The House Crowd CEO Frazer Fearnhead on reducing risk for property investors

Welcome to the last entry in Bdaily North West’s Built Environment series. This Autumn, we’ve offered you key insights into the work of major players reshaping the region’s developed spaces.

Here in our final part, we spoke with Frazer Fearnhead, CEO of Altrincham-based property crowdfunding website The House Crowd.

Can you give our readers a brief outline of your business and what it does?

“The House Crowd is a property crowdfunding platform that enables people to pool resources and invest relatively small amounts in secured bridging loans and development finance. It pays investors a fixed return of 6-12% p.a. depending on the level of risk involved in the relevant deal.

“House Crowd Developments is the property development arm of the company. It focuses on building high quality houses in the North West in the £200k – £500k price bracket. Our model is substantially different from the usual method of equity investing in developments as they are funded wholly by ‘the crowd’ with no involvement from the banks – significantly reducing the risk for investors.”

What are some of the bigger North West projects you’ve been involved with previously?

“Our biggest projects to date involve the conversion of Citation House next to Wilmslow Station into 32 apartments and we have just started the building of Buckton View in Mossley which will comprise 36 family homes.”

What are you working on right now?

“In general we are developing distinctive house types with our architects that we will replicate throughout our portfolio. We are also reinvigorating our brand which will include a new logo and website.

“We have a number developments currently in progress. We are finishing off No. 10 Alderley Edge (four high-end apartments), Gratrix Park in Sale (19 properties), Bank Chambers in Market Square, Stockport (11 apartments), two developments in Sandbach (a total of 24 houses) and the conversion of The Old Library in Frodsham into 14 apartments.”

What sort of economic impact do you believe your work has had on the region?

“We are a small company so, directly, probably very little. But, hopefully, by making these sorts of property investments accessible to most people rather than just the very wealthy, we have provided an effective vehicle for people to grow their wealth and help provide them with a better retirement.

“Importantly, I hope we will inspire others to see they can build a successful business without the support of banks. We have, in fact, been told in no uncertain terms by our bank, RBS, that they have no appetite for supporting us or other companies in our sector. What a wonderful view from a company that had to be bailed out by the taxpayer.

“Still it hasn’t stopped us doubling our revenue every year. This year we are already 142% up year-on-year.”

What’s most important to your business in the work you do?

“We focus on high quality, mid-market properties in areas with strong demand and good market liquidity. Our criteria is driven by the requirements of our investors, who prefer shorter term projects so they can have their capital returned and choose what next to do with it.

“Therefore, we choose projects where we believe we will be able to return investors’ money in 12-15 months. So, they generally need to have full planning in place, a well-established contractor on a fixed-price design and build contract ready to start.

“It’s also important that these projects comprise no more than 40 houses and are capable of being phased so we have a good chance of selling them off-plan.”

Do you operate in partnership with other companies in the North West? If so, do you have any recurring partners? How do you collaborate?

“We have no formal partnerships with other companies but we do work regularly with the same architects, employers’ agents, contractors, interior designers, kitchen companies, etc.”

Can you name any regional developments you’re not involved in that have caught your eye?

“There are many impressive skyscraper developments in the pipeline and they are clearly the future. However, the development that has really caught my eye is the proposal to turn the derelict Little David Street near Chorlton Street bus station into a creative area made up of new independent shops and restaurants, as well as 500 apartments.

“If successful, it could turn the area into a mini-Shoreditch. I think transforming existing buildings and keeping the character of an area is, whilst not as spectacular, ultimately more appealing than building high rise glass towers. Or is that just me showing my age?”

Lastly, what is your favourite space in the North West?

“I think what has happened to the market area in Altrincham over the past few years is truly inspirational. The fact that, in such an affluent area, the town centre was so run down was a disgrace.

“But it’s gone from being ‘somewhere nobody went’ to an incredibly lively social space. The ripple effect of thriving restaurants and independent shops spreading out from the market at the epicentre is clear for everyone to see. It’s fantastic. Hats off to Nick Johnson and Jenny Thompson and everyone else involved in this amazing regeneration.

“You could see the same thing happening in Stockport town centre. It has been very run down for as long as I can remember, but it does have great architecture. I believe they could emulate the amazing turnaround we have witnessed in Altrincham.

“Sadly, after we have dealt with the council there on many issues over the last two years, it seems to me they have an entrenched anti-progressive attitude and I doubt it will happen anytime soon. I hope I’m wrong.”

Thank you, Frazer.

That’s it from our Built Environment series. Thanks for reading! Don’t miss the previous entries:

• Andrew Darke, property director at Assura plc
• Maya Dibley, head of programmes and partnerships at The Landing
• Chris Taylor, managing director of Regency Residential
• Steve Hunt, managing director of Steven Hunt & Associates
• Nick Wiley, associate - project manager of The Frank Whittle Partnership