The House Crowd

The House Crowd is a UK peer to peer lending and crowdfunding platform that allows people to invest in bridging loans and property development loans from £1,000. In 2018, the business achieved authorisation from the Financial Conduct Authority and launched their Innovative Finance ISA[1]. As of January 2019, The House Crowd had funded 368 properties, raised over £93 million and paid investors returns in excess of £38 million.[2]

The House Crowd
Private limited
IndustryInvestment
FoundedUnited Kingdom, 2011 (2011)
Headquarters
Manchester
,
UK
ProductsPeer to Peer Lending

Property Development Lending

Innovative Finance ISA
Websitewww.thehousecrowd.com

History

2011-2015 "Buy-To-Let" Property Crowdfunding

The House Crowd was set up in the UK in December 2011 and began trading in March 2012 and was one of the first UK property crowdfunding companies. It was launched at a time when, as The Guardian explains, ‘young professionals hoping to get a foot on the property ladder and people in their 40s or 50s hoping to fund their retirement through buy-to-let investments have had their plans thwarted by booming house prices.’[3] By June 2014, The Guardian reported that The House Crowd was buying ‘an average of one [property] a week.’[3] An article two days later by the same publication concluded that ‘the phenomenon of crowdfunding is booming.’[4] The following month, the Daily Express reported that ‘[The House Crowd] has spent £5 million buying and refurbishing 69 properties in the Manchester area.’[5]

2015- Peer to Peer Lending, Property Development Lending and FCA Regulation

In 2015, The House Crowd began to offer peer to peer lending products on their platform. In 2016, the business began to use their crowdfunding platform to fund new property developments.

In April 2018, The House Crowd raised just over £1.3 million on their platform in a single day. £1.2m of the funds raised were channelled into the Egyptian Mill Development of 41 houses and 15 apartments in Lees, Greater Manchester.[6]

In January 2018, The House Crowd announced that it had 'received full authorisation from the Financial Conduct Authority (FCA) to operate as a peer-to-peer firm.'[7] In March 2018, the business launched an Innovative Finance ISA, where money is invested in peer-to-peer loans and property development investments, with The House Crowd spreading capital over what the company calls 'a diverse portfolio of property loans as far as practicable.'[8]

Business model

Through crowdfunding, The House Crowd gives like minded investors the opportunity to pool their collective capital to fund a variety of investment loans. The House Crowd have several different investment types:


Secured Peer To Peer Lending

This product offers investors the chance to directly lend money to property owners. It’s a short-term commitment, the minimum level of investment is £1,000, and all funds are secured against the borrower’s land and property. Average returns of 9.2% p.a.


Property Development Investment

This product involves financing new build housing projects. As with peer to peer property lending, investments are secured against the developer’s land and property. With this form of funding, investors can expect up to 10% interest over a relatively short loan period.


Auto-Invest

Offers the opportunity to profit from peer to peer lending without managing an investment portfolio at all. Just deposit the funds. Investments are across secured property development loans and bridging loans.


IF ISA

Allows investors to invest up to £20,000 a year and earn a rate of 7% P.A. tax-free. Investment is diversified across a range of loans (mitigating your risk) all secured against property.


Risk and regulation

The House Crowd is authorised and regulated by the Financial Conduct Authority. As managing director Frazer Fearnhead explained to the BBC, ‘people's investment is protected by the bricks and mortar value of the property and if you want your money back you either need to wait for the property to be sold or sell your share to another investor. We cannot guarantee you will be able to find a buyer but everyone who has wanted to sell so far has managed to do so within a few days.’[9]

Returns

As Money Observer explains, an investor has two options ‘a fixed income-type product promising to pay between 7.5 and 10 per cent per year, [or] an equity set-up whereby investors take three-quarters of net profits.’[10]

Dragon's Den

CEO Frazer Fearnhead appeared on Episode 1 of Season 13 of Dragon's Den, asking for a £1 000 000 for 5% equity in The House Crowd. He failed to secure any investors.[11] Sarah Willingham stated that Fearnhead's pitch was "the most disrespectful pitch from an individual" and that she was "offended". In an interview for Virgin Start Ups Fearnhead stated that the business subsequently used their crowdfunding platform to secure the investment they needed.[12]

Recognition and Awards

2017: Top 100 tech companies in Greater Manchester - Manchester Evening News.[13]

2018: "Best Peer to Peer Lending Platform" - Shares Magazine Awards.[14]

References
  1. Shoffman, Marc (2018-01-09). "The House Crowd achieves FCA authorisation". Peer2Peer Finance News. Retrieved 2019-01-30.
  2. "About us - the best peer to peer lending platform - The House Crowd". www.thehousecrowd.com. Retrieved 2019-01-30.
  3. Gareth Rubin. "Crowdfunded buy-to-let offers a new way on to the property ladder | Business". The Guardian. Retrieved 2015-04-20.
  4. Harriet Meyer. "Crowdfunding proving the perfect match-maker | Money". The Guardian. Retrieved 2015-04-20.
  5. Jones, Harvey (2014-07-30). "Is following the in crowd the right route for savers? | Personal Finance | Finance | Daily Express". Express.co.uk. Retrieved 2015-04-20.
  6. Evershed, Tim (2018-04-18). "The House Crowd raises over £1m in 24 hours". Peer2Peer Finance News. Retrieved 2019-01-30.
  7. Nemeth, Hannah (2018-01-09). "The House Crowd launches IF Isa". Moneywise. Retrieved 2019-01-30.
  8. Turner, Michael (2018-03-19). "The House Crowd unveils 7pc property IFISA". Peer2Peer Finance News. Retrieved 2019-01-30.
  9. Alexander, Ruth (2014-06-06). "Investing in property... with £1,000 - BBC News". M.bbc.co.uk. Retrieved 2015-04-20.
  10. "Is crowdfunding right for you?". Money Observer. 2015-02-19. Retrieved 2015-04-20.
  11. https://www.estateagenttoday.co.uk/breaking-news/2015/7/tv-dragons-demolish-property-crowd-fund-guru
  12. mackintosh.sophie@gmail.com (2018-04-30). "From Dragon's Den to multi-million pound company: The House Crowd". Virgin Start Up Loans - Support and Advice to Start Your Own Business. Retrieved 2019-01-30.
  13. Begum, Shelina (2017-10-06). "The top 100 tech companies in Greater Manchester 2017". men. Retrieved 2019-01-30.
  14. "Shares Awards - Winners | Shares Magazine". www.sharesmagazine.co.uk. Retrieved 2019-01-30.
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