50% tax relief on shares in the new Property118 portal

50% tax relief on shares in the new Property118 portal

13:50 PM, 7th July 2015, About 10 years ago 21

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Updated 7th July 2015 – First published on 30th April 2015

 

Property118 Portal Limited is a new start up business hosted on the established Property118.com website. It seeks to attract investment of £150,000 in return for 10% of the shares in the new company.

The Property118.com website now serves two separate businesses owned by two separate companies. The nature of the relationship between these businesses and companies is documented in a contract which is available on request.

The Property118.com website provides an online community platform with a mission to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents. It was established in 2011 and is an official Google News feed as well as being a leading forum in the UK Private Rented Sector.

The new company now seeking crowd funding (Property118 Portal Limited) is focussed exclusively on advertising tenanted property for sale. The portal pages became operational on the home page of the Property118.com website in mid April 2015.

Buyers search by postcode or Town and simultaneously set up email alerts so they are notified when a property matching their purchasing criteria is listed.

Consider how much money buyers and sellers of tenanted property could save in terms of rental voids and agents fees as a result of buying and selling with reliable tenants in situ.

Have you ever come across a tenant who is happy to be served notice because their landlord wanted to sell? What if they don’t have to leave?

Basic advertisements are FREE for both landlords and agents to create.

Premium listings feature at the top of search results.

Sponsorship of a featured property Newsletter is available to agents and developers on an ex-gratia, meritocratic basis, i.e. sponsors who make the largest payment per enquiry receive preferential placement of advertisements.

Tax Advantages
Own Shares in the Property118 Rental Property for-sale Portal

When shares in Property118 Portal Ltd become available to purchase via our nominated crowd funding platform investors will attract a 50% tax credit on all shares acquired, e.g. buying £10,000 of shares would reduce your tax bill by £5,000 regardless of what rate of tax you pay. Furthermore, if/when those shares are sold there will be no CGT payable either, regardless of the amount of the gain. This is because the company will qualify for SEIS (the Seed Enterprise Initiative Scheme) which also means that investors are able to roll capital gains into the scheme to offset the other 50% of their investment against CGT, this includes rolling over gains realised from the sale of BTL property. In other words, the shares could end up being acquired at a net cost of zero, or to put it another way, the tax relief you get back on the investment could be as much as the investment itself!

The idea for the new property portal, which came from Svetlana Alexander CIMA MA (wife to Property118 founder Mark Alexander), is a completely ring fenced business in its own right.

Marketing is planned to extend well beyond the existing Property118 reader base and will reach out to both buyers and sellers of rental properties, and of course their agents.

Initial funding of the brand awareness campaign (£25,000 pcm over TV and other forms of media) will be raised by selling 10% of the shares in the new company via an FCA authorised crowd funding platform.

Within seven days of launching a similar campaign (promoted via Property118) LettingSupermarket.com reached its £250,000 fund raising target. Demand for shares in the Property118 Portal are anticipated to be even higher, hence we are giving Property118 members the heads up to register their interest now.

The Market

According to research conducted by Paragon Mortgages Plc. there are five million UK properties owned by private landlords.

“An army of two million private landlords now own and rent out five million properties, according to the report by mortgage lender Paragon. This means 18pc of households now rent from private landlords. And the proportion is growing, as investors continue to see property as a source of future income and profit.” Source The Telegraph 22nd October 2014

The Private Rented Sector has been growing rapidly since the phase “buy-to-let” was first coined by the Association of Residential Letting Agents in 1996. The sector is projected to continue to grow, at least in part due to over 55’s seeking better returns from their pension funds which can now be liberated and used to fund alternative asset classes such as rental property to provide income in retirement.

It is estimated that upwards of 200,000 rental properties change hands in the UK every year. When tenants learn that their home is on the market via conventional estate agents, and advertised on portals such as Rightmove and Zoopla, they are immediately spooked into looking for somewhere else to live. In many cases the owners suffer rental voids due to the expectation of properties to be sold with vacant possession. Purchasers then suffer rental voids until the property is re-let. With the new portal it does not have to work this way. Once tenants realise that their property is being sold tenanted to new landlords they can rest assured that they do not need to start looking for a new home because it is being sold to another landlord.

In most cases landlords do not buy enough life insurance to repay their mortgages, which means their families need to sell some or all of their properties when they die in order to repay mortgage lenders. Even if every landlord sold none of their buy-to-let properties prior to death, and if we assume that death will probably occur within 60 years of becoming a landlord, that’s 33,333 landlord deaths a year and circa 83,333 property sale related dilemmas to be considered, i.e. whether to sell conventionally with vacant possession or tenanted. Not all landlords will hold onto their BTL properties until the day they die so it stands to reason that far more rental properties change hands every year.

These figures are supported by the following data from HMRC which was published on 21st April 2015.

“Number of residential property transaction completions with value £40,000 or above for the tax year 2014-2015 = 1,204,320”

Based on 18% of all households being in the Private Rented Sector (according to data produced by Paragon Mortgages Plc) this suggests that 216,777 sales fall into the target market for the Property118 portal every year.

Other

The key point of difference between the Property118 Portal and the likes of Rightmove and Zoopla is that it advertises rental properties only. Furthermore, the portal is available to both agents and owners to use without the requirement of a premium membership.

Voting shares in the new advertising portal (Property118 Portal Limited) will be offered subject to a minimum £1,000 investment, whilst shares without voting rights will be subject to a minimum investment of just £10. The company will be seeking to raise £150,000 in return for 10% of its shares in order to finance initial costs of brand awareness marketing until such time as cashflow is projected to turn positive. Shareholders will be invited to invest on the basis of receiving dividend income during their lifetime and as a legacy for their heirs. This is not to say that a trade sale or flotation could not be considered in due course by voting shareholders. 

For legal, compliance and commercial reasons we are unable to share too many details of the business plan at this stage. However, to ensure you don’t miss out on the opportunity to snap up shares as soon as they are released please register your interest in investing into this new business venture by completing the form below. We will then notify you as soon as the option to obtain a copy of the business plan and to buy into the business is launched on the Crowd Cube funding platform.

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Mark Alexander - Founder of Property118

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19:41 PM, 1st May 2015, About 10 years ago

Reply to the comment left by "mark walsh" at "01/05/2015 - 19:36":

What a strange comment!

How on earth do you reconcile an explanation of how tax efficient the SEIS investment structure is with desperation?
.

Mark Rund

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18:03 PM, 4th May 2015, About 10 years ago

Hi Mark,

Please can you clarify how the CGT roll over relief works?

I'm currently sitting on a CGT bill of around £5k in relation to the sale of a a BTL property. By investing in this scheme would it allow me to reduce this bill legitamtely?

Regards
Mark

user_ 1346

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19:04 PM, 4th May 2015, About 10 years ago

Obfuscated Data

Mark Alexander - Founder of Property118

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19:22 PM, 4th May 2015, About 10 years ago

Reply to the comment left by "CaZ " at "04/05/2015 - 19:04":

Hi CaZ

There are hundreds of listings, only those who upgrade show on the home page. Around 35% have been upgraded. We only load three properties at a time on search results to make page load speed quicker. As you scroll down more properties load.

Most serious buyers look for a certain area, hence we have a search function and also the ability to register to be alerted when there are new listings advertised in that area.

We ask people who are listing properties to confirm they are still for sale every month. They can delete their advert at any time though by logging in and deleting it. We don't actually track sales because we don't charge a commission so don't need to.
.

Mark Alexander - Founder of Property118

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19:29 PM, 4th May 2015, About 10 years ago

Reply to the comment left by "Mark Rund" at "04/05/2015 - 18:03":

Hi Mark

Based on what you have said, yes you could roll your gains into this investment and also claim the 50% tax credit.

There are several trusted websites where you can read about "Seed Enterprise Initiative Scheme", one of which is the .gov website >>>
https://www.gov.uk/seed-enterprise-investment-scheme-background
.

Mark Alexander - Founder of Property118

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18:37 PM, 11th May 2015, About 10 years ago

UPDATE

As promised, this is an update on the share issue in our new company (Property118 Portal Limited)

The compliance aspects of the Crowd Funding are proving to be more of a challenge than we first anticipated. This is because we have two businesses running off just one website.

The new portal earns its money by selling upgrades to premium listings (£11.80 per week) and by charging potential purchasers £1.18 to connect them to vendors selling investment property. On the other hand, Property118.com forums, news and pretty much everything else on Property118 is funded by donations, sponsorships and commission deals such as our insurance product. Each business has its own distinct revenue sources but the law says that our financial promotion must be clear, fair and not misleading, i.e. who owns what.

We are meeting with our lawyers tomorrow in the hope of thrashing this out.

We have had 190 Expression of Interest forms completed so far by people who are interested in buying shares. That’s more than three times the number we had for LettingSupermarket.com and we are looking to sell less shares , i.e. £150,000 in the new portal as opposed to £250,000 raised by LettingSupermarket.com

Oh the joys of being an internet entrepreneur, maybe I should just stick to being a landlord! LOL

All the best and thank you to all who completed the form, and for those of you following this discussion, for your continued interest.

Regards

Mark Alexander – founder of Property118.com
.

Mark Alexander - Founder of Property118

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11:17 AM, 14th May 2015, About 10 years ago

We are incredibly excited today due to having just received the first months statistics for the performance of the new section of our website where landlords can buy and sell tenanted properties.

Bearing in mind that we have only promoted the portal via our Newsletters, we launched from a cold start and we don't have any crowd funding yet (hence no external marketing budget) the results are nothing short of remarkable. You can read them by clicking HERE.

We are still gathering Expressions of Interests for shares to be sold in our new special purpose vehicle for the tenanted property portal and you can read more about that HERE.

The share issue will be completed via a Crowd Funding Platform and the funds raised will be used to finance a National TV brand awareness campaign. What might the statistics look like when we complete that goal?
.

Colin Dartnell

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13:40 PM, 14th June 2015, About 10 years ago

Hi Mark

Any news yet on crowd funding for the 118 portal?

Mark Alexander - Founder of Property118

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14:03 PM, 14th June 2015, About 10 years ago

Reply to the comment left by "Colin Dartnell" at "14/06/2015 - 13:40":

Hi Colin

I will let you know as soon as we are ready. I think we've dealt with all the teething problems now but we want to be certain the portal is fully operational and that all i's are dotted and t's are crossed in terms of compliance before we launch the funding pitch officially.

Meanwhile we are still gathering expressions of interest.
.

Mark Alexander - Founder of Property118

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10:14 AM, 8th July 2015, About 10 years ago

UPDATE

418 potential buyers have created Alerts via our system so that they receive email notifications of properties in their target area as soon as they are listed. Given the minimal level of marketing to date this is very encouraging indeed.

New properties are being listed daily so if you are looking to buy please visit our home page and create an Alert so that you don't miss out. Also, remember that you don't have to offer the list price!

With regards to the availability of shares in Property118 Portal Ltd we have made good progress in terms of completing the legalities required for our crowd funding pitch, which we now hope will go live very soon.

The biggest challenge to date has been legally documenting the relationship between the new property portal business and the existing business, both of which utilise the Property118.com website. This has now been done and details of the contract can be found here https://www.property118.com/wp-content/uploads/2015/07/Business-Cooperation-Agreement.pdf

To date we have 209 expressions of interest in terms of buying shares via our nominated crowd funding platform and we are still taking more.

Our SEIS (Seed Enterprise Initiative Scheme) advanced approval application was given the thumbs up by our accountants and lawyers last month and has been submitted to HMRC for approval. The availability of shares is conditional upon this approval, of which we are very confident.
.

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