UK commercial property fund investors have lost an average of 11.4 per cent over the past five years, analysis by housing investment and shared equity mortgage provider, Castle Trust shows.
Its analysis of returns from 42 funds in the IMA Property Sector shows the best return from the 14 funds focused on the UK over five years is +1.0 per cent while the worst is -26.6 per cent with the sector averaging losses of 11.4 per cent.
Castle Trust research shows growing support for UK residential property investing with more than a third (34 per cent) of financial advisers expecting increased interest in 2013 as the sector recovers.
Castle Trust offers an alternative to property funds with its investment products that enable investors to access UK residential property from £1,000 through its Income and Growth HouSAs which outperform the Halifax House Price Index for terms of three, five or ten years.
Sean Oldfield, chief executive officer, Castle Trust said: “Residential property has historically been a notoriously inaccessible asset class for investors, principally only for buy-to-let investors. Property investment for most people means investing in commercial property funds although many investors think they are gaining exposure to residential property through them.
“Property funds are not as liquid as they may seem. The reality is that investors try to sell when prices turn down, at which point they are locked in and then get the prices that can be achieved for the properties when allowed out. The idea that an open-ended fund can make illiquid assets liquid is misleading, as anyone who tried to sell a holding in a commercial property fund in 2008 will be aware.”
The Income HouSA tracks the Halifax House Price Index and also pays an annual income of between 2 per cent and 3 per cent, depending on the term of the investment.
The Castle Trust Growth HouSA offers a multiple of between 1.25 times and 1.7 times any increase on the Halifax House Price Index, and limits the loss to between 0.75 times and 0.3 times any decline.
The benefits of HouSAs are:
- Returns are better than the Halifax House Price Index
- Some protection against a fall in the Halifax House Price Index
- Tax free investment options
- You can invest from as little as £1,000
- An alternative to a buy-to-let investment without the hassle or ongoing costs
- Open up the housing market for investors without the need to buy a property
- Qualify for inclusion in ISAs, Junior ISAs and SIPPs
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