Navigating UK real estate: Legal insights from Trowers & Hamlins Partners

Risk summary for investments in speculative illiquid securities which are arranged by a firm by way of an online platform.

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be very complex and high risk.

What are the key risks?

You could lose all the money you invest
- By investing into a real estate project through Shojin you will be investing in a Bond instrument issued by Special Purpose Vehicles (SPV’s) which provide a funding facility for the purpose of real estate development. If the project fails, Investors can lose some or all of the money they invested.
- Advertised rates of return aren’t guaranteed. This is not a savings account. If the project doesn’t pay the SPV back as agreed, you could earn less money than expected or nothing at all. A higher advertised rate of return means a higher project risk with an increased probability of losing your money.
- Due Diligence and project oversight is carried out by the platform on each Shojin project that you are investing into to assess how well they are expected to perform. However, you should always also do your own research before investing.
- These investments are sometimes held in an Innovative Finance ISA (IFISA). While any potential gains from your investment will be tax free, you can still lose all your money. An IFISA does not reduce the risk of the investment or protect you from losses.
You are unlikely to be protected if something goes wrong
- Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
- Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
You are unlikely to get your money back quickly
- This type of property investment could face delays that can delay payments. These investments could also fail altogether and be unable to repay investors their money.
- You have the opportunity to sell your investment early through the secondary market but there is no guarantee you will be able to find someone willing to buy.
This is a complex investment
- This investment has a complex structure to ensure the interest of investors is protected. Investments are made into each designated project SPV and are ringfenced from other project SPV's to ensure full transparency of each investment made.
- You may wish to get financial advice to understand how the structure works before deciding to invest.
Don’t put all your eggs in one basket
- Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
- A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

For further information about minibonds, visit the FCA’s website here.

Close

Jatin Ondhia (CEO, Shojin) interviews Samir Nathwani, and Julien Allen, both Partners at Trowers & Hamlins:

As part of Shojin's goal to educate and empower anyone interested in real estate investing, CEO Jatin Ondhia sits down with Samir Nathwani, and Julien Allen, both Partners at Trowers & Hamlins LLP, to delve into the legal world of UK real estate. The discussion covers the current political climate, economic insight, employment trends, inward investment into the UK, and much more.

Time stamps:

Introduction: 00:00

Political and economic environment in the UK: 02:03

Economic Insight: 06:38 Attracting talent into the UK: 09:05

Inward investment into the UK: 15:04

Where are people Investing in the UK?: 18:25

What is going on with UK property? 21:39

Bullish residential market: 25:44

Student accommodation: 26:23

Built to rent: 29:22

Can governments solve the housing issue? 32:40

Visit or register on the Shojin Investor Portal to discover more about Shojin's investment opportunities.

Visit the Trowers and Hamlins website: trowers.com

Garett Stanhope

Published

14 May 2024

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