Risk Warning: The returns of this investment represent a higher-risk investment than a savings account and there is the possibility that you could lose all your money invested in this product. The investments on this website are only available to investors who meet certain net worth or investment sophistication criteria.
You could lose all of your money invested in this product. This is a high-risk investment and much riskier than a savings account.
Investment - Comprehensive Risk Summary:
1. Investment Performance
The value of your investment can go down as well as up and past performance is not an accurate guide to future performance. Your capital is at risk and you may not get back what you invest. Rental dividends, capital returns from the disposal of the properties by the Property Company & bond interest are all dependent on a number of factors including economic conditions (the housing market, inflation, interest rates) and the condition, specification and location of the properties for each project.
Risk Mitigation: If the property project value has not reached the desired levels within the projected investment term, a backup strategy may be to rent the properties until the market conditions improve upon which time the properties may be sold.
We only promote property projects in the UK, which has a robust legal and political system. We promote property projects in UK towns or cities where we believe there is both a high demand for properties to buy and to rent.
We carry out due diligence on all property developers who promote a deal via the Crowd with Us website.
An experienced and dedicated Crowd with Us analyst carries out separate due diligence on each property project.
A lawyer appointed by Crowd with Us carries out all legal due diligence on each property project.
If there are unforeseen costs that arise during a project and there are insufficient funds to cover such costs, then more shares or bonds may be issued by the Property Company to raise the further funds required for the property project. In the case of more shares being issued, your shareholding in the Property Company may be diluted. If sufficient funds cannot be raised for whatever reason and an alternative is needed, the directors of the Property Company may hold a board meeting to decide on the best way forward. For example, if sufficient funds are not able to be raised from investors, the directors may be able to invest funds of their own or they may elect for properties to be sold.
2. Market Liquidity
Property projects promoted via the Crowd with Us website will be sold on completion of the property project or when the property values reach a pre-determined sales trigger value by the developer (see the Information Memorandum). There is no guarantee that the property values will rise to the target value as the liquidity and price growth are driven by housing supply and demand. Property development costs may vary if unexpected works arise or labour & material prices rise more than expected. Although you have the option to sell your shares or bonds at any time, there is no guarantee how long it will take to find a buyer for your shares or bonds. Crowd with Us makes no guarantees on the value of your investment if you decide to exit early or at the end of the investment term.
Properties may be rented on completion of a property development project. This mitigates the risk of selling in a low or falling market until prices rise.
Investment in shares or bonds is aimed at medium to long term investors who feel they can leave their investment in the project until the investment has matured. If you choose to sell your shares or bonds, you may arrange this yourself by private treaty by finding a buyer for your shares or bonds. Crowd with Us will aim to facilitate the administration of the sale of your shares or bonds in this case. Further details of selling your shares or bonds by private treaty are outlined in the relevant Information Memorandum, Investor Agreement or Bond Instrument, which you can review before investing.
Crowd with Us will monitor the sales value of the properties periodically so you can find out what the value of your share holding may be if the relevant properties are sold. This information is shown in the Investor Account Dashboard.
3. Income from rent
Rental profit from the properties after running costs will be paid to you as a dividend on your shares. The rental profit cannot be guaranteed and as such the projected dividends outlined in the investment documentation may differ to what is actually achieved. There may be periods where rental income is not received, for example if the building cannot be occupied due to a fire / flooding or the tenant for whatever reason stops paying the rent.
To mitigate against the financial risk associated with fire or flood, the property developers are responsible to ensure all properties are insured with buildings insurance. To mitigate general wear and tear risk, periodic property inspections may be arranged by the property developers.
Where a maintenance issue arises due to general wear and tear on properties a maintenance professional will be called in to fix the issue.
To mitigate the risk of tenants defaulting on their rent, the property developer is responsible for carrying out reference checks on all applicants to check a tenants credit worthiness, income and character. In addition, deposits are taken for instances where should a tenant leave the property requiring repair work, the deposit can be used towards the costs of the repair work and/or missed rent payments.
Property developers are responsible for arranging yearly Gas Safety checks on any gas appliances such as the boiler and cooking hob by a qualified gas engineer.
The property developers are responsible for periodic property inspections to ensure the properties are kept to a satisfactory standard.
4. Sale of Property
A property sale will require a purchaser to be found and the correct legal process to be carried out. This process can take time and will be subject to prevailing market conditions and the buyer’s circumstances.
On the sale of a property, the property developer is required to use experienced estate agents who know the local market. Property developers will obtain three or more independent valuations to ensure the properties are sold for the full open market value.
The property developers will be responsible to vet prospective buyers to ensure that the buyers can access the required funds to complete on the sale.
Experienced property lawyers will carry out the legal process for the sale.
Crowd with Us will assess the values of all properties periodically by assessing HM Land Registry sold prices in the local area for each project.
5. Bank Finance or Mortgage
A fundamental difference between Crowd with Us and other crowd funding companies is that the property deals are what we call ‘hybrid’, meaning that a combination of mortgage finance and investor finance is used to fund each property project. If the Bank Finance is not paid, the bank can take steps to enforce a sale of the properties. There is also a risk that the mortgage interest rate could rise (if it is not fixed, refer to below Risk Mitigation). Please refer to the ‘How it Works’ section for more details.
To hedge against interest rate rises, property developers may fix the interest rate of the mortgage for a fixed term (e.g. 5 years in the case of a build-to-rent project). Details of this can be found in the investment documentation before you invest.
As a contingency for paying the mortgage in the event there is no rental income on a project, a rainy day reserve sufficient to cover three months of mortgage payments is raised on the initial share or bond offering. These funds are held in the Property Company’s nominated bank account to pay for contingencies such as the mortgage payments in the event of missed rent payments.
The property developers are responsible for monitoring property prices and the bank interest rates both before commencing a property project and after. The Property developer may fix the mortgage for a further period if the initial fixed period expires.
The property developer is responsible for monitoring incoming rental payments via their financial accounts.
6. Dependency on Crowd with Us and Developers
If Crowd with Us or the Developer are unable to fulfil their obligations to manage the properties there may be a delay in the processing of dividends or interest derived from property rental income and/or sale proceeds.
The status of Crowd with Us or the Developer does not affect your ownership of shares or bonds issued to you by a Property Company. The liability of the relevant Property Company is ring fenced to only that property and ring fenced from the liabilities (financial or legal) from other Property projects owned and/or managed by the property developer. In the event Crowd with Us or the Developer cannot carry out the management duties, another professional property management firm would be appointed.
Investing via the Crowd with Us platform is not covered by the Financial Services Compensation Scheme.
Crowd with Us does not give investment advice or provide recommendations regarding investment opportunities. Investments can only be made by users of the Crowd with Us website on the basis of information provided. Crowd with Us takes no responsibility for this information or for any recommendations, opinions or predictions. You should take your own independent legal and financial advice.
The companies listed on our website are private companies owned by the respective property developers. When considering investing, you must take into account the risks inherent in the transaction.
By investing in bonds, your capital is at risk and there is a risk that you may not get back what you put in. You should not invest more money through the platform than you can afford to lose without altering your standard of living.
Using our website you can invest in bonds issued by unlisted companies which may be start-up or newly formed companies looking for funding for their property project. In some cases, the companies may not have a long history or track record and your bonds may be at a risk of losing significant value or all of their value. The Property Company may be unable to meet its repayment obligations. Crowd with Us will not be liable to you for any failure by the Property Company to honour your rights in relation to bonds.
A listed company is required to comply with strict corporate governance and disclosure requirements as stipulated by the listed exchanges, on which the company securities are listed, or by other regulations. However, in the case of an unlisted company, there are no statutory requirements to make any disclosure in case of any change in control or significant change in operational activities. We cannot guarantee and therefore will not be liable to you for any failure to keep you informed of any such matters.
Investors should consider whether each deal promoted sufficiently describes the various risks and conflicts of interest relating to the developers business and their project. We will provide guidance to developers to assist them in preparing full and fair disclosure of all risks in their application. However, we have no ability to guarantee whether all such risks have been accurately described or disclosed and we therefore cannot be held liable for any failure to do so. Before making any investment decisions, you should fully assess the risks involved and query any matters where you feel inadequate risk disclosures have been made.
Crowd with Us will assess each property developers application for funding. We will use our best efforts and knowledge to assess whether we feel that their proposal is financially viable.
If an unfortunate situation arises where a Property Company or a property developer cannot fulfil their obligations under the terms of the bond instrument, then a trustee will exercise their powers to attempt to recover the interest and capital owed to the investors by the Property Company.
Some property developers may elect to have their accounts audited by external auditors. However, there is no requirement for them to undertake audits as the pProperty Companies are unlisted companies.