Property crowdfunding breaking down barriers in London property market

on Mar 17, 2015

Climbing the property ladder might seem quite daunting for a vast majority of people. Even managing to get on the property ladder is no easy task these days, especially when it comes to the capital city. With London’s house prices increasing, the steady inflation has pushed many properties outside an area of affordability for a large number of potential buyers.

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Investing in property in London does have its advantages, though. Since the last recession, homeowners in the capital city have seen a gain of £122,000 on the value of their homes, equating to house price growth of 55.2 percent since 2009. According to research from Hometrack, property in the capital has increased in value 22 times more than that in Glasgow and 12 times more than that in Manchester and Birmingham.
Of course, being able to make a property investment in London cannot be considered a walk in the park. The aforementioned unaffordability of real estate has created a barrier that many people don’t see any way of bypassing. Increased stringency on lending criteria have all but made it impossible to navigate London’s property market. An extensive amount of the capital’s properties have instead been purchased by wealthy foreign investors.
However, for anyone looking to take part in the world of real estate, Property Crowd could be the best solution to those tall barriers. Launched in November 2013, Property Crowd is the first UK real estate crowdfunder working under FCA regulations.
Here’s how it works. Property Crowd only targets high-yielding, prime city centre real estate. Buyers invest in a property of their choice for an amount of £5,000 or more. Then, once the property has tenants, investors receive 100 percent of the net rental income. Upon the property being sold at the end of the term, typically a 5-6 year period, investors receive their investment back as well as 75 percent of any capital gains. In the meantime, Property Crowd members are able to build up their portfolio of real estate investments.
“London continues to attract high net worth individuals, companies and employees from all over the world, which means there is a constant demand for high-quality properties to let“, James Robinson, Property Crowd’s director of sales said.
With the minimum investment being just £5,000, people from all over the UK are able to overcome the barriers that the London property market has craftily placed in front of them. And as the company has been regulated since day one, members of Property Crowd should get a sense of security from knowing that all information provided to them is 100 percent accurate.
Property crowdfunding is beginning to emerge on the real estate scene as a very viable option for many people to take advantage of as an alternative to traditional financing. This particular method of investing in property grew by 156 percent in 2014, amassing just over $1 billion (£676m) in funding volume. Looking ahead, a report by research and advisory firm, Massolution predicts that property crowdfunding will increase by a further 150 percent throughout this year to an estimated $2.57 billion (£1.66bn), making property crowdfunding one of the fastest-growing sectors of ‘crowd capitalism’.


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Alternative Investment Crowdfunding Real Estate Residential Real Estate