Each property you see on the platform is held in a separate limited company which we refer to as ‘Property Companies’ . This is done to ring fence investments and protect investors. The Property Companies’ Articles of Association are highly restrictive. This prevents them from carrying out any activity other than owning the property/assets and requires its directors to act in the best interests of Lenders at all times. The articles also state that all major decisions must be made, by the Lenders, by majority vote.
Each of these companies has a single shareholder; AE Ownership Company Ltd. (AEOC) which is a company limited by guarantee meaning it has no shareholders, instead all investors on the platform automatically become its members.
The sole purpose of AEOC is to own the single share of each Property Company on behalf of its members and it has a legally binding obligation to act in the best interests of its members.
Investments are made by way of a loan to the Property Company for a fixed term.
All significant decisions must be made by the investors by way of a majority vote.
Who are the shareholders of the Property Companies?
Each Property Company has one issued share which is held by a company limited by guarantee (AE Ownership Company Ltd). AE Ownership Company Ltd has no shareholders, instead all investors on the platform automatically become members.
Who are the directors of the Property Companies?
Each Property Company has a single director, who is also a director of Housemartin. The director’s duties and powers are clearly defined and restricted by the articles of association. All actions must be in favour of the Lenders.
What is the duration of the loan?
Each loan runs until the lease on the property ends and is not extended or an alternative lease is found. Any extension or new lease must be approved by the Lenders by majority vote. Lender votes are also held at regular intervals (the date of the next scheduled vote is displayed in the details page of each property) where lenders can vote, by majority, to repay the loan.
What happens at the end of the loan?
If the tenant wishes to extend/renew the lease, the loan can continue, subject to a Lender vote. If the tenant does not wish to renew a Lender vote will be held on how to proceed.
What happens if the property is sold?
If Lenders vote, by a majority, to sell a property, all proceeds less costs and taxes (including any capital gain below a 3% per annum cap) will be distributed to Lenders. This cap is an initial requirement of Housemartin’s authorisation by the FCA..
What legal documents govern my investment?
Terms of Business
The Terms of Business govern the obligations between investors and Housemartin. Critically, they do not permit the transfer of loans between investors outside the legal and operational framework of our platform.
Loan Agreement
The loan agreement details the financial parameters of the loan, including the interest payable and term of the loan. The Loan Agreement is the agreement governing the terms of the loan and comprises the Loan Conditions and the Terms of Agreement applicable to the relevant loan.
Terms of Agreement
The Terms of Agreement summarise the key commercial terms applicable to a particular loan and Loan Agreement. The Terms of Agreement can be found on the details page of each loan.
Loan Conditions
The Loan Conditions detail the full terms of each loan. The Loan Conditions can be found on the details page of each loan.
Articles of Association
The articles of association are a legally binding document which form part of the borrowing company’s constitution, defines the responsibilities of the directors, the kind of business to be undertaken and the means by which the shareholders exert control over the board of directors. They have been written to protect Lenders interests at all times.
Who makes the important decisions about investments?
Lenders are required to make all significant decisions impacting their investments. The articles of association of the Property Companies prohibit their directors from taking major decisions without Lenders consent.