The House Crowd was a peer-to-peer lending and crowdfunding platform in the UK that allowed investors to make bridging loans and property development loans starting at PS1,000. The Financial Conduct Authority granted authorisation to the company in 2018 and they launched the Innovative Finance ISA. The website contains a variety of reviews on The House Crowd.
Trustpilot gives it a good rating with a score of 3.0/5 from hundreds reviewers. The House Crowd had already funded 368 properties, raised more than PS93 million, and paid investors returns exceeding PS38 million.  On 24 February 2021, The House Crowd went into administration.
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Who and what are the House Crowd?
Frazer Fearnhead was once a contestant in BBC’s Dragon’s Den. He went on to establish a property crowdfunding platform that offers borrowers and investors a variety of products.
Products The House Crowd offers
At the time of writing, THC has five main products that you can invest in. These investments can be either equity- or debt-based and require a minimum investment in the order of PS1000. The money of the investors is pooled and then the returns are split with THC taking their share. Products available
- Innovative finance ISA
- Crowdfunding for property equity
- Peer to Peer lending
- Investment in property development
What are the House Crowd’s Fees?
The House Crowd’s transparency in fees is one of its best features. Equity investments have a percentage charge based on the amount of money raised. This fee is charged to each company that was formed for the project.
You can review the information pack to see all fees associated with each investment. This will allow you to make an informed decision about whether or not you wish to invest.
How safe are house crowd investments?
Without discussing the safety of your investment funds, no The House Crowd review is complete. Your money is protected by a legal lien over the property, regardless of whether you are investing in property development or peer-to-peer lending.
Diversifying your investments and spreading them can help reduce risk. You can also reduce your exposure by using the auto investment feature of The House Crowd.
Also, keep in mind that your investment will be subject to a set term. This will tie up your capital for an agreed upon period. When enough properties are sold, your capital will be repaid in priority. However, you cannot guarantee that you will receive your money back or interest.
How it works
HouseCrowd lists a variety of properties on its website. Usually, there are two new properties each week. Each property has a fixed amount that can be raised. This includes the acquisition cost, refurbishment costs, and transaction costs (surveyors or stamp duty, e.t.c).
This will allow to calculate your return. These estimates are based on projections by Savills in the region. The larger your investment, the greater the percentage of property you own.
Instead of paying by debit card online, transfer your money to the solicitor using online banking. This money is kept in a secure account. If the house owners go bankrupt, it will be reimbursed and returned to you.
What types of properties are available through The House Crowd
THC has advertised a variety of properties, from apartments with one bedroom to six-bedroom houses. THC requires that financials are correct in order to maximize investors returns.
Flat 25% fees are charged by The House Crowd. This fee is 25% for any rent collected during the year, and 25% for any gains when the property is sold. This is my only problem. I find the 25% fee excessive, especially for rental income.
Who is The House Crowd Good for?
- People who are interested but don’t have the funds to invest in property.
- Property is a good option for investors looking to diversify.
- Splitting investments among multiple properties is an option for investors.
Who is The House Crowd Not Good for?
Traders who are looking to flip houses to make a quick profit. The minimum holding period for THC is five years.
Many people already manage their own buy to let portfolios and take over all aspects of property management.
Merits and Demerits of House Crowd
While signing up for The House Crowd can offer some great benefits, you should also be aware of potential negative aspects.
|Spread your investment across multiple projects||It is possible for returns to be unpredictable.|
|All aspects of sales and listings handled by a dedicated team||Each investment comes with risk. There is no guarantee that you will get your initial investment back or the expected returns.|
|You can access a simple investor dashboard that gives you all the information you need to manage your investments.||This is not a good investment opportunity if you are impatient.|
|Invest in Peer to Peer lending||The House Crowd has a smaller staff than other providers.|
|Independent RICS fund monitors monitor all developer drawdowns based on current site valuations.||A property’s price can fluctuate between up and down.|
|The House Crowd offers a good selection of investment options.||If you invest through an Innovative Finance ISA (IFISA), the minimum investment period is three years.|
Why choose The House Crowd over other Crowdfunding Websites?
These are the reasons I believe THC is more valuable than other crowd funding sites:
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House Crowd is a pioneer because they are the first to introduce this idea to market.
Great track record
They have funded over 120 properties. The other four websites listed above have only funded 24 properties. THC informed me that they had paid all dividends over the last 3 years.
After looking at the other websites, it became apparent that they rarely bring new properties to market. There isn’t enough variety. THC has at least one to two properties added every week, which I noticed when I looked at their other websites.
The House Crowd: What Can They Do to Reduce Risks?
A legal charge is included with any investment in property related to the loan. This provides protection against default. This is the same as a bank securing a mortgage when it lends to us for our residential mortgages.
What do people think about the house crowd?
Trustpilot has a majority of positive reviews. Investors can leave negative reviews if they are not satisfied with one or the other. Most of these reviews are about loan defaults. Many of them are ongoing.
The House Crowd team is responsive and helpful. This highlights how important it is to understand what you are investing in.
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- P2P platforms have been known to deal with assets that are in liquidation and then go into administration. The ringfencing mechanism protects investments, but it’s only the waiting for everything else to unravel that is the problem.
- I’m not familiar with the structures of the different P2P platforms dealing with property. Assuming that these people are lending money to their mortgage, I assume they invest through such a platform. In this instance, the P2P platform is the mortgage lender. The security for the properties is provided by the P2P platform.
- That is a completely different situation and one that the OP might not want to consider. I’m not sure what the structures are for different P2P platforms dealing with property.
- Administrators are also under pressure to continue lending money to developers they have already promised. The best chance of the loan being repaid is if the developer finishes the job.
- It is with regret that i have to inform you that the Board, with consent from the Financial Conduct Authority (“FCA”), voted to place The House Crowd Limited (“THC”) in administration. Frank Ofonagoro (Jeremy Woodside) and Frank Wessely (Quuma Advisory Limited) were thus appointed Joint Administrators at the High Court on the 24th of February 2021.
- I have been affected by FCA shutdowns several times. It is often very slow. You could be waiting for your money after more than 5 years of inflation.
Peer-to peer lending is a fascinating and growing asset class. However, there are risks associated with this investment, especially in times of uncertainty like Brexit.
The House Crowd has been well reviewed by us. This platform is a great way for property investors to get access to some amazing property deals without having to put up a lot of capital.