Last month the residential market took another unusual step into the impending modern era with the launch of residential property crowdfunding company Property Partner.
The newly established company is trading with the aim of purchasing rental properties and then subsequently allowing investors to finance sums of £50 and upwards in the property. Investors in these buy-to-let residential properties will then receive monthly rental income based on how much they originally invested. Investments can subsequently be cashed in either at market value, after being an investor for five years, or through trading them on Property Partner’s secondary exchange. Clearly the company is setting out with the unique selling point of allowing those who are bold enough to invest in property in the same way that they would shares.
Property Partner is mindful that their shrewdest of users will want to comprehensively research the property prior to investing. The company therefore provides comprehensive information about the property such as photos, floor plans, surveyor reports and valuations, financial information such as predicted income, and also the title report from solicitors and conveyancers.
The platform appears to be popular so far. On their first day of trading, one property in Croydon which had an empty value of £275,000 was acquired for £217,000 and the funds to purchase it were raised from around 148 different investors.
This initial popularity is undoubtedly helped through the company’s strong foundations. Investors of this intriguing project include Octopus investments, an early backer of Zoopla; and Betfair co-founder Ed Wray.
The use of buy-to-lets to enter the London housing market, which may otherwise be impregnable, is an area of the property industry Today’s Conveyancer has covered previously. Property Partner certainly looks to provide a unique new opening and investment strategy to armchair investors.
However, the scheme looks to have some shaky grounding for any potential fish willing to bite. Investors will have no control over day-to-day decisions regarding the property, unlike regular landlords, but will still face classic rental risks such as rent arrears, eviction costs and void periods. Property Partner also takes a 2% initial fee on capital invested and a monthly 15% fee on profits. Furthermore, there may be nobody willing to purchase a share using Property Partner’s secondary exchange, potentially tying up money in a poor investment.
Although this platform is unlikely to have any fundamental ramifications on any practising conveyancers or solicitors, it is worth keeping an eye on any such developing schemes to try and understand the strange and unique ways the residential conveyancing market is developing. It also provides an opportunity to collectively hope that platforms such as these don’t signify the late stages of a property bubble, where buy-to-lets seem to be the answer to everything.​
