Investor FAQ

Investor - Frequently Asked Questions


Capitalstackers Ltd is the company set up to create and manage the CapitalStackers platform.  It is owned by people with a breadth of experience in real estate finance.  A key shareholder is Hallidays Chartered Accountants and directors of Hallidays also sit on the board of CapitalStackers.
Capitalstackers Trustees Ltd ("CTL") has been set up for the sole purpose of independently looking after the security interests of CapitalStackers investors. CTL acts as security trustee on all deals entered into by the investors. The board of CTL is controlled by Hallidays directors
Hallidays is an independent firm of chartered accountants with a 20% shareholding in CapitalStackers.  Directors of Hallidays are also the controlling directors of Capitalstackers Trustees Ltd. 
The purpose of CapitalStackers is to bring together borrowers (generally those seeking a higher level of funding than is offered by the banks) and investors seeking a higher rate of return on their money than is available elsewhere.
Yes.  CapitalStackers is authorised and regulated by the FCA to operate its loan-based crowdfunding platform.  Please note that crowdfunding is not covered by the Financial Services Compensation Scheme.
CapitalStackers provides you with the opportunity to invest directly in real estate transactions, diversify your risk and tailor your returns to match your risk appetite.  Depending on your risk appetite, returns can be from 5% up to 20%.  Furthermore, your investment is secured against the underlying property assets being financed.
The minimum level of investment is £5,000 and investors need to self certify that they both understand and accept the risks associated with this form of investment.  Prior to you becoming a member of the CapitalStackers platform, the standard financial services Know Your Customer (KYC) checks need to be concluded.  Investors must be UK domiciled.
Many types of real estate investment and development (including residential development) opportunities are available.  Each scheme will be "stand alone", with a discrete set of investors, pricing and risk parameters.  You therefore have the opportunity to build a portfolio with a range of assets which suit your specific requirements.
The minimum investment is £5,000 although some deals will have a higher participation threshold.  There is no maximum.
We do not provide investment advice.  You should consult an Independent Financial Adviser if you are in any doubt regarding investment through the CapitalStackers platform.
Yes, investors remain anonymous from each other and the borrower.
During the last budget, loan-based crowdfunding products were approved for inclusion within an Individual Savings Account but there was no direction as to how that might be achieved.  We are awaiting the response of the mainstream investment industry regarding an ISA wrap and will publish details on the website when solutions have been produced.
Yes.  You can invest through a company, a limited liability partnership or your firm.

Yes, in most cases. Lending for residential investment is not allowed under HMRC rules although loans for residential development and any commercial property are permitted. Care should be taken to sell your participation in a residential development loan should the borrower decide to roll the loan into an investment in the absence of selling the completed property.

Crowdfunding is classed as a non-standard asset by the FCA for Self Invested Personal Pensions (SIPPs) purposes. You are likely, therefore, to encounter resistance from most SIPP providers. More information on the subject is available from SIPPclub.

If your pension fund is a Small Self Administered Scheme ("SSAS") we have relationships with pension providers who have pre-approved CapitalStackers as a qualifying assets class. See our "Invest Through Your Pension" page.

CapitalStackers is authorised and regulated by the FCA although loan-based crowdfunding is excluded from the Financial Services Compensation Scheme.  On every deal, we use a combination of our rigorous initial due diligence and detailed ongoing risk monitoring which is shared with investors.  The land and property asset security on every scheme provides you with tangible protection.  Moreover, on every deal our margin fees are only paid out once our investors have been fully repaid with interest.  We are therefore only ever going to publish deals in which we have total faith.  To do otherwise would not only damage our reputation but cost us financially.
CapitalStackers operates within the terms of the FCA client assets rules. Your money is segregated in a compliant ring-fenced client account which is controlled and operated by Hallidays.
A rigorous due diligence process is undertaken on any new investment proposition and the results of both the initial and ongoing analysis are posted in the deal room.  The analysis includes, but is not limited to, checks on: borrower experience, property comparisons and financial modelling of loan to value and interest cover sensitivity.  External professional advice is sought on all deals.  CapitalStackers is managed by a team well experienced in real estate lending analysis.  Proposals that do not meet our minimum risk quality threshold will be rejected. 
The coupon payable by the borrower will be negotiated by the CapitalStackers team and determined by the perceived risks associated with the deal.  This is the borrower's target rate and includes the investor return and CapitalStackers' margin fee.  Simply put, we 'skim' the rate payable by the borrower and offer the remaining interest to the investors and our 'skim' is paid only after the investors have been paid.  Therefore, the borrower pays CapitalStackers and the return quoted to investors is their actual return - there are no fees paid by the investor.
The Current Coupon on investment loans will be calculated and paid in full on an ongoing quarterly basis where sufficient cash flow is available or rolled up and paid in full at maturity of the loan together with any Deferred Coupon if applicable.  All development loans are subject to a Deferred Coupon compounded monthly, rolled up and payable at maturity of the loan.
Investment returns are shown gross of any tax deduction.

CapitalStackers will pay interest gross and provide investors with an annual statement of the interest received. Tax payers are obliged to declare this income to HMRC.

If you buy or sell in the secondary market and the transaction includes a premium or discount to the face value of the loan including interest to date, there will be a capital gain or loss which should also be reported to HMRC.

Note: Investment through CapitalStackers is only available to those with UK bank accounts.
As the opportunities offered by CapitalStackers are project specific schemes, we anticipate that cash will be invested relatively quickly. Nevertheless, all schemes will be subject to due diligence and until this is complete and the borrower's equity invested, no drawings will be made. We endeavour to assess a realistic timescale for drawings within our initial appraisal. It is worth noting that we only ask you to remit your funds for investment at the final stage of the auction.
Currently, only a small administration charge to cover the costs of KYC applies.  Investors pay no other fees or ongoing management charge.
Just as would be the case if a borrower were to transact with a bank, borrowing fees are rolled into the deal and paid by the borrower.  The CapitalStackers margin fee and (if applicable) exit fee are only payable upon the successful completion of the scheme once our investors have been paid out in full.

In the same way that you would pay a stockbroker for selling your shares, we charge fees for selling loan participations through our secondary market. Details of these transaction charges are published in the membership area.

We have two types of auction. Primary Market auctions apply to newly posted deals and are published by CapitalStackers for a set period.  Investors bid against each other with winning bids being determined as the lowest rates at the conclusion of the auction.

There are two types of bid in the Primary Market. A Non-Agreed Bid is where investors win by offering the lowest rate and so are subject to being outbid at any time up to the auction close. Alternatively, an Agreed Bid can be made at a discount to the Borrower's target rate or the market rate if lower.  The Borrower benefits from a lower than market rate whilst the investor benefits by not being subsequently outbid, even if the market rate drifts lower than this Agreed Bid.  Auctions can be wholly competitive with Non-Agreed Bids only; partly competitive where both Agreed and Non-Agreed Bids are enabled; or, non-competitive where the same rate applies to all investors and winning bids are selected on a 'first past the post' basis.

The second type of auction applies to the Secondary Market where an investor chooses to post a participation in an existing deal and other investors compete in terms of how much they are prepared to pay for that investment given it will definitely include rolled up interest in the case of a development and potentially include rolled up interest in the case of an investment loan.  We provide calculation toolkits so that the seller and purchaser are able to see their respective returns based on the amount paid.  Secondary Market transactions are strictly between investors and do not involve the Borrower.
The CapitalStackers team will meet with all borrowers whose schemes are promoted, visit the property(ies) to be funded and liaise with the senior debt provider. The profile of the borrower built up from such enquiries will be shared with investors as part of the due diligence process. As with investors, Know Your Customer checks will also be undertaken on all borrowers.
CapitalStackers is the only platform not to insist on cash being deposited by an investor prior to making a bid.  Some think this is a bold move and will only lead to problems when it comes to completing the deal.  We take a different view.  Real estate and the finance of it is a capital intensive activity - hence the reason behind our minimum investment criteria.  We believe there will be a natural reluctance by our investors to tie up their existing cash (perhaps having liquidated other investments) until such time as they are reasonably sure it will be deployed, especially when they are bidding significant sums and where they might be subject to being outbid.  In completing a deal we also have to go through a due diligence process once the funding has been secured so there is a natural period during which we will ask our investors to remit the funds in readiness for completion.  Therefore, we will issue a funding request towards the auction close with a polite request for prompt payment.
Your cash is held in the Capitalstackers Ltd Client Account. The account is maintained at the Royal Bank of Scotland plc and administered by Hallidays directors whose mandate strictly directs them to: (a) submit funds to our lawyers to complete the deal, or; (b) in the unlikely circumstances the deal were to be abandoned, to remit the funds back to your account.
No. Once your bid has been accepted you are committed to the deal.
All investments will be secured against the underlying property asset(s).  Generally this will be a second legal charge ranking behind the senior lender but in some circumstances will be a first legal charge. In certain instances personal or corporate guarantees may also be sought from the borrower.
Professionals will be appointed by Capitalstackers Trustees Ltd (as security trustee). This appointment will be arranged through CapitalStackers under the service agreement. Sometimes such appointments will be made jointly with the senior lender but we will ensure that the interests of investors are protected at all times.  Investors' legal interests will be safeguarded by Taylors, a highly regarded firm of Manchester lawyers who have agreed a service contract with CapitalStackers for the provision of legal advice and documentation services.  The CapitalStackers team have strong relationships with a wide range of the most significant property advisers.  Valuers and other professionals will be appointed as required.  Details will be provided as part of the due diligence process and professional reports will be available for viewing in the deal data room.
We will provide comprehensive information on each deal and detail the associated risks.  You also will be able to get a feel for the appetite of your co-investors through feedback from the auction area. However, the ultimate decision as to whether or not to commit is for you (and, where appropriate, your advisers).
The legal and valuation due diligence process will often throw up minor variations to a published deal.  These variations will be assessed by the CapitalStackers team and communicated to the investor group.  Should any variation result in increased investor risk, the opportunity to confirm a participation or withdraw will be given to all investors.  If necessary, the deal will be repriced and republished.
Regular update reports incorporating any professional input (e.g. from the monitoring surveyor) will be posted in the deal room and data room to allow you to monitor progress.
Yes. When registering with CapitalStackers, you have the option to provide your advisers with either full execution authority or read only access.  Such access will be conditional on the advisers also completing the KYC process.
Each loan is different and its anticipated term will be clearly detailed in the deal summary.  The regular updates that are provided to investors will highlight any variation to the anticipated repayment date.
Yes, a secondary market is available through which you will be able to liquidate your investment.  However, early repayment cannot be guaranteed as the secondary market will require an investor willing to acquire your participation.
If you have a question about something not covered in these FAQ, the Glossary or the webpage content, please contact us using the email link below.