Empire Property Holdings’ Loan Notes are helping investors take advantage of a generational change in property ownership.
The financial crash of 2008 was different. Banks around the world could only keep their doors open if the assets they held as security was worth what the market thought they were worth. Fearing queues outside banks and ATMs, central banks around the world pumped trillions of dollars into rescuing the banks and keeping them on life support.
Whatever happened, asset prices would not be allowed to fall. And, against all the odds, the central bankers were wildly successful.
Outside the world of banking & finance, major demographic changes were taking place in the country. More and more single-person households were being formed. Levels of divorce remained stubbornly high, and, year on year, the population increased by more than a quarter of a million in the UK.
What’s the issue?
The UK just has not been building enough new homes. According to the National Audit Office, to reach the government’s target of one million new homes by 2020, an extra 174,000 will need to be built each year in England alone.
House prices just keep on rising. The average house price peaked before the Great Recession at £184,131 (Q3, 2007, Nationwide House Price Survey). 8 years on from the crash, it’s now £205,937 (Q4, 2016, Nationwide House Price Survey). Homeowners have been the winners and more & more people are now being left behind from the dream of home ownership.
How does it work?
Empire Property Holdings’ respected and experienced Directors were among the first to recognise that there is no going back from where we are. It’s becoming harder and harder for first-time buyers to get on the property ladder. The dynamics of home ownership have changed – forever.
Private renting continues to grow exponentially. Property developers are doing their very best to keep up with demand. Hence, they’re looking to work with Loan Note investors to take advantage of the development opportunities out there.
Empire Property Holdings’ model takes advantage of recent legislative changes in the UK. Permitted Development Rights now mean that developers do not need planning permission to turn a commercial property into residential accommodation. This makes the whole process quicker and easier, cutting out many of the necessary steps that needed to be taken prior to the new system coming into law.
Who’s behind the project?
Empire Property Holdings. A special purpose vehicle, incorporated to acquire commercial properties for development into residential accommodation by Empire Property Concepts.
The founder of Empire Property Concepts and Empire Property Holdings is Paul Rothwell, an innovative developer with a hugely impressive track record. Here at Smart Invest UK, we like that their books are open to all for further due diligence and risk assessment. They have developed a forensic method to assess the attractiveness of a potential investment factoring in purchase price, average renovation costs, achievable yields through tenancy and later refinance or resale value.
Their model is based on converting existing commercial premises in prominent towns and cities into HMOs or self-contained flats. Financial viability and a significant yield are the primary deciding factors in a decision to go ahead with a development or not.
What are the investment options?
When the Growth option is chosen, investors enjoy a fixed interest rate over either a 2 or 4-year term. Under this Growth option, investors receive compounded interest and a bonus, or a higher rate of annual return when compared to the income option. The capital sum is returned at the end of the fixed period along with the interest accrued.
When the Income option is chosen, investors enjoy the same fixed interest rate but the annual Interest is split into two and paid out on a six monthly basis. Under this option, the original capital sum invested will be returned in full to the investor at the end of the term.