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British Pearl's Resale Market: an introduction

8 July 2019 • James Newbery

Property is an illiquid asset. You tend to buy a property with a long-term goal in mind - to live in it or to let it out. Compared to other asset classes, it’s not very flexible should you need to access your capital before you originally intended to.

This was one of the things about property investing we wanted to address at British Pearl, along with the traditional stress, expense, and hassle of outright property ownership.

We want to provide each of our investors a home for their savings for the long-term, and we encourage our customers to consider each of our investments in this way. But we also want our products to be flexible. We understand that there may be times when people need to access their invested funds before the Investment Exit Date.

Making property more liquid

So we created a source of liquidity through our secure and automated Resale Market. This means investors can:

  • List their shares or loans for sale before the Investment Exit Date for other investors to buy.
  • Buy shares or loans that are listed for sale that they missed out on in the New Sale Market or add to an existing investment.

The Resale Market is subject to demand and fees apply. More on this below.

How does the Resale Market work?

Once a property has been fully funded in the New Sale Market, the Resale Market will open. If you are investing in a property for the first time, topping up an existing investment or selling shares and/or loans that you already own, you will be guided through the process by the investment tool in the same way as in the New Sale Market.

The Resale Market process

Once a property has fully sold on the New Sale market, you can see what’s happening in the Resale Market (orders to buy or sell) in a property’s Info Pack.

You’ll see what loans and shares are trading for, which can help you decide what to bid if you’re buying or how to price if you’re selling. British Pearl also provides an 'Indicative Share Price' to help guide investors in making decisions in the Resale Market (see the FAQs for more information here).

You then enter whether you want to buy or sell, how much you want to buy or sell and the price at which you would be happy to buy or sell.

The system will then do one of three things:

  1. Immediately match the whole of your order with other listed buy or sell orders.
  2. Match as much of your order as possible against other listed buy or sell orders. Any portion not immediately bought/sold will be listed as an order in the Resale Market.
  3. If none of your order can be matched immediately with listed buy or sell orders, the entire order will be listed in the Resale Market waiting to be matched.

The Resale Market system will automatically pair matched orders together and transact for you over time. Full details of the transactions will be emailed to you as they happen and can be found in the the Activity section of your Account.

Some practical points

  • Quick access to capital is not guaranteed. As mentioned earlier, we encourage customers to take a long-term view regarding their British Pearl investments. The Resale Market is a way to release some capital before the Investment Exit Date, but depends on there being other investors interested in buying your shares or loans. To date, trading on the Resale Market has been quick, but there may be times where you have to wait for buyers to become available.

  • Payments. When you sell a loan you are entitled to receive the interest payment for the entire period of your ownership. If you sell part way through a month, the payment (in respect of that part) is paid monthly alongside your other income on or around the 12th of the month. Dividends from shares are different: they are not apportioned between a buyer and seller. Whoever owns a share at the time a dividend is due will receive the whole of that dividend when it’s paid out on or around the 12th of the month.

  • Pricing. It is important to note that there is no guarantee that your orders will match with other investors as quickly as you want or at the price you want. If that is the case, you can cancel your order completely or cancel and create a new order at a different price.

  • Capital availability. When you place an order, you are committing to a transaction. This means that with an order to buy you will need to have the cash available to pay for the order when it matches. In order to ensure that the transaction takes place, the total cash required to transact is ring-fenced in your Wallet. The cash will still show up as available but you will not be able to invest that cash elsewhere or withdraw it, without first canceling your buy order. If you cancel the order funds are released immediately.

  • Fees. There are fees associated with using the Resale Market. See our FAQs for more information.

  • Taxes. Shares sold on the Resale market may be subject to Capital Gains Tax. See our FAQs for more information.

Summary

Circumstances change, and while an investor may have started out with a long-term goal in mind they may find themselves needing tied-up capital released. Our Resale Market was designed to provide some reassurance that there is a way for investors to access their money before the investment term ends, should they need to.

If you have any questions then please do not hesitate to contact us and we would be delighted to answer them.

James Newbery is Investment Director at British Pearl.

When you invest with British Pearl, your capital is at risk and invested sums are not covered by the Financial Services Compensation Scheme (FSCS). Forecasts are not guarantees and performance may vary. Tax treatment depends on individual circumstances and may change. Read our key risk statement.

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Your capital is at risk Investing in property involves risk. The value of your investment can go down as well as up and historic performance is not a guide for future performance. Any projections of future performance are based on all information known at the time of share investment or loan, and internal calculations and opinions of British Pearl. These are subject to change and are not guarantees and should not be relied upon as such. Risks include the total loss of your share investment or loan, variable rental income due to property not being rented or a depressed rental market, and inability to sell your share investment or loan due to lack of a buyer. Investing with British Pearl falls outside the remit of the Financial Services Compensation Scheme. Please refer to the Key Risks section of this site for a more comprehensive description of the risks involved.

British Pearl ® is the trading name of British Pearl Limited (Company No. 7151774), a company authorised and regulated by the Financial Conduct Authority (Register No. 674693) and British Pearl Finance Limited (Company No. 10575280 and Register No. 770867), which is an appointed representative of British Pearl Limited. Both companies are wholly owned subsidiaries of British Pearl Group Limited (Company No. 9701436) and all are registered in England and Wales at 4th Floor, 7-10 Chandos Street, Cavendish Square, London, W1G 9DQ