London's housing shortage is now in the hands of the people – marginally, at least. Homegrown, a new investment platform, launched today to allow average people to invest in building more homes.
Led by former PwC man Anthony Rushworth, Homegrown takes minimum investments of £500 per project and aims to produce returns of 15 per cent each year. The typical investment matures in around two years.
The business will focus on funding residential developments in London and the South East, and has already committed to projects including a former police station in Norbury, a new five-storey building in Hackney Downs and a 56-flat development in Limehouse.
“Homegrown is about giving everyday investors access to the often superior development returns that are typically only available to professionals and institutions. It also helps them to do their bit in solving the housing crisis by providing property developers with much needed equity finance,” said Rushworth.
“We like to think we’re filling a major hole for many UK investors left by the buy-to-let exodus. With the raft of tax changes imposed on it, buy-to-let is no longer the investment it was and investors are increasingly looking for alternatives.”
Although residential developers are usually able to find traditional funding to cover the majority of a project, Rushworth explained, they often struggle to get the last bit. This is where Homegrown's equity finance comes in.
The platform also does everything it can to de-risk the investments, which Rushworth conceded are at the higher risk end of crowdfunding.
Homegrown invests in pre-vetted and fully underwritten residential developments that have already received planning permission and bank finance, and are being undertaken by established developers.
The firm then adds its own layer of due diligence including analysing financial assumptions and reports, undertaking a sensitivity analysis, and only investing in projects whose developers have a strong track record of delivering on schedule and within budget.