March was a super busy month for us and we’ve made some very important changes to your account – here’s everything you need to know.
With our 2019 product improvement plan in full swing, we’re busy making changes to the CapitalRise experience.
We’ll be rolling out changes to our platform over the course of 2019. We believe these changes should make investing and managing your CapitalRise portfolio even more straightforward.
A new way to manage your investments
Following the switch of our client money manager on 2 April, you can now manage your CapitalRise investments and cash balance anywhere, anytime via your online account. With 24/7 access to your portfolio and cash balance, you can invest on the go and ensure you never miss an opportunity.
What’s more, when you fund your account for investment, you now have your own CapitalRise personal account number and sort code and can see your funds credited automatically. That means that we can process your investment faster and get your funds invested as soon as possible.
This doesn’t affect any uninvested funds you’re holding with us. When you login to your CapitalRise account following the switch, you’ll be able to see your uninvested balance and add or withdraw funds.
We have switched your ISA manager
If you hold a CapitalRise ISA account, we have now switched your ISA manager. This change means you have more flexibility when it comes to managing your ISA money in between investments.
This doesn’t affect any live investments you have with us and there’s nothing you need to do.
Deciding which platform to invest with is a big decision
With so many property crowdfunding platforms now available, it’s always good to ask the right questions and find out a little more, before making your first step into investing and trusting a company with your hard-earned money. We’ve pulled together 10 of the questions we feel it’s most important to have the answers to before making a decision.
1. Is it FCA authorised?
As a first step, make sure the company/platform is authorised and regulated by the Financial Conduct Authority (FCA) to provide the service they are offering, either directly or via an Appointed Representative. The FCA regulates 58,000 financial services firms and financial markets in the UK, making sure they operate in a fair, transparent and effective manner, to ensure consumers are treated with integrity. Whilst being FCA regulated doesn’t guarantee a firm will operate in accordance with the regulator’s rules, it’s best to avoid all platforms that do not fall in some way under its regime.
2. How much risk do I want to take?
Investments all carry varying levels of risk. Before investing, it’s important you fully understand what’s at stake and weigh this up against your personal risk tolerance. Property is typically an illiquid investment which means you can’t sell it in a matter of hours or days (like many stocks or bonds), but it comes with an illiquidity premium which means you typically get higher returns. You need to make sure the investment term, in other words how long your money will be tied up for, is appropriate for your lifestyle. On the flip side, being a physical asset increases the investment security as it will always retain some level of value, unlike say a stock which can go to zero.
3. What do I know about the platform I am investing with?
It’s always advisable to learn more about the people behind a platform and their expertise, before entrusting them with your own funds. Make sure they have a strong and demonstrable track record in property and investment markets. It’s important to analyse the previous investments that have been made on the platform and how they have performed (Although you shouldn’t rely on past performance alone as it doesn’t guarantee future results). Make sure the company’s loan book is strong and has no delays or defaults. Always ask what’s at stake for the company should an investment go sour – will it only suffer reputationally, or also financially? If management are willing to put their money where their mouth is and invest alongside the crowd, that’s a strong demonstration of confidence.
4. What do other people say about the company?
It’s easy for any company to tell you that they’re great, but what do those independent from it think? Most online businesses are rated on independent review platforms, where customers share honest, impartial feedback on their experiences. Make sure an investment platform has enough reviews and holds at least a four-star rating. It’s always sensible to check for any additional reviews that come up on Google, as well as to see what the media thinks of the business, if anything. If the company doesn’t allow customer reviews, it’s better to steer clear.
5. How good is the customer service?
With many online investment platforms, the communication is done predominantly via their website and emails. However, as no two investors are alike, it’s highly recommended that you find a platform that offers live online chats and/or phone calls with their investor relations team as part of their standard service, so that no question is left unanswered before making an investment decision. If you can’t speak to a human representative of the company, or the person you do speak to does not know their subject and lacks in professionalism, this doesn’t bode well for the platform.
6. How secure is my investment?
The great thing about property is that it is a physical asset you can see and touch. As a tangible asset, an investor can have their investment secured by way of a legal charge (which goes on the Land Registry) over the property itself, preventing it being sold until you have been repaid. Think about it like a bank; when they give you a mortgage they take a legal charge against your house. That is why people say “backed by bricks and mortar”, because quite literally your investment is secured by the land and physical structure. This is great for investors as it means that if something does go wrong, you have some recourse from the value of the underlying asset. Even in a worst-case scenario you are more likely to be repaid than unsecured creditors or anyone with an equity stake.
7. Have I done all my due diligence?
Every investment opportunity listed on a platform should offer some level of due diligence behind it; the more detailed the better. How extensive this information is and the expertise of the team that produced it are key indicators of the quality of both an investment platform and its underlying assets. You should also run your own due diligence based on your personal investment criteria before proceeding.
8. Can I invest tax-efficiently?
With investments of up to £20,000, we believe it makes sense to utilise your tax-free ISA allowance. Make sure your chosen platform offers Innovative Finance ISA investments, which allow investors to protect returns from both income tax and capital gains tax. Also make sure you fully understand the type of investment you are making via an Innovative Finance ISA as they are generally higher risk and may not be protected by the Financial Services Compensation Scheme.
9. What fees am I being charged?
As we all know, fees will eat away at your overall returns potential. Make sure you’re clear on how a platform generates revenue and exactly what fees the platform charges to investors. For example, if the headline rate of return is forecast to be 8% per year, but the platform charges you 1.5% per year, you are only making a 6.5% net return, which is significantly less attractive. Choose platforms that are completely transparent on fees and where they exist are as low as possible. Make sure the net return to you is clearly communicated and fees are not hidden away in small print.
10. Can I build a diversified portfolio?
Diversifying your portfolio might mean investing across different platforms, so after selecting your preferred platforms, it’s time to build out your portfolio. Always look to spread your risk by investing your capital across several deals, potentially with different maturity dates to stagger timing of your returns. You can choose different levels of risk (i.e. preferred equity – most risk; mezzanine loans – medium risk; and senior loans – low risk), locations (i.e. UK regions vs London) and type of asset (residential/commercial/mixed-use). Some platforms will allow you to review and select your investments on a project by project basis, meaning you’re not investing into a blind pool where you have no visibility on what assets they are putting your money into.
Ask a professional if you’re unsure. As always, if you’re unsure about anything, before making a financial decision you should talk to a professional independent financial adviser. The content of this blog post is not intended to be a substitute for professional investment advice. This post sets out personal opinions which are not capable of being applied universally; following them will not guarantee success.
Capital is at risk & interest payments are not guaranteed. Past performance and forecasts are not reliable indicators of future performance. There is no recognised market to sell this investment. Investment performance is not covered by the Financial Services Compensation Scheme. Tax rules and allowances depend on your circumstances and may change. IFISAs and Cash ISAs are not comparable products. Investments held in IFISAs are generally high-risk with limited or no cover by the FSCS. Please carefully consider this type of product before you proceed as you could lose the money you invest.
The Innovative Finance ISA (IFISA) is barely three years old, but it’s already piquing the interest of savvy investors who want their money to work harder.
The IFISA is a tax wrapper for money invested in peer-to-peer loans and other alternative investments and can offer double digit tax-free returns.
10% average annual returns
Some marketplace lenders who also provide IFISAs, currently offer average annual returns of up to 10%.
With projected returns at 10%, if you invested the full annual ISA allowance of £20,000 this tax year, and every year for the next 18 years, you could turn your £360,000 investment into more than £1 million – thanks to compounded returns of 10% p.a. and your tax-free ISA wrapper. This calculation does of course depend on the investments performing as expected and does not include the effect of any fees, which some platforms may charge.
Put simply, in less than 20 years, you could potentially become an Innovative Finance ISA millionaire.
That’s a relatively short amount of time, especially when compared with other ISA options such as Cash ISAs which, whilst being low risk and covered by the Financial Services Compensation Scheme would likely take twice as long to produce such significant returns.
Becoming an IFISA millionaire
Average annual returns
Annual ISA investment
Become an ISA millionaire in
Innovative Finance ISA
Traditionally, options for your annual ISA allowance were limited to saving in the low risk, but low interest Cash ISA (rates currently between 1% easy access and 2% fixed, as above) or investing in a Stocks and Shares ISA for the potential to earn greater interest, but with the risks and volatility of the Stock Market, where the value of investments can go up and down.
An Innovative Finance ISA, whilst not without risks, also allows you to stockpile your gains tax-free, which of course has a profound effect on your total investment returns over time.
In many cases, you can transfer existing ISA funds into your preferred IFISA, which can make the transition from mediocre investor to potential millionaire much quicker.
Innovative, but unknown
Despite the ability to maximise the power of your investment and receive a significant return there is a lack of understanding around Innovative Finance ISAs – and the great rewards they can reap.
Investors should be aware that unlike with Cash ISAs, investing places your capital at risk and there is no compensation for poor investment performance. Forecasts are not reliable indicators of future performance. The content of this promotion should not be construed as offering investment or tax advice. Tax rules and allowances depend on your circumstances and may change. The opinions set out in this document are not capable of being applied universally and following them will not guarantee success.
This is a financial promotion issued by CapitalRise Finance Limited, an Appointed Representative of Gallium Fund Solutions Limited, which is authorised and regulated by the Financial Conduct Authority, FRN: 487176.
We’ve recently launched the CapitalRise Bulletin Board, a new section of our site where CapitalRise members can easily list, buy and sell CapitalRise investments.
All our investment opportunities have an estimated term, but it may be that you decide you’d like to try and liquidate your investment a little sooner. Whilst we can’t guarantee that you’ll find a buyer for your investment, we will list it for 30 days and all registered CapitalRise members will be able to view it by navigating to the Bulletin Board section of their CapitalRise account.
On the other hand, you may have missed out on an investment opportunity – and this could be your opportunity to get in on the action! Should you decide you’re interested in buying an investment, as a member you’ll have access to all the necessary documents you need to complete your own due diligence on the opportunity – just as you would if you were investing in a new CapitalRise opportunity.
How do I use the Bulletin Board?
It’s simple to list your investment on the board. By logging into your account, you can see what your investment is currently worth and let us know that you’d like to sell it by clicking ‘Put my investment up for sale’ – we’ll take it from there.
It’s worth noting that the value of your investment will be the value of the capital and accrued returns at the date you choose to put it up for sale.
Your investment will be posted on the Bulletin Board straight away and other CapitalRise members will then be able to view the details and decide whether they’d like to buy it.
Don’t worry, we’ll be managing this part, so you won’t need to deal directly with a buyer. If another CapitalRise member decides they’d like to buy your investment, we’ll let you know via email – and if you’re happy to proceed, we’ll arrange the transfer.
Your investment will be listed for 30 days on the bulletin board, but you can change your mind at any point during that time about selling it, you just need to let us know. If you have an investment that is paying interest quarterly the investment will be posted for 30 days or up until the next interest repayment, whichever is sooner.
If your investment hasn’t sold within this time, you will still have been accruing returns and the investment will be live again at its present value.
We will charge you an admin fee if you decide to go ahead with a sale, which will be 1.5% of the sale value.
Great, I’m ready to get involved!
The Bulletin Board is accessed via your CapitalRise Account menu and is open to all members. If you’re interested in getting involved, you can browse any currently listed opportunities and view all the details.
You can also view details of our latest new and upcoming opportunities in the Investments section of our website.
Through the years, the experts on our lending team have seen prime central London (PCL) property prices weather the storm through the ups and downs of many property cycles and bounce back faster and stronger than the rest of the UK property market when it comes to property downturns.
While it’s true that PCL has seen relative decline since 2014, PCL is now nearing the trough and there are there plenty of great development and investment opportunities to be found.
“Historically, any recovery in the prime markets has been sparked in central London, with a strong bounce in values. Often, the catalyst has been a currency advantage, though it requires this property to look identifiably good value and for some of the uncertainty afflicting the market to clear.” (Source: Savills UK Residential Autumn 2018 report)
We received over £1.3bn of lending enquiries over the last six months of 2018, proving that developers are finding opportunities and giving us confidence that this will only increase through 2019 as hopefully some of the Brexit uncertainty lifts and the market begins to recover.
CapitalRise CEO, Uma Rajah commented on the report: “This is a strong forecast and it reflects what we’re expecting to see in the market. There are a lot of developers out there, seeking finance for impressive prime developments. With strong track records and long-standing market knowledge, these developers are developing because they know they’ll be able to sell. With this demand still very much present, we’re sure that the market will continue on the road to recovery.”
The next CapitalRise prime property investment opportunity will be launching soon. Take a look at our previously funded projects to get a feel for the type of investments CapitalRise members have already funded.
You can find a full copy of the Savills Autumn 2018 residential property forecasts here.
The CapitalRise team spent a very enjoyable evening this week meeting developers and professional partners at an exclusive Private Viewing. With drinks and canapes served at a stunning Knightsbridge apartment, guests had the chance to explore this boutique 5,698sqft apartment with extensive living and entertaining spaces, whilst conversing with our team about their finance requirements.
More about this unique property from Finchatton
This apartment is part of London’s exceptional new residences that effortlessly balances timeless elegance with modern sophistication. On the ground floor is the formal reception and dining room, study and family kitchen. All three bedroom suites are on the lower ground floor and all have access to a private terrace with a beautiful living wall.
New residential property research released by Knight Frank paints a strong picture of the London prime property market, reaffirming its continued stability.
According to the research report compiled by Tom Bill, in June 2018, numbers of new prospective buyers for prime central London property were up 31% year on year, with total sales of properties over £10 million sitting at £470 million. This significant rise in buyer interest over the last year highlights the continued demand for prime property and proves the ongoing resilience of this market.
With Brexit negotiations still up in the air and a continued environment of political uncertainty in the UK, this is refreshingly positive news. Bill also gives his view of the market in prime outer London, noting that year on year figures show 31% fewer properties withdrawn from sale, with buyers more likely to meet asking prices and complete the sale. A definite vote of confidence for those investing and selling in the prime property space.
CapitalRise co-founder, Alex Michelin commented on the results of the report;
“In the short term, we expect Brexit to cause some disruption. However, the weak pound continues to encourage buyers with a US dollar income to consider London as a safe investment and most of the buyers we speak to maintain that the appeal of London – namely quality of life, culture and business opportunities – remains unchanged.”
CapitalRise have a number of investment opportunities launching over the coming months. Browse our upcoming deals and previously funded projects for a view of the prime property investments we provide. You can find a copy of the report here.
The whole office is abuzz this morning following a hugely exciting evening yesterday for CapitalRise at the Resi Awards, where we won the Best Newcomer award. I could not be prouder of the team and what we have achieved over the past 22 months. We launched this business to address a gap in the market; to help developers find fast and reliable funding and to provide investors access to previously unavailable real estate opportunities. With nearly £10m of lending already funded and over £2 million returned to investors, we have proved the model and are delighted to receive industry recognition for our hard work.
Last night’s awards at the Grosvenor Hotel were a glamorous affair, with representation across the residential sector and myself, Kate, Matt & Steffan in attendance to collect our award.
2018 is already shaping up to be another busy year at CapitalRise. The significant seed funding investment we recently secured will allow us to continue our fast-paced growth, expanding our team and pursuing new property investment opportunities. We have continued to grow the team in recent months, with Carrie Russell joining our marketing team and Joe Postle joining our product team on Monday. Our first developer exit loan was hugely well received by investors, becoming fully funded within two business days, with many trying to access the opportunity after funding closed. With no end in sight to low interest rates in the UK, our product remains hugely attractive to investors looking for attractive risk weighted returns and we are working hard to bring more investment opportunities to our investors in the coming weeks & months.
In the meantime, I would like to say a massive thank you to the whole team for all their hard work in getting us to this point. We have achieved so much, and it is fabulous to have that hard work recognised with this Resi award, of which we should all be very proud. And most excitingly, there is so much more to come – onwards and upwards!