Loanstock FAQ

Unikitty business presentation

What is Loanstock?
‘Loanstock’ is the term we use for money invested in a co-op by external parties. There are other methods for such parties to invest, but one of the advantages of loanstock is that it cuts out intermediary services and their cost, so the full amount goes directly to the co-op.

The system is best described as a type of ‘fixed-term investment’ – this means people lend money to the co-op for a fixed period of time. The co-op pays interest to the loan stockholder, and Anarres will issue an extra loan stock certificate to cover this interest each year. At the end of the set period, the investor is paid back in full, including the interest.

Why should I invest my money?
By helping to set up a housing co-operative, you are using money to change the housing market.

What will my money be used for?
Now that we have secured a property, our priority is to both retrofit it for energy conservation and to convert it to a six-bed property: to do this, we need loanstock, ideally made up of a series of loans of no less than £500, to be paid back over a period of 5 to 20 years. Loanstock will also be used to make any necessary renovations. You can find out more about our plans for the house beyond it being a home, by reading our Secondary Rules. If you’d like to have a look at them, feel free to send us an e-mail.

Do I get interest?
Yes (if you want). On the loanstock application form, you can choose how much interest you would like to receive (0-3%). When we receive your application, we may get in touch to see ask whether you are able to shorten or extend the term based on the interest you ask for.

How and when will interest be paid?
Interest will be paid on the 31st December each year, or at the end of the term of the loan, i.e. when it matures.

Why not go to a bank for the loan?
One of the advantages of loanstock is that it cuts out intermediary services and their cost, so the full amount goes directly to the co-op, as mentioned above. Furthermore, we would prefer to pay interest to our investors who support what we are doing and want us to succeed.

If you do invest in us, you are helping create long-term, affordable and secure housing which won’t be sold off for private gain. Unlike banks and other forms of investment, we are 100% transparent with your money, and you will be kept up-to-date with how your money is being used.

What about tax?
The co-op does not deduct tax from the interest – it is the investor’s responsibility to declare the interest in a tax return. If anyone receives more than £250 interest in a year, the co-op is legally obliged to make a special declaration to the local tax office. The loanstock is an unsecured investment.

Can I decide to withdraw my investment whenever I want?
Investments will generally be returned with interest at the end of the term you initially choose. We will consider all requests for early withdrawal of an investment, and may return the invested money (with interest accumulated), if it is financially viable for the co-operative to do so. However, there is no guarantee that we will be able to fulfill these requests.

Why is the loanstock unsecured? Does that mean I won’t get the money back?
In short, no it doesn’t mean that. ‘Unsecured’ means that the co-operative does not offer investors any collateral against the loan. However, In the unlikely event that things do go wrong and the co-operative fails or defaults, it is very likely that the house would be sold in order to repay investors. This is an extremely rare occurrence among co-operatives. As a model, they have an excellent track record.

I’m not sure if I want to invest, can I make a donation instead?
Yes. If you’re not interested in investing for whatever reason, you can also make a donation. Please get in touch via e-mail if this interests you.

I’d like to invest, what do I do now?
Great! Get in touch (anarreshousing[at]riseup[dot]net) and we can discuss the details, and send you an application form.

How can I get more info?
Drop us an e-mail and we’d be happy to answer any questions: anarreshousing[at]riseup[dot]net