An online Property ISA has been launched and is aimed at renters who want to save for a deposit to buy their first home.
The Property ISA can actually be opened by anyone, even homeowners, but the founders of Bricklane.com, Simon Heawood (pictured right) and Tom Cavill (pictured left), had Generation Rent in mind when they set it up.
As renters themselves, saving for a deposit proved difficult as house prices continue to rise in a low interest rate environment.
Simon Heawood said: “Our aim is to help those saving for a first home to get on the ladder years earlier than they would by saving with cash. Alongside, we will provide a great service to residents of properties owned by our community of savers.”
How does it work?
Bricklane.com works through a unique combination of an online investment platform with a Real Estate Investment Trust (REIT) structure – a well-established method of property investment.
Investors receive rental income from high quality properties in Leeds, Birmingham and Manchester, which are professionally let out to tenants.
Bricklane.com says that an investment of £1,000 in these three cities five years ago would now be worth an estimated £1,360 – an annual total return of 6.3%. The strong rental yields in these cities are expected to be attractive in the current low interest rate environment.
The minimum investment is £100 and monthly contributions from £50 can be added. Existing ISAs can also be transferred into the Property ISA.
Investors can sell their stake in the Property ISA at any time by selling it to other investors.
The Property ISA is covered by the Financial Services Compensation Scheme up to £50,000. The combination of the tax-efficient REIT structure and ISA wrapper means that there is no tax on growth in the value of the property or rental income received.
Financial back-up
Bricklane.com has a number of financial backers including Zoopla Property Group and venture capital firm LocalGlobe.
Alex Chesterman, founder & CEO of Zoopla Property Group, said: “Bricklane.com has come up with a saver-friendly product that is especially useful for first-time buyers saving towards a deposit and sees the property market from the renters’ perspective, for the first time.”
Robin Klein, founding partner of early stage tech investor LocalGlobe, added: “Bricklane.com’s product is an elegant, tech-enabled answer to the problems of the housing crisis, and could help a whole generation of people who feel shut out of the market gain an entry.
“Their Property ISA connects savers with investments in a uniquely user-friendly way that could revolutionise the way young people save for their first home, as well as providing a higher quality service for tenants.”
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