The Property Partner platform launched in 2013 offering investors the ability to invest in residential/commercial property via special purpose vehicles (SPVs). By acquiring shares in a particular SPV, investors own a proportion of the underlying property; generating returns via rental income (distributed as dividends) and potential capital appreciation. In addition to direct property investment; a new addition to the Property Partner platform is the ability to invest in property-backed development loan bonds.
I have written a comprehensive Property Partner review below. If you find it useful and choose to sign-up, I would really appreciate if you would do so via my referral link.
Property Partner - UK Property Investment
Cashback: £30 / £150 / £300 / £750 (All 1.5%)
Minimum investment: £2,000 / £10,000 / £20,000 / £50,000
- Time in business
- Hands-off investing
Summary of key features
The key features of the Property Partner investment account are listed below.
|Estimated annual returns||Platform focuses on property crowdfunding (i.e. equity ownership) whereby returns depend on potential dividends generated through rental income or capital appreciation. However, platform has ventured into offering development loans where fixed interest rates are cited (e.g. 11.0%).|
|Loan security||All development loans are asset-backed.|
|Early exit||✓ Secondary market exists.|
|Auto re-investment||✓ Dividends can be reinvested in the same property.|
|Innovative Finance ISA||✓|
|Cashback offer||£30 when you invest £2,000|
Detailed Property Partner Review
Where will my funds be invested?
When investing through Property Partner, you can choose whether or not you want to manually select individual investments (in specific properties or specific funds which are offered from time to time) or in one of three auto-invest plans.
The three auto-invest plans are the Income Plan (focuses on investing in income-generating property), the Growth Plan (focuses on investing in property deemed to exhibit the potential for greatest capital appreciation) or the Balanced Plan (a mixture of the aforementioned options).
Whichever option you choose; you will be investing in shares of a special purpose vehicle (SPV) setup to acquire and manage the properties purchased. Purchases are made via a UK limited company (the SPV) due to land registry rules which prevent more than four separate individual owners being listed on the deed of ownership.
In addition to property investments made via SPV’s, Property Partner released its first property-backed development loan bond opportunity (Salcombe Rise) on 20 February 2019. Rather than take a share in the property, investors are able to lend capital to the project developer at 11.0% interest per annum for an expected 15 month term.
What is the minimum investment required?
The current minimum investment is set at £1,000 for the three auto-invest plans listed above. Similarly, the minimum investment was set at £1,000 for the opportunistic fund and development loan bond that I invested in.
However, there is currently no minimum for investments made in specific properties through the secondary market.
In order to qualify for cashback under the current offer, you will need to invest a minimum of £2,000.
How much information is provided on investments?
The Property Partner team provide a wealth of information about the investments available on the platform. The investment case, security, surveyors report, exit plans and fees are all laid out clearly. Property Partner also release a video summarising the investment opportunity.
See for example the summary page for the Opportunistic Fund below.
How frequently are dividends paid?
Rental income is returned to investors on the 5th of each month (on fully-funded, completed properties which are trading on the secondary market).
Rental income may be lower than expected where, for example, tenant issues arise or costs increase due to property repairs.
Where investing in a development loan bond; interest is paid at the end of your term loan.
What are the charges imposed by Property Partner?
Property Partner changed its fee structure in August 2019. Whereas investors were previously only charged a 2.0% upfront fee, investments are now subject to recurring assets under management and account fees. This was an unpopular move as 1) the new fee structure has a greater impact on smaller investors, and 2) these terms were applied to current investors (who invested based on the old terms) rather than just to new investors. In theory, these new pricing changes should now be priced into the secondary market as investors (both old and new) are aware of the new charges applicable.
An Assets Under Management fee is charged, ranging from 1.2% if investing £5,000 to 0.24% if investing £1.0 million. This percentage is applied to the entire balance held with Property Partner.
In addition, an account fee of £1 per month is payable, regardless of the size of your investment.
The total annual recurring fee % if investing £5,000 would be 1.49%, which drops to 1.34% if investing £10,000, 1.25 if investing £25,000 and 0.98% if investing £50,000. A number of further tiers exist when investing north of £50,000 to reduce the percentage charge further. This example illustrates that Property Partner is now likely to be less attractive to smaller investors.
When purchasing shares in any property on the Property Partner platform, a 2% fee remains payable. In addition, stamp duty of 0.5% is payable to HMRC (automatically collected).
An additional sourcing fee of 3.0%+VAT is also be charged for each property on the platform. These fees are clarified on each individual property page.
How good is the investment performance reporting?
I cannot fully comment at this time given how recently I invested on the platform. However, the investment dashboard looks pretty clear to me and I’m confident that it will meet my needs.
The platform appears to offer the ability to download tax statements easily which summarise dividends received and any capital gains/losses realised.
What are the key risks of investing through the platform?
As with any investment that offers returns in excess of bank savings accounts, there are risks attached which you must be aware of before making an investment decision.
- The capital value of property may fall due to local market factors and/or a wider economic downturn.
- Rental income may vary as it is market/demand driven.
- Tenants falling into arrears, damage uncovered by insurance or properties unlet may result in reduced rental income for a period of time.
- Withdrawing money through the secondary market is not guaranteed as it relies on a willing purchaser. Resale value may be lower than the initial amount invested and current market value.
- Selling a property after holding for five years may still result in a negative return where the property value has depreciated over that period.
What would happen if Property Partner went into administration?
All investments made on the Property Partner platform are in individual ring-fenced UK Limited Companies. Therefore, the Property Partner platform ceasing to exist would not result in the total loss of your investment. It would, however, be an inconvenience and would likely result in money not being easily accessible (as it is likely that no secondary market would be in operation for a period of time). Property Partner would need to appoint an alternative asset manager.
Any funds held with Property Partner but not invested in property are similarly ring-fenced in separate client money accounts.
Is money invested in Property Partner safe?
Investing with Property Partner is not akin to placing savings in a bank account or building society. You are not afforded any kind of guarantee against losses and therefore you must bear in mind that your total investment value could decrease.
The value of your investment will be inherently linked to the value of the underlying property. Delays may be experienced in trying to resell your investment in the secondary market which could prevent timely access to funds. Therefore, we would only recommend investing funds which you do not expect to require at short notice.
How and when can I resell my investment?
There are two exit options available:
- At any point in time, you can list your shares for sale on the secondary market (which is fully regulated). The marketplace appears to be relatively liquid, evidenced by trading data released by Property Partner. However, there are no guarantees you will be able to find a buyer at your desired price.
Selling prices are determined by individual sellers, with reference to the quarterly independent property valuations conducted. Property Partner provides data on the latest traded prices for shares in each resale property. At the time of writing, the majority of properties listed on the resale market were available at a discount to the latest valuation which may be reflective of Brexit fears amongst investors.
- After five years on the Property Partner platform; Property Partner seeks to give investors an opportunity to sell their holdings at the current market value. At first, the property will be relaunched on the platform to seek new investors at the latest market value. If there is not sufficient interest; the property will be listed on the open market with net proceeds returned to investors. In this scenario, the sales process (as in any property transaction) may be prolonged, resulting in a delay to the return of funds.
How can I pay money in?
The Property Partner platform accepts payments via debit card or bank transfer. Neither methods have a fee imposed.
What cashback does Property Partner offer its new investors?
Property Partner is currently offering:
- £30 if you invest £2,000 (1.5%)
- £150 if you invest £10,000 (1.5%)
- £300 if you invest £20,000 (1.5%)
- £750 if you invest £50,000 (1.5%)
Whilst you should never invest solely on the basis of cashback offered; using such offers can potentially boost your first year returns and it is my personal preference to take advantage of these offers when available.
Click here to sign-up and take advantage of the current cashback offer.
I personally invested £2,000 into an ‘opportunistic fund’ launched by Property Partner on 23 January 2019 and received my £30 cashback on 11 February 2019 (13 working days later). The official terms state that cashback will be paid on the first 10th of the month (or next working day) following the investment conditions being met. I was therefore paid in line with the stated terms (as the 10 February 2019 fell on a weekend).