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Glossary
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Service Charge
Where a property shares communal areas between different owners, there is generally a charge applied to cover the cost of the maintenance of those areas. This is most common in a block of flats where a management company may be employed to ensure that common parts are kept clean, decorated and of a high standard so that the overall property value is supported.
Shares
An ownership interest in a company which entitles the shareholder to certain rights, for example a share of the profits or dividend payments from the company.
Share Investor
Is an investor who purchases shares in an SPV.
Share Valuation
The share valuation is the latest valuation expressed on a per share basis.
SHIELD
SHIELD is a short-term loan facility that we have the discretion to make available to any SPV requiring liquidity support where the SPV Reserve has been depleted. It is possible that an SPV could encounter several negative cash flow events at the same time, requiring funds more than the SPV Reserve and rental income. In such circumstances, where the investment is still worthwhile, SHIELD acts as a second line of defence for the SPV after the SPV Reserve has been fully utilised. SHIELD is funded directly from British Pearl revenues and can be deployed to any SPV, unlike the SPV Reserve, which is property specific. SHIELD lending is not guaranteed and it is not a Contingency Fund as defined by the FCA: “arrangements used for the purpose of making payments to a lender when a borrower does not meet its obligations under a P2P agreement”.
Special Purpose Vehicle ('SPV')
Each property investment is owned by a special purpose vehicle (“SPV”), which is a UK limited company incorporated for the 'special purpose' of purchasing a single property. This is done so that each individual property is held completely separately to British Pearl so that any risks to British Pearl as a business will not affect individual SPVs.
SPV Reserve
Each SPV will have an SPV Reserve. This will be an amount of money that operates like a sinking fund. Some of the rental income that is received is put aside to help cover costs such as void periods, maintenance and other events that require cash. It is possible for SPV Reserve funds to be depleted and not replenished. SPV Reserve liquidity is not guaranteed, and it is not a Contingency Fund as defined by the FCA: “arrangements used for the purpose of making payments to a lender when a borrower does not meet its obligations under a P2P agreement”.
Stamp Duty Land Tax ('SDLT')
A property transaction tax levied by HMRC. It is incurred by the SPV on purchase of each property. The latest SDLT rates are published on the Government's website.
Stamp Duty Reserve Tax ('SDRT')
A transaction tax levied by HMRC for acquiring shares in property investments and is only applicable to purchases made through the Resale Market. Note that it is different to SDLT and the latest SDRT rates are published on the Government's website.
Surveyor
British Pearl engages RICS qualified surveyors in order to professionally assess proposed property purchases and to provide ongoing valuations.