Invest and Fund was established with the aim of becoming the UK’s leading specialist Property Development finance platform. Operating in the peer to peer sector, we have been regulated by the Financial Conduct Authority since 2017 and work equally on behalf of our borrowers and lenders. We give property developers access to competitive, well-structured financing put together by highly experienced, knowledgeable specialists who are passionate about their sector. Participation in these loans is then accessible to individuals, private banks, family offices and institutions, who can earn attractive, risk-adjusted returns, all secured against UK land and property, with strong security headroom metrics.
Invest & Fund has a strong track record of working with experienced developers of residential property. We help to finance the delivery of much needed good quality housing, solely in the UK. Philosophically, we are a high-quality credit business and employ deep fundamental credit evaluation on every loan at every stage. Only once a loan has been fully assessed and approved by our internal credit team will it be made available via our platform to our registered lenders, enabling fractional loan parts to be taken up to 100% of the drawdown amount.
Our loans are structured to offer lenders an attractive risk-adjusted rate of return starting from 6.50% with the benefit of being secured against UK based property. While it is our fundamental credit approach, coupled with our team’s decades of experience in financing UK residential property, which sets us apart, we also overlay maximum metrics ensuring our developers have a strong profit margin without financial pressures and our lenders have the added comfort of very material security headroom.
For example, we currently lend up to 65% LTGDV (loan to gross development value), which means that the aggregate of all advances and interest is not more than the 65% of the independently assessed value of the completed property development project.
This has resulted in us lending more than £130m with no capital losses and all interest paid in full, delivering historical returns of 6.50% plus for our lenders, much of this during a challenging period for UK PLC. This record is something we are proud of and something we believe demonstrates the strength of our business.
Investing in Property versus Funding Property Development
When considering property investing, many people often default to thinking in terms of property purchase or property fund investments, grouping property development financing into the same category. While there are some characteristics which are aligned, they do behave differently under various scenarios.
High quality property development financing debt can provide a low beta investment which can act as a hedge through many market conditions. When house prices are rising, the security metrics are usually similarly enhanced, and in a weaker market where prices may see a decline, house sale prices would have to drop a long way further than anything seen in recent memory, and all developer profit eliminated before the security headroom was eroded. All in all, if done well, the risk to lenders’ capital is minimised, whilst attractive yields may be achieved throughout the economic cycle.
Is Now the Right Time to Invest?
One of the few areas of strong consensus and cross-party political agreement is the need for a material increase in quality UK housing stock over the next decade, with stated commitments from all main parties to accelerate the number of housing starts. The fundamentals of the market remain solid and the prices rises seen during 2021, as reported by a number of building societies, show that there are strong tailwinds in the property development sector.
So, while many investors will have seen significant volatility in their equity portfolios and reductions in dividend pay outs triggered by the coronavirus pandemic in 2020, our lenders have continued to receive and accrue yields of c6.50%. 2020 has served to remind us of all the importance of diversification when constructing and maintaining an investment portfolio and to looking behind the headings to consider the actual characteristics of a more recently accessible asset class.
That is where Invest & Fund can help. Our offering represents an alternative to traditional investments, such as stocks and shares, is income producing, and has a strong track record in protecting capital.
Visit our website to find out why the Invest & Fund platform is at the cutting edge of residential property development finance.