New UK scheme for buying shares in a property

[Brendan Burgess]

[broken link removed] is a new scheme which allows individuals buy shares in specific houses and so participate in the rise or fall in the housing market.

In theory, it allows people get their foot on the property ladder. It would also be a good place to put savings which you intend to use to buy a house as they will rise and fall in line with property prices.

In practice, I don't know whether all the benefits would be wiped out by high costs.

But it's a good idea.

I wonder could one form an Irish unit linked fund which invested in maybe 100 residential properties. The returns on this fund should mirror the housing market.

Brendan

 

[shanegl]

I believe you can now trade REITs on the FTSE. Might be an alternative to consider regarding costs. I think they had to introduce specific legislation for it.
I might be wrong, but I believe one of the requirements for setting up a retail unit linked fund in Ireland is that the underlying securities are liquid and transferable.

 

[LDFerguson]

Wealth Options had a fund for investment in Irish residential property in Dublin 2, 4 and 6, only available through brokers. But it was due to close recently.

[broken link removed]

Liam D. Ferguson
www.ferga.com

 

[DrMoriarty]

Article in the (London) Times business section on PIM and similar schemes [link may require free registration].

 

[Brendan Burgess]

Hi Liam

The D246 is interesting. Have you seen an independent review of it anywhere?

As I see it, you are tied in for 6.5 years, so it would not be suitable for someone thinking of buying a house in case they need to realise their cash quickly.

The tranaction costs/charges are very high for such a short term investment.

9% stamp duty on the purchases.
3% on the amount invested.
2% on the cost price of each building bought
1.5% annual management charge
And a share of the profits.

Brendan

 

[GreatDane]

Hi

Nice to see these type of funds available for both UK and Ireland, but having taken a quick look into my crystal ball, I'm forced to ask have them come on the market too late - in terms of residential investments for circa 6-years from 2007, with charges etc to be considered and likely low level growth in the next year or two (with price reductions in certain quarters also forecast) ?

Am very interested in the concept btw, don't get me wrong here

Regards

G>

 

[F. Kruger]

I think that the REIT structure will suit a lot of people that are investing in property. They will particularly appeal to those that do not have inflated expectations on what type of returns that can be achieved, either by capital growth or yield.

This is not the say that they are a property investment panacea but, rather, that they fill a gap in the market as part of a property portfolio.

A ‘collective’ investment in REITs would give you access (which might have been unavailable to individual investors) to property in a number of sectors (residential, office, shopping centres etc) with a large geographical spread. The outlay is comparatively low and you can exit a lot easier than a direct investment. Syndicated or Direct investment in property is not regulated by the Financial Regulator, a ‘collective’(wrapped) investment would be.

They will probably be more suitable for income seeking investors that can invest for the long term and gain comfort from things like corporate governance, diversification, and restrictions on debt-financing, gearing and development.