HMOs on the Secondary Market

We have received several inquiries about the HMO units over the last few months.

Towards the end of 2017, the HMO properties that had previously funded were removed from the Secondary Market (‘SM’) on the Property Moose platform.

These properties have not been on the SM since 17^th October 2017.

During the subsequent period, we have been assessing the HMO properties, and have been working closely with several PLC property companies and local agents in order to create a strategy for the units for 2018.

Why did we do this?

In order for the SM to operate effectively and fairly, it is important for property values to be updated so that the calculations and projections shown on the website can be used as a useful indicator to buyers and sellers of shares on the SM.

It is easier for us to monitor the values of traditional buy-to-let properties, and there are many tools that we can use to do this.

For HMOs, the valuation methodology is different and requires specific expertise. This is because the properties are valued on a commercial basis and not a ‘bricks and mortar basis’.

This review process took longer than we would have hoped which we appreciate has been frustrating for several of our valued members. Notwithstanding the amount of time it has taken, lots of useful information has been gathered which will shape the strategy for the HMO units in 2018 (see below).

Why have the HMO properties not yet been put back on the SM?

Although the review of the properties took longer than we thought which delayed them being put back on the SM, it is with much regret that the Secondary Market will be removed entirely from the platform on 28^th February 2018. All properties will be removed from the SM on this date.

With the introduction of MiFID II and GDPR, and the uncertainty they bring in the regulatory sphere (not to mention the unknown impact of Brexit on our regulatory position and that of other financially regulated firms [MiFID II is an EU Directive]), it has become untenable to continue to offer the secondary market as a service without significantly increasing the fees payable by members.

We have held off on making this change for as long as possible and have so far absorbed the costs associated with running the service in the correct legal and regulatory framework. Please read more about this situation by clicking HERE.

What is the 2018 strategy for HMO properties?

The HMO and buy-to-let investment opportunities on Property Moose have always been for a fixed projected initial term. By the end of Q1 2018, we are giving all HMO and buy-to-let investors the opportunity to vote on the disposal strategy.

This will likely bring forward the exit date of the units, but the majority are maturing in 2018, and we think there is a potential benefit in maximising the amount of time any property is marketed for sale (should the investors vote as such).

We are positive about this process and strategy, and we aim to increase and maximize the potential value of the units and deliver strong returns to investors.

Every unit (or ‘PM SPV’) will have a unique strategy, and you will need to vote on the exit plan for those that you are invested in.

These initial voting opportunities will be done in batches, and the first set will be sent out within a week of this blog post going live.

Read more about the portfolio exit strategy HERE.

We are aware of the inconvenience and frustration that the delay in reviewing the properties will have caused some members, and how the removal of the SM may affect some members that wanted to liquidate their shares at a discount. We share this frustration and we have invested a lot into the system, but it has only ever been there as a backup and not to be relied upon. We hope that processing the exits at the end (or before the end) of the initial projected term, in line with the original investment strategy, delivers positive returns across the board.

 

 

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