Property investment platform Propio.com is set to launch a property ISA ahead of its April deadline.
Part of a new breed of innovative finance ISAs (IFISAs), ‘The Property ISA’ will invest money purely in property-backed loans and allow people to invest their ISA funds into alternatives from traditional asset classes like equities, bonds and cash.
ISAs are considered a tax-efficient way of investing money as they allow people to invest up to £20,000 annually and to pay no tax on any profit made. Propio.com aims to expand on this with its Innovative Finance ISA.
“People are sick of earning peanuts on cash ISAs. IFISAs like ours offer the potential for better returns by opening up access to alternative asset classes,” Tom Buttress, co-founder at Propio.com, 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 ISA but without the unpredictability of equities.”
Through Propio, investors can pick from one of three ISAs based on their risk appetite – cautious, balanced or adventurous – offering fixed-rate returns of up to 7% per year. Investor money is then spread across a range of property-backed loans throughout the UK.
According to Buttress, Propio allows the user to invest into a loan secured against the property – similar to a mortgage, ‘but over much shorter time scales’. This way, the investor is less exposed to the fluctuations of the property market, making it a way of gaining access to the asset class without the risks and hassle of ownership.
Money invested through Propio is used to provide loans to property professionals, helping them to build and refurbish properties. Each loan is carefully selected by Propio’s in-house team of property experts and underwriters.
What’s more, Propio investors can sign up, invest, keep an eye on their returns and withdraw any money they’ve made – all on their phone. Investors can get started with just £100 and are able to invest up to £20,000 per year tax-free.
Buttress continued: “We know that traditional property investing requires time, money and patience, making it inaccessible to most people. So, we’ve come up with a smarter way for everyday people to access better, more stable property returns whether you’re on the bus, in the gym or at the beach. One that works for a new generation of investors and helps build much needed homes for people in the UK at the same time.”