Assetz Exchange

Idea

Introduction

Assetz Exchange ('AE') has been established to offer retail investors a way to more efficiently invest and trade in residential buy-to-let property and housebuilding projects for both income and capital growth. The business has an experienced team with a 17-year pedigree in the buy-to-let property industry through its association to Assetz Property and its 140,000 registered property investors.

AE offers fractional property investment opportunities through a crowdfunding model with optional ISA tax advantages. AE enables investors to create a customised and diversified property portfolio in minutes made up of different types of properties across the UK, including Buy-to-Let and developments.

The business has FCA permissions as a Peer-to-Peer lender, which the directors believe is a simpler and more tax efficient alternative to the existing equity models used by other property platforms. Assetz Capital, the highly successful Peer-to-Peer business lender, is also a shareholder in AE.

Intended impact

Property is one of the nation’s most popular investment asset classes. However, recent changes to taxation and modifications to mortgage rules, such as larger deposit requirements have made buy-to-let property investment less accessible and less profitable. In addition, property development projects require even more capital and are much more difficult to manage. AE intends to address these issues by:

Facilitating a crowdfunded approach to property investment, in an optional IF ISA, mitigating some of the ‘mortgage interest tax’, and 3% SDLT on property by using Multiple Dwelling Relief.

Enabling buy-to-let investment on a hands-off basis.

Enabling users to diversify their capital across many properties.

Opening up access to attractive property locations and projects, thereby enabling investors to invest in properties in other parts of the country.By investing together, private investors will be able to achieve benefits of scale more like an institutional investor.

Substantial accomplishments to date

● Assetz Exchange was conceived as an idea in summer 2014.

● An application to the Financial Conduct Authority (FCA) for a Consumer Credit License was made in January 2015.

● The partnership with the Assetz group of companies was concluded in June 2015.

● The current site and technology was designed and built throughout 2015 and 2016.

● In April 2017 the FCA granted AE full Peer-to-Peer lending platform permissions.

● On 27 July 2017 we completed a Seed 1 ‘friends and family’ capital raise of £105k.

● HMRC granted ISA Manager approvals in September 2017.

● A further funding round was carried out in July 2018 to ready the platform for launch.

● AE appointed Goji to operate the ISA management in March 2019.

● Website soft-launched in May 2019 and is now fully live with the first three properties and numerous more in evaluation.

The purpose of Assetz Exchange is to help bring institutional size buying power to a group of investors, working together to acquire properties or house building projects. This buying power can bring existing rental housing onto the platform for continued rental initially, followed by a planned exit to the homebuyer market in due course. It could also permit the acquisition of housing development projects for rent or sale, further bolstering housing supply. We intend to be part of the solution to the housing crisis.

Monetisation strategy

AE will generate revenues in several ways:

Arrangement of loans:

● AE will look to make between 3% & 5% for the financing of new properties.

● There are currently no charges to the trading of loan parts. However, once the platform is established management will look to introduce a nominal charge.

Management fees:

● The properties will be professionally managed by a lettings agency.

● 7.5% inc VAT of the rental income is expected to be charged by the appointed letting agency to cover the management of the property.

● 5.5% of the rental income is planned to be charged as the loan administration fee by AE making total property rental charges of 12.5% inc VAT.

Sourcing bonus:

● AE will qualify for an extra fee if a property is sourced at a cost below an independent valuation, after purchase costs have also been accounted for.

The breakeven level for AE is presently just £20k of revenue per month and this is represented as the platform funding around just £500k of property each month*.

*Based on unaudited management accounts and cost forecasts.

Use of proceeds

The proceeds of the fundraise will be used to fund the business’s working capital and is expected to take the business through to profitability. This includes:

● Further optimising and development of the website.

● Further development of the property and client money back-office accounting systems.

● Hiring further team members.

● Further legal and professional costs.

● Working capital.

● Launch marketing and PR.

Investor Rewards

All investors who successfully register on the platform will have £15 credited to their account with which they can make their first investment.

Please note that any discounts, rewards and/or offers listed by a company in its campaign are subject to the terms and conditions applied by that company and listed above. It is the company’s responsibility to honour such discounts, rewards and/or offers and Seedrs does not take any responsibility for them.