Investors have rushed to invest in a new house-share company, after it offered shares over a crowdfunding site.
Smart Property, which manages boutique house-shares for young professionals in the north of England, raised over £300,000 in 15 days when it floated its company shares on CrowdCube, a leading global crowdfunding portal.
Smart Property’s directors Andy Graham, 29, and Nick Morris, 31, say they were overwhelmed at the response, which will now allow them to expand the company with more properties in Leicester, Manchester, Nottingham and Sheffield.
“We expected to have interest, but we were truly astounded at the number of people wanting to invest,” said Graham. “It just shows that the house-share market is a very attractive prospect for anyone wanting to invest in property at the moment. We were completely oversubscribed and shot into overfunding after just six days, before reaching our upper funding limit after a further seven days.
“The number of young, professional house sharers is rapidly increasing in the UK, due to soaring property prices which prevent young people from getting on the property ladder, or even from renting their own flat or house.
“It’s a booming sector, and more and more people clearly want to get involved.”
Graham, from Manchester, and Morris, from Leicester, offered the public up to 24% of equity in their company Smart Property via CrowdCube, where potential investors had one month to invest.
But within a week, the entrepreneurs had exceeded their target of £150,000 and reached a stunning £300,000 in total.
The two graduates, both of whom shared houses as students, founded their business renting high-end house shares to professionals who can’t afford to buy their own properties, after recognising a gap in the market.
As the house share sector balloons, Dragons Den-style crowdfunding is the best way to attract investors who are ready to sign up for this exciting, fast-paced business, according to Graham, who still lives in a house share.
He said: “These young professionals go to work every day and do not want a shabby, student-style house share. They want to share with other young professionals in smart, clean, fashionable, tech-smart properties with all mod-cons.
“We at Smart Property collaborate with landlords to refurbish properties and ensure that this new generation of house-sharers gets exactly what they are looking for.”
Around 4.5 million houses, or 20 per cent of properties in the UK, are now let out to house sharers*, and estate agent Savills predicts that the house share market could account for an addition 1.1 million properties by 2021.
With rents for individual properties climbing to an average of £771 per month, some 43 per cent of 18 to 24 year-olds in the UK are now living in a house share, according to Knight Frank*. Tenants renting with Smart Property pay an average of £375 all inclusive for a double room.
Yet while affordability is still a key issue, house share tenants’ demands have increased. Thirty per cent of 18 to 24 year-olds move between rental house shares to ‘upgrade to a nicer property’; 75 per cent prefer a furnished property, and 62 per cent prefer to roll their bills up into one easy payment*.
Graham said “We are unique in offering landlords guaranteed rent, while offering tenants high-tech heating and utilities; view today, move tomorrow procedures, and the ability to unify the rental cost into one single monthly payment that includes super fast broadband, Sky TV and semi-serviced living - which might include cleaning services or laundry collection.”
Armed with more funding, the two entrepreneurs now hope to attract landlords en masse to their product, marrying even more properties with the young professional letting market.