Hazel De KloeIt’s a real favourite, isn’t it?  The ability to JV (Joint Venture) with someone on a property deal (as long as it goes well!) can create a real win/win situation for all concerned. 

Making use of JV finance historically has enabled people to be involved in the world of property investment when they may not otherwise have been able, on both sides.  Many property education companies tell us how to nurture associations with people and work together in order for us to use OPM (Other Peoples’ Money) to help us finance deals. 



FCA Policy Statement


This is great in principle, however… times have changed.  Since the 1st January 2014, the FCA (Financial Conduct Authority) has brought in a new Policy Statement governing the way JV relationships may operate.  Policy Statement 13/3 defines some very clear rules to determine how we may or may not form a JV partnership.  In essence, the following information is useful to know.

Loan Basis


If they’re an individual (with a few exceptions – see below) you are no longer allowed to work with someone on a profit share basis.  You are restricted to working with them only on a loan basis, i.e. they lend you money for an agreed annual percentage interest rate and time frame.  This goes for anyone that you meet at a networking event, work colleague, casual acquaintance or other similar situation.  I believe that the reason for this is to protect members of the general public from potentially being caught out in a property deal which they may know very little about and which could end up losing them money.



Whilst in general you are not allowed to work with people on a JV profit share basis, there are a few exceptions to the rule.  As far as I understand, it is permitted as long as they are:


  • Immediate family
  • Your partner or good friend
  • They are a ‘Corporate Investor’ (i.e. non-human!)
  • High Net Worth Individual
  • Sophisticated Investor


The first two categories are (as far as I know) exempt, as people who know you well should know what they’re getting themselves into!  Other than that, you need to determine if they fit one of the other categories.  You must ascertain this before working with them.  A Corporate Investor will be a separate legal entity represented by a Director or other such person and a HNW Individual or Sophisticated Investor will have to be determined by the conversation you have with them in the first place.  If they appear to fall into this category, you will need to ask them to take a verification test (with a yearly compliance review if they do start working with you) then, and only then, are you allowed to present the opportunity to them.  If they understand it and it is appropriate for them to come into, then go ahead, if they don’t understand or it is not appropriate for them, you mustn’t work with them.


If you talk to anyone about what you do and they are potentially interested in working with you, you must follow these guidelines.  I do not profess to be an expert in this area; I’m merely conveying my interpretation of what the Policy Statement 13/3 implies.  Please do your own research into the subject if you intend to use it at any point.  As with all financial arrangements, the advice of a good solicitor should be sought and correct legal documentation put in place before you decide to work with anyone on a partnership basis; even (and sometimes especially!) family and friends!


To contact Hazel, email hazel@justdoproperty.co.uk