Property IFISAs: Backing bricks and mortar
Property is one of the most popular asset classes in the UK, as investors enjoy the familiar security of bricks and mortar. There is now a way to access the rewards that come with property investing without the hassle of managing buy-to-let properties or the volatility of a stock market-linked property fund.
The Innovative Finance ISA (IFISA) allows investors to invest in property-backed peer-to-peer loans, including residential buy-to-let mortgages, bridging loans and property development loans, while enjoying tax-free earnings on their income. Some P2P lending platforms will automatically deploy your funds across a variety of property-backed loans. Alternatively, investors can pick individual property projects on certain platforms.
Like other types of ISAs, IFISAs enable investors to receive interest and capital gains tax free, up to the current annual ISA limit of £20,000.
Here is a selection of some of the IFISA-eligible property investment options currently available.
Assetz Exchange
Assetz Exchange offers property loans, with a minimum investment of just £1 and a target rate of return of up to six per cent.
The company is a crowdfunding property investment platform delivering income for investors primarily through the purchase and leasing of social housing.
Since its first supported living accommodation lease started in December 2020, the company has helped over 100 individuals to find supported housing. This number is set to significantly increase, with an estimated 150 to 200 extra units being provided by the end of 2022.
Read more: Assetz Exchange leadership credited with “pedantic accuracy”
CapitalRise
This platform specialises in prime property loans, with a minimum investment of £1,000 and a target rate of return of up 11 per cent.
Investors can access high-end property in London and the Home Counties that would usually be the preserve of institutions and high-net-worth individuals.
Since its launch in 2016, CapitalRise has originated loans worth £264m for property valued at £751m. Some £129m in total has been repaid with an average annual return of 8.2 per cent.
CrowdProperty
CrowdProperty offers residential property development loans for a minimum investment of £500, with a target rate of return of up to 8.5 per cent.
The platform prides itself on its transparency of data for investors and the expertise of its management team.
In the past 12 months, the company has grown agreed development loans by 51 per cent, despite a slow fourth quarter of 2022. The first three-quarters of the year delivered a year-on-year growth of 76 per cent.
CrowdProperty is about to embark on a fundraise on equity fundraising on Seedrs to help it deliver a new three-year growth strategy, which it said would focus on strong people and culture, scalable systems and processes, robust governance and control, and exceptional customer relationship management.
In total it has lent £294m to fund 2,982 homes.
EasyMoney
EasyMoney funds property loans for a minimum investment of £100, with a target rate of return of between 4.63 per cent and 6.51 per cent.
Its core business is funding residential and commercial property deals, typically for periods of between 12 and 24 months.
In February 2023 it announced that after five years of operations it has lent more than £250m.
The P2P property lending platform was launched in February 2018 by Andrew de Candole under a licensing deal with EasyJet founder Stelios Haji-Ioannou.
Kuflink
Kuflink facilitates property loans with a minimum investment of £100, with a target rate of return of up to 9.73 per cent.
The platform, which won Bridging Lender of the Year, CEO of the Year and the Investor’s Choice award at the Peer2Peer Finance Awards in December, almost doubled its profits in 2022 following a “record” year of lending.
It recently announced that it has refreshed its range of investor products and services following feedback from its user base.
Loanpad
Loanpad issues property loans for a minimum investment of just £10, with a target rate of return of up five per cent.
The platform has been heralded by P2P ratings and research firm 4th Way, which named it among its top six platforms of 2022.
It described Loanpad as “the lowest-risk P2P lending company in the UK, and probably one of the safest investments anywhere, in any asset class”. Neil Faulkner (pictured), chief executive and head of research at 4th Way, added that Loanpad’s investors have praised the platform’s ability to facilitate relending.
The company has total live loans of more than £151m, according to its website.
Loanpad narrowed its cumulative losses in its latest full-year results and is targeting £100m of new lending in 2023.
“Despite a relatively flat fourth quarter due to political and market instability, new lending was over £60m in 2022 and we would hope to do close to £100m in 2023,” said the platform’s chief executive, Louis Schwartz. “We have an increasing number of lending partners and investors and we are very bullish on the outlook for the next 12 months.”
Simple Crowdfunding
Simple Crowdfunding invests in property development finance, with a minimum threshold of £500 and a target rate of return of up to nine per cent.
It says it “makes online property investment accessible to everyone, whilst helping property developers deliver more homes in the UK”.
Unlike the other platforms on this list, Simple Crowdfunding offers equity and debt investments.
Last September, managing director Atuksha Poonwassie revealed the platform has seen increased demand for P2P loans over equity investments. She said this was because they offer regular fixed income during challenging economic conditions.
“We’re in an unsure market and people want more certainty,” she told Peer2Peer Finance News. “Our IFISA is still growing as well.”
