What we do

What does Property Partner do?

Property Partner is the world’s first stock exchange for residential property, allowing investors to take a view on individual property assets, diversify their portfolio and manage their market exposure at the click of a button.

Residential property is a popular investment with a strong track record, but it is not always easy to access. Our purpose is to bring accessibility, simplicity and liquidity to this asset class.

Property Partner allows you to invest in residential property, earn monthly income from rent and sell your investment on the Resale market.

What are the different types of investment opportunities?

On Property Partner you have a choice between New Listing (primary market) and Resale (secondary market) investment opportunities.

“New Listing” opportunities

“New Listing” opportunities are properties for which we have negotiated an option to purchase at an agreed price. The funds to purchase these properties are live funded on our platform within a specified time period.

New Listing opportunities are presented on the platform along with a Chartered Surveyor’s valuation and survey, solicitor’s conveyancing report and forecast rental information.

When you commit funds to a “New Listing”, your Property Partner account balance will decrease but no money will actually leave the client monies account until the live funding target is reached.

In the unlikely event that a new listing does not reach its funding target within the specified time, either Property Partner will make up the difference using our own cash (for example, if the difference is very small) or the funding process will fail and the property will not be acquired. Where the funding process fails, all committed funds will be released in the respective customers’ accounts i.e. the funds will never leave your customer account. This applies to 100% of committed funds – Property Partner will obviously not charge or receive any fees and any costs that have been incurred (for example, surveyors and solicitors) will be borne solely by Property Partner.

“Pre-orders”

All “New Listings” are available in “Pre-Order” mode for a set period of time, with the remainder (if any) moving to a live funding process thereafter.

Pre-order ensures a window of at least several days for everyone to participate in a New Listing, meaning you can digest the information in your own time and won’t miss the opportunity to invest. You will also be able to see the pre-order closing date in each property page.

So long as you invest in the Pre-order period you will not miss out on the chance to invest, but to accommodate everyone fairly we may need to scale-back orders if they exceed the Funding Target for a New Listing (see below).

What is scale-back?

Scale-back may be applied if pre-orders are oversubscribed. When investor commitments exceed the Funding Target for a New Listing, your commitment may be reduced on a pro-rata basis. For example, if the funding target is £1,000,000 but we received pre-orders amounting to £2,000,000 (excluding fees) then you would receive 50% of your initial order.

Please note that investments made by Auto-invest will not be subject to scale-back unless there is oversubscription via Auto-invest alone.

“Resale” opportunities

“Resale” opportunities appear on the platform when another Property Partner investor chooses to sell their investment.

The selling investor can choose the price in which they offer their shares for sale, but we will provide information to help both potential buyers and sellers to perform diligence, and determine whether they wish to buy or sell at a given price.

In addition, we provide an updated estimate of the valuation of each property each quarter. RICS accredited surveyors carry out revaluations of all our properties on a quarterly basis and we update the valuations on or about the 5th of January, April, July and October. A comprehensive Chartered Surveyor’s physical inspection and valuation is completed every five years in connection with the 5 year exit mechanic.

However, ultimately it is your decision what price to buy or sell at. Our estimated valuations do not constitute, and should not be considered, investment advice.

Property Partner Discretion & Classification Requirements

Property Partner reserves the right not to list an investment for sale and to decline investment requests via its platform at its sole discretion. In addition, all customers must classify as sophisticated, high net worth or restricted investors and, until you have done so, nothing on our site is intended as an offer capable of acceptance by you or us.

How are the investments structured?

Your investment in property on the platform is made via the purchase of a beneficial interest in shares in a UK Limited Company, established specifically for purchasing that individual property.

Special purpose vehicle (SPV)

It is not possible for more than four people to be listed on a UK land registry deed, as such each property listed on Property Partner is owned by a special purpose vehicle (“SPV”), which is a UK Limited Company, in which you can acquire a beneficial interest in shares. There is a different SPV for each and every property; therefore, you will always know that you are investing in a specific property chosen by you.

Is there an ownership cap per SPV?

The maximum number of shares that you can purchase in any property is 199,900 which is equivalent to 19.99% of the SPV. The cap on percentage ownership is to ensure no individual owns a beneficial interest greater than 20%.

Nominee arrangement

Your shares are held under a nominee arrangement, with the nominee being the legal shareholder of the relevant SPV. The nominee holds those shares on your behalf and you will be entitled to all the economic benefits as the ultimate beneficial owner. The nominee is a UK Limited Company wholly owned by Property Partner called Property Partner Nominee Limited. The purpose of this arrangement is to facilitate the electronic transfer of shares and for ease of administering operations as set out in the management contract, and it is a widely recognised approach for doing so.

Property purchase costs

As with buying property directly, purchase costs such as stamp duty, solicitor’s fees and survey costs are incurred. These costs are funded by the amounts raised from investors and shown on the platform before you make an investment. We amortise these costs over 5 years, which means we spread the costs over that period. We include the unamortised amount within the estimated valuation of investments i.e. the shares in property SPVs.

Standard investment documents

At the point of investment, you will be required to agree to a set of investment documents. These are standard form for each investment and sample documents can be accessed from your Dashboard on the platform.

Why do we undertake customer identity verification?

After a customer sets up a Property Partner account, we complete an identity verification check. This is an essential part of our due diligence process, and is something that’s required by our regulator, the Financial Conduct Authority (FCA) for all customers.

In the event that we are unable to complete the identity verification check electronically, we may ask that you provide two identity documents that may also need to be certified by an independent professional. Whilst we appreciate that this is can be an inconvenience, our objective and intention is ultimately a benefit that protects both our customers and ourselves.

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Properties

How we select properties

All residential property investments available through Property Partner were specifically chosen by our Director of Property, Robert Weaver, and his team. Robert is one of the UK’s most experienced residential property professionals. Previously a Global Director of Residential Investment at RBS, Robert is a Fellow of the Royal Institution of Chartered Surveyors (RICS) and sits on the residential committee of the British Property Federation.

Property Partner also accesses research from third parties, such as the Independent Data Bank (IPD), JLL, Knight Frank and Savills. Our investors benefit from all of this knowledge.

Our Property team searches for property differently to the average buyer, focusing on properties that will give the best returns. To do this, Robert and the team overlay two types of insight: The Economic Perspective and The Property Perspective.

The Economic Perspective

Historically, the majority of residential property returns have been delivered through capital appreciation. However, we look to balance income and capital returns when we choose our properties, to maximise the ‘total returns’ that this combination can bring to our investors over time.

The Property Perspective

When selecting properties, we focus on investment themes that we see as growth opportunities. Good examples include areas benefitting from regeneration, value migration or infrastructure investment (e.g. the Crossrail line that is set to transform London). We expect these areas to see strong capital returns and rental price growth.

At other times, we will use our knowledge and buying power to engage with more complex purchases, such as those with complicated legal situations.

We also seek ‘wholesale’ discounts, through the purchase of entire blocks of flats. Additional advantages come with such transactions, including enhanced yields and greater stability of income.

Who takes care of the letting and management?

When you buy a share in a property (through an SPV), you never need to worry about letting or management of properties. Property Partner takes care of this on behalf of the investors.

The SPV which acquires the relevant property enters into a management agreement with Property Partner, which in turn delegates property management decision-making and authority to a letting and management agent.

To facilitate this, we charge 10.5% + VAT (total of 12.6%) per annum of Gross Rent, which includes both advertising, letting and managing the property but excludes certain costs such as maintenance (consistent with industry practice).

In certain situations, we may charge a lower amount. For example, we might do this if the property is rented by long term tenants under an Assured Periodic Tenancy. Property Partner uses local agents to perform much of the advertising, letting and management services and pays for these third party costs out of the 10.5% + VAT fee, meaning this is generally only a breakeven activity for Property Partner.

Do you accept tenants in receipt of housing benefits?

We don’t have tenants receiving housing benefits right now (correct at the time of writing) but in the future there may be a scenario in which we inherit tenants receiving housing benefits.

Do you offer rent guarantee insurance?

We do not provide rent guarantee insurance, but do provide conservative void period forecasts. We’ve also met or exceeded our rental income forecasts to date - you can see these in our regular ‘Open House’ blog.

It’s also important to understand that Property Partner allows you to diversify your investment across multiple properties. This reduces the risk of losing income in void periods, and therefore reduces the need for rent guarantee insurance.

What kind of tenant turnover do you have?

It is too early to say what kind of turnover we have as we have been operating for less than 2 years. However, to date we have met or exceeded all our income forecasts.

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Income

How do I earn an income?

You beneficially own a portion of the individual property via a specific UK Limited Company, (the SPV). You will receive a share of the Dividends from the SPV every month, in direct proportion to your ownership of the SPV that owns the property.

The Dividends available to property investors are calculated as the Gross Rent collected from tenants, minus property-related costs including: purchase costs, furnishings, cosmetic remedial works, forecast maintenance, annual voids, corporate taxation, all fees and mortgage interest payments (for geared properties).

Under no circumstances will you be required to contribute further capital, e.g. during vacant periods or to cover defaults.

Estimates of future Dividends are provided prior to you making an investment. These estimates are based on consultation with third parties, such as local estate agents and surveyors. We then apply estimates for void periods, on-going maintenance, and any other costs we envisage as per the above. Our estimates are available for review as part of the investment process. However, it is important to note that this information is based on estimates and Property Partner does not provide investment advice in this regard. It may be that lower Gross Rents are secured and/or higher costs incurred. See also Key Risks.

How do I calculate my monthly income?

Every property has a different projected dividend yield and every property has different opportunities for capital growth as well.

As an example, If you invested £10,000 in a property on the platform with an estimated dividend yield of 3.05%, you would expect to receive £305 per year in dividends (i.e. £10,000 x 3.05%). This would mean an estimated income of £25.41 a month, which would be paid directly into your Property Partner account. You are free to then reinvest or withdraw those funds.

Any capital gains would be in addition to this dividend yield. The combination of income, capital gains and our charges would give you a total return.

Each property page has a Calculator to help you calculate your total returns based on different scenarios.

The calculator will show estimates of:

  • Initial Investment
  • Dividends
  • House Price Change
  • Costs and taxes
  • Estimated Gains

When will Dividends be paid?

Your share of Dividends will start accruing from the date the property is purchased, or a later date if specified in the property description. Dividends for any given month will be paid on the 5th of the following month, directly into your Property Partner account. If the 5th of the month falls on the weekend or a bank holiday, dividends will be paid on the next business day.

The first payment will typically follow the first full month from purchase - for example, if a property is purchased on 15th December, the first disbursement will be on 5th February for the period 15th December to 31st January.

In addition, we provide an updated estimate of the valuation of each property each quarter. RICS accredited surveyors carry out revaluations of all our properties on a quarterly basis and we update the valuations on the 5th of January, April, July and October (if this falls on a weekend or bank holiday, then the next business day) so that you can monitor any capital returns. All of this will be presented through your personal dashboard on the platform.

Where do I find my monthly returns?

We email you once the property you have invested in has successfully been funded. You will then receive a monthly email notifying you that dividends have been received on your investments.

You can also view your 'current investments' tab and see any dividends received.

Will I need to put in further capital?

No, investors will not have to contribute further capital. All costs including bills and fees are funded from the Gross Rent. The risk of the largest unexpected costs, such as flood or fire, are mitigated through property insurance.

We also forecast certain costs, such as upcoming roof maintenance, and either (i) raise a works provision during the initial crowdfunding when the property is a New Listing or (ii) set aside a certain amount of the Gross Rent to deal with these costs as and when they arise. We make all of this information available to investors at the point of investment. If further information relating to costs becomes available later, we will communicate this clearly via our website so that all Investors (current and prospective) are aware.

It is possible that a cost is incurred that is larger than Gross Rent, and may be unexpected and also uninsured. In such a scenario Property Partner reserves the right to take out a loan which is secured against the property, to fund the expenditure. That loan is repaid from Gross Rent, and this impacts the investors’ returns accordingly. If this situation were to occur, the matter would be communicated clearly to existing and prospective investors alike in a clear, fair and transparent manner.

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Exit and Capital Return

How do I exit my investment?

Capital appreciation or depreciation (see Key Risks) is realised when you exit your investment. There are two principle ways to exit:

  1. Offer your investment for sale via Property Partner's platform

    You can do this at any point. You can choose the price at which you offer your investment for sale. Your investment is then listed as a “Resale” opportunity to other investors.

    We provide you and prospective purchasers of your investment with an estimated valuation (on a per share basis) which is updated every quarter from independent RICS accredited surveyor valuations. And, of course, you’ll be able to see the prices at which previous shares in that property have traded, as well as the prices currently being bid by prospective buyers.

    Ultimately it is your decision what price to buy or sell at, our estimated valuations do not constitute, and should not be considered, investment advice.

    Depending on the price you are offering your investment for sale, the opportunity may or may not appear attractive to prospective buyers (and therefore may or may not sell). You can adjust the price to make it more attractive to buyers. However, there is no guarantee that anyone will be willing to buy your investment from you, whatever the price. In this scenario your opportunity to exit is limited to (2) below.

  2. Exit after five years at market value

    On each fifth anniversary of the completion of the transaction on the platform, each investor in the property has an opportunity to sell their holdings at fair market value. This process is outlined as follows:

    1. The property is inspected and valued by an independent Chartered Surveyor with reference to factors such as recent transactions and the condition of the property, adjusted for any potential liabilities that the SPV may have, such as a mortgage or taxation. This is then divided by the number of shares the SPV has issued (1,000,000 in each case) to create a per share market value.
    2. Investors that would like to exit at this point will be aggregated into a block which will be relisted on the Property Partner platform at the per share market value for up to 4 weeks. This process is similar to the initial crowdfunding of a New Listing.

    If this process is unsuccessful for whatever reason, Property Partner will commence proceedings to sell the underlying property. The property will be advertised for sale on the open market at the valuation determined by the Chartered Surveyor. Property Partner will administer this process and is obliged to act in the interests of investors to maximise financial return. On successful completion of the sale, all Investors in that property will be exited and net proceeds will be distributed to investors. Note that third party costs, such as legal fees, will reduce the proceeds available for distribution to investors, but Property Partner will not charge any fees or make any profit margin on the third party fees.

    It should be noted that if the underlying property is sold, this process will take as long as required and typically the sales process is between 3-4 months. However, there is no guarantee of this as the sale could take longer.

Are there any fees when buying or selling on the ‘Resale’ market?

When purchasing shares on the Resale market a 2% fee applies, same as with our New Listings properties. There are no fees upon successfully selling shares.

Please note that your investment in the Resale market will be subject to Stamp Duty Reserve Tax. Stamp Duty Reserve Tax is an amount payable to HM Revenue & Customs for acquiring shares in property investments on the secondary exchange (i.e. Resale opportunities). The amount payable is 0.5% of the cost of those shares.

When you purchase shares on the Resale market you are automatically offered the cheapest shares first until the amount of shares proportionate to how much you want to invest have been purchased.

What is ‘premium on purchase’?

The Premium/Discount on Purchase is the percentage difference between the amount paid for a Resale investment and its Latest Valuation at the time of purchase. It is positive (a ‘premium’) when the amount paid is greater than the Latest Valuation at the time of purchase and negative (a ‘discount’) when the amount paid is lower.

For example, if you purchased a Resale investment for £10,200 (share price of £1.02) but the Latest Valuation of the shares acquired was £10,000 (share price of £1.00), then the Premium paid would be 2%.

Can I delist my shares from the ‘Resale’ market?

Yes, the shares you have offered for sale can be delisted, adjusted and relisted at anytime up until the point another customer opts to buy them i.e. if you list them and someone accepts that price and acquires the shares the transaction is complete and you cannot unwind that transaction - however you can delist or adjust any time up until that occurs.

Do I still earn a monthly income when I list my shares for sale on the ‘Resale’ market?

You will still receive monthly dividends for the shares you have listed for sale as long as you still own them on the 5th of the month when the rent dispersal is paid.

How liquid is the Resale market?

In our Open House monthly reports (which you can find in our blog section), you will find further data on our Resale market, including time to sell, trading volumes, and a download of trading activity allowing you to perform your own analysis.

Trading volumes have been meaningful and figures vary substantially by property, with ‘older’ properties (those funded many months ago) generally seeing more trading volume than more recent properties, since they have had a longer time in which to trade.

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Gearing

What is gearing?

‘Gearing’ is essentially the use of borrowed capital (i.e. debt) to part fund a property purchase. It’s also known as ‘leveraging’, though many would refer to it as a mortgage. It’s attractive to many investors because it offers the opportunity to enhance returns; debt increases both risks and rewards.

At Property Partner, we take a considered attitude when it comes to risk, and will only list certain kinds of property with gearing, in order to reduce these potential risks.

Firstly, we do not offer geared investments on individual properties. Whilst it is possible to accurately forecast net income for an individual property on an annual basis, the same isn’t true for monthly returns, which can be volatile e.g. during void periods when the property is untenanted, and produces no rental income. This makes leverage less appropriate for individual properties, as there are a number of non-recoverable outgoings including council tax and utilities, which make monthly interest payments difficult to cover.

However, the risk is lessened for multiple units – whether they be groups of properties from the same development, or whole blocks of flats. With a larger number of units, there is a more stable stream of income as there are multiple tenants providing rental income. With this reduced income volatility, debt and interest payments become less risky to take on.

For this reason, we only offer gearing as an option for multiple unit properties. The more units in a property and/or the higher the rental yield, the greater percentage of leverage we will be comfortable using. Furthermore, we are only offering properties on our platform where the gross rental income forecast is comfortably higher than 1.25 times the cost of interest.

We typically structure the debt with a fixed interest rate period of between 2 to 5 years depending on the specific property and circumstances. The maximum term aligns with our 5 yearly exit protection mechanics (which you can read more about here).

At this point we can ‘go to market’ to renew the debt at prevailing market rates - with those investors that choose to continue holding their investment presented with an updated returns forecast. Further information on the mortgage terms for a respective property will be disclosed in the property overview page.

Gearing properties has a number of risks and rewards that are explained in this article here in more detail. Please note that we use the term Leverage interchangeably with Gearing or Geared.

How does it work?

The Special Purpose Vehicle (SPV) that purchases the property raises the debt (or mortgage) that is secured against the property. Property Partner investors are not personally liable for any debt repayment. Any amounts due to the provider of debt, including interest and principal repayments, are the responsibility of the SPV, which will ultimately make payment.

The debt provider typically charges a one-off debt arrangement fee. This is usually around 1% of total debt, but may vary. The arrangement fee is added to the purchase costs and amortised over a 5-year period.

What are the risks and rewards of gearing?

Gearing amplifies the impact of property price movements, meaning that investors' returns outperform the market if prices rise, and underperform it if they fall. See the illustrative example below, in the section titled 'How does gearing impact total returns?'

Debt incurs a monthly interest charge which has a priority over dividend payments to investors. Should actual Gross Rent be lower than forecast for a particular month, the Dividend Yield would be relatively lower than if the property was unleveraged.

It is worth mentioning that Dividend Yield is not always adversely impacted by debt. In some instances, Dividend Yield can be enhanced by debt. Two factors that can lead to this happening are low interest rates for the debt and the corporation tax benefit that comes with paying interest.

The tax benefit of interest payments comes because interest payments are tax deductible: a benefit that flows through to Property Partner investors. For example, for every £1 of interest, £0.20 is offset against corporation tax (note corporation tax rates are subject to change).

How does gearing impact total returns?

The Total Returns of an investment, expressed as a percentage, are the amounts received (all dividends and proceeds from sale of your investment) divided by the Total Cost of that investment (cost of acquiring the shares and Transaction Costs).

Gearing increases both potential returns but also risk. The provider of debt receives a fixed return in the form of interest and does not have exposure to property price movements. For example, on the disposal of a property, the debt is required to be paid as a priority before payments to Property Partner investors.

Investors in the SPV therefore have the entire exposure to movement in the property price. This amplifies the impact of price movements. The examples below illustrate this:

Illustrative Example of Capital Returns

No Debt Purchased Debt at 50% Purchased No Debt In 5 Years Debt at 50% In 5 Years No Debt In 5 Years Debt at 50% In 5 Years
Property Price Movement -20% -20% 20% 20%
Property Price / Value 500,000 500,000 400,000 400,000 600,000 600,000
Debt Raised / Repaid 0 (250,000) 0 (250,000) 0 (250,000)
Investment / Proceeds 500,000 250,000 400,000 150,000 600,000 350,000
Capital Profit (100,000) (100,000) 100,000 100,000
Capital Return n/a n/a -20.00% -40.00% 20.00% 40.00%

Note: the above calculation is for illustrative purposes only and to help explain the impact of leverage on capital returns. There are other factors that impact capital returns, such as amortised purchase costs and deferred tax. These are presented in more detail on the respective Properties’ page.

For more information please read the article here

Does a mortgage affect income?

Yes, it does. Properties from different areas will yield different levels of income from rent, depending on the purchase price, so it is important to consider this when gearing an investment property.

If the ungeared net yield of a property is higher than the cost of debt, the mortgage will increase the income yield of the property. Similarly, if the ungeared net yield of a property is lower than the cost of debt, the mortgage will decrease the income yield of the property. Property Partner takes this into account when assessing gearing.

What happens if interest rates increase?

We presume constant interest costs in our forecasts, but the downside risk of higher interest rates may be partially mitigated by our conservative assumption of 0% rental growth.

Will I ever be required to put in more capital?

No, under no circumstances will you be required to contribute further capital e.g. during void periods or to cover defaults. All costs will be paid out of Gross Rent. The risk of large unexpected costs is mitigated through property insurance. To the extent that large costs are not covered by insurance, these amounts will be deducted from Gross Rent, reducing dividend payments.

Property Partner does reserve the right to take out a loan which is secured against the property, to fund large expenditure not covered by insurance. Property Partner will ensure that the loan-to-value resulting from the leverage provides sufficient headroom to raise this further debt if required at a later date.

Does gearing impact the five year exit mechanic?

No. The minimum term of any debt raised will not extend beyond the five yearly exit mechanic. At the 5-year point, the Latest Valuation is based on the Latest Property Value less any deferred tax and outstanding debt. Future interest rates after the 5 year period would not impact this Latest Valuation and investors’ ability to exit at fair market value.

After 5 years we can ‘go to market’ to renew the debt at current market rates. There is risk that the new terms of the debt are uneconomical and it may be in the best interests of investors to sell the property, repay the debt and return the remaining proceeds to investors.

Further information on the 5 yearly exit mechanic can be found here.

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Valuation Policy

New Listing

Funding target

The funding target of a New Listing, which forms the basis for the share price, consists of:

  • The property’s purchase price (see the definition below)
  • Plus all third party purchase costs and additional funds required for furnishings and repairs
  • Less any mortgage (which is a term loan secured against the property)

Purchase price

The purchase price for a New Listing is the price paid to acquire the property, which in turn is supported by a Chartered Surveyor’s physical inspection and valuation.

Resale

Latest Valuation

The Latest Valuation is the estimated valuation of the SPV (all the shares combined) that holds the property.

The Latest Valuation of the shares is updated when the property is initially made available on the Resale market. Valuations reflect:

  • The change in property value (i.e. the Latest Property Value), as determined by an independent RICS accredited surveyor, if any
  • The amortisation of purchase costs
  • A change in the deferred tax provision, if any

It is worth noting that if the property is geared, the mortgage balance will remain unchanged each month - this is because the debt is interest only.

Valuation updates are published on or about the 5th of January, April, July and October. If the 5th falls on a weekend or a bank holiday, then the valuation updates will be published on the next business day.

Latest Property Value

Up to and including May 2016 we revalued properties at the end of each month using a combination of quarterly RICS Chartered Surveyor’s desktop valuations and movements in the House Price Index (“HPI”), published by Land Registry.

However, since June 2016 we are no longer providing monthly revaluations between quarterly updates. Instead, our RICS accredited surveyors carry out revaluations on a quarterly basis for all fully funded properties that are available on the Resale market and these are updated on or about the 5th of January, April, July and October.

For investment blocks we prefer to value each property at the more conservative assumption of investment value (bulk transaction value). However, we do have the discretion to value each property (or unit) at market value on the assumption of vacant possession (break-up value), if, for example the block consists of a lower number of units and/or is within an active local market.

Finally, every five years we arrange a Chartered Surveyor’s physical inspection and valuation process to provide a further update to valuation. This valuation is the basis for the five yearly exit process. You can find out more further information on the 5 yearly exit mechanic here.

Amortisation of Purchase Costs

Purchase costs are amortised (depreciated) over the period to the first five year anniversary of the property’s listing on our site. This means we spread the cost over five years, gradually reducing the total purchase costs over that period in equal monthly amounts. For example, if total purchase costs were £6,000, this amount would reduce by £100 each month until the 'five year anniversary' at which point the outstanding balance would be zero.

Purchase costs include Stamp Duty Land Tax, third party professional fees (including any brokerage fees), pre-letting expenses (including furnishing), and other third party costs relating to the purchase of a property and arranging the mortgage (if applicable). These purchase costs are unavoidable and are incurred by all individuals and companies that acquire buy-to-let properties.

Deferred Tax

Should the property value increase, corporation tax maybe payable on the gain on disposal. This is because all properties listed on Property Partner are acquired through a Special Purpose Vehicle (SPV), which is a UK limited company. This future corporation tax liability is recognised in the valuation of the SPV (the Latest Valuation) and is called deferred tax. When we revalue the properties, as described above, we adjust the Deferred Tax provision accordingly. The Latest Property Value has to increase to an amount greater than the purchase price plus certain incidental purchase costs before any deferred tax is recognised.

Deferred Tax only becomes payable if and when the property is sold, and is considered a potential “liability” until that point. For example, if the property valuation increased by £10,000 over and above the purchase price and certain purchase costs, then £1,800 (£10,000 x 18%) would be recognised as a deferred tax liability.

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Bids

What are bids?

The Bid Engine allows customers to place ‘Bid’ orders for property shares on our Resale market. You can now indicate the price(s) at which you are willing to buy shares in a property on our Resale market.

Why have you launched a Bid Engine?

We want people to be able to take their view on the property market - whether they’re ‘bullish’ (they think the property prices will rise) - or ‘bearish’ (they think property prices will decrease).

Where can I find bids?

To be able to access the Bid Engine, you will need to make sure that you’re logged into your account on www.propertypartner.co

The Bid Engine is only accessible if you are logged into your account.

On each Property page, you will see a chart underneath the latest valuation, this shows the range of current bid orders for that particular property. To place a bid, you click the “Bid” icon.

How does it work?

It works like any other bidding system. You are able to set the price(s) at which you are willing to buy - and when a bid order matches a sell order at the same price, there’s a trade.

You can place as many bids as you like. Subject to Scale Down mechanics (see below) bids will be successful until your available balance runs out.

When bid ranges cross, the highest priced and earliest placed bid will trade first.

You are able to bid across as many properties as you wish. Example: If you had £1,000 in your account, you might place £54,000 worth of bids: i.e. across 54 Resale Properties X £1,000 on each. The first matched bids will be successful. Then, according to your available funds, the rest will either be cancelled or reduced - leaving only your most favourable bids in place. This process is known as Scale Down. Note Scale Down relates to bids and is distinct from the scaling back that may occur if pre-orders are oversubscribed.

How does the process of Scale Down work?

There are a few different instances of Scale Down occurring. Scale Down only occurs in relation to orders to buy i.e. “Bid”. Increases in your available funds will also cause previously scaled down bids to scale back up to the point you originally set the bid at (i.e. the “high water mark” of the bid). The process is explained in the scenarios outlined below:

Scenario 1: Bidding across multiple properties. Let’s say you place 54 different bids of £1000 across 54 different properties, giving you £54,000 worth of bids. When the first order is successful, the rest of your orders will be scaled down accordingly until cancelled or until you top up your available funds.

Example: Assume you have available funds of £10,000 and you place 54 bids of £1000. If one of those £1000 bids matches all other bids will remain in place as resting bids of £1000 and your available funds will reduce to £9000. If you then match another £8500 of successful bids (reducing your available funds to £500) then all remaining bids will scale back to £500 so as to match your available funds. Bids will continue to match until your available funds reach a point where there is not enough to secure 1 share in a given property you are bidding for. At that point bids relating to that property will cancel.

NOTE: If you still have resting bids and you increase your available funds (by making a deposit, selling shares, receiving dividends or promotional funds) then your resting bids will scale back up to the high water mark of a given bid i.e. in the example given if your bids had scaled back to £500 to match available funds and you then deposited a further £1000 into your account then those bids would scale back up to £1000 and continue to match until the bids are fulfilled or your new available funds (in this case £1500) were depleted.

Scenario 2: If you bid to buy on one property, and you place two or more bids on said property for more than your available funds, the lower priced bid (least competitive) will be scaled down to equal your available funds.

Example: Assume you have available funds of £600 and you place a bid of £500 at a price of £1.00 on a property AND another bid of £500 at £0.99 on the same property. The lower priced (least competitive) bid of £0.99 will be scaled back to £100 worth of bids at £0.99p. It will then remain until cancelled or scaled back up (to its £500 high water mark) in the event that your available funds increase.

Scenario 3: Reducing your available balance by any means (purchase on primary/Resale, withdrawal or transactions through bids) will potentially trigger Scale Down of any bids that are above your available funds. This will occur on single property or multiple property bids. As outlined above if your available funds increase then any bids you have made will scale back up to the high water mark of the given bid.

Example: Assume you have available funds of £1000 and you place 10 bids of £1000 across multiple properties. You then invest £500 in a new listing which reduces your available funds to £500 - this triggers scale down of all your bids to £500. You then deposit £500 and all your bids scale back up to £1000.

Does my account need to be funded to be able to place a bid?

Yes, it does.

You will need to have available funds in your Property Partner account to be able to make a bid on the Resale market.

Your maximum exposure from bids is limited to the available funds in your account. If you don't have available funds, then you can't bid at any price. However, if you increase your available balance (such as through receipt of dividends, making a deposit, selling shares or receiving a promotional benefit), then those available funds can be matched against your resting bids. For this reason if you do not want increases in available funds to match against your bids then you should cancel those bids.

Can I change or edit a bid once it’s been made?

You are able to cancel your bid order at any time up until it is matched.

Once a bid matches you cannot withdraw from the trade because Resale market trades are between investors; consequently, price will depend on fluctuations in the market that are outside our control.

At the moment, you are unable to edit or amend a bid that has been placed so if you want to change it you need to cancel it and place a new bid. We will be looking into creating a more flexible process.

What is the difference between ‘Active’ and ‘Unfillable’ shares?

Bids that can be fulfilled are called Active shares. They become classified as ‘Active’ shares when the bid amount can be fulfilled.

‘Unfillable’ shares are simply classified as ‘Unfillable’ when those shares can’t be filled. Bids with unfillable shares can be identified by their bright orange colour in your dashboard. This will generally be due to not having enough available funds to cover the entire bid.

How do I keep track of my bid orders?

Your bids are displayed on your dashboard under the 5th tab ‘Bid Orders’. These are listed chronologically, with the newest at the top. Once your shares are bought, the shares you are bidding for are reduced and the property appears in your current investments tab (if it didn’t already exist).

How will I be notified when my bid is matched?

You will receive a transaction email from Property Partner notifying you that your bid has been matched and that you have purchased shares.

Just like any other Resale transaction, you will be able to see this transaction in your account history in your User Dashboard.

Will the system remember my original bid?

The system will remember the “High Water Mark” of any bids you make until the bid is completely fulfilled or cancelled.

“High Water Mark” means that the system will remember the original bid, even if you don’t have the available funds to fulfill all of it. This lets bidders increase available funds to fulfill bids made, allowing you to keep your bid, add funds to your account and have multiple bids fulfilled. This allows you to take your view on multiple properties. See examples outlined in the section explaining Scale Down for further detail.

Will the system remember my Old Bids?

Once the bid order has been completely transacted, your original bid order will be deleted from the system and will not viewable in your account history.

‘Old’ bids (bids that are completely fulfilled or cancelled) are not remembered by the system.

Is there any sort of ‘fill’ or ‘kill’ option?

As of right now, there is no ‘fill’ or ‘kill’ option in the Bid Engine. A bid order may work itself out so that you are receiving the order in many small increments depending on the quantities of shares sold at your bid price.

What is the highest number of shares I can acquire through a bid

Provided you have sufficient available funds you can acquire up to a maximum of 199,900 shares in a given investment. If you already have shares in that investment you will be scaled back to that amount once the bid is placed because there is an ownership cap on each property of 19.99%.

Is there a way to set a time frame on a bid?

Not at the moment, no. This may be a functionality that we will consider adding in further releases.

Is there a stop order function?

At the moment, there are no stop orders. You must set the bid limit appropriately or cancel a bid manually if you no longer desire to buy shares at that price.

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Auto-invest

What is Auto-invest?

Auto-invest is a feature that allows you to invest your funds automatically each month, at an amount that you set.

Auto-invest will begin from the first ‘New Listing’ property after it is enabled. Auto-invest will not invest into the property currently available for Pre-order, so you may have to for the next property launch to see your first auto-investment.

How does it work?

You can set an initial lump sum amount to invest on the day you set-up and you can also choose how much to invest monthly, and on what date. Auto-invest deploys your funds into the next 5 New Listing properties regardless of when they occur.

Whenever there is a “funding event” into Auto-invest such as allocation of a lump sum to invest or receipt of a regular monthly contribution, Auto-invest will divide the funds in your Auto-invest account by 5 and allocate funds to the next 5 New Listings. For example if you were to make an initial deposit of £10,000 into your Auto-invest account it will deploy £2,000 into the next 5 New Listings until your Auto-invest balance is zero and you hold 5 x £2,000 in five New Listing investments. However, if after say 2 investments of £2,000 (totalling £4,000 invested), you then deposited another £1,000 for Auto-invest purposes (as a one off payment or a regular monthly contribution) that would trigger a “funding event” and cause Auto-invest to add that £1,000 to your remaining £6,000 Auto-invest allocation (bringing your total Auto-invest allocation to £7,000). At this point, because a new “funding event” has occurred, Auto-invest will divide your Auto-invest balance at that time (i.e. in this case £7,000) by 5 and allocate those funds to the next 5 New Listings (so £1,400 for each of the new 5 New Listings).

Committing funds to Auto-invest helps us plan for future offerings on our platform. Our way of saying thank you is to provide an added benefit to allocating funds to Auto-invest; namely immediate interest on your Auto-invest funds from the moment you commit them. You will receive 3% annual interest, calculated daily but paid monthly on or about the 5th of the month, on any committed but as yet undeployed funds in your Auto-invest account. The specific calculation for interest is as follows:

Average holdings in period * (daily interest rate * days in period)

Where:

Average holdings in period = average of closing balances for the period

Daily interest rate = interest rate / 365

So you earn interest on your Auto-invest balance until an investment is made at which point you earn Dividends (from rent) and own an investment with the potential for capital appreciation. Either way your funds are put to work.

You can top-up your Auto-invest account at any time, using a card payment or Bank Transfer.

Will I always invest the amount I set?

Each payment will be split over the subsequent five properties at a minimum. Unless you have deselected the ‘reinvestment of dividends and interest’ option we will also invest any Dividends and interest you receive in the form of rental income. Reinvestment of Dividends works as follows:

Payment of a Dividend is not treated as a “funding event” so when you receive a Dividend payment there will not be a recalculation of the sum to be invested into New Listings. However, one of two things will happen. Either:
  1. if there is a further “funding event” any Dividends committed to Auto-invest will be added to the pot of funds used at that time to calculate how much to invest i.e. the pot (including Dividends) will be divided by 5 and Auto-invested; or
  2. if there is no “funding event” then Auto-invest will wait until all investments calculated at the time of the last funding event have been made (at which point you should have zero funds in Auto-invest other than Dividends). Auto-invest will detect that you still have funds to invest and will then invest up to the same amount as it has most recently done using your committed Dividend funds.

For example, if you chose to Auto-invest £10,000 resulting in an initial (10,000/5) = £2000 investment with four further same sized investments to come and, at that point, you received £200 in Dividend payments, then Auto-invest will keep investing £2,000 until only the £200 remains. At this point it will invest that £200 in the next New Listing that follows the 5 investments of £2,000. However, if at any point before all 5 of the £2,000 investments had been made, you made a further lump sum or regular contribution to Auto-invest (triggering a “funding event”) then at that time the £200 of Dividends would be added to your “pot” of Auto-invest funds (i.e. any yet to be invested funds in Auto-invest + the new contribution that triggered the “funding event” + any Dividends committed to Auto-invest) for the purposes of calculating the next 5 investments.

A further benefit to making investments by Auto-invest is that your contributions will not be subject to scale-back in the case of over demand unless there is oversubscription via Auto-investors alone.

Can I still invest manually?

Yes. You are free to invest manually as and when you wish. This will not affect your Auto-invest payments. You will have a separate “Available Funds” balance which can be used for manual investments. Note however that, unlike funds committed to Auto-invest, the funds in your “Available Funds” do not attract interest until you invest them.

Can I change/stop my Auto-invest settings?

Yes. You are free to change the monthly amount that you invest, the date of payment, or to switch off auto-invest completely. Just contact our customer service team on +44 (0)20 3696 5600.

What are the benefits of Auto-invest?

Using Auto-invest means you can:

  • Build a diversified portfolio: Every property is hand-picked by leading UK experts, both for investment potential and for variety.
  • Reinvest your income: Accumulation is a powerful investment tool.
  • Let us do all the hard work - simply review your portfolio, and sell holdings when you’re ready.
  • Immediately start earning interest on committed funds while you wait for them to be invested.
  • Auto-invest contributions will not be subject to scale-back in the case of over demand unless there is oversubscription via Auto-investors alone.

How am I taxed on my investment?

For those who are UK tax resident, the dividends you receive can be included in your £5,000 tax-free dividend allowance each year. Anything beyond this will be taxed at the marginal rate of income tax.

For those who are UK tax resident, capital gains can be included in your £11,100 tax-free capital gains allowance each year. Anything beyond this will be taxed at the marginal rate of capital gains tax.

Tax treatment depends on individual circumstances and is subject to change.

What are my payment options?

You can setup auto-invest with either a card payment or a Bank Transfer for the initial payment, but monthly recurring payments must be setup with a debit card.

When is my first payment taken?

If you use card to make the first payment, it will be taken today. If you choose to use a Bank Transfer to start your auto-invest account, it will be setup for you within 3 working days (longer for non-UK accounts), you will receive a confirmation email in both cases. Unless you tell us otherwise, your auto-invest account will be set to re-invest dividends automatically.

When will you take monthly payments?

A recurring payment for the amount you request will be set up for each month and will be taken from your account on a day you choose. This will be delayed by at least one calendar month to ensure you have enough time between payments, and so your initial payment is invested. E.g. If you set-up auto-invest on the 26th March, and set your monthly payment to the 2nd of each month, then the first monthly payment will be taken on 2nd April. If you made your first investment on the 5th of the month, payment would be taken on the 5th from then on. We may soon introduce functionality to enable customers to change the regular date on which payments are made.

For full details please refer to clause 4 of our Investor Terms & Conditions.

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Data and Tools

What information is on my Dashboard?

As an investor you will have access to a dashboard so that you can monitor your investments. In particular, the dashboard provides information on:

  • Deposits
  • Withdrawals
  • Dividends Received
  • Latest Valuation Gains
  • Realised Capital Gains
  • Available funds
  • Latest Valuations
  • Forecast Monthly Dividends
  • Pending Investments
  • Current Investments
  • Investments for Sale
  • Investments Sold

Please note that when funding for a new property is completed your investment will appear in the Pending Investments section. The investment will move to the Current Investment section when the property is launched in the Resale market.

What information is in my Account History?

The Account History section provides information on all account activities, including:

  • Shares Bought
  • Fees and taxes
  • Bank and Debit Card transfers
  • Shares Sold
  • Dividends paid

What information is in my Tax Statement?

In the Tax Statement section you can download your tax statement. This provides a summary of your Dividends Received and Capital Gains/Losses realised, for the date range you select.

Do you provide share certificates or other legal documents?

When purchasing any type of shares (or securities) electronically, through a platform such as ours, physical share certificates are not issued. This is the norm in the industry as ownership of shares is constantly being transferred to other parties.

An electronic receipt is sent out for each transaction so that you can keep a copy of those for your records.

Also the solicitor's report on each property is downloadable and confirms that the SPV has exchanged on the property and also provides the SPV number.

What information is in my Investment Docs section?

In the Investment Documents section you will find our standard legal documents:

  • Investor Terms and Conditions
  • The terms and conditions that sets out the basis of your investment in a chosen property.

  • Articles of Association (for SPV)
  • The Articles of Association sets out the basic rights attached to the shares of the SPV.

  • Shareholders' Agreement
  • The agreement that sets out the relationship between the Nominee (the holder of legal title of the shares) and you as beneficial shareholders.

  • Management Services Agreement
  • The document under which the Nominee will appoint London House Exchange Limited to act as manager of the property, and sets out the terms and conditions of such appointment.

  • Transfer of Beneficial Interest Agreement
  • The agreement by you to transfer any number of shares held in an SPV to another Property Partner user.

What is the HPI?

The House Price Index (HPI) is an official statistic that captures changes in the value of residential properties in the UK. The UK HPI uses house sales data from Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland and is calculated by the Office of National Statistics. For more information please see the HPI website.

How do I calculate my income?

Each property page has a Calculator to help you calculate your total returns based on different scenarios.

The calculator will allow you to input your assumptions on Annual property price change, Initial investment amount and select an Investment period of 1 to 5 years. It will then show you the expected Total Returns (overall and annualised) for that particular investment, including details on:

  • Initial Investment
  • Dividends
  • House Price Change
  • Costs and taxes

Where can I find investors and property data?

Our monthly Open House Report contains data about our community, investment performance and measures of liquidity in our Resale market. The series is born out of our commitment to data transparency. All those that are signed up with us will continue to receive these Open House posts, along with other essential updates. If you’re not already signed up, click here to do so.

Where do I find additional information?

In our Blog here you will find additional information on several topics from new legislation, to new features and in depth articles on various subjects ranging from the government budget to our investment cases.

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Account Funding

How do I fund my Property Partner account?

There are two ways you can fund your Property Partner account:

  1. Debit card. We accept Visa Debit, Visa Electron, MasterCard and Maestro. The funds appear in your Property Partner account immediately.
  2. Bank transfer. The funds will take up to three business days to appear in your Property Partner account.

If you fund your account in a currency other than GBP, your bank will convert the amounts at their specified exchange rate.

Please note our minimum investment is £50.

Will I be charged for funding my Property Partner account?

Property Partner does not charge for funding your account. However, if your bank account is outside of the UK, our bank will charge you approximately £5.00 if funding via bank transfer.

We cannot advise on charges your bank may levy.

Why do you verify bank accounts?

Our regulator, the Financial Conduct Authority (FCA), requires that we verify that the bank account details that you provided belong to you. This is a standard anti-money laundering procedure and is only needed the first time an investor makes a withdrawal.

Property Partner will undertake bank account verification of both private and corporate customers on their first withdrawal from their Property Partner account. If for any reason bank verification cannot be completed electronically, Property Partner will request a bank statement or bank letter that confirms the account name and details belong to the respective customer or business.

How do I withdraw funds from my Property Partner account?

You can withdraw funds at any time from the “Account” page. Withdrawals to UK bank accounts take up to 3 business days to clear, but this can take a little longer for non-UK accounts.

All withdrawals are in GBP and your bank will convert the amounts at their specified exchange rate.

In order to protect your funds, the first time you make a withdrawal we may verify that the account details entered belong to you. Where possible we will perform this electronically, but we may require further information such as a copy of a recent bank statement.

Why do I have to verify my bank details for withdrawals?

Our regulator, the Financial Conduct Authority (FCA), requires that we verify that the bank account details that you provided belong to you. This is a standard anti-money laundering procedure and is only needed the first time an investor makes a withdrawal. We also do this for your protection; to ensure that money from your Property Partner account goes to your bank account.

Typically, we complete this verification electronically, however where this is not possible we may request further information such as a copy of a recent bank statement. Property Partner will only transfer money to a bank account in the name of the Property Partner account holder.

Is there a minimum withdrawal?

Yes, the minimum withdrawal is £50.

Will I be charged for withdrawing funds from my Property Partner Account?

UK Investors

No, we will not charge you for withdrawing funds to a UK bank.

Non-UK Investors

Property Partner does not charge you for withdrawing funds. However, if your bank account is outside of the UK, our bank will charge you approximately £5.00.

We cannot comment on any charges that your bank may levy.

Can I invest as a corporate?

You are more than welcome to invest as a corporate. During your account setup there is an option at the top of the 'identity check' tab that asks if you would like to set your account up as a corporate.

Can I invest using my ISA or SIPP?

HMRC rules broadly state that residential property can only be held within a SIPP as long as the property is held within a *genuine diverse commercial vehicle*, and it has not been acquired for the purpose of allowing the investor to occupy the property.

Due to each investment being on an individual property basis, and not through a diverse investment vehicle, it is currently not possible to invest on Property Partner through a pension. We are considering solutions to offer this kind of investment and hope to do so in due course.

Also, at present you cannot put crowdfunding investments in an ISA. This is currently a hot topic and if legislation changes, we will of course let our Investors know.

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Fees and Taxes

What are the fees paid by investors?

The fees relate to Property Partner’s two primary services:

  1. A technology platform that allows investors to make indirect investments in property, and subsequently sell those investments, for which we charge a one-off fee of 2% at the point funds are invested. This fee is not annually recurring and there is no charge on disposal. The 2% fee applies, whether it is a New Listing or Resale investment that you’re making. Transaction fees on all markets shall be rounded up to the nearest pence and the minimum fee per transaction shall be £0.01.
  2. The advertising, letting and full management of those properties, for which we charge 10.5% + VAT (total of 12.6%) of Gross Rent. The amount is deducted from gross rental income and reduces the amount distributed to investors. In certain situations we may charge a lower amount, such may be the case if the property is rented by long term tenants under an Assured Periodic Tenancy for example. Reduced charges will be disclosed within the property’s “overview page” on the platform. Property Partner may choose to outsource all or part of this service to a third party but will of course bear the costs of this.

What are the fees paid by vendors?

We charge a Vendor Fee to all property vendors that sell properties via our platform. This fee is the same for all vendors.

How much is the Vendor Fee?

We charge a 2.5% + VAT fee to all property vendors that sell via our platform.

Why are vendors charged?

Property Partner has built a strong reputation in the industry as a fast and reliable buyer. We buy at a size that is too big for many private investors, but under the radar of larger institutions. This, combined with our track record, bargaining power and pace to execute deals means we have something unique and valuable to offer vendors.

What are the tax implications of investing via Property Partner?

Corporation Tax (payable by SPVs)

With Property Partner, your investment in property is made through a UK Limited Company, via the purchase of an interest in shares. We call this a Special Purpose Vehicle “SPV”, which is established specifically for purchasing that individual property.

The taxable profit made by the SPV is subject to corporation tax, which the SPV will pay directly to the UK tax authority, HMRC. The Corporation Tax rate in the UK is currently 20%, however, following the budget announcements made in March 2016, this is set to reduce to 19% in April 2017, and to 17% in April 2020.

In addition, should the property price increase, Corporation Tax is payable on the gain on disposal. This future Corporation Tax liability is recognised in the valuation of the SPV and is called ‘Deferred Tax’.

For example, if the property valuation increased by £10,000 over a 5 year period, then £1,800 (£10,000 x 18%) would be recognised as a Deferred Tax liability, which in turn is reflected in the estimated value that we publish for that property’s shares on the platform.

Recognising Deferred Tax is important for ensuring that the investors who have benefited from any property price increases are the same investors that incur the related Corporation Tax.

Stamp Duty Land Tax (payable by SPVs)

Following the March 2016 budget, as from April 2016 purchases of a second residential property in England, Northern Ireland or Wales are subject to an additional 3% Stamp Duty Land Tax (“SDLT”). In the case of companies and non-individuals (such as our SPVs) first purchases of such properties are also subject to the additional 3% Stamp Duty Land Tax. There are no exemptions. However, if we are acquiring more than 6 units we also have an option to elect SDLT for non residential and mixed use land and property rates. This typically applies to commercial property but can be adopted for residential property in certain circumstances i.e. if purchasing more than 6 units in a transaction. See Glossary section of our FAQs under Stamp Duty Land Tax for analysis.

Personal taxation (payable by investors whether individual or corporate)

Whilst all investors should seek independent tax advice, an overview of the personal tax implications for investors domiciled and resident in the UK (which may be subject to change in future) is outlined below

  1. Dividends

    Pre April 2016:
    For dividends received by Property Partner investors prior to April 2016, HMRC provide a 10% tax credit to compensate for tax already paid at the SPV level. As a result, Basic Rate taxpayers will be liable for no additional tax on this income. However, higher rate taxpayers will be subject to 25% tax and additional rate taxpayers will be subject to 30.6% tax. Due to this dividend tax credit, the total income related tax paid by investors (i.e. the Corporation Tax of the SPV and personal Income Tax on the dividends) is at least as favourable as owning the property directly.

    Post April 2016:
    The 10% dividend tax rate will be abolished for UK taxpayers from April 2016, and a £5,000 annual dividend allowance will be introduced instead. Anyone who invests less than around £150k in share investments will pay no tax on their dividends (assuming a dividend yield of approximately 3%). This means that Property Partner investors may pay less or even no tax on their dividends depending on whether or not they received cumulative dividends from all sources in excess of £5,000 in a given tax year. For gains in excess of £5,000 income tax is payable.

  2. Capital Gains

    If you dispose of your investment on our Resale market for an amount that is greater than that which you purchased it for, you may have to pay Capital Gains Tax.

    UK taxpayers receive an annual tax-free allowance on Capital Gains Tax of £11,100 for the 2016/17 tax year though we note that this may vary in future tax years.

    Annual capital gains below £11,100 will not be subject to Capital Gains Tax. If you've made more capital gains than this in the tax year, the gains will be taxable at 18% for basic rate taxpayers and 28% for higher or additional rate taxpayers. Post 6th April 2016, Capital Gains Tax lowers to 10% for basic rate taxpayers and 20% for higher or additional rate taxpayer.

Other information

We provide all our investors with tax statements, which can be accessed in the Accounts section of the Property Partner platform. These are to assist you with any tax returns, and provide a summary of dividends received and capital gains generated over a specified period.

Please note that tax rates are subject to future change, and the above does not constitute tax advice.

Does Property Partner pay interest on client monies?

No, Property Partner does not pay interest on client monies (i.e. those funds that are within your account but not invested in property).

What is Stamp Duty Reserve Tax?

Stamp Duty Reserve Tax is an amount payable to HM Revenue & Customs for acquiring shares in property investments on the secondary exchange (i.e. Resale opportunities). The amount payable is 0.5% of the cost of those shares.

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Non-UK Investors

Is it possible to invest from outside the UK?

Yes, absolutely.

However, it is your responsibility to satisfy yourself that an investment through Property Partner complies with and is permitted under the laws of your jurisdiction. This includes complying with any governmental or regulatory requirements or other applicable formalities.

Unfortunately, we don't currently accept investors based in the US.

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Security

What happens if Property Partner ceases to exist or falls into financial distress?

Each property investment is separately ring-fenced from the assets and liabilities of Property Partner, as well as any other property investments on the platform.

If Property Partner were to fall into financial distress an alternative manager could be appointed to continue management of the assets in accordance with the terms of investment.

Any funds that are held in your account, but not yet invested in property, are held in a client monies bank account in accordance with FCA rules. This is a separate bank account that is ring-fenced from the monies of Property Partner and will be returned to investors in the event of Property Partner falling into financial distress.

Is Property Partner authorised and regulated by the Financial Conduct Authority (FCA)?

Yes, Property Partner is the trading name of London House Exchange Limited. London House Exchange Limited is authorised and regulated by the Financial Conduct Authority (No. 613499).

Our full scope of permissions are listed on the FCA's Financial Services Register.

Why do I require a PIN to login?

Account security is important to us, and an extra verification step helps prevent anyone else accessing your account. You will be asked for your PIN each time you log in.

How do I change my PIN?

You will be prompted to create a 6 digit PIN when you sign-up. You can change your PIN at any time in Account Settings.

What if I forget my PIN?

You can click on ‘Reset PIN’ to setup a new PIN.

What happens if I enter an incorrect PIN?

You will be able re-enter the PIN, but please keep in mind that your account will be locked out after a number of wrong attempts. This is to protect your account from any unauthorised access.

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Complaint Procedure

What is the Complaints Procedure?

We take complaints very seriously. Please call us on +44 (0)20 3696 5600 or e-mail us at registration@propertypartner.co.

You also have the right to complain to The Financial Ombudsman Service (“FOS”). The FOS, is a free service to consumers for the impartial resolution of complaints. You may contact the FOS at any stage of your complaint for free and impartial advice but you must have allowed us the opportunity to resolve the complaint within our Internal Complaints Procedure before they will review your complaint. Details of our Internal Complaints procedure are available on request (contact details above) and without charge.

You can contact the FOS directly by email at complaint.info@financial-ombudsman.org.uk, by telephone on 0800 0234567, or in writing to The Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR.

You can also now make a complaint through the European Commission’s Online Dispute Resolution Platform (the “ODR Platform”), which can be accessed at http://ec.europa.eu/consumers/odr. The ODR Platform can be used for resolving your dispute. Through this platform, you can submit a complaint by filling in an electronic form.

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Promotions

Referrals Promotion

How does the referral offer work?

Everyone who signs-up for Property Partner has their own referral invite link, which can be found in the dashboard. If the referee clicks on the invite link and subsequently signs-up, then the referral offer will be applied to the referee's account. In order for the referrer and referee to receive the reward, the referee must reach a cumulative portfolio size of £1,000.

At the point, both the referrer and referee will be eligible for £50 cashback.

When will the referral offer payments be made?

The payment will be made on the 10th of each month, or the nearest working day.

Can I refer people who have already invested?

No, they cannot have already signed-up to Property Partner.

Welcome Promotion

Why did I receive this promotion?

Every so often, we will offer a welcome bonus to certain customer segments.

How does this promotion work?

Property Partner will provide a set amount as a welcome bonus for a new customer to make an investment.

If the customer does not subsequently reach a funded and invested portfolio size as specified in the promotion after 30 days, those funds will be transferred back to Property Partner. During that 30 day period, should the total funded and invested portfolio size not reach the relevant threshold, the customer cannot withdraw those funds.

If the customer reaches the relevant threshold within 30 days of acceptance, they are free to keep the welcome bonus. At that point, the customer is free to withdraw those funds.

Promotions Terms and Conditions

What does 'Available to withdraw' mean?

If you are part of this promotion and have not reached the threshold, you will see an 'Available to withdraw' number.

This is calculated, in relation to the above rules, as follows:

What you can withdraw = Sum of deposits - Sum of withdrawals + Sum of Dividends + Sum of Actualised Profits + Sum of Cashback.

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Glossary

Amortised Purchase Costs

Purchase costs for a property include Stamp Duty Land Tax, third party professional fees (legal and surveyor, and occasionally brokerage), pre-letting expenses (including furnishing) and other third party costs relating to purchase. For a Leveraged property investment, purchase costs may also include a debt arrangement fee payable to the bank.

These purchase costs are unavoidable and are incurred by all individuals and companies that acquire buy-to-let properties in the UK. We amortise (depreciate) the purchase costs over the period to the first ‘five year anniversary’, which means we spread the cost over five years.

Capital Gains

Capital Gains is the difference between the sales proceeds from an investment and its Investment Cost. If sales proceeds are lower than Investment Cost, then the Capital Gains are negative (a ‘capital loss’). Capital Gains does not account for any Dividends Received or any Transaction Costs.

Deferred Tax

All properties listed on Property Partner are acquired through a Special Purpose Vehicle (SPV), which is a UK limited company.

Deferred Tax is the accumulated corporation tax within the SPV resulting from an increase in the value of the property since purchase (i.e. the corporation tax rate multiplied by the valuation increase). Deferred Tax only becomes payable if and when the property is sold, and is considered a potential “liability” until that point.

Dividends

Dividends are the amounts paid, on a monthly basis, to all investors in a property. Dividends are calculated as Gross Rent, less deductions for:

  1. Property related costs (including property management, maintenance and insurance)
  2. Estimated likely void periods (i.e. when there are no tenants paying rent)
  3. Corporation tax

For a leveraged property investment, there will also be a deduction for interest charges, which are tax deductible. For example, for every £1 of interest, £0.20 is offset against corporation tax (note corporation tax rates are subject to change).

Dividends Received

Dividends Received are the cumulative Dividends received by a specific investor. The investor sees the amount presented on their personal dashboard.

Dividend Yield

Dividend Yield is a measure of the net income (gross rent less deductions) from a property investment relative to the value of the property. The Dividend Yield displayed for individual properties is calculated as follows:

  • New Listings: annual Dividends expressed as a percentage of the Fund Raising Target (plus 2% Property Partner fee)
  • Resale investments: annual Dividends per share expressed as a percentage of Lowest Share Price (plus 2% Property Partner fee and 0.5% Stamp Duty Reserve Tax) at which that property is offered for sale at that time

For New Listing opportunities, the Dividend begins to accrue from the completion date of the property’s purchase, or a later date if specified in the property description.

Forecast Dividends

Forecast Dividends are the expected monthly amounts that an investor will receive from their Property Partner investments.

For example, if the forecast annual Dividends for a property in its entirety are £9,450 and you own 2% of the shares, then your Forecast Dividends are £15.75 per month (i.e. the annual figure of £9,450 divided by 12 and multiplied by 2%).

Funding Target

The funding target of a New Listing, which forms the basis for the share price, consists of:

  • The property’s purchase price (see the definition below)
  • Plus all third party purchase costs and additional funds required for furnishings and repairs
  • Less any mortgage (which is a term loan secured against the property)

Gain / Loss

Gain / Loss is the difference between the sales proceeds from an investment and its Total Cost (which includes any Transaction Costs). If sales proceeds are lower than Total Cost, then the amounts are negative (a ‘loss’).

Gross Rent

Gross Rent is the forecast or actual rental income received, before any deductions whatsoever. For example, if we estimate that we can let a property for £1,000 per month, then forecast Gross Rent is £12,000 per annum.

Gross Rental Yield

Gross Rental Yield is the forecast Gross Rent (presented after building service charges for leasehold properties), expressed as a percentage of the Latest Property Value.

Interest

Interest is the cost payable to a financial institution, such as a bank, for borrowing money to fund part of a property’s purchase i.e. a Leveraged investment. Interest is usually expressed as an annual percentage rate.

A simple example: debt of £250,000 with an interest rate of 4% per annum means that £10,000 is payable during the course of the year to the debt provider. This is often paid monthly or quarterly.

Investment Cost

Investment Cost is the price paid for your investment excluding Transaction Costs.

Latest Share Valuation

The Latest Share Valuation is the Latest Valuation expressed on a per share basis. Each property (held by an SPV) has 1,000,000 shares in issue.

Latest Valuation

The Latest Valuation of any investment consists of the Latest Property Value, plus the Unamortised Purchase Costs, less Deferred Tax, and less any other liabilities.

For a Leveraged property investment, the debt will also be deducted when computing the Latest Valuation.

Latest Valuation Gains

Latest Valuation Gains are an estimate of gains or losses based on the Latest Valuation.

Specifically, they are the difference between the Latest Valuation and the valuation at the time of purchase.

Latest Property Value

The Latest Property Value is the most recent estimated valuation.

For New Listings this will be the proposed purchase price, which in turn is supported by a Chartered Surveyor’s physical inspection and valuation.

Thereafter, RICS accredited surveyors carry out revaluations on a quarterly basis and we update the valuations on or about the 5th of January, April, July and October. Every five years we repeat the Chartered Surveyor’s physical inspection and valuation process. This valuation is the basis for the five yearly exit process.

Leverage

Leverage is the use of debt finance to fund part of a property’s purchase cost. This is often called a mortgage and is secured against the property. Further information on Leverage can be found in our FAQs, here.

The term Leverage is often used interchangeably with Geared or Gearing.

Loan to Value

Loan to Value (“LTV”) is the ratio of ‘debt’ to the property’s ‘purchase price’ or ‘value’, and is expressed as a percentage.

For example, if the property’s purchase price is £1,000,000 and the LTV is 55%, then £550,000 will be funded by debt.

Net Rent

Net Rent is the Gross Rent less all property-related costs (e.g. maintenance, void periods, insurance, letting & management of the property).

Net Rent is presented prior to the deduction of Corporation Tax.

New Listing

“New Listing” opportunities are properties for which we have negotiated an option to purchase at an agreed price. The funds to purchase these properties are live funded on our platform within a specified time period.

New Listing opportunities are presented on the platform along with a Chartered Surveyor’s valuation and survey, solicitor’s conveyancing report and forecast rental information.

When you commit funds to a “New Listing”, your Property Partner account balance will decrease but no money will actually leave the client monies account until the live funding target is reached.

In the unlikely event that a new listing does not reach its funding target within the specified time, either Property Partner will make up the difference using our own cash (for example, if the difference is very small) or the funding process will fail and the property will not be acquired. Where the funding process fails, all committed funds will be released in the respective customers’ accounts i.e. the funds will never leave your customer account. This applies to 100% of committed funds – Property Partner will obviously not charge or receive any fees and any costs that have been incurred (for example, surveyors and solicitors) will be borne solely by Property Partner.

Ownership cap

The maximum number of shares that you can purchase in any property is 199,900 which is equivalent to 19.99% of the SPV. The cap on percentage ownership is to ensure no individual owns a beneficial interest greater than 20%.

Premium/Discount on Purchase

The Premium/Discount on Purchase is the percentage difference between the amount paid for a Resale investment and its Latest Valuation at the time of purchase. It is positive (a ‘premium’) when the amount paid is greater than the Latest Valuation at the time of purchase and negative (a ‘discount’) when the amount paid is lower.

For example, if you purchased a Resale investment for £10,200 (share price of £1.02) but the Latest Valuation of the shares acquired was £10,000 (share price of £1.00), then the Premium paid would be 2%.

Pre-orders

All “New Listings” are available in “Pre-Order” mode for a set period of time, with the remainder (if any) moving to a live funding process thereafter.

Pre-order ensures a window of at least several days for everyone to participate in a New Listing, meaning you can digest the information in your own time and won’t miss the opportunity to invest. You will also be able to see the pre-order closing date in each property page.

So long as you invest in the Pre-order period you will not miss out on the chance to invest, but to accommodate everyone fairly we may need to scale-back orders if they exceed the Funding Target for a New Listing (see below).

Resale

“Resale” opportunities appear on the platform when another Property Partner investor chooses to sell their investment.

The selling investor can choose what price to sell at, but we will provide information to help you perform the diligence required to determine whether or not you wish to sell or purchase the investment at that price.

Each quarter we provide an updated valuation for each of the properties on our platform. A RICS desktop valuation is published on or about the 5th of January, April, July and October. If the 5th falls on a weekend or a bank holiday, then the valuation updates will be published on the next business day. A comprehensive Chartered Surveyor’s physical inspection and valuation is completed every five years.

However, ultimately it is your decision what price to buy or sell at, our estimated valuations do not constitute, and should not be considered, investment advice.

Scale-back

Scale-back may be applied if pre-orders are oversubscribed. When investor commitments exceed the Funding Target for a New Listing, your commitment may be reduced on a pro-rata basis. For example, if the funding target is £1,000,000 but we received pre-orders amounting to £2,000,000 (excluding fees) then you would receive 50% of your initial order.

Please note that investments made by Auto-invest will not be subject to scale-back unless there is oversubscription via Auto-invest alone.

Sell/Bid Spread

The Sell/Bid Spread is the difference between the Highest Bid Available and the Lowest Share Price.

The size of the Sell/Bid spread is one measure of liquidity for the given property. A spread closer to 0 represents greater liquidity.

Share

Each special purpose vehicle has 1,000,000 shares, and each share has an equal standing in terms of rights and economic benefits.

Special Purpose Vehicle

Each property listed on Property Partner is owned by a special purpose vehicle (“SPV”), which is a UK Limited Company, that you can then buy shares in. There is a different SPV for each and every property; therefore you will always know that you are investing in a specific property chosen by you.

We structure the property investments through a SPV because it is not possible to have more than four people listed on the UK land registry deed.

Stamp Duty Land Tax

Stamp Duty Land Tax is an amount payable to HM Revenue & Customs on the purchase of property or land in the UK. HM Treasury has recently changed how this tax is calculated.

Under the old rules, prior to 4th December 2014, stamp duty land tax was paid at a single rate on the entire property price. Now the tax is calculated on a tiered system, with the first £125,000 at 0% and each amount above this charged at the appropriate rate as set out below. For example, a property bought for £275,000 will incur stamp duty of £3,750.

An additional 3% SDLT is payable on the purchase of additional residential properties (or, in the case of a purchase by a corporate entity like one of our SPVs, all purchases including the first purchase).

However, where a purchase of 6 or more units is made we have the option of to elect SDLT for non residential and mixed use land and property rates. This typically applies to commercial property but can be adopted for residential property in certain circumstances i.e. if purchasing more than 6 units in a transaction.

So for a purchase of a 6 unit block for say £1m we can adopt either basis for calculating SDLT. This is summarised as follows:

  • MDR, residential property: the average purchase price is £166,666.67 and the average SDLT is £5,833. Therefore the total SDLT is £34,998 (i.e. 6 x £5,833). The total effective rate is 3.5%.
  • Alternative measure (commercial): the total purchase price is £1,000,000 and the effective SDLT rate is 3.95%. Therefore the total SDLT is £39,500.

Tables for each option are shown below:

MDR, Residential:

Purchase price of property Tax Rate (inc 3%)
0 to £125,000 3%
£125,001 to £250,000 5%
£250,001 to £925,000 8%
£925,001 to £1,500,000 13%
£1,500,001 and over 15%

Commercial:

Purchase price of property Tax Rate
0 to £150,000 0%
£150,001 to £250,000 2%
£250,001 to £900,000,000 5%

Stamp Duty Reserve Tax

Stamp Duty Reserve Tax is an amount payable to HM Revenue & Customs for acquiring shares in property investments on the secondary exchange (i.e. Resale opportunities). The amount payable is 0.5% of the cost of those shares.

Total Cost

Total Cost is the aggregate cost of acquiring a Property Partner investment. The amount includes Investment Cost and Transaction Costs.

Total Return

The Total Return of a Property Partner investment is the total gain or loss generated from holding an investment. The Total Return includes all Dividends Received, Capital Gains generated and Transaction Costs paid.

It is expressed as a percentage or a total amount. For example, if £10,000 was invested in a property and the Total Return 3 years later was 20%, then the investor would have generated a Total Return of £2,000 from holding the investment.

Transaction Costs

Transaction Costs are recognised as a one-off deduction when you make a Property Partner investment.

Transaction Costs cover:

  1. Property Partner’s one-off transaction fee (at 2% of the Investment Cost)
  2. Stamp Duty Reserve Tax, which is a tax on acquiring shares (at 0.5% of the Investment Cost and only incurred if making a Resale investment)
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