Justice For The Crowd

Justice For The Crowd

Justice For The CrowdHow great is this?

We love crowdfunding and the whole concept of the crowd coming together for the common good whether that be to invest in start-ups, property, inventions or community projects. But our property lawyer (thanks Jane) has just introduced us to a new crowdfunding site that we think is fantastic: www.Crowdjustice.co.uk

If you have an issue that might require legal action, and it affects your community, the platform can crowd together like-minded people to try and protect their particular interests. By pooling resources – each person can contribute according to their means –  it enables those with a worthy cause to access legal advice and fund judicial reviews of proposed legislation such as the recent proposed government changes that affect landlords Clause 24.

Even though Clause 24 doesn’t affect The House Crowd (as we do not borrow money), we believe that disallowing mortgage interest payments to be deducted from a landlord’s net profit calculations is grossly unfair and discriminatory.
Click here to find out more about the proposed legal case against Clause 24: https://www.crowdjustice.co.uk/case/clause24/


The Inexorable Growth Of Property Crowdfunding

The Inexorable Growth Of Property Crowdfunding

Property Crowdfunding did not exist prior to 2012. It was not possible to operate a platform in the USA until the ‘Jobs’ Act was passed in April 2012 which made crowdfunding lawful in the States (albeit with a very high net worth qualification criteria).

In the UK it was also virtually impossible, although with a clever legal structure that made use of a few narrow exemptions in the Financial Services and Markets Act The House Crowd was able to start trading in March 2012 and became the first property crowdfunding platform in the world.inexp blog image

Since that time, both crowdfunding and the sub-sector property crowdfunding platforms have experienced huge growth in the space of just a few years.

Property crowdfunding has exploded all over the globe, with platforms springing up in countries such as France, Italy, Egypt, Singapore and also in the Middle East.

Global crowdfunding, in the last 5 years, has grown from zero to a multibillion dollar industry and is growing exponentially, doubling (approximately) every two months [Source: Crowd Data Center].

The property crowdfunding niche is currently raising $2.5B a year and is forecast to multiply 100 fold to reach over $250B by 2020 [Source: Massolution CF-RE 2015]

This phenomenal growth has occurred partly due to the relaxing of regulation to enable crowdfunding to expand as it was seen as beneficial to the economy and partly as a result of peoples lack of trust and dissatisfaction with the traditional institutional alternatives that produce poor results.

In the UK, all legitimate crowdfunding companies are now authorised by the FCA (either directly or as an authorised representative of a regulated firm) and have to undergo a thorough due diligence process to assess suitability so that investors can be assured they are dealing with a reputable company.

Industry forecasters predict that the diversity of online investors will grow as a wider age range and more women become involved.  Some have also noticed an increase in wealthier investors entering the property crowdfunding market. Markley Roderick (lawyer and moderator of the “Innovations in Real Estate: Crowdfund Investing” conference in April 2014) stated:

“If only a small percentage of them invest only a small amount of their assets in real estate, the market will be trillions of dollars.”

In the UK, The UK Crowdfunding industry has grown from £267 million in 2012 to £666 million in 2013 to £1.74 billion in 2014. [Source: Nesta and University of Cambridge Survey November 2014]

By 2016 the peer-to-peer market will be worth £5 billion in the UK and £36 billion within a decade. [Source: Research and Markets UK Market peer to Peer Lending Facts and Figures 2015]

Technological advancements have also aided this growth. Web platforms have allowed property companies to access a wide audience, gain attention and raise capital outside of the traditional circle of friends, family, banks and venture capitalists to raise money for their projects quickly – sometimes in the space of a few hours – rather than waiting weeks or months for a bank to approve a loan.

By using a small amount of money from a large number of individuals, crowdfunding has become highly accessible and beneficial for both investors and property businesses. Property crowdfunding also enables investors to diversify and gain direct access to the property market.

It is not possible to predict the future but what seems clear is that property crowdfunding will be on a very steep growth trajectory for the next few years at least.

Why is Property Crowdfunding Attractive For Property Businesses

  • It allows companies to get in front of a large number of new investors via online platforms.
  • Companies have a quick access to readily available funds as well as an opportunity to secure more capital than through other means.
  • Crowdfunding can provide a way to access capital at a lower cost than may otherwise be possible

What Opportunities Does Property Crowdfunding Afford Investors?

  • Investors are able to gain access to the property investment deals that would otherwise only be open to individuals with large amounts of capital. Some platforms require a minimum as low as £500 to invest.
  • With crowdfunding, the due diligence research on every property deal is taken care of and investors have the benefit of the platform’s knowledge and expertise in filtering out unsuitable deals and are able to concentrate on selecting those deals that appeal to them
  • Crowdfunding allows investors to diversify their portfolio, without having to invest a large amount of time / money.

Property values can fall. Your capital may be at risk & returns may vary. Read our Risk Warning.

150th Project Milestone


Sometimes there are occasions that require a visit to the card shop to congratulate people on meeting a milestone birthday and others where we would prefer not to face the fact we’ve hit our forties and would prefer to pull the duvet over our heads and sob gently into our pillows.

There are times when the build up to the celebrations has taken expert planning (such as Sarah with our Christmas party) and then there are the milestones that appear to have passed us by without anybody noticing.

One such milestone was The House Crowd successfully funding our 150th project!

It hardly seems a few months since we celebrating hitting the HCP100 and I must admit now pushing for our 160th seems to have been a missed opportunity to break out the bubbles!!150 top mid2

So what does it mean hitting 150 projects fully funded?
The infographic’s explain it in paint and radiators but to the team here it’s much more than that.

150 projects is a sign that our investors still love what we are doing, we’ve smashed the £16Million raised milestone, we’ve picked up more national & international awards, we’ve started a new industry and more than anything we appear to be picking the types of property that you our investors love as much as the people who are now calling a project a ‘home’.

150 top mid

You can read more about our new projects once you have registered and self-certified on our website and hopefully be part of this exciting journey.

In the meanwhile I’m off to search for a congratulations on your 160th project card from the local shop.




Property values can fall. Your capital may be at risk & returns may vary. Read our Risk Warning.

The Budget And How it May Affect B2L And Property Crowdfunding

Further to yesterday’s Autumn Statement, I wanted to put across my thoughts as there were quite a lot of property orientated issues raised including how it may affect property crowdfunding.

George Osborne clearly wants to try and stop property being used as an investment vehicle for ordinary people.
budget(1)Who knows what his motivations are but his changes always seem to favour the large house builders and institutions. He seems to base his decisions on what is happening in the London market as opposed to the country as a whole (there’s a surprise!). I think the claims by some people that B2L investors push house prices up and make property unaffordable are vastly exaggerated and if this is an attempt to address that supposition, it will be shown to be misguided.

Accidental landlords and other landlords with small portfolios, hit by a continual barrage of legislation that creates more work and ever decreasing profits will inevitably sell up in huge swathes leading to larger landlords /cash rich investors, for a short while at least, being able to purchase at reduced prices as supply exceeds demand.

Regarding the property market as a whole, the underlying situation is that in many areas demand outstrips supply. Population keeps increasing while construction of new dwelling has been decreasing. The cost of building new property continues to rise and there clearly has to be a balance between the cost of existing stock and new build – who would pay twice as much for a new house as a similar existing property down the road? As long as this situation remains property prices will be underpinned and continue their inevitable rise.

If he believes these changes will make it easier for people to get on the property ladder – he is wrong. People will still need to save large deposits and pay for mortgages which they find hard to do. If indeed his actions do force house prices  down, home owners (who are more likely to be Tory voters) may find themselves in negative equity and will not be well disposed towards Mr Osborne or the government. Another Tory u- turn will no doubt quickly be implemented when they realise they have shot themselves in the foot.

Leveraging for landlords is now much more difficult and with little prospect of profit due to interest relief being abolished many landlords will not enter the market at all. Rents will be pushed up due to less competition and the need for landlords to cope financially with burdensome legislation.

What does it mean for The House Crowd?

We are in the midst of completing a full review of all the details, which will lead to a summary of all the changes, their impact and potential opportunities these bring in order to ensure we are providing the best returns for our investors. In the meantime, these are my top level thoughts about how The House Crowd may be affected.

We have always believed Buy 2 Let should be viewed a long term investment.  There are various parties with conflicting interests at work and governments are always tinkering and making changes  to address the balance one way or another. Whilst in some respects these recent changes may initiate a bad period for some landlords, we are ideally placed to weather any storm and in fact given the nature of our business actually benefit from it.

As a company, THC has no need of mortgages so are not affected by the stopping of interest rate relief.

Many small and amateur private landlords will sell up as a result of all the negative new regulations and stamp duty increase and this may lead to short term price falls in some areas.

Again, every situation presents opportunities, and cash rich buyers like The House Crowd will be able to purchase at keen prices. We can negotiate attractive prices as we are cash buyers and can absorb the 3% stamp duty by negotiating those better prices, so we will pay no more than we would have otherwise and possibly less. In any event it appears that companies/ funds owning more than 15 properties will be exempt so it may not affect us at all.

The only real downside for the House Crowd is there will be a smaller pool of prospective investor purchasers for our properties in the short term, though we can always look to institutional buyers if we want to sell chunks of our portfolio.

However, there would need to be a very significant drop in prices to make houses more affordable for home buyers. If that happens many homeowners would be in negative equity – not something that would make the government popular and will therefore pull out the stops to prevent.

The changes will benefit larger landlords and companies while the losers will unfortunately be the smaller individual landlords.

It may well encourage those who believe in property as an investment vehicle to look to alternatives such as crowdfunding where they do not have the burden of dealing with legislation and can benefit from being part of a big organisation with economies of scale and enhanced purchase power. It may well help increase our client base.

Sadly, many tenants (who the government purports to want to help) will also lose out because rents will continue to increase whilst competition will decrease.

We are constantly approached by companies that work with the housing departments of local councils. They all tell us the same story about how councils are so utterly desperate for private housing stock that they are increasingly being forced to house people in hotels. Taking London and the South East as an example, the housing shortage is so bad councils are now relocating people as far afield as Birmingham and Manchester with no thought to the social implications of disrupting families and communities. In our opinion, the government should be supporting private landlords in order to ease the housing crisis, not punishing them.

I believe Osborne has vastly underestimated the value that the PRS provides in supplying badly needed housing and his actions will be seen in retrospect as a huge mistake. It is inevitably going to lead to an even greater shortage of supply and there will simply be nowhere for people to live as they can neither afford to rent or buy. Longer term, due to lack of supply, there will be a big upward pressure on rents which will benefit those like THC who hold large property portfolios.

Everything is swings and roundabouts.

In a couple of years, once the government realises the repercussions of what it has done, they will make B2L more appealing again.  In the meantime, we can take advantage of depressed prices in the B2L market and also look at the incentives available for house building and build to let that we can also take advantage of and as a well-funded crowd funding company we are in an ideal position to capitalise on the fact there will be many more opportunities in those areas.




And the survey says…


Our October 2015 survey finds that a quarter of under 30’s say they need someone to die before they can afford to buy a property.

This October The House Crowd carried out a survey of 1,000 18-29 year old’s from across the UK.And the survey says

Whilst the results highlighted some points that most people will already be familiar with and perhaps consider as a reason to use our platform there are some very surprising and perhaps sobering statistics that come from the survey.

Millennial’s feel UK property is so out of reach that 23% say they will have to wait until they inherit money before they can get on the property ladder.
Research also revealed 16% believe that they will have to invest their money abroad as soaring UK house prices make domestic property unaffordable.

The survey indicates that 87% of under 30’s have not been able to afford to invest in property. Though many are frustrated by this – 36% of those surveyed said they felt they’d have to rent forever – 31% are simply resigned to their fate, saying it’s the same for everyone of their generation.

The House Crowd’s research shows that today’s twentysomething’s feel that there are just too many barriers to make their first steps on to the property ladder:


  • 54% can’t afford to save a deposit
  • 55% say UK house prices are too high
  • 35% can’t afford mortgage repayments
  • 19% don’t want to be tied down to one location

Having read through the comments and statistics Frazer commented, “The situation for the younger generation appears to be getting worse, and it’s concerning that so many feel resigned to the fact that they will never be able to invest in property. However, if under 30’s look beyond the conventional routes to property investment, there are ways to get that elusive first step on the property ladder.

“Property crowdfunding through a reputable organisation like The House Crowd enables people who don’t have access to large deposits, or the ability to pay big mortgages, to invest. We also take care of all the management and maintenance of properties, so young investors can focus on their busy lives and building their careers while we look after their investment.

“Twentysomething’s don’t have to deal with mortgage lenders and endless questions from the banks to invest in property – there is another way.”



Property values can fall. Your capital may be at risk & returns may vary. Read our Risk Warning.


Property investing still perceived as a winner in 2013

So how do people perceive the future of property investing in these interesting times?

The two most important factors for people investing in property in 2013, according to a recent survey, are a stable income and a boost to insufficient pension provision.

“Landlord Today” also reported that confidence in the UK market is robust, with ¾ of property investors stating they intend to buy additional buy to let properties over the next 12 months, as low savings rates and returns on the stock market means property investment compares very favourably with income from other investments.

Many involved in property investing  are taking a long-term view, with 65% stating that rental income for retirement is their main motivation, followed by long-term capital growth (27%).  Just 8% of respondents cited short-term capital growth as their reason for investing. 68% of people surveyed claimed they are achieving gross rental yields of at least 6%, but only 20% achieving 9% yields or higher.

Only 5% felt that property prices have further to fall.  We suspect they have all been spending too much time reading The Daily Mail.