HOW DOES IT WORK?

• Prospective partners register to join the My Property Partners database
• On registration partners are are asked to indicate which property they might be interested in and how much they want to contribute to that project
• My Property Partners collates this information
• When a sufficient number of partners have signed up to a particular project My Property Partners will launch an offer
  
  

• Full details of the property will be released
• Each property will be split up into partnership stakes of depending on the particular project. E.g.
  • 20 partnership stakes representing 5% each of the property
• Partners positions of between 5% and 30% will be offered
  • The minimum threshold ensures there is a manageable number of partners
  • The maximum threshold ensure no single partner has full control
• A minimum investment of £15,000 will also apply
  
  

• On receiving details of a launched project, prospective partners decide whether they would like to commit to the project and how large a partnership stake they would like
• To secure a place a deposit of 2% of funds is payable
• On a first come first serve basis My Property Partners will close the project when a sufficient number of partners have secured their place
• A waiting list of prospective partners will be collated if necessary
• If for any reason the project is cancelled the deposit will be returned
  
  

• When a sufficient number of partners have signed up and paid their deposit My Property Partners will set up a legal partnership – Limited Liability Partnership (LLP) - specifically for the purchase of this property
• An LLP is similar to the Limited company in that the liability of the partners is limited to the capital you have contributed. Learn more by clicking on the following links:
• www.businesslink.gov.uk
• www.companieshouse.gov.uk
• Each partner will be sent a Partnership Agreement which outlines the purpose of the partnership and provides guidelines for its operation - this is effectively a more detailed version of this page
• Partners will be required to sign and return the relevant documentation to become partners of the LLP - strict timelines will be required to return the paperwork
• The partnership stake, based on the proportion of committed funds, gives each partner legal ownership of a portion of the LLP and all of its assets
• A bank account is also opened in the name of the LLP
  
  

• Once a partner has joined the partnership he/she will transfer funds to the LLP bank account
  • Remember each investors is now a partner in the LLP and the bank account and all funds are owned by the LLP directly. My Property Partners does not take or hold deposit money on behalf of partners
• The LLP bank account will be with a major high street bank e.g. HSBC, Lloyds, Barclays providing added security given the recent issues Northern Rock has faced
• Once all funds have been collected the property purchase will take place in the name of the LLP
• A deposit will be paid to the property owner/developer and any payment plan will be followed as per the developers request. My Property Partners will administer this process
• If the full funds are not required initially, the funds will remain in the LLP account and any interested earned will benefit the LLP and therefore its partners
  
  

• As with any property investment in the UK or abroad there will be a number of other costs associated with the purchase. Some of the costs will be required up front (e.g. stamp duty) and other will be required later on (e.g. furniture for rental properties)
• The property owner, i.e. the LLP, and therefore each partner will be responsible for all future costs incurred
• However, purchasing propeorty through My Property Partners is about reducing risk and minimising the need to cover unforseen costs in the future
• Therefore, each project raises additional funds at the outset to cover future costs – these ‘reserve funds’ will cover a range of costs depending on the individual project. E.g.
• Service charge costs, stamp duty fees, solicitor fees for purchases, furnishing costs, accounting fees to for the LLP etc
• When a project is launch the size of the reserve fund required will also be disclosed, e.g this may be 2% of the purchase price
• All funds will be held in the bank account of the LLP and any interest earned will go to the LLP and therefore its partners
• If the reserve funds are required to cover costs it will be topped up again from future income e.g. interest earned, rental income or share of profits if the property is an apart hotel
• At the end of the investment period, when the property is sold, the reserve fund is return to the partners
• Any interest earned on this reserve would have also been returned to shareholders during the investment period
  
  

• Depending on the particular property a certain level of income will be generated from either:
  • Interest income for off-plan properties where funds may be held in the LLP bank account
  • Rental income where a property is being rented out
  • Capital gains where a property has been sold
• The income will be retained by the LLP until the end of the LLPs financial year
• Accounts for the LLP will be completed by an independent accountancy firm
• The profits that the LLP makes in that year will be calculated subject to the costs of the accountants, any other property related costs and a fee payable to My Property Partners (see below)
• As long as there are notable propfits, e.g. £5,000 the profits will be distributed to partners according to their partnership stakes - which is based on the funds they have committed
• Where profits are small these will be retained in the LLP account and will be distributed the following year - and will earn interest in the interim
  
• Any tax payable on this income will be the responsibility of each individual partner
  
  

One-off arrangement fee

• The are significant costs incurred by My Property Partners to provide this partnership opportunity. To cover these costs (such as advertising, legal advice, time etc) My Property Partners charges an arrangement fee similar to that of investment funds run by the likes of Fidelity, Gartmore etc
• The arrangement fee is 2% of invested funds subject to a minimum of £300

Share of profits

• Many other schemes or funds will charge a fixed fee every year for the ‘administration’ or other costs
• However, My Property Partners is about minimising risks and this also relates to on-going charges
• A true partnership approach would be for My Property Partners to only charge fees if the LLP makes profits – this is exactly what My Property Partners will do
• My Property Partners will charge a fee based on a share the profits generated by the LLP in that year - notes that this is a share of profits not a share of income
• If the LLP does not have any notable income, My Property Partners will not charge any fees for that year but will instead accrue a small fee (less than 0.5% of purchase price) which is payable when the LLP has sufficient income to cover these costs
• If the LLP does have income e.g. from rental income or capital gains, My Property Partners will charge a fee equal to 10% of the profits
• Capital Protection: Your initial invested capital will never be used to pay My Property Partners – only a share of profits will ever be used
  
  

• Each project launched by My Property Partners will have a pre-agreed investment period, E.g. An off-plan project may have a 5 year investment period which covers 3 years of construction and 2 years or rental
• During the invesment period all major decision will be in the hands of the partners - this includes the option to exit early
• My Property Partners will facilitate the decision making and provide any relevant information so that the partners can make an informed decision
• My Property Partners will make proposals to the partneship or put forward proposals suggested by partners
• All partners will be required to vote on all proposals
• A partners voting power will reflect his/her partnership stake
• All decisions will go with the majority vote and the minority will be obliged to accpet these decisions (e.g. rental levels, whether to hold on to the property after completion, accept sales offers etc)
• My Property Partners will administer any decisions made by the partnership
  

• End of investment period
  • At the end of the investment period the property will be sold and the proceeds will be returned to partners according to their partnership stake - subject to the relevant costs incurred during the sales process
  • When the end of the investment period drawns near, all Partners will be required to decide on the minimum sale price and My Property Partners will administer the sales process on behalf of the partners
  • Any personal tax liabilities will be the responsibility of the individual partners
    
    

  What if you don't want to exit after the investment period?

  • After the investment period it would be unfair to force any partner to stay invested
  • However, there will be an opportunity for new partners or existing partners to buy the share of exiting partners should they wish and therefore remain invested
  • If an amicable solution is not met then the partnership will be required to dispose of the property and share the proceeds
    
    

  What if I want to exit early and other partners want to stay invested?

  • Your circumstance may change during the investment period and it may be possible that you will need your money back
  • However, it would be unfair on other partners to force a property sale
  • At any point you will be able to sell your share of the LLP to another party although there are likely to be costs associated with transferring your share of the LLP to someone else
  • My Property Partners will support any partner wanting to sell his/her partnership stake which may include
    • Adverting to sell the partners stake to prospective partners
    • Purchasing the partneship stake
    • Providing the necessary information and documentation to suport the sale
  • In the worst possible scenario you may have to sell your share for less than the market value in order to exit – as this will be more attractive to a potential buyer. Depending on how long you have remained invested and market growth, this may still generate an acceptable return for you
  • My Property Partners will support you to sell your share but can not promise that an exit will be possible before the investment period ends
  • Therefore, you should only invest if you can afford to leave the monies invested for the investment period