On Thursday, Homegrown, launched its residential property investment platform focusing solely on the construction of new homes. The FCA-authorized platform will now provide retail investors with access quality residential development projects alongside institutional investors and is targeting average net returns of 15% per annum. The minimum investment is just £500 per project.
Homegrown stated that adds its own layer of due diligence, including analyzing financial assumptions and reports, undertaking a sensitivity analysis, and only investing in projects whose developers have a strong track record of delivering on schedule and within budget. The platform has three overall aims:
- to democratize property investment, which historically has been restricted to high net worth and institutional investors
- to increase the funds available to mid-size developers, helping to get Britain building and solve the entrenched housing crisis
- to offer ‘Bricks and Mortar’ investors an alternative to the beleaguered buy-to-let sector following a raft of punitive tax changes
It was revealed:
“Homegrown will focus its activities on urban areas where there is high demand, predominantly in London and the South East. Investors can handpick from a number of shortlisted projects and follow the performance of their investment online from the first brick laid all the way through to completion.”
In its test phase, Homegrown stated it has helped fund five developments, in areas such as Hackney, the Docklands, Norbury and Kilburn, with a gross development value of £140m. All developments are held in a separate Special Purpose Vehicle (SPV) and typically complete after a period of around two years — at which point profits are distributed to shareholders.
“Homegrown has a transparent and 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 interests with those of investors. All projected returns quoted are net of these fees.”
Anthony Rushworth, CEO of Homegrown, commented:
“Homegrown is about giving everyday investors access to the often superior development returns that are typically only available to professionals and institutions. It also helps them to do their bit in solving the housing crisis by providing property developers with much needed equity finance. We also like to think we’re filling 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. Homegrown, by contrast, does away with the reliance on rental yields and long term property market growth.
Rushworth then added:
“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. 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.”