Last week saw the official launch of Homegrown, the UK’s first residential property investment platform focused solely on the construction of new homes.
The FCA-authorised platform intends to empower everyday investors and aid them in ‘getting Britain building’. Users are able to access pre-vetted projects alongside institutional investors, targeting average net returns of 15% per annum with a minimum investment of £500 per project.
Fully underwritten residential developments will also be offered by the platform, all of which have received planning permission and bank financing – reducing risk and demonstrating commercial grit.
Homegrown will also analyse financial assumptions and reports and will only invest in projects whose developers have a strong track record of delivering on time and within budget.
“Homegrown is about giving everyday investors access to the often-superior development returns that are typically only available to professionals and institutions,” said Anthony Rushworth, Homegrown CEO. “It also helps them to do their bit in solving the housing crisis bit in solving the housing crisis by providing property developers with much needed empty finance.
The platform has three main aims: to facilitate property investment, which has been historically restricted to high net worth and institutional investors; to increase the funds available to mid-size developers, aiding them to solve the housing crisis, and finally, to offer ‘Bricks and Mortar’ investors a substitute to the unsettled buy-to-let sector following the influx of severe tax changes.
Rushworth aims to fill a “major hole” for many UK investors left by the buy-to-let exodus. “With the raft of tax changes imposed on it, buy-to-let is no longer the investment it was and investors are increasingly looking for alternatives,” he explained.
“Homegrown, by contrast, does away with the reliance on rental yields and long-term property market growth.”
Homegrown’s activities will be focused on urban areas where demand is high, primarily in London and the South East. Investors can choose from a number of shortlisted projects and go online to inspect the performance of their investment from the first brick laid all the way through to completion.
The platform has helped fund five developments in its test phase, stretching across areas such as Hackney, the Docklands, Norbury and Kilburn, with a gross development value of £140 million. All developments are held in a separate special purpose vehicle (SPV) and typically complete over a period of two years – at which point shareholders are distributed profit.
Homegrown possesses a clear, flat fee structure, charging a one-off deal origination fee of 5% when funds have successfully been raised, and 15% of the profits achieved, thus aligning its regards with those of investors. All projected returns quoted are net of these fees.
Rushworth continued: “Crucially, the developments we put on our platform have already been underwritten and approved by some of the sharpest minds in the business, and we take the cream of that crop.”
“There are clearly risks involved with property investment but we work hard to de-risk our investments as much as we can,” he warned. “The platform also provides investors with an opportunity to easily diversify their risk by spreading their investment across a number of developments which are being added to our platform all the time.”