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
Name: Property Partner
Description: Property Partner operates a tiered cashback promotion. Invest £2,000 to get £30, £10,000 to get £150, £20,000 to get £300 or £50,000 to get £750.
- 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 also offers property-backed development loan bond investments. These opportunities are often quickly funded when they go live on the platform.
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 is £1,000 for the development loan bonds.
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.
For example, see the below summary page for the ‘Opportunistic Fund’ opportunity I invested in 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?
Investments are subject to an assets under management fee and an account fee. The Assets Under Management fee is tiered depending on how much cash you have invested on the platform. If you are investing less than £5,000, the AUM fee will be 1.2% whereas if you invest £1 million, the applicable AUM fee would be 0.24%. An additional account fee of £1 per month is payable – this does not vary based on investment size.
For example, 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.
In addition to the aforementioned recurring fees, a 2.0% fee is payable when purchasing shares in any property on the Property Partner platform whilst stamp duty of 0.5% is payable to HMRC (automatically collected). Property Partner also takes a sourcing fee of 3.0%+VAT when bringing new properties onto the platform. These fees are clarified on each individual property page.
In a booming property market featuring rising prices, these fees likely wouldn’t feel too high as strong percentage returns would likely still be generated on resale of the property at the five-year anniversary period, whilst investors would further benefit from diversifying their property investments. However, in a declining market, fees will remain payable.
Whilst Property Partner enables easy diversification and low barriers of entry to the UK property market, prospective investors should take time to consider the level of fees charged for the size of the investment they want to make. Since the new fee structure was imposed, I have personally scaled back my Property Partner investments and moved more funds into property loan platforms such as Loanpad and Kuflink.
How good is the investment performance reporting?
The investment dashboard is clear and easy to follow.
Tax statements can be easily downloaded, summarising 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 is authorised by the FCA (link). As an FCA authorised platform, Property Partner is required to have a wind-down plan in place and has pre-engaged PricewaterhouseCoopers LLP to manage the sale of the property portfolio and return of capital to investors.
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 cashback of:
- £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%)
If you have found my Property Partner review useful and choose to sign-up, I would really appreciate if you would do so via my referral link.
I personally invested £2,000 in January 2019 and received £30 cashback in February 2019 (13 working days later).