Property fintech Dot plots to become investor one-stop shop

By Roger Baird on Thursday 18 April 2019

Alternative Lending

The platform wants to attract young professional renters in such cities as Manchester and Liverpool.

A new online platform sells a one-stop shop for investors who want to become landlords, amid a raft of regulatory changes that has knocked the appeal of buy-to-let properties.

London-registered Dot allows investors who are not specialists to build up property portfolios which are selected, refurbished and serviced by the platform in rental hotspots in secondary urban cities, such as Manchester and Liverpool.

Under Dot’s system, investors pay a 30 per cent deposit on a flat, which then allows the firm to complete a mortgage lasting up to five years and refurbish the property into “high-quality housing”.

Its instant mortgages currently carry an interest rate of 4.99 per cent. Set against this, the platform expects investors to earn between 4 per cent a year to 6 per cent, after finance, management and maintenance costs have been deducted.

Weaker demand

The move comes as demand in the buy-to-let market has been hit by legislation that has hit the sector’s profitability in recent years.

These include the introduction of an additional 3 per cent stamp duty surcharge in April 2016 and the abolition of mortgage interest tax relief for landlords, to be phased down to a 20 per cent flat rate in 2020.

However, evidence that on a larger scale that confidence may be returning to this sector came this week when it emerged that Goldman Sachs backed its first build-to-rent project in the UK. The US  investment bank agreed a debt facility on a £184m, 42-storey, building in Birmingham, called Broad Street Tower, which will hold 481 apartments.   

On a smaller scale, Dot claims its investors can “buy a fully financed, designed and managed property in minutes. [And] build a high-value portfolio over time”.

The start up was launched last year, by co-founder and chief executive Gray Stern who said he became  “frustrated with the innate inefficiencies of the property market.” The New Zealand former banker previously launched buy-to-let mortgage lender Landbay in 2014.

The two other founders behind Dot are chief operating officer Fraser Armstrong-Watters and chief communications officer Lucy Sharp.

Young professionals

The platform has around 20 properties in Manchester and Liverpool aimed at young professionals, bought with $3m raised from investors, mainly in the US.

Dot said: “Our local ground teams build partnerships with property developers, large landlords and estate agents in city centres. We target specific districts that are within short walking distance of downtown and major schools and universities that have a vibrant local culture encompassing great cafes, bars, restaurants and amenities.”

Investors must be prepared to spend as much as £5,000 to refurbish properties to a high standard. It suppliers include Smeg, Made, eve and Nespresso.

Landlords are also charged between £500 and £1,000 a year for filing accounts and other compliance tasks carried out by professional services firm EY.

Rents in Manchester for a two-bed flat are around £1,200-£1,400 a month, and in Liverpool around two-thirds of that. Typical flats sell from £150,000 upwards.

The platform, according to the Financial Times, is also eyeing the US market, and plans to buy properties in US “secondary cities” such as Austin and Denver, where millennials priced out of big cities are increasingly moving.

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Companies in this Article:

Financial Times
Goldman Sachs