Frequently Asked Questions

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Why do you need investment? What will the money be used for?

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Green Wood needs investment in the form of loan stock to be able to replace some of the loan stock from our original investment drive in 2018. We are also raising funds to convert the basement (currently used for storage) into a multipurpose communal space.

 

Currently, the kitchen-diner serves as the only indoor space for members and our wider community to socialize. Converting the basement will enable space for co-working, holding meetings and workshops, hanging out, and exercising; we also plan to include shower facilities to relieve pressure on the single current bathroom. This space will benefit members of the co-op, but most importantly it will enable Green Wood to play a more significant role in the local and wider community, allowing us to host meetings and events. We like to share our space and regularly host members of other coops, people attending events, and friends who are passing through town. Having an additional room and bathroom will support us to welcome more people into our home. Insulating this space will also improve the energy rating of the house and thus reduce the interest rate on our mortgage. In asking for investment, we aim to secure the funds to complete this basement refurbishment.

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How will you repay the money?

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Green Wood provides housing to its members in exchange for rent. In order to keep Green Wood viable,

the rent is set so that it covers all expenses and other obligations (including loan repayments) of the

organisation.

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We have a detailed financial model running a cash-flow over 40 years which accounts for all our loan

stock repayments.

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Is it safe to loan to Green Wood?

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All loan investments have some amount of risk involved and Green Wood is no exception. Loan stocks

are not secured against a property or against individual assets. However it is a legally binding contract

between the lender and Green Wood meaning that if Green Wood has the means to repay its debts, it has

the obligation to do so.

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In order to provide Green Wood the best chance of success, our financial model plans for unexpected loss

of income (e.g. rooms being unoccupied) and increase in expenditures (e.g. increase in mortgage interest

rate, extraordinary maintenance, inflation and so on). Overall, it would require members not being able to pay rent in combination with a crash of the housing market for investors being at risk not to make their money back.

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An investment into a housing co-op is putting money into an organization that owns and manages property assets - if things go wrong then sale of the property will be used to pay back debts. 

 

Strengths of Investing: 

• Housing is one of the least volatile types of investment on the market 

• High demand for places within housing co-operatives in Leeds helps to ensure continual full occupancy. This means that the co-op’s main source of income (rent) is reliable.

• Since being set up in 2018, Green Wood has kept up all mortgage payments and paid back all loanstock lenders on time. A record of all financial returns can be viewed on the Financial Conduct Authority website here.

• Our rigorous financial plan is stress tested against possible weaknesses, such as fluctuating income levels and possible interest rate increases 

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Weaknesses to investing: 

• If the co-op defaults on mortgage repayments and needs to sell the house, the bank recovers its money before loanstock investors. However, given that house prices in the UK continue to increase, there is a very low chance of there being insufficient funds to repay loanstock investors after the bank has recovered its money.

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Is this a lucrative investment?

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There are certainly market investments that would provide you with more financial return than investing

in a housing co-op. Therefore we wouldn't encourage anyone to think of such investment as purely for the

money.

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However, investing in Green Wood is simple, ethical and can provide you with more financial return than

leaving your money in a savings account. We offer a rate of interest between 0-3%.

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With the vastly fluctuating interest rates we have seen over the past few years, there are times that your investment in Green Wood might be giving you above average returns, and at other times it might be below average. However, it will always be socially useful and supporting alternative, more democratic forms of housing.

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What will you do with my money if you don’t reach the £56k goal?

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Approximately £26,000 of the target is earmarked for replacing loanstock that is fruiting in 2023. We are confident that we can raise this amount.

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An additional £30,000 is planned for the basement refurbishment (which is a generous estimate based on professional quotes and a healthy contingency budget). If we do not meet this target, we will reconsider our timescales for the basement refurbishment and adjust our plans accordingly. If we decide that we will not go ahead with the basement conversion, we are likely to repay at least some of the loan stock, but may consider holding on to some amounts to complete other necessary work on the house like improving the ventilation and fixing the garage roof! Regardless, we will stay in touch with our investors and seek to be transparent about our financial situation and decisions.

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Can I see your financial plan?

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Yes! You can download our detailed financial plan here.

 

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Don’t hesitate to contact us if you have any other questions.