There has been a surge of new crowdfunding platforms aimed at people who either cannot afford to purchase their own buy to let property, or wish to minimise their risk by purchasing only a share.
The UK Crowdfunding Association - a body set up by crowdfunding organisations to promote the business model and which now has a code of practice for new entrants - says 14 of its 40 members are recently-established property-focussed sites, either directly investment in individual properties or in related areas such as peer-to-peer lending.
Julia Groves, a representative of the UKCFA who gave the figures to the Sunday Times, told the newspaper that she anticipated larger companies would enter the crowdfunding arena in the near future.
For the moment one of the most successful crowdfunding property sites appears to be Property Partner, which is quoted in the newspaper as claiming it has raised £16m to fund its expansion programme.
Property Partner aims at individual property investors on a model adopted by a number of crowdfunding sites. It selects a number of properties and asks investors to put in a sum of money from £50 to £50,000 - there is a one-off 2.0 per cent fee and in return the firm arranges the purchase of the property.
The property is then let out with Property Partner keeping 10.5 per cent of the rental return; the rest is distributed proportionately in line with each investor’s commitment.
It says in the Sunday Times that it has over 6,000 users who have invested in excess of £24m.
Property Partner claims that traditional buy to let will shortly be unprofitable for many individual buyers and landlords thanks to reduced mortgage interest tax relief and other anti-private rental sector fiscal measures.
We have in recent months reported on new property crowdfunding sites such as Propnology and Crowdproperty amongst others.
The Sunday Times article makes it clear that crowdfunding is a young, still-evolving and largely-untested vehicle for investment, in property as much as in any other sector, and it cites research from the UK Business Angels Association that there may be a relatively high level of crowdfunded business failures.
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Yes! now the industry is waking up to the kiss of death to landlords is NOT the 3% Stamp Duty hike as so often reported on here and other media, but the TAX HIKES now applied only to SMALL LANDLORDS by The Chancellor
well done for finally catching up
If you are a large landlord by the way (15 properties or more) you dont need to worry these massive tax hikes dont affect you!
Not tax hikes but partial removal of tax subsidies which 1st time buyers don't get. The whole buy to let interest only gearing model is nothing more than rampant tax avoidance. Buy to let is an investment like shares (case law) not a business and should pay tax like other investments.
Crowdfunding says to me that a business is being run badly, and it is unfortunately a good way to keep the failing business going. Some online gents are quite a good example of this, where their advertising spend outweighs income by quite a lot. Shame about the investors though.
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