FCA Proposes 90-Day Notice for Property Fund Withdrawals. What If Your Purchase Completes in 30?

Investors in certain property and other illiquid funds could have to give at least 90 days’ notice before redeeming their holdings, under proposals published by the Financial Conduct Authority on 8 October. For a buyer whose solicitor needs the purchase money next month, that creates an obvious question: where will the cash come from?

The proposals are still under consultation. They have not changed withdrawal terms overnight. But they expose a funding problem that already exists: an investment statement can show substantial wealth without showing when that wealth can be turned into spendable money.

A £5m portfolio might comfortably exceed a £2m purchase price. Yet if part of it sits in restricted funds, part belongs to a pension and part is already pledged to a bank, the amount available for completion can be considerably smaller. The property contract runs to a date. The investments each run to their own terms.

For buyers and their wealth advisers, the practical task is to bring those timetables together before committing to the purchase. Where a gap remains, borrowing may help. Its suitability depends on what can secure it, what it costs and how it will be repaid.

What the FCA Has Proposed

The proposed minimum terms concern specified non-UCITS retail schemes, known as NURS, with predominantly inherently illiquid holdings. The relevant threshold is generally at least 50% of fund assets, with property and infrastructure among the investments in scope. The detailed definition and each fund’s arrangements matter.

The consultation proposes at least 90 days’ notice and dealing no more frequently than monthly for affected funds. A longer notice period could be appropriate for some strategies. This would therefore be a minimum framework, rather than a universal promise of payment exactly three months after a request.

The FCA’s concern is the mismatch between quick investor withdrawals and assets that can take much longer to sell. Under pressure, a fund may face rushed disposals or have to suspend redemptions. Better alignment is intended to reduce that tension.

For a property buyer, the immediate lesson is straightforward: establish the likely payment date for an investment redemption before treating it as completion money.

£5m Invested Does Not Necessarily Mean £2m Available Next Month

Consider a hypothetical buyer with £5m of investment assets who needs £2m for a property purchase in 30 days. Their holdings include £500,000 of cash, £2m of listed investments, £1m in a property fund and £1.5m within a pension.

The headline total suggests ample resources. The funding conversation is more specific. How much of the cash is already committed? Which listed assets could be sold, when would the proceeds settle and what would the disposal mean for the investment plan? What are the property fund’s actual redemption terms? Can any pension money legitimately be accessed, and would doing so be appropriate?

Those questions do not imply the portfolio is unsuitable. Different assets serve different purposes. They do determine which assets can support this particular purchase.

The buyer might decide to use the cash and sell selected listed investments. They might prefer a mortgage that preserves more liquidity. They might negotiate a later completion. A temporary facility could also be considered if a dependable receipt will arrive later.

The right answer emerges from the timing and cost of those choices. It cannot be established from the £5m total alone.

A Withdrawal Request Is Only One Step Towards Cash

For purchase planning, three dates deserve separate attention: when a redemption request is accepted, when the holding is dealt and when the proceeds reach the account from which completion will be funded.

A client may understand a notice period but overlook the next dealing date or the time needed for settlement and transfer. A platform or investment wrapper may also sit between the fund and the buyer. Each stage needs to fit the transaction.

That is why the useful confirmation is a timetable from the investment adviser or provider, including any circumstances that could delay payment. A general statement that an asset is “redeemable” gives the solicitor much less certainty.

Borrowing Can Separate the Purchase From the Investment Timetable

A buyer does not always need to make every investment decision at the speed demanded by a property transaction. Suitable borrowing can create time to arrange a disposal or await a receipt. That flexibility has a price, and it puts a repayment obligation alongside the existing investment risk.

A conventional residential mortgage may be appropriate where the client expects to retain debt for several years. For a large or complex case, private-bank finance may offer another structure, subject to the bank’s requirements and the economics of the wider relationship.

A property-backed bridge may be considered where the requirement is genuinely temporary and there is a credible exit. The security, property use and borrower circumstances determine the appropriate lending route, including whether regulated finance is required.

Securities-backed borrowing may be another possibility where the buyer holds investments acceptable to a lender. The assessment begins with those particular holdings, their ownership and the proposed facility terms.

The Property Fund May Not Be Acceptable Loan Security

The distinction between owning an investment and being able to borrow against it is particularly important here. A lender needs collateral it can value, control and, if necessary, realise. An illiquid or restricted holding may fail that assessment or receive little or no lending value.

A client waiting for a property fund redemption should therefore avoid assuming that the same fund can secure the cash they need in the meantime. Other eligible investments might support a facility. Alternatively, property security may provide a different route.

With securities-backed lending, the lender assigns lending values to accepted assets. The resulting borrowing capacity can differ substantially from the portfolio’s market value. Concentration, currency, volatility, existing pledges and custody arrangements can all influence the assessment.

Falling collateral values can also trigger a requirement to add security or reduce the loan. If that requirement cannot be met, investments may be sold. A buyer seeking breathing space needs to understand whether the proposed facility could itself create an urgent cash demand.

Willow’s securities-backed lending guide explains the structure. The client’s actual holdings and the lender’s terms determine what is possible.

How Much Does Buying Time Cost?

Suppose a buyer needs a temporary £1m facility. Using a purely illustrative annual interest rate of 8%, simple interest on a constant balance for three months would be £20,000. For six months, it would be £40,000.

These are arithmetic examples, not current quotations. They exclude arrangement, legal, valuation, exit and other costs, and do not model retained or compounded interest. Their purpose is to show why the likely duration of the gap matters as much as the headline rate.

The comparison should include selling accessible investments, using more cash, arranging longer-term debt and changing the purchase timetable where possible. Investment and tax consequences belong in the discussion with the relevant advisers.

A temporary loan can be sensible when its cost buys useful flexibility and repayment is dependable. It becomes much harder to justify when the exit depends on an uncertain redemption date and there is no practical alternative.

The Strongest Repayment Plan Has Room for Delay

“The fund will pay out” is a starting point for discussion. A lender and borrower need to understand how much is expected, what supports the timing and what happens if the proceeds arrive later or are lower than anticipated.

A buyer may have other accessible assets that provide a fallback. A longer facility term might create headroom, although it can change the cost. A conventional mortgage could be considered from the outset if the supposed short-term requirement is likely to persist.

Relying on an extension at maturity is a weaker position. Availability, underwriting and pricing may all have changed by then. The more useful conversation happens before the original facility is agreed.

Why Wealth Managers Should Raise This Before a Client Makes an Offer

A property purchase can bring together investments, cash reserves, tax planning and borrowing in a single decision. The wealth manager may know the portfolio in detail; the mortgage adviser needs to understand which parts of it can support the transaction and on what timetable.

Early coordination gives the client more choices. The investment adviser can assess disposals and liquidity while Willow investigates suitable borrowing. The solicitor can then work with a funding plan that has been tested against the proposed completion date.

Ownership deserves the same attention. Assets held by a spouse, company, trust or pension cannot simply be added together and treated as the buyer’s personal cash. The authority to withdraw, transfer or pledge them needs to be established with the appropriate advisers.

This conversation is especially useful before a client is presented as a cash buyer. That description should reflect the money available for the transaction, rather than the size of the wider balance sheet.

How Willow Private Finance Can Help

Willow can assess a property funding requirement alongside the client’s investment adviser, identifying the amount needed, the completion date, available security and expected repayment source.

Depending on the circumstances, the comparison may include residential mortgages, private-bank borrowing, bridging finance or Lombard lending. Eligibility, execution time and total cost need to be considered together.

The investment adviser remains responsible for advice on the portfolio, with tax and legal input where needed. Willow’s role is to establish what the borrowing can achieve and whether its conditions fit the purchase.

The FCA consultation gives wealthy buyers a timely reason to look beyond the value on their investment statement. Before committing to a property, establish how much money can reach the solicitor, by which date, and how any remaining gap will be funded.