Investors who want to take part in the buy to let bonanza but do not want to get involved in managing their own properties can buy a slice of Britain’s first residential real estate investment trust (REIT).
Cost of entry to the buy to let market is preventing many would-be property barons from investing.
But the new REIT allows investors to stake as little as £1,000 to buy a share in the REIT.
The REIT has been launched by Mill Group Residential and is looking for professional and institutional investors.
Individuals wanting to put money into the REIT can find out more through crowdfunding platform SyndicateRoom.
REITS are companies holding property for rental income and long-term growth in values. To qualify for special tax concessions, a REIT must be listed on a UK stock exchange.
The REIT must also pay out 90% of earnings to shareholders as dividends.
A stake in the REIT can be held in an ISA or self-invested personal pension (SiPP), which allows REIT share values to grow free of capital gains tax and profits to be paid out without income tax.
The Mill Group REIT is believed to be the UK’s first residential buy to let venture, but commercial property REITS have run successfully in the country for several years.
The Mill Group REIT intends to hold homes in London, the South and Midlands valued between £180,000 and £430,000. The first portfolio is believed to be almost fully let.
The advantage for investors is shares in the REIT are considerably cheaper than raising a deposit on an average UK home.
According to the Land Registry’s latest data, a 25% deposit on an average home price of £177,300 is £44,325.
Other benefits include not having to manage properties and tenants, including sorting out repairs and chasing unpaid rents.
The fund managers take on this task for investors.
The REIT has around £2 million to invest and is looking for a £300,000 top up from crowdfunding investors.
“The cost of a home is too expensive for many people in several parts of the country and renting a property is their only option,” said a Mill Group spokesman.
“We expect rental demand to continue at similar levels as this year and house prices to keep appreciating.”