Advisers whose clients want exposure to property should consider other ways of investing in the property market that may be more liquid than bricks and mortar.
John Jenkins, chief executive of Amicus Finance, said that more investors were considering short-term property lending as a way of benefiting from the property market, but without either buying a second home or investing in property funds or stocks and shares.
Mr Jenkins said: “Many investors would like to increase their exposure to the UK property market above owning their own home, but are put off the idea of buying a second home or can’t afford to do so. Investors often have a limited appetite for alternatives such as property funds or shares.”
According to Amicus, demand for short-term property lending has boomed in line with the housing market. It has grown from about £1.4bn in 2013 to an estimated £3bn a year in 2015.
His comments came as lending platform Crowdstacker published research that showed 44 per cent of investors wanted to increase exposure to the UK housing market. Despite this 36 per cent of investors were concerned about the risks involved in managing properties.
Adviser view
Alan Solomons, director for London-based Alpha Investments and Financial Planning, said: “None of what Mr Jenkins has claimed is a surprise. Residential property has gone up significantly over the long term.
“However, the rise recently in house prices is, in my opinion, unsustainable. At some point, the bubble will burst. Property is illiquid. The July Budget has changed cash-generative benefits of buy-to-let for the worse. Lending, as the article talks about, has its risks too.”
