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Who can invest in property bonds?

by Nikki Dale -

Property bonds and loan notes products are designed for investors that have enough knowledge and experience to make an evaluation of the product, including all its risks as well as all its merits.

The rule of thumb is, property bond and loan note products that are worth considering will ask you to qualify for one of the following investor criteria’s.

READ MORE: Best fixed rate property bonds

Self-certified or certified Sophisticated Investor

Self-certified Sophisticated Investor criteria covers majority of interested individuals.  If you have invested in the past in property (Buy-to-let through a limited company), student accommodation (PBSA), stocks & shares in the AIM market or any unlisted limited company – even if you don’t still hold the investment now – you will likely still qualify.

Sophisticated Investors need to confirm one of the following as part of their self-certification:

  • A director of a limited company that has a turnover of at least £1m within the last two years.
  • You have made more than a single investment in an unlisted limited company within the last two years.
  • A member of a network, or syndicate of business angels for a minimum of six months.
  • Have worked in the past two years in a professional capacity in the private equity sector, or in the provision of finance for SMEs.

Self-certified or certified High Net Worth Individual

Other investors might fall into the HNWI criteria whereby they earn £100,000 per annum or more or hold assets to the value of £250,000 or more.

For high-net-worth individual certification at least one of the following must apply:

  • I had, during the financial year immediately preceding the date below, an annual income to the value of £100,000 or more;
  • I held, throughout the financial year immediately preceding the date below, net assets to the value of £250,000 or more.

Why is it necessary to certify as a Sophisticated Investor or HNWI?

If one of these categories does not apply to you, you will be treated as a Retail Investor and you will not be able to gain access to any of the information (Information Memorandum) about the bond or loan note product.

This is to protect all parties as these products are financial promotions and it may expose an individual to a significant risk of losing all or some of their investment.

READ MORE: What security can Property Bonds / Loan Notes provide for investors


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