IFISAs are most profitable property investment option
Innovative Finance ISAs (IFISAs) represent the most profitable way to invest in the UK property market, easyMoney has claimed.
Amid an ongoing slowdown in the residential property sector, peer-to-peer lending platform easyMoney found that the average residential property purchase would yield just 3.5 per cent per year.
By comparison, real estate investment trusts (REITs) are delivering average annual returns of 4.4 per cent, while buy-to-let investments have an average yield of 5.1 per cent.
The lender noted that commercial property investments are targeting annual returns of 5.8 per cent, while property bonds are offering an expected return of six per cent.
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However, property-focused IFISAs can deliver the strongest performance, with the average return coming in at 7.7 per cent.
“During the house price boom initiated by 2020’s stamp duty holiday, basic bricks and mortar investments generated great returns for amateur or accidental investors – the latter being those who buy property for the purposes of living in it and for whom the subsequent equity growth is an additional bonus,” said Jason Ferrando, chief executive of easyMoney.
“But now that market conditions have changed so dramatically, anyone who is looking to make profit from the UK property industry is going to need to build a more diverse portfolio and look seriously at alternative and emerging investment avenues, the best of which is clearly IFISAs.”
Earlier this year, research conducted by Peer2Peer Finance News found that by the end of February 2023, a fully diversified IFISA portfolio spread across all 41 available providers would return an average of 8.83 per cent, according to the target returns stated for the 2022/23 tax year.
By comparison, at the end of February 2022, 39 IFISAs were open to retail investors, targeting average returns of 7.75 per cent.
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