The share of buy-to-let (BTL) lending decreased to 12.5% in June 2017 – the lowest percentage since Q3 2013 – which has led to calls from a property expert for investors to utilise crowdfunding to fund investment.
The BTL market has changed in recent months. With higher stamp duty costs and the phasing out of mortgage tax relief, funding is difficult to come by for landlords and new investors.
With this, the majority of buy-to-let landlords are concerned about protecting their profits following increasing taxation, stricter lending and increasing regulation – fuelling the property crowdfunding firms that have launched in recent years.
Jatin Ondhia, chief executive officer of Shojin Property Partners, described the government as ‘misguided’ and thinks more investors should use crowdfunding to fund their investments.
“Unlike earlier generations, many young people don’t want to be bogged down by a mortgage so early in their lives,” he said.
“Today, people of all ages and socio-economic backgrounds can invest in the buy-to-let via crowdfunding platforms to generate both income and capital growth. This way of investing in rental property offers a hands-off investment and the opportunity to spread risk.”
Rather than having larger amounts of capital tied up in property, Ondhia believes that investors can take a share across a range of properties. “It removes the regulatory burden from individuals because properties are managed by larger, professional outfits that also benefit from economies of scale,” he explained.
“At any time, investors can release their capital by selling a stake in a property, using their annual capital gains allowance. This gives them freedom that would not be provided by traditional ownership of a buy-to-let property.”
Ondhia continued: “All of us in the UK have always loved investing in property and luckily crowdfunding is enabling us to continue investing. What’s more, crowdfunding enables investors to be totally hands-off.”