Making an investment
How is the initial property purchase funded?
Due to the large sum required, often at short notice and with uncertain timing, Assetz Exchange typically uses a selected pool of investors who fund the initial property purchase for a small fee (paid by Assetz Exchange). This means that investors’ funds are not tied up pre-completion and start accruing income immediately. These investors are obliged to sell a portion of their holding at the price they paid once the property launches on the Exchange.
How do I view investment opportunities?
All investment opportunities can be browsed on the Exchange. The Exchange is where investors buy and sell investments, providing there is a corresponding willing seller or buyer. It can be navigated to from the top navigation bar. The information can be viewed in a number of ways depending on your preference:
The list view is the most comprehensive and customisable of the investment views. Columns can be added and removed by clicking ‘Customise’ and they can also be dragged and dropped to change the order. The list can be sorted by any attribute by clicking the relevant column header.
This is a simplified, high level view which includes a picture of each property. It is particularly useful for mobile viewing.
You can set your default view by clicking the cog to the right of the ‘List/Grid/Map’ buttons. Mobile devices always switch to the grid view by default.
More comprehensive data and information (including the legal documentation) can be viewed by clicking either the property name or ‘Details’ button.
What is the difference between the net price and the gross price?
The net price is the price of the property excluding the costs associated with the purchase. This is the price you would typically see advertised in an estate agent or on Rightmove.
We call the fixed costs involved with the purchase (stamp duty, legal fees, our fees, a provision for contingency and any costs of upgrading the property) ‘Fixed costs & contingency’ or ‘FCC’. The FCC is clearly displayed for each property and remains constant unless a property is physically sold or a loan repayment is made.
The gross price is the net price + FCC.
One of the main advantages of investing with Assetz Exchange is that trades on our secondary market (the Exchange) are frictionless. The new buyer pays the FCC for the trade, meaning the seller is fully reimbursed. Investors in a traditional buy-to-let property have no way of recouping these sunk costs when they sell the property.
Investors have the choice to view prices in net or gross terms (or both).
What is the difference between a buy and sell price?
A buy price is a price put forward by the buyer while a sell price is a sell price put forward by a seller.
What is a RICS valuation?
A valuation of the property undertaken by a Royal Institution of Chartered Surveyors (RICS) registered surveyor. RICS is a professional body promoting and enforcing the highest international standards in the valuation, management and development of land, real estate, construction and infrastructure.
How often are properties revalued?
An initial valuation by a RICS surveyor is held before the property is purchased by the company. Subsequent valuations are then held if requested and voted for by investors.
What is the contingency fund and target?
The contingency fund is a buffer set aside to cover any unexpected costs. It is the sum of cash plus prepayments, less accruals and creditors.
The contingency target is the target level of contingency fund the company is aiming to maintain. If the balance falls below target then income is withheld from distributions in order to replenish the contingency balance. If the contingency balance is above target the excess will be distributed to investors (the exception being if more than one month’s rent is paid in advance). Contingency targets are only set for properties let on an AST.
What is the forecast net yield?
What are events?
Events are matters of importance that investors are alerted to. Examples of events may include a tenant being in arrears, investors voting to put a property up for sale, a property being untenanted, an investor vote being in progress or the suspension of trading in a property.
How do I invest?
Placing an order
Orders to buy and sell can be placed from any Exchange view or from the property details page. Buy orders can be placed by pressing the green ‘Buy’ (or ‘+’) button while sell orders can be placed by pressing the red ‘Sell’ (or ‘-’) button.
Any number or size of buy orders can be placed, irrespective of the amount of money an investor holds in their account at any particular time.
If an investor has money in their account to cover the size of an order, it is known as an ‘active order’. If an investor has no money in their account, it is known as an ‘inactive order’.
‘Inactive orders’ are only visible to the investor who placed the order. If they become active then they become visible to all and are eligible to be matched.
Orders can also be part active, part inactive if an investor has less than the total size of an order in their account.
If I place an order, when is it transacted?
If an active buy order is placed and there is a corresponding sell order at the same price, the order will instantly match and a trade will take place. Likewise if a sell order is placed and there is a corresponding active buy order at the same price, the order will instantly match and a trade will take place.
If there is no corresponding price the order will sit on the Exchange unmatched until it is either cancelled or matched by another order.
If an investor has multiple inactive buy orders which become active upon funding of their account then orders will match in priority of the earliest placed order. The exception to this is where the funding of the account happens by way of interest distribution, in which case priority will be given to the property which made the distribution.
Viewing active orders
Cancelling an order
Any unmatched order can be cancelled by either clicking it or hovering over it and selecting cancel.
What are orders?
Orders are offers to buy or sell on the Exchange and can be viewed in the order book on the relevant investment details page.
Are there any limits on Exchange prices?
Investors ultimately must take responsibility for their investment decisions, but we do have some controls in place to rein in excessive price inflation and to provide additional warnings to investors.
P = net purchase price of the property
H = % change in the HPI for the property type in the local authority area since the purchase date
- The maximum trading price for an investment capped at P * (1.1 + H/100)
- This cap will change on a monthly basis as the Land Registry HPI data is updated
- If an investor attempts to purchase a property with less than 12 months left on its lease (for properties that are not on an AST) then a ‘warning pop-up’ will be displayed, outlining the risks and asking if the investor wishes to proceed
- If an investor has selected a buy price in excess of 10% higher than the change in the HPI since the property was bought then a ‘warning pop-up’ will be displayed asking if the investor wishes to proceed.
- Assetz Exchange reserves the right to alter the caps at any time and for any reason. Any changes will be communicated to investors.
So for example if Assetz Exchange purchased a property for £100,000 and HPI for the area since then is 7% then the price cap will be set at £117,000.
If I place an order, when is it transacted?
If a buy or sell order is placed and there is a corresponding sell or buy order at the same price, the order will instantly match and a trade will take place. If there is no corresponding price the order will sit on the Exchange unmatched until it is either cancelled or matched by another order.
Is there a minimum investment amount?
The current minimum investment differs for each property but is approximately £1. This enables investors to diversify their investments across a large number of properties and makes property investment much more accessible versus traditional buy-to-let.
Do I own part of the property?
No. Investments are made in the form of loans. Please see Investment structure.
What fees do Assetz Exchange charge?
Assetz Exchange is fully transparent on fees. We charge an arrangement fee when the property is first purchased (included in FCC) and also a monthly monitoring fee which is a proportion of the rent received. Both fees are clearly stated in the loan conditions. All forecast yields shown are net of all fees and known costs. There is a 2% charge of gross proceeds if a property is sold on the open market.
There are no fees when buying or selling on the Exchange.
For more details see the fees section.
What are fixed costs & contingency (FCC)?
These are the upfront costs involved with the initial purchase of the property and comprise, stamp duty, legal fees, company set up fees, legal fees, Assetz Exchange arrangement fees and the initial contingency balance. These costs are recoverable by the investor if the investment is sold on the Exchange.
What is the risk profile?
The risk profile is Assetz Exchange’s own assessment of the risk of the investment on a five-stage scale (Low, Low-medium, Medium, Medium-high, High). Assetz Exchange has an internal risk assessment process through which every investment passes before it is approved to go live on the site. This process assesses the investment against criteria that affect both rental (interest) return and capital return.