A new company launches today with ambitions to be to residential property what the London Stock Exchange is to shares.
Property Partner will buy rental properties and allow investors to chip in anything from £50 upwards to become the owners.
The investors will earn ‘dividends’ from their share of rental income and be able to cash in their investments – either exiting their shares at market value five years down the line or by trading them at any time on Property Partner’s secondary exchange.
With backers including Octopus, an early backer of Zoopla, and Jon Moulton (founder of Alchemy) and Ed Ray (Betfair), the firm offers what it considers to be a safer alternative to buy-to-let.
CEO Daniel Gandesha – an accountant who is also a residential landlord – said: “If you want to invest in buy-to-let, the opportunities are quite limited but also quite risky – not least because you are putting all your eggs in one basket.
“You should be able to trade in property in the same way as buying and selling shares – and that is what we are offering.
“Our job is to allow investors to click and invest – and, unlike hands-on buy-to-let, it will be an armchair investment.”
Property Partner, whose chief operating officer is Jalin Somalya, recruited from Google, has already soft-launched with 7,500 people actively signed up to its platform which today opens to the general public.
It has already acquired one property in Croydon, with assured periodic (as opposed to AST) tenants in situ, offering a net yield of 4.1%.
The property had an empty value of £275,000, but with an assured tenancy in place was acquired for £217,000. It has just under 200 investors, all attracted by digital advertising.
Today, two other properties will be made available.
The firm plans to offer properties in every major city in the UK and also to expand into Europe inside 12 months. It is planning to build good relationships with estate agents and letting agents – who it will use to manage the properties.
Property Partner had originally contemplated dealing with just a small number of the big players – one agent in particular was said to have been keen on a deal – but decided it was better to be completely independent and work with a wide range of different agents and auctions houses.
Gandesha said: “We are a buyer who can move very quickly and can buy with tenancies in place. We have a strong balance sheet and we can underwrite our purchases ourselves.
“We are planning 100 transactions this year, but it is our expansion beyond that which is important: from year three, we will be talking about billions of pounds.”
Robert Weaver FRICS, director of property at the business and whose CV includes stints at Savills, RBS, and Invista where he ran funds owning 2,000 properties, says their strategy is to seek out properties “with a story to them”.
For example, while many landlords fight shy of assured tenancies because they are difficult to bring to an end, the Croydon property’s assured tenants are there for the long term and look after the property as though it were their own – as can be seen from the pictures. Properties with assured tenancies in place usually sell for 10-15% less than market value.
The firm is also keen on properties with good transport links, including what will be Crossrail.
There are other property crowdfunding companies around, mostly unregulated and using third party crowdfunding platforms to raise money.
The differences, says Property Partner, are very obvious: first, Property Partner is regulated by the FCA; second, it is its own platform. And thirdly: “Our ambitions are on a completely different scale,” said Gandesha.
“Property is an investment class, it is a market that is here to stay and we are delivering something on scale.”
But how cost-effective can it be in admin terms to have an investor who might be only buying a £50 stake in a property, and who would still be entitled to at least some rental income, however paltry?
Weaver said that because so much could be done electronically, costs will be kept down. “We are very mindful of the economics,” he said.
Daniel Gandesha
Robert Weaver
The Croydon house is the white property, and also pictured is its garden
Comments are closed.