Here is a brief taster video for the UK Buy to Let market to get you in the mood:
In simple terms:
We enable property owners to release slices of equity from assets such as residential, buy-to-let and commercial property by introducing the equity slices to investors.
Although our offering is a unique one, it has in fact been available to homeowners and and commercial property owners for decades if not centuries since property deeds were first created. However, until recently most people have just done what was expected of them and used banks to finance property ownership. Not only is this not necessary but it's also not desirable in a substantial number of cases.
The Slice aims to disrupt the status quo and here are some of the markets which could be disrupted
Bank Savings: Traditionally people put their money with Banks because they are considered "As safe as houses". Unfortunately with interest rates so low, the Bank is the only one making any return on these savings. Banks typically take the money deposited with them and invest it in property by way of mortgages. Thereby making a nice tidy profit. We believe Equity Slicing could substantially disrupt this market because it has the potential to cut out the middleman (The Banks). We present an opportunity for a long term saver to get a much higher income from their savings, plus the potential upside of capital growth in the underlying property with built in protection against capital losses.
Buy to Let Equity Release: The typical landlord releases equity in one of two ways; 1) Sale of the BTL property or 2) refinancing of the property. In the first case this can lead to substantial Capital Gains Tax bills and a burden to reinvest the cash that they don't need in a comparable investment. In the second case, although cash is in the bank the BTL property often just breaks even in terms of rental income meeting the repayment requirements of the bank. This results in the income flow being cut off for the Landlord. Equity Slices mean that a BTL landlord can slowly release equity without increasing debt, whilst retaining an ongoing income and mitigating CGT. This is of particular benefit to the older landlords who originally intended to purchase their BTL as a pension as now they are able to extract a steady tax efficient annuity of sorts from their property pot.
Equity Release for the 55+ age group: This market is serviced by banks and other financial institutions who offer rollup / reversion mortgages. The sector is substantial and growing at an incredible pace due to the aging of most western populations. The way it typically works is the homeowner borrows a lump sum, often less than 25% of the value of their property and then the interest on this loan is rolled up into the overall debt. This creates a situation where the homeowner is paying compound interest and they can quickly end up converting substantial amounts of the equity in their property to debt. Potentially leaving little or nothing for their decedents when they die or for themselves when they need more intense care. Many of these types of mortgages lock people into their properties because if they move or enter long term care they must repay the debt. Equity Slicing has the potential to substantially disrupt this market by providing an alternative, safer and cheaper way with greater control, to release equity from property.
Business Owner Pension Pots: Many business owners have pension pots however in times where cash is short, a business owner will typically forgo their pension contributions. This doesn't need to happen. With the use of Equity Slicing a business could make a contribution in slices of a wholly owned commercial property to the directors SIPP accounts without any substantial cash outlay.
Commercial Capital Raising: Through the use of Equity Slicing, businesses which own their commercial property can raise capital through the sale of equity slices instead of a bank loan. A bank loan typically comes with capital repayments which can have a substantial drain on the cash borrowed over time. With equity slicing there is no need for capital repayments although there is the option to buy back the slice at any time in the future.
These are just a small number of sectors which equity slicing has the opportunity to disrupt.
How can you help? Beside the obvious of becoming a buyer or seller of equity slices we are looking for skilled and experienced entrepreneurs who can add some value to our project, be it through investment, fund raising, network or in an advisory capacity. Talk to me and lets see where it goes. Call +44 (0)333 33 59059.
The Slice Ltd.