Alternatives to buy-to-let property investments

Posted by Mark Lloyd, Property Master Academy on 27 August 2019 | Comments

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In recent years, landlords have been hit by a number of tax and regulatory changes. This has caused some property investors to look outside of the buy-to-let market towards other types of investment.

Fortunately, there are still plenty of opportunities for property investors to achieve lucrative returns - without the hassle of navigating the increasing legislation involved in the buy-to-let sector.

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Peer-to-peer lending

Rather than becoming a landlord yourself, you can choose to lend to buy-to-let landlords instead.

Landbay is a peer-to-peer provider that lets you lend money to residential property investors in the form of buy-to-let mortgages (statistically, the lowest risk of peer-to-peer lending).

They currently offer a return of up to 3.5% a year in regular monthly returns from investments secured against property backed by the UK rental market. An investment can be as little as £100.

Your investment is spread across lots of different mortgages. The risk is diversified as the properties against which the loans are secured are situated across the country.

To further mitigate risk, peer-to-peer companies are authorised and regulated by city watchdog, the FCA. However, your funds aren’t protected under the FSCS.

Most peer-to-peer providers carry a provision fund that pays out if things do go wrong. This fund equates to around 0.6% of the amount of money lent out at Landbay.

Invest indirectly in property

Companies like Bricklane.com enable you to earn returns from property without investing directly.

They offer two property portfolios that allow investors to earn returns from rental income and changes in property value. You can make investments via ISAs and SIPPs. The advantage of this is that there’s no tax to pay on property gains or income, making it a tax-efficient way to invest in residential property.

Alternatively, you can choose to invest via a standard account.

Simon Heawood, Bricklane.com's co-founder, commented, “You benefit from diversification, as you don’t have to choose an individual property, and instead your investment is automatically spread over the areas you choose: Regional Capitals (Birmingham, Manchester and Leeds) and London.”

Invest in housebuilders’ shares

The share prices of major housebuilders have performed well over the last few years. Partly, this is down to the housing shortage in the UK that has generated some profitable opportunities for developers.

This trend is set to continue as a House of Commons briefing paper published at the end of 2018 states England alone needs to build between 240,000 and 350,000 new homes a year to meet demand.

Earlier this year, financial analysts tipped Barratt Developments, Bovis, Bellway, and Taylor Wimpey as ones to watch. However, some property investors may feel this is more like trading on the stock market than investing in property. Many different commercial and economic factors influence the performance of shares and their trajectory bears little resemblance to how the housing market is performing.

Would you like to learn more about property investment?

Register for our course: Houses of Multiple Occupancy (HMO) to find out how you could earn £30,000 - £35,000 income per year on every property.

Dates: 18th October 2019

Venue: Park Inn, Heathrow + One Day HMO Tour (date tbc)

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