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Mustard Seed Property

Mustard Seed Share Offer 2020

£250 minimum

Risk factors

All investment and commercial activities carry risk, and investors should consider whether Mustard Seed Property is a suitable investment for them in light of their own personal circumstances.

This offer is not covered by the Financial Services Compensation Scheme.

General Investment Risks

MSP wants to be fully open and transparent to its potential investors about the risks as well as the benefits of investment in community shares. MSP wishes to make the following general points explicit:

  • The money you pay for shares is not safeguarded by any depositor protection scheme such as the Financial Services Compensation Scheme (FSCS)
  • This Share Offer is exempt from regulations under the Financial Services and Markets Act 2000 and Financial Services and Markets Act 2000 (Prospectus) Regulations 2019 and therefore you do not have the protection provided by these acts. This means that there is no right to complain to an Ombudsman; and this share offer has not needed to be approved by an approved person under the Act.
  • The shares are not tradable and the full value may not be returned if certain risks described below are realised.
  • The shares are an illiquid financial instrument which means you may not be able to get your capital back immediately or when needed.
  • MSP provides for withdrawal of share capital after a certain point - see ‘Important Information’ section of the Share Offer Document

The shares are illiquid, and the Board of Directors may not consider they are in a position to allow withdrawal if and when required, so you may not be able to have your money back when you request it.

  • Over the past 10 years the Society has been able to provide liquidity of approximately 2-6% in any given year, with 100% of shareholder requests for withdrawal of share capital being honoured. Please note that past performance is neither a guarantee nor a reliable indicator of future results.
  • The Financial model provides for 2.0% of total share capital (at previous year end) being withdrawn each year.

The value of the shares may be written down so you may not receive all, or any, of your money back.



There is a potential impact of Covid 19 on property prices; should house prices fall this may reduce the equity available for borrowing (and make it more difficult to raise the required debt for refurbishment against properties) and potentially require MSP to write-down the value of the share capital.

Operational risks

That Mustard Seed is undertaking a significant increase in the scale at which it operates

  • MSP has operated a successful business model for over a decade, generating net surpluses in years when capital not raised / property purchased.
  • Strong evidence has been used to underpin the assumptions in their business plan and forecast financial model, around the new properties – including capital costs and rental incomes - and the revenue growth that will drive. 

Impact of Covid 19 on business model (additional cost and reduced income)

  • There are some operational cost increases which have been planned for to ensure the required PPE and additional cleaning is provided for all properties.
  • MSP does not expect there will be any reduction in income or reduced density in terms of accommodation (numbers of people living at properties)

Voids caused by residents either moving out or being slow to take up anticipated occupancy; some rooms may be left vacant for a time, putting pressure on the partners.

  • MSP leases properties to partners on internally repairing and insuring leases, meaning this is a risk that is shouldered by the partner.
  • Rents are set to allow for some level of voids as well as maintenance and management costs 

Property development; buying and developing property carries both cost and time overrun risk. Both affect the ability to deliver expected financial yields.

  • Valuations and appropriate surveys by qualified personnel, including detailed costs reports for all significant refurbishment work, are carried out ahead of purchases.

The business model is asset rich, and for that reason expansion requires significant cash outlay, share capital and debt finance

  • MSP has successfully raised share capital to date and has also built solid relationships with lenders (including Triodos Bank and OpenBox Developments).


Commercial risks

Government policy change where revenues from leases are currently underpinned by housing benefit. Our partners also rely on support contracts, which are usually funded through Local Authority budgets. Changes in policy can affect the levels of funding.

  • MSP leases properties to partners on internally repairing and insuring leases, meaning this is a risk that is shouldered by the partner.
  • In most instances the alternative to existing support contracts is residential care or ‘hospital’, both of which are more expensive to the state

Our partners may get into financial difficulty or fail to provide appropriate support to individuals.

  • Mustard Seed Property carefully assesses its partners based on quality and experience.
  • Partners are required to share their annual accounts and provide an annual impact report for each property they lease.
  • Operational partners are currently managing the social and financial challenges from Covid-19. The rents for the people they support (in properties provided by MSP) are paid for through Housing Benefit so this is not adjudged to present much risk to the business model.

Interest rates where current senior debt with Triodos Bank is borrowed at a rate of 3% above base rate. MSP also intends to take on additional senior debt as it purchases and develops more properties. If the Bank of England raises interest rates our mortgage payments would increase and this may begin to impact on the return available to investors.

  • Our financial model and forecasts assume a base rate of 0.50% in the medium term, with a minimum overall rate for lending with Triodos (existing and planned) of 3.50% (0.50% base rate + 3.0%).
  • Senior debt facility agreed with OpenBox fixed at 4.00% for first 3 years.
  • Mustard Seed Property has a policy to maintain a sensible and affordable level of gearing (amount of debt relative to equity) which is not expected to exceed 40% over the forecast period.
Applied for to date, of
£600,000 target

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