🏙️ A Community-based Solution for Investing in your Neighbourhood

29 Jul

Summary:

A platform for local homeowners to invest as a community in new local infrastructure projects. This investment comes from the increased value of their property, allowing them to invest and own their neighbourhoods’ future.

The Problem

New government-funded infrastructure often aims to inflate the housing market, benefitting few and leading to unaffordable neighbourhoods for the locals.

Small amount of value is recouped by the government through stamp duty (~3%) and direct over-station development (~5–10%). However, most value goes to private landowners.

Top-down centralised investing is out of touch with the real needs of local communities.

Investments must be bottom-up and led by local homeownersto create resilient and adaptable communities.

This increase in land value from investment in public infrastructure should be spread within the community, not concentrated among a minority of landowners.

Moving towards community-driven investment groups may offer a potential solution to this problem.

The Scape

‘Localvest’: A Neighborhood Investment Platform

Imagine in the not-so-distant future, the citizens of a city take back control of their local infrastructure projects through a new platform called ‘Localvest’.

Localvest is a platform designed to create a more sustainable, and equitable city by empowering local communities to choose and invest in new infrastructure projects.

Each homeowner has an account on the platform in which their homes are linked to digital passports - helping connect to existing data and houses on the platform in the neighbourhood.

Investment groups emerge between neighbouring homeowners.

Potential Projects are proposed by homeowners or through collaborative meetings between homeowners to come up with ideas together.

Proposed projects could include:

New green spaces
Local business infrastructure
Communal sustainable energy grids
Leisure centres for learning or sport

Once decided, they are put forward to be voted on, with some being split up into parcels so residents could invest in individual shares, and others left as complete projects for investment group funding.

Investments are made through homeowners investing equity in the increased value of their new home as an investment into new projects.

A digital property deed exists on the blockchain for each home in which equity is exchanged to cover the investment through a smart contract.

The value uplift above the background inflation for property homes is automatically calculated every 3 months. From this, people can invest a small portion (~20%) of their increased value towards potential investment.

When a new project for a green space containing outdoor cafes, and greenhouse working spaces is proposed on the platform, a local investing group of 20 different homeowners vote on the project.

Their communal fund (funded by exchanged equity from an increase in the value of their property) sufficiently covers the project's projected cost. Once enough votes are reached, this forms an agreement between the homeowners and investment groups for the project to be funded.

This agreement between local homeowners and investors for the exchange of equity can come to an end once the costs for both the construction and maintenance of the project are covered.

Downstream Value Creation

Localvest’s widespread adoption within the city leads to:

Responsive to Neighbourhood Needs
Neighbourhoods decide based on the projects they need instead of those that offer investors the most speculative value.
Collective Owned Infrastructure
Encouragement of collectively owned local infrastructure that can improve living or reduce costs such as micro energy grids.
Sharing Value Across Community
Spreading the increase in property value more equitably across the community and preventing locals from being outpriced in their neighbourhoods.