Property Partner Review – 3 Key Findings for 2020

Property Partner offers a unique real estate investment platform for both high-net-worth individuals and companies to invest in residential and commercial properties in the UK.

As an investor, you have the option to invest in a large variety of projects and earn monthly rental income while also benefiting from the capital appreciation of the property in the long run.

As one of the largest property crowdfunding platforms in the UK, Property Partner provides a number of interesting features, including an active secondary market for reselling your investments, extensive research material and statistics, and passive portfolio management through their auto-investment tool.

If you’re thinking about adding UK real estate to your investment portfolio, make sure to read our comprehensive Property Partner review. We’ll be covering everything you need to know, including how the platform works, the pros and cons, what the fees are like, and the best alternatives.

Top 3 Takeaways for Property Partner

After spending several months testing the best real estate crowdfunding platforms in Europe, we’ve come down to three key features that define Property Partner:

1. Best for portfolios valued over £25,000. Property Partner attracts high-net-worth individuals, sophisticated investors, and companies who can enjoy reduced fees and up to 12% per year returns on secured development loans. Having a portfolio of £145 million assets under its management, Property Partner has been voted as the best property investment platform for 2018 and 2019. 
2. Portfolio Diversification. Property Partner allows you to diversify your property portfolio by splitting your investment across multiple properties, returning capital gains and monthly rental income while minimizing the concentration risk.
3. Secondary Market. Besides the standard option to exit a property after 5 years, Property Partner boasts a popular secondary market to sell of investments before time. Investors are free to decide the amount shares they wish to sell, and put a price per share, while buyers bid for shares.

What is Property Partner?

Founded in 2015, Property Partner is a popular property crowdfunding platform from the UK aiming to simplify real estate investments. With more than 10,000 investors from around the world and £145m worth of assets under management, Property Partners ranks among the leading platforms in the UK.

The company runs a fairly easy-to-use platform where investors can diversify across a range of projects and invest based on their capacities. In return, these projects provide stable returns with a balanced risk profile.

The firm brings together property developers and real estate investors under one roof to fund various residential and commercial property development projects. As an investor, you have the option to invest in property-backed loan bonds and become entitled to monthly rental income. Moreover, you can sell off your investments in a resale market to close your stake before time.

Property Partner has balanced investment criteria, allowing you to put your money in the most suitable projects depending on your investment plan and risk appetite. There are three different investment plans to choose from, including income plans, growth plans, and a balanced plan.

Property Partner main features

Pros and Cons

After assessing the platform thoroughly, here are the main advantages and drawbacks of Property Partner:

Pros

• FCA-regulated and operational since 2015.
• Earnings from capital gains and rental income.
• Quick and easy account sign-up and fast, intuitive website with a plethora of information.
• Exit at fair market value on completion of a 5-year cycle.
• Fair fee for larger portfolios and small charges on reselling your shares.
• Liquid secondary market for selling your investment shares.  
• Auto re-invest feature to invest your monthly rental income.
• Low minimum investment requirement of just £250.

Cons

• Dividends and capital gains slightly lower than some competitors.
• Ultimate control of the property rests with the company.
• Auto re-invest feature requires a minimum of £5,000.
• Investments are only made in UK properties. 
• High fees for portfolios below £25,000

The listed pros and cons are worth considering while making investment decisions. However, you can have more information on the company’s website to learn more about risks, investment safeguards, holdings, regulations, and policies.

Is Property Partner Safe?

As is the case with all investment instruments, real estate investments come with some degree of risk, so make sure to perform your own due diligence before making any decisions.

With that in mind, let’s try to answer whether Property Partner can be considered safe.

Property Partner is the trading name of London House Exchange Limited which is regulated by the FCA and maintains a specific level of capital to provide for routine losses and regulatory expenses. You can find them in the FCA register by performing a simple search:

Property Partner structures investments through an SPV (Special Purpose Vehicle), meaning their own assets and liabilities are detached from individual investments.

Should Property Partner go bust, client assets of the SPVs cannot be accessed by Property Partner or Property Partner’s creditors. In this case, PwC will manage its sale and return the clients’ money from the proceeds.

Moreover, Property Partner’s annual statutory accounts are audited by BDO, one of the world’s leading audit firms.

Property Partner takes all these measures to maintain its integrity and protect your investments. However, these precautions are not an absolute guarantee of investment protection and you should do a complete risk assessment before investing.

Is Investing in UK Property a Good Idea?

The UK’s real estate market has sound fundamentals, and property values are increasing steadily. According to some estimates, house prices have been increasing by more than 2% every year for the last 10 years.

In the past decade, residential property values rose by more than 30%. This tremendous growth makes the UK one of the most lucrative markets for property investors. The UK’s Real estate sector is subject to economic activity in the region, and there is still a huge demand for property.

Along with a steady increase in prices, there’s a consistent increase in rents, which are rising by 2.6% to 4% annually. The demand for rental homes increased by 8% last year and it is expected to increase more in the upcoming years.

Stable prices, rising rents, and a surge in demand positions the UK’s real estate sector as an attractive investment opportunity.

How does Property Partner Work?

As one of UK’s top real estate crowdfunding platforms, Property Partner aims to make real estate investments simple and accessible for people regardless of their expertise and financial muscle.

Their operational model provides investors a convenience in identifying, evaluating, acquiring, and selling properties.

The firm acquires properties with investors’ money through a live funding event in a specified time. If the funding target is not achieved within the specified time, your funds will be transferred back in full to your account. There would be no fee in this case.

In other words, the platform does all the work while you just sit back and make investing decisions. You don’t have to go through the hassle of finding tenants, doing maintenance, and managing the property, as the firm takes care of everything.

Once you commit your funds, Property Partner will look out for suitable properties for your portfolio and recommend properties they think will be good for you.

They will also provide you with reasonable information about the properties to aid you in making informed investment decisions.

Investors commit their funds for different projects they wish to acquire, and when a project meets its funding target, Property Partner acquires it on behalf of investors.

Step 1: Open an Account

You can either create a personal account or a business account with Property Partner. In some countries, including the UK, there are certain tax benefits when investing through a limited company.

The account opening process is quite simple and requires you to submit personal details such as your name, email, address, nationality, etc. for creating a personal account.

If you are opting for the business account, you are required to submit the details of your business, including company location, company name, certificate of incorporation, beneficial owners, and more.

While setting up your account, you can secure it with an extra layer of security by creating a unique 6-digit pin code. This pin will be required to log in along with your email and password. However, it’s recommended to switch to 2-step verification codes on your phone for the highest level of protection.

Step 2: Pass the KYC

The FCA asks Property Partner to perform a complete identity-verification for all their clients as part of their due diligence process. In case they cannot verify your identity electronically, they will request you to submit two certified documents to prove your identity.

The platform also classifies inventors into three different classes. These classes include ‘high net-worth’, ‘self-certified sophisticated’, and ‘restricted’ investors.

You are required to complete a short questionnaire to determine whether or not you’re a ‘restricted investor’. Alternatively, you can declare yourself as a ‘sophisticated’ or ‘high net-worth’ investor by self-certification. By doing this, you acknowledge and understand all the risks associated with investing in this platform.

Without profile classification, Property Partner won’t allow you to buy or sell any properties on their platform. Classification takes place right after the signup and you can see your classification details in your account settings.

Step 3: Transfer Funds

Funding your account takes just a couple of clicks. You can add funds to your account by clicking the ‘Add Funds’ button in the top right corner. You can transfer money directly from your bank account after your account has been verified.

If your home currency is not GBP, you can convert it with free banking services such as Revolut or Transferwise which also provide you with a free UK bank account.

The FCA requires the firm to verify bank accounts to ensure the security of your account while maintaining anti-money laundering standards. Therefore, your bank account must be verified before you transfer funds to your Property Partner account. The verification is done electronically for both international bank accounts and UK bank accounts.

There’s no fee on transferring funds to your account. For the UK bank accounts, funds transfer usually takes a few hours. However, if you are a foreign investor, funds transfer might take several days. There’s no minimum amount requirement for bank transfers.

Step 4: Make an Investment

Making an investment and building a diversified property portfolio is quite simple with Property Partner. After transferring funds to your account, you can choose the property and decide how much you want to invest. You just select the property and commit funds, rest is Property Partner’s duty.

Once you make an investment, you start earning rental income every month, which you can track through an intuitive dashboard. All the properties are revalued every six months, and you can keep track of capital gains/losses and how much you have generated from your portfolio.

You can exit at market value at the completion of a 5-year exit cycle. Alternatively, you can sell your investment shares to other investors on the resale market if you wish to.

How Much Can I Make at Property Partner?

Property Partner enables you to generate two-dimensional income by investing in the property of your choice. You can generate monthly rental income in the form of dividends, and also benefit from capital gains as your portfolio value grows due to an increase in property value.

The platform has different plans for different investors, some plans focus on growth, and others focus on generating strong monthly income in the form of dividends. You can view the specs of each plan and choose the most suitable one.

Rental Income

When you make an investment in Property Partner, you become a beneficial owner of the shares of the property you have invested in via an SPV. After the shares are acquired, you can receive monthly dividends in proportion to your investment.

The monthly dividend income you receive is calculated as the gross rent from tenants, minus all the property-related costs, including maintenance, furnishing, tax, and other expenses.  

Capital Gains

Capitals gains are the profits you generate by selling your property shares for an increased price. If the value of the property you had invested in goes up, you can sell its shares to other investors at an increased price, and benefit from the capital appreciation.

Capital gains are calculated by taking the difference between the price at which you purchase the property and the value at which you sell its shares.

Property Partner claims to have consistently beaten the FTSE all-share index in terms of annual returns. FTSE all-share has been returning 6.1% per annum, while Property Partner returned 9.1% per annum for the past two decades. As always, however, you shouldn’t rely solely on past performances for projecting future returns. 

How Does the Secondary Market Work?

The secondary market is a resale venue and it works like a stock market where you can sell your investment shares to other investors. This market allows you to exit from your investment before completing the 5-year exit cycle.

Selling your investment is simple, you begin with enlisting your shares on the market for a value you think will attract other investors. The platform assists you in determining the price by listing the latest share valuation calculated by an independent chartered surveyor. You can find this valuation at the individual property page you have chosen to sell. Along with the latest valuation, you can see the ‘buy price’, the price at which other investors are selling their shares.

Once you list your shares, investors start bidding for these shares, and you can make a deal with the highest bidder if you want to sell quickly. You have to pay a small fee of 2% for purchasing shares and 0.5% as Stamp Duty Tax Reserve.

Example Project: Student Dorm

To understand how a typical investment works at Property Partner, let’s go through an example project. For this example, we’re going with a 53-bed, purpose-built student accommodation in Newcastle.

This project is listed on the resale market and seeks funding of £19,04,949 to complete the development of 53-bed student accommodation. The purchase price of this property, at the time of fundraising, was £3,297,000.

You can access a lot of information about this property, including its location, floor plan, composition, mortgage details, exit strategy, rental information, and some other information. In addition to property details, you can view financial insights, including rental income breakdown and share valuation information.

Rental income breakdown includes details about dividend yield, gross rent, gross revenue, service charges, and some property maintenance costs.

On the other hand, the share valuation includes the total share capital, value per share, amortized purchase cost, and the latest property valuation. 

In our case, the latest share value of this property is £190.49, and the total share capital is 1,000,000. The latest property valuation is £1,904,949. The gross rental yield is 8.38%, and the dividend will be paid from this amount after deducting service charges and other costs.

Remember, the information provided by the platform is estimated, and you should perform your due diligence. Your returns will depend on how many shares you buy, what property costs are deducted from the gross rental yield, and how much the property value changes.

What Happens if Property Partner Goes Bust?

All the investments in Property Partner are treated separately. Your investments are neither associated with the firms’ assets and liabilities nor with other investors’ funds.

If the platform ceases to exist, there’s a plan to appoint an alternative manager to either manage your assets or sell them complying with the investment terms.

Each investment is deposited into a separate account, and if the platform shuts down due to financial distress, your funds (you haven’t yet invested) will be paid back according to the FCA’s regulatory requirements.

Uninvested funds are held on trust in a segregated client monies account at Barclays Bank which is covered by Financial Services Compensation Scheme (FSCS) up to a limit of £85,000.

Property Partner Fee Schedule

Property Partner charges different types of fees, including asset management fees, transaction fees, account fees, and sourcing fees.

• Assets Under Management Fee: AUM fee is charged on the equity value of each property. If your portfolio is valued over £25,000, the fee will be 0.7%, and if it’s valued below £25,000, then the fee will amount to 1.2%. 
• Account Fee: The account fee is £1.00 and is charged monthly to all clients.
• Transaction Fee: This fee ranges up to 2% of the transaction amount.
• Sourcing Fee: Sourcing fee is 3.0% + VAT on the purchase cost of the property for New Listings.

Property Partner Alternatives

Numerous platforms are operating in the real estate crowdfunding space. These are some popular alternatives to Property Partner in Europe.

1. EstateGuru: Largest in continental Europe

EstateGuru is one of Europe’s leading real estate crowdfunding platforms where you can invest in property-backed loans such as business loans, development loans, and bridge loans. EstateGuru lends money to project developers, and they make interest repayments to investors according to agreed terms.  

• Regulated by the FCA in the UK and National Bank of Lithuania
• More than 90% of projects are backed by 1st-rank mortgages.
• The secondary market allows you to sell your investments for an early exit.
• The minimum investment limit is €50
• The average annual return is 11%.
• More than 1,400 loans have been funded with an average LTV of 59%.
• Most loans are short-term with an average loan term of 14.2 months.
• Auto-invest feature that works quite efficiently when combined with the €50 investment minimum.

2. AblRate: Popular UK alternative

Founded in 2014, AblRate is an FCA regulated real estate crowdfunding platform based in England. This platform gives investors access to a variety of secured loans such as development loans and bridging loans. Most loans are backed by high-value assets such as aircraft, yachts, and power stations.

• Lucrative returns of 8% – 13% on single property portfolios and 7% – 10% on diversified portfolios.  
• Impressive statistics for the loan book with low default rates
• The total amount funded for loans so far exceeds £54 million, out of which more than £9 million is paid as interest repayments.
• A secondary market where you can sell your investments through bids and offers.
• The firm accepts European investors with a UK bank account (like Revolut or TransferWise)
• Depending on the loan, investors receive monthly interest and initial capital.  

3. Rendity: German and Austrian properties

Based in Vienna, Rendity is an innovative fintech startup where investors can generate a passive income by lending their money to high-quality real estate developers. Anyone who is above the age of 18 and has a bank account in a European bank can invest in Rendity.

• Annual returns of up to 8%.
• No fees for investors.
• The invested capital exceeds €35 million, out of which €7.3 million is returned.
• The minimum investment limit is €500, and most properties are selected from urban areas.
• Rendity has two plans: a growth plan and an income plan, similar to Property Partner.
• The exit cycle is only 24 months.

Concluding the Property Partner Review

Property Partner is regulated by the FCA and takes multiple measures for investment security. They also allow you to build a diversified portfolio and buy properties at discounts, providing you an opportunity to generate capital gains.

Moreover, they have an active resale market where you can sell the shares of your investments if you want an early exit.

For accounts below £25,000, the fees will ultimately bite into your earnings. However, for portfolios larger than this threshold can enjoy reduced fees and white-glove onboarding and customer support.

If you’re not a sophisticated investor, you can begin with managed investment plans. The firm does all the heavy-lifting, while you just decide what to invest and where to invest, they take care of tenants, maintenance, and regulations.

Taking into account all these factors along with pros and cons, we can say Property Partner is a viable investment avenue for anyone who wants to dive in the UK’s growing real estate sector.