( PcurrentPinitial ) / Pinitial

On the other hand, an annualised return, expressed via a geometric average, tells you what the annual rate of return would be that would produce the same cumulative return when compounded over the same period.


Well, okay, that does all look pretty scary, but in practice you’ll find that calculating your annualised returns is quite a straightforward way of accurately monitoring your investment performance over time.

All handy stuff when taking control of your property portfolio.

Of course, as always, if you have any questions please do get in touch. We’ll happily talk you through any aspect of property investment that you might be unsure about. It always pays to know the ins and outs of what’s going on with your money, and we’re here to help you do just that.

 

How Brexit Is Affecting UK Property Investment

On October 4th, the pound dropped to a 31-year low against the dollar. This, of course, following Theresa May’s announcement that she’ll be invoking Article 50 and starting the Brexit process.

Shortly after this, on October 11th, the FTSE 100 hit an all-time high, trading at 7,129.83. What’s going on?

Foreign investors, prompted by the falling value of the pound, have moved in.

Most of the blue-chip companies listed on the FTSE 100 generate most of their revenues overseas, meaning that the index has been amongst the main beneficiaries of the plummeting pound.

It has, in short, never been a better time to secure assets in the UK. Investors are snatching up high returning UK real estate to add to their property portfolios. Construction companies report a 20% increase in interest for property after the Brexit vote, and house price sentiment has recorded its largest surge in 7 years.

These buyers are mainly Chinese cash investors, many of whom are hoping to profit from rental yields in northern cities like Manchester, where rental yields are highest in the UK. Areas undergoing regeneration, with links to good schools and transport networks, are getting the highest levels of attention.

How Brexit Is Affecting UK Property Investment For the Future

The latest UK property market outlook report by M&G Real Estate states that the UK’s property market is in a strong position to withstand short term economic uncertainties, much more so than during the financial crisis.

Lack of supply in many locations keeps occupier markets comfortable. Private rented residential and long lease properties remain attractive for institutional investors and pension funds, whilst a below average rate is holding up rental properties, at least in the short term, in prime locations.

Things are still uncertain, that’s for sure, and adjustments in property pricing are to be expected right now. But all reports remain cautiously optimistic that, despite some wobbles in the short term, property in the UK will remain a compelling asset class in the long term.

Investing in Wilmslow

The town of Wilmslow is situated within the prestigious Golden Triangle of Cheshire towns and villages. Along with Prestbury, Alderley Edge, Hale, Altrincham and Bowdon, properties in Wilmslow are highly sought after, and some of the highest priced in the UK, outside of London.

Other than being a favourite of footballers and celebrities, there are many other factors that make Wilmslow a prime property hotspot. The main factor is its ideal location, but the benefits of living in Wilmslow are numerous.

Wilmslow Transport Network

Wilmslow is situated just three miles from Manchester Airport, and ten miles south of Manchester city centre. This makes it an excellent location for commuters to the city, and for those working at the airport, which is currently undergoing massive regeneration, creating many new jobs.

Of course, Wilmslow’s closeness to Manchester Airport is also attractive to those who travel internationally for work and pleasure.

Transport will play a major role to anybody considering Wilmslow to set up home. Most commuters into the city rely on public transport, particularly rail services. Wilmslow railway station is situated 12 miles south of Manchester Piccadilly station, on the Crewe to Manchester line, as little as 15 minutes away.

Manchester airport, too, is just minutes away by train. Bus routes are well served for easy access to surrounding towns and villages, however there is little point taking the bus into the city when the rail service is so quick.

Its proximity to the vibrant city of Manchester is a major draw, but Wilmslow is also set within stunning English countryside, offering residents the best of both worlds: combined city and country life.

Countryside Living in Wilmslow

There are beautiful countryside walks to be enjoyed all along the River Bollin, running from the centre of Wilmslow itself to Twinnies Bridge. There’s the chance to wander through picturesque parkland, footpaths and woodland trails, home to a profusion of rare flora and fauna.

Wilmslow is also home to a wonderful Artisan Market, selling local and ethically-sourced produce. This runs on every third Saturday of the month in the heart of town.

Education in Wilmslow

Wilmslow is well-served in terms of schools, both at primary and secondary level. The private sector, in particular, thrives in the area, which is little surprise given the affluence of the area. Nonetheless, the state sector is extremely well catered for, with many schools gaining ‘Very Good’ or ‘Outstanding’ OFSTED reports.

Wilmslow Healthcare

For healthcare, there’s the Wilmslow Health Centre as the local GP practice, which also serves nearby Handforth, as well as Alderley Edge and Prestbury. Those looking for private medical treatment look to 52 Alderley Road, a modern private hospital right in the main road out of town.

Wilmslow Rental Market

Data gathered in July 2016 finds that a one-bedroom property in Wilmslow rents for an average of £929 a month, whilst two beds average £1,072.

Wilmslow Rental Market (July 2016) | The House Crowd

Rental properties appeal strongly to the young professional market, those mainly between 26 and 34, often known as Generation Rent. These tenants look for high quality, contemporary apartments within walking distance of Wilmslow town proper, as well as that all-important railway station.

Who Buys In Wilmslow?

Other than the high end of the market, where houses sell for often in excess of £10,000,000, Wilmslow is also popular with young professionals and families. The most highly sought-after commodity in Wilmslow is the three bed semi, with many going for well over the asking price.

Wilmslow Property Market (July 2016) | The House Crowd

However, with increasing employment opportunities in Wilmslow, the town is now attracting a steady stream of young professionals, both single adults and couples, who are drawn to the town, not just for all the above reasons, but also to work with some of the town’s desirable employers.

For those from this demographic wishing to buy, the typical price for two bed apartments is generally around the £250,000 mark.

Employment in Wilmslow

Alderley Edge BioHub

One of the biggest employers currently emerging in Wilmslow is the BioHub at Alderley Park. The hub, created by the BioCity Group, exists to support the growth of successful life science companies. 86,000sq ft of state-of-the-art, world-class labs and commercial office space, filled with emerging pharmaceutical, biotech and life science companies is, of course, a major space for employment of professionals, not just from the sciences, but also office and support staff, Directors, and so on.

Handforth Dean Business Park and Retail Park

Adjacent to the A34 (Wilmslow Road), Handforth Dean is one of the newest office developments in South Manchester. Just across from the Business Park is the highly anticipated Handforth Dean Retail Park, which is on course to open its doors imminently. As well as providing leisure and shopping facilities that local residents are pretty excited about, the shopping centre will also, of course, create a swathe of new jobs.

Imperium Games

Just off Church Street is the international games development studio, Cloud Imperium. Employing a range of professionals in different roles: animation, art, audio, design, engineering, marketing, production, QA, support and UI, it’s a very exciting place for young professionals to work.

TT Games

Another gaming company, TT Games is situated in Emerson Court on the Alderley Road. Its titles are principally for younger gamers, and feature a lot of the Lego brand games. Again, there are many opportunities for digital artists, animators and programmers here at this high profile, BAFTA-winning company.

Venturi

An award-winning IT recruitment specialist, Venturi is another high profile employer in Wilmslow, on both sides. Recruiting IT specialists to lucrative roles in the local area, as well as within its in-house staff, Venturi is another string to the Wilmslow employment opportunities bow.


As the influx of residents into Manchester and Cheshire continues to grow, as a result of vast regeneration across the Northern Powerhouse, we expect to see demand grow even higher across the region.

Whether you’re planning to invest in Wilmslow’s rental sector, or as a development project, it’s absolutely a seller’s market in Wilmslow right now. Having a property in the town is a pretty exciting investment at the moment: it’s a great time to invest in Wilmslow.


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4 Reasons To Consider Real Estate Investment

New-Build and Off-Plan property investment consultants, YPC Group, have revealed why they think Real Estate investment beats all other forms of investment. In an article for Opp Today, New-Build Specialist David Lines explains why he believes that no other option can rival Real Estate investment.

“When I first started investing in property,” Lines says. “I did so for a number of reasons. These included the fact that property investment is easier to understand.”

However, this was not the only reason Lines gave for his preference for Real Estate investment.

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4 Reasons To Consider Real Estate Investment

  1. Control

When investing in the stock market, Lines says that it felt as though his investment was always in somebody else’s hands. But with Real Estate investment, there is much more control.

Even when handing property management over to a specialist company, Lines says that property investment allowed him to be more in control of the fate of his investment.

  1. Rental Income Dividends

Real Estate investment, Lines says, generates a much higher income than investment in stocks, bonds and cash accounts. He states that his gross rental yields average between 5% and 7%, which is three times the dividend yield to be expected from UK stocks.

  1. Capital Gains

With a global undersupply of homes, property is always in demand. As such, even in financial crises, like the one in the late 2000s, the property market bounces back quickly.

Real Estate investment, Lines states, has “given me a capital gain over the last 20 years that stock market investors can only dream about”.

  1. Gearing

With stock market or government bonds, if you invest £20,000 and the market rises by 10%, you make £2,000.

With Real Estate investment, on the other hand, if you take that £20,000 and use it as a deposit, borrow £80,000 to buy a £100,000 property, a 10% market rise will give you £10,000… a 50% return.


Well, we already know how lucrative Real Estate investment can be. Obviously, as we always say, investments of any kind are never without risk, and Real Estate investment is no different. However, as David Lines and YPC Group has stated, there are some excellent benefits to be gained when you consider this form of investment portfolio.

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The Future of Property Demand in the UK

Sheree Foy, founder of Source Harrogate, has told the Yorkshire Post her predictions for the future of property demand in the UK.

Firstly, she dismissed ideas that Brexit will have a long term effect. On the supply side, she says, not a great deal will change. Demand, however, may be affected. Growth forecasts show reductions over the next two years, and there are rumours amongst financial analysts of a 50-50 chance of recession.

Along with base rate reductions by the Bank of England to a record low of 0.25%, cheaper mortgage rates, and the prospect of further interest rate plummets, property demand may be a bigger issue.

But Foy is less interested in these matters, looking to the longer term.

So what are the big issues around property demand in coming decades?


Property Demand by Demographics

Over the next ten years, we will see a significant rise in the over 65 age group, combined with a dramatic rise in over 85s. One in five people in the UK right now will live to see their 100th birthday, according to the Department of Work and Pensions.

From this, Foy predicts a rise in property demand for bungalows, and other homes suitable for later life living. Foy labels these properties as “rare asset[s] with a guaranteed increase in demand” – and notes that those who plan ahead with their investments to meet this upcoming property demand are set to reap rewards.

Homes with smaller gardens, close to towns, with adapted kitchens and bathrooms, are all winners.

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Property Demand by Location

Over the last ten years, farming has become increasingly more automated, leading to an inward flow to towns, which are more attractive than ever.

On the other hand, public transport is becoming less available, with journey times taking longer and longer. Without a drastic overhaul of the public transport network, property demand in cities and towns could continue to rise.

Nonetheless, Foy is banking on a return to the country facilitated by technology. Better broadband connections and speeds are making home working an increasingly available option for many, whilst the predicted adoption of driverless cars in coming years will also relieve much of the strain of commuting. With this eventuality on the horizon, country living could equally be set to rise in popularity.

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Property Demand By Energy

As we move further away from dependence on huge power stations in favour of multiple source and sustainable energy sources, EPCs (Energy Performance Certificates) are set to become crucially important to the desirability of a property.

More locally generated power, from solar powers to wind turbines, are growing in use in domestic settings. Homes with adverse EPCs, Foy states, just aren’t selling like they used to.

To increase the desirability of your property, Foy recommends staying on top of energy efficiency in the home. Replace old boilers, insulate walls and roof spaces, double/triple glaze those windows, and look into home power generation options.

 


Planning ahead for future property demand is a key factor to take into account when investing in property. Choose your weapons wisely, and build a portfolio that will stand the test of time.


 

5 Ways To Find The Best Property Investment Areas

Whether you’re buying a property investment in the rental sector, or to sell on within the residential sales market, you’ll be looking to get the best return on your investment. So how do you go about ascertaining the best property investment areas to target?

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We take a look at the top five factors to consider before investing in property, and the questions you ought to be asking yourself to ensure you’re looking in the best property investment areas for your money.

  1. Local Trends

  • What are the current cost trends in the region?

  • Are housing prices here rising quicker than other regions?

  • What is the average cost within other neighbouring towns, and how does your town compare?

It’s worth starting with a broad area you’re hoping to target, and zoning in from there on the best property investment areas to focus on.

  1. Indications of Growth

  • What new infrastructure developments are being constructed in the area (schools, transport networks, shopping areas)?

  • What industrial growth is going on (businesses putting down roots, new job opportunities)?

  • What residential regeneration projects might you be able to get in on?

Spend some time in your desired area, and do plenty of research into what’s going on at ground level. Where there are concrete signs of development for the future, there is opportunity, as potential buyers (or tenants) flood to the area for work and leisure.

  1. Tax Implications

  • What is the tax charge likely to be?

  • How are property taxes likely to increase in the near future?

It’s a good idea to have a chat with a local tax assessor, and gain some trustworthy advice from a tax expert. Find out about tax structures, and any that will specifically apply to your area.

  1. Schooling

  • What are the OFSTED reports of local schools?

  • What do the GCSE and A Level results look like of catchment area secondary schools?

  • What family demographics dominate your desired area?

Any families looking to buy (or rent) a property are very driven towards areas in catchment for the best schools. In many cases, good catchment areas are reflected in the house prices in the area. Schools are a key factor that indicate the best property investment areas to focus on. Don’t underestimate the value that parents place on where their children will be educated.

  1. Outlying Regions to Cities and Towns

  • What are the transport networks like from outlying towns and villages into the main city/town?

  • Where are the job opportunities for those likely to buy in your desired area?

Whilst prices will be high, and supply low, within cities and affluent towns, some of the smaller towns and villages in the outskirts can be particularly desirable.

Rural areas where public transport is less freely available are actually more desirable for many buyers, where village schools are often well-appointed, and space and scenery make a pleasant contrast from working in the city, are very desirable. Such rural regions are very likely to see high value rises over time.

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Understanding the market will help you identify the best property investment areas to target.

These five factors to consider are perhaps the best ones to implement if you’re hoping to generate an income from investment in property. As always, it’s best to do as much research as possible, and to seek as much expert advice as you can.


 

UK Property Market Growth Slows

… but prices continue to rise!

The latest Hometrack UK Cities Index has shown that the annual rate of house price growth in twenty of the UK’s largest cities slowed to 8.2% in August 2016. In July, growth had been at 9.5%. The average house price in the UK, as a result, was £239,400. Prices are still rising, but just not as fast at the moment.

Why Is the UK Housing Market Slowing?

People are finding it increasingly difficult to buy a home whilst the UK housing market continues to inflate quicker than earnings, particularly in the south, where many potential buyers are finding themselves completely priced out of the market. This fact is what is probably most of the reason for the slowdown in house price growth over the last couple of months.

There’s also the factor of the shock outcome of the EU Referendum, which gave lots of potential buyers reason to pause for thought. And, of course, is also in part due to the recent interest rate cut by the Bank of England.

So What’s the Good News?

Nonetheless, these disruptions to the UK housing market don’t seem to have had a lasting effect, and we’re seeing the market begin to settle down again now. This is good news that suggests an underlying strength within the residential UK housing market, which will hopefully see us optimistically into the long term.

What Does this Mean for Investors in the UK Property Market?

There is still a massive imbalance between supply and demand of properties on the market. This goes some way to explaining the continuing growth of the rental sector, and why property investors are increasingly leaning towards buy-to-let investment, including HMOs, as their investment of choice.

If residential property as an investment is still on your radar, however, then it’s still a good time to buy. There are signs that house prices are going to continue to rise, and getting in whilst there’s a chance you can afford to could pay in the longer term.

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For investors in the property market wishing to take the sensible route of diversifying their portfolio, record low interest rates make the potentially higher returns of equity crowdfunding and P2P lending for Real Estate an appetising option.

So choose your weapon… all signs point to a continually promising future for the UK property market.

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Our August 2016 Statistics: P2P Secured Loans

Our August 2016 Statistics: P2P Secured Loans

In addition to our equity-based crowdfunding investments, did you know we also offer peer-to-peer secured loans for real estate? We’ve been offering these since 2015, with much success. See below details of our August 2016 statistics to find out how these performed last month.

What is secured peer to peer lending for real estate?

Peer to peer lending is a type of debt financing, allowing individuals to borrow money without backing or by using traditional financial institutions. By lending through P2P on real estate, there is the chance for higher return yields (though, of course, this comes with some risk to capital). You can find out more with our free Guide to Making Peer To Peer Secured Loans.

Check out how these performed in our August 2016 statistics…

Here’s the stats to show how these P2P secured loans are doing as of August 2016 (Gross):

  • Total Sum Loaned –£8,784,684
  • Total Returns Paid – £127,241
  • No of Loans – 22
  • No of Loans Repaid – 7
  • Average Loan Period – 10 months
  • Default Rate – 0%
  • Average Loan Size – £399,304
  • Average Loan to Value – 68%
  • Average Interest Rate Paid – 9.00%

You can learn more about our secured peer to peer loans by downloading our free guide here.

You can also read more about our new peer to peer loans, equity investments and property crowdfunding by simply registering on our website by hitting the purple button. Alternatively, have a browse through our current investment opportunities by clicking the blue button!

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If you have any questions about investing in peer to peer secured lending or property crowdfunding, then please don’t hesitate to get in touch with us. We’re always happy to offer advice and information on all aspects of property investment to help you choose the right investment method for you.