Property bonds are loans to property companies, and the quality of the borrower is what decides whether you are repaid. Yet many investors spend more time comparing the headline rate than checking who is behind the bond. This guide sets out a practical, step-by-step check that anyone can do before investing, using free public records.

The principle
  • Check the borrower, the promoter and the security separately; they are often three different parties.
  • Use official sources, not the provider’s own website, to verify claims.
  • If something cannot be verified, treat that as information.

Step 1: identify who you are lending to

The bond’s documents will name the issuer, the company that borrows your money. Search for it at Companies House. Look at when it was incorporated, its registered address, its directors and any previous companies those directors have run. A brand-new company with no accounts is not necessarily a problem, but it has no track record to assess. Check for charges registered against its assets and for any history of dissolved or insolvent companies connected to the same people.

Step 2: read the accounts

Where accounts are filed, look at the balance sheet. How much debt is there, and how much equity sits beneath it? A company funded almost entirely by bondholders has little cushion if a project goes wrong. Check whether the accounts are late, whether they are filed in abbreviated form and whether the company has made any profit. If the issuer is a special-purpose vehicle set up for one project, ask who stands behind it.

Step 3: check the promoter on the FCA Register

The promoter of the bond may be separate from the issuer. Look the firm and any named individuals up on the FCA Register, and check exactly what permissions they hold. Being authorised for one activity does not mean the bond itself is regulated. Check the FCA’s warning list for the firm and for similar names. Since 2020, FCA rules have restricted the promotion of speculative illiquid securities, which include many mini-bonds, to ordinary retail investors. That is why most property bonds are offered only to people who certify as high net worth or sophisticated.

Step 4: understand the security

If the bond is described as “secured”, find out exactly what that means. Ask:

  • What asset is the charge over, and what is its independent valuation?
  • Is it a first charge, or does another lender rank ahead of you?
  • What is the loan-to-value, including any senior debt?
  • Who holds the security for investors, and is it an independent security trustee?
  • What happens to investors if the borrower defaults?

Security can reduce risk, but only if the asset is genuinely worth what is claimed and your claim ranks high enough to be paid from it. Our guide to returns, security and risks goes further.

Step 5: test the story behind the rate

A bond’s rate reflects its risk. Ask how the borrower will repay: from the sale of completed units, from refinancing, or from rent? Is that plan realistic given the stage of the project and current market conditions? A rate far above comparable bonds deserves extra scrutiny, not enthusiasm. See what determines property bond rates.

Step 6: look for warning signs

  • Guaranteed returns or language such as “risk-free” or “100% secure”.
  • Pressure to commit quickly, or incentives for introducing friends.
  • Vague or missing information about the property, valuation or trustee.
  • Unregistered or recently changed company names and addresses.
  • Reluctance to provide documents or answer direct questions.
  • Marketing that focuses on returns and barely mentions risk.

Step 7: read the documents and take advice

The information memorandum or offer document is the legally important text, not the brochure or the website. Read the risk factors, the terms on early repayment and default, and any fees or costs that come out of your money. For a substantial amount, consider paying for independent advice from an FCA-authorised adviser or a solicitor.

Putting it together

None of these checks removes risk. Property bonds remain illiquid, mostly unregulated and not covered by the FSCS, and capital can be lost. What the checks do is help you avoid avoidable problems and decide with your eyes open. For the fundamentals, start with what property bonds are, then see what to compare when choosing one, or visit our property bonds hub and compare property bonds matched to your eligibility.

This article is general information only and does not constitute financial advice. Property bonds carry a real risk of capital loss. Seek independent advice from an FCA-authorised financial adviser if you are unsure.