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Property debt investment platforms alternative to buy-to-let?

7 October 2019

More than half of buy-to-let landlords have been impacted by recent tougher tax treatments and tighter bank lending criteria, with many selling and reducing their property holdings. 

Research from Fitzrovia Finance showed that 54% of buy-to-let landlords have been adversely affected by the changes, with one in five reducing the number of buy-to-let properties in their portfolios, while 15% said they were deterred from buying more properties.

Landlords that have sold buy-to-let property over the past two years released an average £129,746 in cash, the data showed.

According to the secured property lender, property investors are increasingly turning to real estate investment platforms as an alternative to invest. Of those that have sold a buy-to-let property, nearly one in 10 (8%) said they used the funds to invest through property debt investment platforms. As many as one in three believes that as the buy-to-let market has become less attractive, they will use property debt investment platforms more.

Of those opting to use property debt investment platforms, the most important feature was the offer of secured property lending opportunities (33%), the research found. Nearly three in ten (29%) would also like to see new regulation that will make the sector more transparent and safer. Both ranked higher than trust in the company’s management team (28%) and attractive risk-adjusted returns (26%).

Brad Bauman, CEO, Fitzrovia Finance, said: “Property debt investment platforms are a good alternative for landlords who understand the asset class and the risks involved.  As the buy-to-let market becomes less attractive, our research suggests that many may increasingly turn to property debt investment platforms for attractive risk adjusted returns but without the hassle of managing  tenants or carrying out costly maintenance.”

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