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Are property bonds a good investment? Q&A with Hunter Jones

Are property bonds a good investment? Q&A with Hunter Jones

By Reece Mennie is the CEO of Hunter Jones 

Tell us about yourself and what Hunter Jones does:

 My name’s Reece Mennie. I’m the CEO and Founder of Hunter Jones, a London-based company that I set up back in 2013. Between then and now, we’ve built up a strong reputation as a specialist introducer of property bonds and have raised over £50 million for a range of SME businesses.

 What exactly does it mean to be an introducer and what are property bonds? 

In a nutshell, an introducer can either be one person or a whole organisation hired to introduce alternative investment opportunities on behalf of their clients. As for property bonds, which are also known as loan notes, these are a form of alternative investment issued by property developers to raise funds for the land purchasing and construction costs involved with a planned development. They’re generally issued for a fixed term and set for a time period that allows the developer to complete construction and generate the returns owed to the investor.

How do property bonds work? 

Once the bonds are issued, they’re secured against the property or land with a legal charge to protect the investors’ capital against loss. These charges provide both collateral and security to investors and become registered on the property title at the Land Registry Office. The investor will be paid a rate of interest over an agreed period of time – usually between two and five years – after which point the bond matures and the loan amount is returned. It really is as simple as that!

Why should people consider using alternative investment introducers? 

The UK’s interest rates are nearing an all-time low. Because of this, investors have struggled to make a healthy return on their money. In the hopes of finding ways of doing so, many have discovered the opportunities presented by the residential property market. However, traditional property investment is dogged by complexity and demands that investors deal with a wide number of issues like insurance payments, council tax, Stamp Duty, maintenance fees, rental voids and other tenancy issues – the list goes on. On top of this, buy-to-let property investment has experienced a real downturn in recent years due to a marked dilution in the tax advantages, as well as tighter restrictions on mortgage eligibility.

Why have property bonds become so popular among investors?

Investors are looking to property bonds as a viable alternative to buy-to-let in increasing numbers. Not only can they be asset backed, meaning there are always underlying assets to generate returns for investors, they also encourage investing with relatively low amounts of capital. Property bonds create some of the most attractive returns available to investors.

How do property bonds offer an appealing alternative to buy-to-let? 

It makes sense that many investors prefer to take a more ‘hands-off’ approach to their investments. They might recognise the potential for attractive returns within the UK’s property market, but might not have the time, experience or expertise that’s needed. For these people, property bonds are invaluable as they don’t burden investors with the day-to-day hassles that are associated with directly owning a property. Put simply, property bonds offer the best of both worlds: appealing fixed returns with the peace of mind that comes with ‘bricks and mortar’.

Are alternative investment firms regulated by the Financial Conduct Authority [FCA]? 

The alternative investment sector is completely unregulated by the FCA, and we at Hunter Jones are no exception to this. Though we’re not directly authorised nor regulated, we are however an Appointed Representative of Equity for Growth [Securities] Limited, which is both authorised and regulated by the FCA.

But what is an Appointed Representative?

Appointed Representatives, or simply ARs, are similar to conventional introducers in that they can be individuals or firms and are entitled to provide regulated products and services on behalf of regulated clients.

Why is it worth becoming an Appointed Representative? 

There are a number of key positives for introducers to consider becoming ARs despite there being no legal obligation for them to do so. Firstly, ARs can conduct regulated activities such as arranging or being directly involved in investments, the discretionary management of assets, or operating a collective investment scheme by effectively ‘borrowing’ the principles as an authorised firm. The application process is relatively straightforward and can be completed in a matter of weeks rather than extending across several months, making it much faster and cheaper than direct authorisation.

Is there lots of risk involved with investing in property bonds?

While the FCA considers property bonds to be a high-risk investment opportunity, it’s important to remember that the level of risk differs from person to person. This is why it’s wise for prospective investors to consult an independent financial adviser before taking action. Hunter Jones doesn’t offer any type of financial advice, nor does it make personal recommendations on investment opportunities. Our responsibility is to provide the facts for the investors to make their own, informed decision.

How do investors know if property bonds are for them? 

Property bonds can be a good option for those people looking for ways of generating passive income from their investment that pays regularly and offers attractive rates of interest. They may also be an ideal opportunity for those seeking an investment that protects their capital by securing against assets. As one of the best ways to generate substantial returns, property bonds can be very appealing for any prospective high-net-worth individuals, sophisticated investors or self-certified investors.

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