What is Chapeltown Cohousing Limited?
Chapeltown Cohousing is a housing co-operative set up in 2002 and registered with the Financial Conduct Authority under the Co-operative and Community Benefit Societies Act 2014. We have an aim of providing, constructing, converting, improving or managing accommodation on co-operative principles. We are fully mutual – so all our members make decisions together. We are also not-for-profit and our rules prevent individuals taking profits or assets out of the co-operative.
What is loanstock?
Loanstock is a loan in the form of an unsecured, fixed-term, fixed-interest bond.
Loanstock is non-transferable. It cannot be sold on, or transferred from one person to another unless it is held jointly. In the event of the loanstock holder dying, then the loanstock held forms part of the estate and can be inherited by his/her successors along with any other assets.
Loanstock confers neither voting rights nor any control over Chapeltown Cohousing.
Chapeltown Cohousing is offering loanstock for a term of 4 years or more at interest rates chosen by the loanstock holder and ranging from 0% to
4% 3% (inclusive) per year. As we are a housing co-operative seeking to develop affordable housing, we offer this loanstock as an opportunity for those who share our vision to help us make it a reality and see a social return on their investment, and not just a financial one. Choosing a lower interest rate offers us more support. Update 6/5/20: Following on from the cut in the Bank of England base rate to 0.1%, we are lowering our maximum interest rate for new loanstock to 3%.
There is no schedule for regular capital repayments. The capital is repaid in full at the end of the term. Early repayment is possible at the discretion of Chapeltown Cohousing; Chapeltown Cohousing can also choose to repay loanstock at any time.
The interest on loans is calculated and compounded (i.e. added to the loan) annually and paid as a lump sum at the end of the term. For example, a 5-year loan of £20,000 offered at 1% interest would earn £1,020.20 in interest, which would be paid at the end of 5 years along with the £20,000 capital. However, Chapeltown Cohousing may choose to pay some or all accrued interest annually rather than at the end of the term, in which case such interest will not be compounded (i.e. not be added to the loan).
The minimum loanstock offered for any individual is £3,000 and the maximum loanstock holding is £250,000.
Please note that you can apply for more than one loanstock issue with different interest rates.
Are there financial risks?
Yes. We are confident, based on our financial planning, that Chapeltown Cohousing’s plans are viable. However, please be aware that loanstock is treated as an unsecured loan and therefore carries an element of risk.
Our business model shown in Section 8 of the Loanstock Offer Document shows where all our money comes from. All development and grant finding has been confirmed: our £2 million development loan from Ecology Building Society, £1 million loan from Leeds City Council, and the full amount from the Housing Infrastructure Fund.
We have purchased the land, obtained planning permission and started building, which means that Chapeltown Cohousing does have some substantial assets that can be sold. However, we cannot guarantee that we would be able to repay all or any loanstock in the event of insolvency or otherwise.
Both the development loan and the long-term mortgage from Ecology Building Society and Leeds City Council are secured against the site. This means that if loan repayments are not met, the relevant lender(s) would be entitled to take possession of the site and sell it to recover the outstanding amounts owed to them, ahead of payment of amounts owing to loanstock holders.
You should also be aware that Chapeltown Cohousing is not considered to be conducting (or authorised to be conducting) regulated activities by the Financial Conduct Authority, and investors therefore have no right of complaint to the Financial Ombudsman or recourse to the Financial Services Compensation Scheme. Therefore, the money you pay for your loanstock is not safeguarded by such a scheme or any dispute resolution scheme.
Please consider the risks of investing in Chapeltown Cohousing carefully and, if needed, seek independent advice from an independent financial adviser or other person experienced with investments of this type.
Benefits of investing in Chapeltown Cohousing
- An ethical investment – with interest if you choose to receive it
- An opportunity to be a catalyst for change in one of the most deprived areas of the country
- High accountability: you know exactly where your money has gone
- No bankers’ bonuses
The Co-operative Advantage
Is being a co-operative good business? Yes, according to a report by Co-operatives UK, which revealed the following:
- Fairness – 75% of people in the UK think co-ops are fair, while only 18% think shareholder companies (PLCs) are.
- Trust – 66% think co-ops can be trusted, but only 29% think PLCs can.
- Honesty – 63% think co-ops are honest, compared with 15% who think PLCs are honest.
- Public good – 65% of people think co-operatives work for the public good, compared with 12% who think PLCs do.
Furthermore, according to the UK Co-operative Economy 2018 report the co-operative sector turned over £36.1 billion during the year and has proved extremely resilient over the last five years, amidst uncertain wider economic conditions.
How to apply
Terms and conditions can be found in our full Loanstock Offer document (554KB). The form at the end is also available as a Word document (26KB). You’ll also get a chance to see our annual accounts, business plan and financial model.
Chapeltown Cohousing Ltd
Registered under the Co-operative and Community Benefit Societies Act 2014
Register No. 29376R
115 Spencer Place, Leeds, LS7 4DU