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Housing Co-operative

What is loanstock?

 

Loanstock is a collection of fixed term loans made to the co-operative by external parties. Payments are made directly to the co-op and do not go through any intermediary services. Once the payments are received a Loanstock Agreement is issued with the agreed terms of the loan. Once the agreed term has elapsed the investment is repaid plus interest.

 

The loan is financed by monthly rental payments from members. The loanstock is issued as stocks not shares and does not give lenders any powers in the running of the co-op. 

 

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Why should I invest? 

 

You will receive interest on your ethical investment based on the interest rate you have selected. 

 

Your investment will help to create secure, affordable and sustainably developed housing for generations to come. It will help to create a long term, intentional and supportive community that will have a positive and regenerative impact on local environments and ecosystems. 

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How much do we aim to raise?

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We aim to raise £150,000 in loanstock. This amount has been determined by advice we have sought from experts and seen in precedents across the community housing sector.

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How will the money be spent?

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The £150,000 loan stock raised combined with members deposits will be used as a down-payment on the property. We are securing a mortgage with Triodos Bank for the remaining amount. The more money raised at this stage means the co-op has to borrow less making the scheme more affordable as well as returning interest to community investors rather than banks. 

 

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How much can I invest and at what interest rate?

 

You can invest any amount between £500 - £100,000

 

We offer an interest rate of 0-3%. The interest offered is compound which means that the chosen interest rate is applied each year to the total amount after interest has been earned. Interest will only start accruing at the point that the co-op purchases its first property. 

 

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Why choose the 0% option?

 

If you go for the 0% option you will receive back your original sum with no interest. Some people take this option as a way of providing extra support to a co-op. The co-op will have extra money and more financial freedom to develop because of this.

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When will I be repaid?

 

You can select a loan period of 5, 10, 15, 20, or 25 years after which time your loan will be repaid in full plus interest at the selected rate. Longer terms benefit the co-op financially. Loanstock given before the purchase of a property will be held for 12 months. Investors may request their money be returned if the Co-op has yet to purchase a property after 12 months. The loan period starts on the day of purchase of the Co-op's first property. 

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What about tax?

 

The co-op does not deduct tax from the interest – it is the investor’s responsibility to declare the interest in a tax return. If anyone receives more than £250 interest in a year, the co-op is legally obliged to make a special declaration to the local tax office.

 

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How can I invest?

 

If you would like to invest in our loanstock offer or would like to know more you can apply using the button at the top of this page. You can also request an Investor Pack which includes our full business and financial model. Contact us at projecthomecooperative@gmail.com or using our contact us page.

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How protected is my investment?

 

Loanstock is an unsecured loan which just means that the co-op does not offer any collateral against the loan. However, in the unlikely event that the business goes into financial difficulty, the co-op would sell the property and use funds from the sale to repay investors. The co-op is obliged to repay investors before recouping their own money. 

 

Whilst it is very unlikely for housing co-ops to run into financial difficulty and they have very solid track records, this mechanism ensures that investors get their money back should that occur. You will notice in the business plan (available on request) that we have clear mechanisms for replacing members should they choose to leave and so ensuring continued monthly income.