Life for rentThe peer-to-peer sector lends itself well to the mortgage market – using technology to make it easier for landlords to get the finance to purchase properties directly, while also letting investors profit from the property market through decent interest rates.
One of the most well-known players in this sector is Landbay. Professional landlords can get a mortgage loan secured against the property, which is funded through a pool of investors, who can expect a return of up to 3.54 per cent. The company’s chief executive John Goodall tells me that while residential property investors might expect less in the way of returns compared to some non-property players, the income is stable. It’s also a way of hedging your money against inflation. But the real bonus is that investors can tap the property market for a small sum of £100, without the demands of being a landlord. However, supporting the buy-to-let market – and effectively capitalising on Generation Rent – doesn’t end with the peer-to-peer players. Equity is worth considering if you want a higher return, and are prepared to take the risk. Property Partner is the biggest name in that field, which lets investors buy and sell shares in firms that own rented properties. Since it launched in 2015, returns have hit seven per cent. Bricklane.com is also shaking things up. The company supports the buy-to-let market, but investors make money out of the rental income and changes in the value of the properties owned. Rather than lending against properties (as with the debt platforms), you buy shares in either the London property portfolio (which has returned 10.7 per cent since it launched 10 months ago), or the Regional fund (which has seen returns around eight per cent each year). Being structured as a real estate investment trust means Bricklane funds are eligible in an Isa or a self-invested personal pension, making this a tax-efficient way to invest in UK residential property. “The products pass on the best of property – rental income, stable movements in price without equity market volatility, and choice over where to invest,” says chief executive Simon Heawood. “Combined with costs that are 30 per cent lower than commercial property funds, and strong returns since we launched, we’re seeing a lot of demand from investors looking to escape the downsides of buy-to-let, while maintaining exposure to the property market.”