With returns from Buy To Let investing falling over recent years, community benefit society Equfund is ready to Reap what it sows in a housing system that “penalises the most vulnerable and is unethical and unsustainable”.
Now re-launched for its second round, Reap invests in property to provide affordable rental homes for those in housing need, with each acquisition assessed to ensure it can provide a durable and reliable cash income stream for investors.
The management of the property is handled entirely by Equfund, and Reap actively rents to tenants in receipt of Local Housing Allowance or Universal Credit – even assisting LHA tenants with the paperwork required to submit and claim their correct allowances.
“We can no longer rely on the welfare state to provide a safety net,” said Andrew Mahon, director at Equfund.
“Instead we need to look to ethically minded institutions and individuals to take the mantle and break the cycle of housing poverty in the UK.
“We’re calling out to people who have reaped the rewards of the buoyant property markets of the past and are now wanting to give a helping hand to individuals and families who are trapped in today’s restrictive property sector.”
With a minimum investment of £15,000, investors will receive a fixed monthly income (from the rental income), with a flat interest rate of 3% per annum without the associated risks, responsibilities and inconveniences of being a landlord.
100% of the original lump sum is returned to the investor after five years, and the invested amount and their monthly income is unaffected by voids (or maintenance costs) if the property requires maintenance.
The first round of Reap raised over £3,750,000 when it first launched in 2015, double the target amount.
In this second round, Reap has transitioned from primarily investing in and refurbishing long-term empty homes to acquiring properties that are ready to move in to.
This transition, which was brought about by the worsening housing crisis, allows the company to act with greater speed in providing housing for those most in need and to allocate more investors’ funds against property.
“The media spotlight has sadly shifted away from the homeless and our country’s chronic housing shortage,” said Mahon.
“It’s an absolute travesty that a leading cause of homelessness in the UK is the government’s poor implementation of Universal Credit and the misuse of the Help To Buy scheme.
“This has not only inflated house prices and swollen the coffers of large, faceless property developers, but it has also led directly to an affordability crisis for our nation’s renters and increased hardship for the poorest within our society.
“Our current Buy To Let market is clearly not fit for purpose,” he continued. “Buy To Let mortgage lenders unfortunately push landlords to discriminate against those on housing benefits – this is a system that penalises the most vulnerable in society, and it is unethical and unsustainable.”
Since being founded in 2002, Equfund has found homes for thousands of people through investments of over £33m.
Reap is pitched as protecting investors’ money by only borrowing 85% of the property value, and the loan is registered against property at HM Land Registry, much in the same way a mortgage is.
There are no fees involved, and Reap guarantees to secure the investment against UK property and does not rely on property price growth to generate an income for investors.
Each property has its open market value assessed by an independent Chartered Surveyor, and investors can arrange to visit a property prior to allocating their funds against it.
For further security, and to limit exposure to any single property or locality, investors can request to have their money split and lodged against more than one property.