50% tax relief on shares in the new Property118 portal

by Property 118

13:50 PM, 7th July 2015
About 3 years ago

50% tax relief on shares in the new Property118 portal

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50% tax relief on shares in the new Property118 portal

Updated 7th July 2015 – First published on 30th April 2015

 

Property118 Portal Limited is a new start up business hosted on the established Property118.com website. It seeks to attract investment of £150,000 in return for 10% of the shares in the new company.

The Property118.com website now serves two separate businesses owned by two separate companies. The nature of the relationship between these businesses and companies is documented in a contract which is available on request.

The Property118.com website provides an online community platform with a mission to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents. It was established in 2011 and is an official Google News feed as well as being a leading forum in the UK Private Rented Sector.

The new company now seeking crowd funding (Property118 Portal Limited) is focussed exclusively on advertising tenanted property for sale. The portal pages became operational on the home page of the Property118.com website in mid April 2015.

Buyers search by postcode or Town and simultaneously set up email alerts so they are notified when a property matching their purchasing criteria is listed.

Consider how much money buyers and sellers of tenanted property could save in terms of rental voids and agents fees as a result of buying and selling with reliable tenants in situ.

Have you ever come across a tenant who is happy to be served notice because their landlord wanted to sell? What if they don’t have to leave?

Basic advertisements are FREE for both landlords and agents to create.

Premium listings feature at the top of search results.

Sponsorship of a featured property Newsletter is available to agents and developers on an ex-gratia, meritocratic basis, i.e. sponsors who make the largest payment per enquiry receive preferential placement of advertisements.

Tax Advantages
Own Shares in the Property118 Rental Property for-sale Portal

When shares in Property118 Portal Ltd become available to purchase via our nominated crowd funding platform investors will attract a 50% tax credit on all shares acquired, e.g. buying £10,000 of shares would reduce your tax bill by £5,000 regardless of what rate of tax you pay. Furthermore, if/when those shares are sold there will be no CGT payable either, regardless of the amount of the gain. This is because the company will qualify for SEIS (the Seed Enterprise Initiative Scheme) which also means that investors are able to roll capital gains into the scheme to offset the other 50% of their investment against CGT, this includes rolling over gains realised from the sale of BTL property. In other words, the shares could end up being acquired at a net cost of zero, or to put it another way, the tax relief you get back on the investment could be as much as the investment itself!

The idea for the new property portal, which came from Svetlana Alexander CIMA MA (wife to Property118 founder Mark Alexander), is a completely ring fenced business in its own right.

Marketing is planned to extend well beyond the existing Property118 reader base and will reach out to both buyers and sellers of rental properties, and of course their agents.

Initial funding of the brand awareness campaign (£25,000 pcm over TV and other forms of media) will be raised by selling 10% of the shares in the new company via an FCA authorised crowd funding platform.

Within seven days of launching a similar campaign (promoted via Property118) LettingSupermarket.com reached its £250,000 fund raising target. Demand for shares in the Property118 Portal are anticipated to be even higher, hence we are giving Property118 members the heads up to register their interest now.

The Market

According to research conducted by Paragon Mortgages Plc. there are five million UK properties owned by private landlords.

“An army of two million private landlords now own and rent out five million properties, according to the report by mortgage lender Paragon. This means 18pc of households now rent from private landlords. And the proportion is growing, as investors continue to see property as a source of future income and profit.” Source The Telegraph 22nd October 2014

The Private Rented Sector has been growing rapidly since the phase “buy-to-let” was first coined by the Association of Residential Letting Agents in 1996. The sector is projected to continue to grow, at least in part due to over 55’s seeking better returns from their pension funds which can now be liberated and used to fund alternative asset classes such as rental property to provide income in retirement.

It is estimated that upwards of 200,000 rental properties change hands in the UK every year. When tenants learn that their home is on the market via conventional estate agents, and advertised on portals such as Rightmove and Zoopla, they are immediately spooked into looking for somewhere else to live. In many cases the owners suffer rental voids due to the expectation of properties to be sold with vacant possession. Purchasers then suffer rental voids until the property is re-let. With the new portal it does not have to work this way. Once tenants realise that their property is being sold tenanted to new landlords they can rest assured that they do not need to start looking for a new home because it is being sold to another landlord.

In most cases landlords do not buy enough life insurance to repay their mortgages, which means their families need to sell some or all of their properties when they die in order to repay mortgage lenders. Even if every landlord sold none of their buy-to-let properties prior to death, and if we assume that death will probably occur within 60 years of becoming a landlord, that’s 33,333 landlord deaths a year and circa 83,333 property sale related dilemmas to be considered, i.e. whether to sell conventionally with vacant possession or tenanted. Not all landlords will hold onto their BTL properties until the day they die so it stands to reason that far more rental properties change hands every year.

These figures are supported by the following data from HMRC which was published on 21st April 2015.

“Number of residential property transaction completions with value £40,000 or above for the tax year 2014-2015 = 1,204,320”

Based on 18% of all households being in the Private Rented Sector (according to data produced by Paragon Mortgages Plc) this suggests that 216,777 sales fall into the target market for the Property118 portal every year.

Other

The key point of difference between the Property118 Portal and the likes of Rightmove and Zoopla is that it advertises rental properties only. Furthermore, the portal is available to both agents and owners to use without the requirement of a premium membership.

Voting shares in the new advertising portal (Property118 Portal Limited) will be offered subject to a minimum £1,000 investment, whilst shares without voting rights will be subject to a minimum investment of just £10. The company will be seeking to raise £150,000 in return for 10% of its shares in order to finance initial costs of brand awareness marketing until such time as cashflow is projected to turn positive. Shareholders will be invited to invest on the basis of receiving dividend income during their lifetime and as a legacy for their heirs. This is not to say that a trade sale or flotation could not be considered in due course by voting shareholders. 

For legal, compliance and commercial reasons we are unable to share too many details of the business plan at this stage. However, to ensure you don’t miss out on the opportunity to snap up shares as soon as they are released please register your interest in investing into this new business venture by completing the form below. We will then notify you as soon as the option to obtain a copy of the business plan and to buy into the business is launched on the Crowd Cube funding platform.

 



Comments

Mark Alexander

18:50 PM, 16th April 2015
About 4 years ago

New portal now launched 😀

Tenanted Property For Sale Banner
.

Colin Dartnell

8:51 AM, 18th April 2015
About 4 years ago

Hi Mark,

If everything is free how do you achieve an income to maintain the website and pay dividends? Will there be chargeable upgrades and / or advertising on the site.

Mark Alexander

9:55 AM, 18th April 2015
About 4 years ago

Reply to the comment left by "Colin Dartnell" at "18/04/2015 - 08:51":

Hi Colin

Yes there will be.
.

Mervin SX

16:17 PM, 18th April 2015
About 4 years ago

Mark,

You are selling 10% of the new firm for £150,000. Out of curiosity, what makes the new company worth £1.5 million?

I'm not trying to make a fuss - but if I am interested in investing in your new venture - will you have an answer to this question?

Cheers,
Mervin

Mark Alexander

18:23 PM, 18th April 2015
About 4 years ago

Reply to the comment left by "Mervin SX" at "18/04/2015 - 16:17":

We will indeed. Something is only worth what others are prepared to pay. The business plan will provide an opportunity for that decision to be made by potential investors.
.

Mark Alexander

10:31 AM, 19th April 2015
About 4 years ago

The new portal is performing much better than we projected. In the first two days following launch more properties were listed than we forecast for the first full month. The only awareness campaign to date has been via Property118 and a couple of presentations at the Property Investor show at ExCel where I was invited to present a seminar on buying and selling tenanted property. There has been no paid for advertising but there has been a fair amount of social sharing amongst users of the portal but that costs nothing.

We have now received 100's of expressions of interest from people who want to receive the 'heads up' as soon as our business plan is released and shares are available to purchase via the Crowd Cube platform. This is very encouraging indeed.

I cannot share the detail of the business plan with you at this stage but I can share some of the principles and the questions we have sought to address.

For example, the £25,000 pcm marketing budget will buy around 5 million live views of our 10 second TV advertisements per month. Live views do not count catch up TV or recorded programs which can be fast forwarded. Live views literally means people who are watching TV live during scheduled broadcasting.

The next question we had to answer is what percentage of all properties are sold to buy to let investors. What's your guess? Our research suggests up to a quarter of all property sales are to buy-to-let investors at the moment.

How many of the potential buyers of buy-to-let property will visit the portal and pay £1.18 to be put in touch with the sellers when they see our TV adverts? One back handed compliment from our accountant that made us smile was that the initial advert concept is so tacky people will definitely remember it! :S

How many enquiries will there be for an average listing?

How many properties are likely to be listed each month based on the exposure we will buy?

What percentage of people who list their properties will pay £11.80 per week to upgrade to a Premium listing so that their advert appears at the top of search results in their area?

For how many weeks will the average person pay for £11:80 to upgrade?

When you have crunched these numbers you will have some idea of the potential income from this project. We have made our own educated guesses but only time will tell whether our projections are accurate. Perhaps we will even come up with similar answers? All will be revealed when our business plan is released.

Will landlords or their beneficiaries really want to suffer rental voids to sell their properties with vacant possession and pay an agent to list them?

Will investors prefer the hassle of finding new tenants or will they prefer to purchase properties with well established, good paying tenants and enjoy cashflow from day one?

In our opinion, the key to the success of the new portal will be awareness. The funds raised via crowd funding will be a good barometer of peoples faith in the project and will fund the initial awareness campaign until such time as the cashflow is strong enough to support ongoing marketing.

The portal is operational and there have been very few initial gremlins. Exciting times are ahead.

Link to the Property118 portal >>> http://www.property118.com/
.

Howard Reuben CeMap CeRER

14:46 PM, 21st April 2015
About 4 years ago

The property portal specifically for BTL's is of course a great idea, and I would like to add a note too re the BTL mortgages that may need to be used to fund the purchases;

We have not spoken to all lenders, but have spoken to a lot and no one really has a problem with a purchaser buying a property with sitting tenants, however, there are one or two little quirks.

Some lenders will need a new AST signed to reflect the change of landlord (a good idea anyway, I would have thought!).

Some will need to actually see the AST and some will then only work off of the lower of the two figures from the valuer or the AST. This last point can prove difficult for a borrower if the tenant has been there for a long time and 'enjoys' a reduced rent compared to the market rent possible. The lower the rent, the lower the mortgage amount possible.

Then of course there are the usual criteria assessments re how many properties already owned, whether owned by Ltd Company or individual etc etc

In summary - before purchase, speak with a knowledgeable BTL broker.

Howard (http://www.property118.com/member/?id=314) Reuben

🙂

Mark Alexander

15:08 PM, 21st April 2015
About 4 years ago

Reply to the comment left by "Howard Reuben" at "21/04/2015 - 14:46":

Very good points Howard, especially in respect of raising mortgages against tenanted properties.

We have also got this covered from the conveyancing perspective for due diligence purposes, for the protection of both purchasers and mortgage lenders, please see >>> http://buytoletconveyancing.co.uk/buying-a-tenanted-property/
.

Howard Reuben CeMap CeRER

15:25 PM, 21st April 2015
About 4 years ago

Reply to the comment left by "Mark Alexander" at "21/04/2015 - 15:08":

What a team!

And then of course every mortgage (BTL or otherwise) is actually just a debt anyway, and all debts should be covered - as per >> http://www.property118.com/landlords-life-insurance-strategy-and-calculator/

mark walsh

19:36 PM, 1st May 2015
About 4 years ago

Mark you sound desperate tax incentives not a reason to invest your desperate why

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