Your investment in each property 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)
Each property listed on London House Exchange 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. Properties being owned by an SPV mean that the properties are also ‘ring-fenced’ so the performance of one investment does not affect another.
Is there an ownership cap per SPV?
The maximum number of shares that you can purchase in any property 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%.
Your shares are held under a nominee arrangement, with the nominee being the legal owner 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 London House Exchange 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 forms for each investment and sample documents can be accessed from your Dashboard on the platform.