Housebuilders St Mark Homes has set-up its first Enterprise Investment Scheme. The scheme is to be asset backed using residential property. It offers two versions allowing the opportunity to invest for capital growth or income. However, St Mark Homes anticipates the majority will invest for growth.
The design of the scheme overcomes legislation prohibiting EIS property development companies. This is because the companies will not actually develop the properties, instead they will contract for developers. But, in order to secure payment, St Mark Homes will take a charge on the property.
Further to this providing added security and lowering the overall risk of the EIS, St Mark Homes will project costs and agree budgets with the developers in advance, resulting in any cost overruns being at the expense of the developers and not the the scheme.
The schemes carries the usual tax breaks associated with such investment vehicles, including income tax and inheritance tax business property reliefs, plus capital gains tax exemption on disposals after five years.
With the scheme's asset backing it should have wider appeal than some of its riskier EIS counterparts.