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Crowd Funding Update

As a general rule I try to bring you insight that is focused on the fundamentals combined with an eye on emerging trends that will have real impact to your property investing business. For example, I first announced here in Property Investor NewsTM last summer how the FCA's PS 13/3 will impact Joint Ventures (JVs). Last month I explained how the regulations are changing for Crowd Funding (CF). Late in January the FT and the BBC reported how a £4m loan was funded on a CF platform. More on that in a bit. Earlier last year I wrote an article here on the changing regulations for REITs in the UK.

The key is being able to spot the trends early so you can adjust as necessary. Some changes could have limited or no impact or your property business. Other changes will be rather significant even if the initial impact is quite limited.

As property investors, we are actually highly dependent on the legal system and the regulatory environment. While we think we are investing in bricks and mortar, what we really buy and sell are contracts to control an income stream. While that might sound a bit fuzzy for some hands-on investors, I want you to pause a minute. Think about what I have just said. The property is likely something that existed long before you came along and it will exist after you are gone. If you 'own' it the only evidence is a contract or a digital entry at the Land Registry. Your right to enter a property is defined by the rental contract you have with a tenant and for the most part you can not enter your own property unless the tenant agrees. So, it comes down to the paperwork plus the legal system backing up the paperwork. Ownership is all about the legal system that lets the 'owner' enforce their rights. A flawed legal system and you can not own much of anything. Misunderstanding the legal system is an own goal.

Let me now connect the dots in terms of 'crowd funding', the changing legal framework and your property investing activity.

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