By Roger Baird on Wednesday 27 February 2019
The property platform said it will provide annual returns of up to seven per cent.
Property investment platform Propio.com will launch an innovative finance individual savings account (ISA) product, that will focus purely on property-backed loans.
The London-based firm said the product will be in place ahead of the 5 April ISA deadline, which allows customers to invest up to £20,000 tax free over the next 12 months.
Propio, founded a year ago, said it will launch three property ISAs based on customers risk appetite – cautious, balanced or adventurous – offering fixed-rate returns of up to seven per cent per year.
Property ISA’s are newer types of accounts, that allow customers to invest outside of more traditional asset classes, such as shares, bonds and cash.
Propio.com co-founder and managing director Tom Buttress said: “Some people are scared by the volatility of stocks, and while investing in small cap companies can generate strong returns, property is largely seen as more defensive and lower risk, because investments can be backed by real assets.”
He added: “Our Property ISA is designed to sit in between cash and equities, offering better returns than a basic savings ISAs but without the unpredictability of equities.”
The platform said it will use the cash it brings in from its ISA to provide loans to property professionals to build and refurbish homes and other buildings. Customer investments begin at £100.
Buttress said: “Unlike buy-to-let, with Propio you’re not actually buying property but investing into a loan secured against it – a bit like a mortgage but over much shorter time scales.
“This means that you’re less exposed to the fluctuations of the property market, making it a way of gaining access to the asset class without all the risks and hassle of ownership.”
The growth of the average price of a home in the UK slowed to 3.1 per cent, to £216,600, over the last year, compared to a 3.6 per cent rise over the previous 12 months, according to data released today by Zoopla.
The online estate agent blamed “affordability pressures” and “heightened uncertainty” caused by features such as Britain’s prolonged exit from the European Union, scheduled at the end of next month.