How the Bonds and Joint Equity works
Bonds are issued by a JEIP which is a Single Purpose Vehicle (SPV) that only invests in Joint Equity Shared Home Ownership properties through the Joint Equity Scheme.
The Bonds are classified as Mini Bonds and comply with all relevant regulatory requirements for Mini Bonds.
Joint Equity has been operating since 2007 and has supported Resident Partners to buy their home, through the Joint Equity approach, across England (but excluding London).
The scheme has an upper purchase limit of £250,000 and allows Resident Partners to find the home of their choice. This means that every Resident Partner is a property finder for us.
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The Joint Equity Scheme is an alternative for:-
- People who are trapped in the private rented accommodation, not able to raise their own mortgage and want to be secure in their own home not under threat from a landlord giving them notice to quit or racking up rents
- Investors who want to invest in UK residential property but do not like the Buy to Let market for any of the many reasons we could list including; cost, lack of adequate returns, hassle, agents, problem tenants, damage, maintenance, rental voids….
Joint Equity have a tried and tested Partners Contract which is the Co-Ownership Deed and have over 2,500 potential Resident Partners on the waiting list.
All Resident Partners are assessed for affordability and have a record of paying rent. The home they want to buy is also assessed for suitability.
JEIP Bonds in general have several advantages over other investment routes.
- Bonds are a debt security under which the JEIP owes the Bondholder a debt and is obliged to pay interest quarterly (the coupon) and repay the principal at the date of maturity.
- JEIP Bonds are only invested in Joint Equity Shared Home Ownership properties so the underlying asset that the Bondholders have lent against is UK residential property
- They defuse the risk of investment across multiple properties, many different locations and a wide range of Resident Partners so the risk of a default is mitigated across the whole asset holding and demographics.
- Bonds are usually less volatile than equites or stocks and are therefore often viewed as safer that equities.
- Bonds are relatively easy to trade and the value is related to future value of the future interest payments and the terminal bonuses accrued. JEIP Bonds can be sold through our Bond Market Place or by private agreement.
- Bondholders have more legal and financial protection and a higher creditor priority than Shareholders who usually lose their investment.
- Bonds contribute a element of stability to almost any portfolio.
The benefits of using the Joint Equity Scheme and JEIP Bonds are
- The Bond Holders have the added security of the SPV co-owning the property, no charges over the property needed as its co-ownership.
- Geographical and demographical spread of properties further reducing risk,
- The experience of Joint Equity in the purchase and management of the properties,
- This is an ethical investment where the investment helps people buy and live in their own home of their choice and
- The Bonds provide competitive quarterly interest payments with a terminal bonus that is allocated annually,
- The Bonds are tradable through the JEIP market place allowing early exit,
- Allocating the terminal bonus annually allows current valuations to reflect future inflows.
