This is a guest blog post by Lee Grandin, Managing Director of UK-based Lend2Landlord. Don’t miss Lee’s panel discussion:
? 12/07/2016 5:00 pm
Panel Discussion “Real Estate Crowdfunding – Funds, REITs and Individual Deals”
We British have a love affair with homeownership. But while we’d all love to own castles and stone cottages there aren’t enough for all 65 million of us. We haven’t built enough houses for decades which has put pressure on property prices – and in the process, our landlords and property entrepreneurs have become some of the wealthiest individuals in the country.
Since 1996 the product on everyone’s lips has been ‘buy-to-let’ – a type of mortgage where landlords borrow money based on the rental income they receive from tenants rather than their personal income. There were landlords around before buy-to-let but for the first time they could own a plethora of properties without spending much of their own money.
I first got involved in this untapped goldmine working as an independent financial adviser in the 1990s. Then a few years later I started to build up my own mini-empire as a landlord. Not that it began in pleasant circumstances – I bought a house to live in, split up with my girlfriend and decided to rent it out with a buy-to-let mortgage rather than live at the scene of the breakup.
Still, I was so confident in buy-to-let that I started my own brokerage in 1998 called Landlord Mortgages, which helped others build property portfolios and is still going strong. Conditions in Britain made things better and better, as investing in property became not only profitable but a necessity for the country to operate.
The government stopped building council houses, meaning tenants were suddenly relying on private landlords rather than the public sector to rent. And as population growth swelled so did house prices. It’s hard to believe, but to purchase your average UK house in 1998 cost £65,000 ($81,000). By the end of 2007 that rose to £184,000 ($229,000) and now you need to fork out £204,000 ($253,000) (figures from Nationwide).
Bringing us to the present day, the government is now taxing landlords more heavily, but on the flipside, the market is evolving with ever-cheaper forms of funding. Trying to stay ahead of the game, I was inspired by peer-to-peer lending platforms like Rate Setter, Funding Circle, and Zopa – which connect landlords or developers to funders without banks sticking their noses in. I have now founded Lend2Landlord.com, which connects multiple lending platforms to the landlord or developer because appetite to invest in UK property is as strong as ever.
Also, my service helps developers build more homes, which is virtuous as well as profitable in a market where we desperately need more homes. With peer-to-peer money can come from anywhere, whether in Britain or abroad – and the more cash merrier I’d say. After all, London has only got where it is as a thriving global city due to foreign investment.
This will continue by the way. Since we voted Brexit the dollar has strengthened against the pound, making it more cost-effective to invest in our property from across the pond. In December I’m heading to North America with the remit of debunking myths about our property market. Where is good to invest in UK property? How should you invest? And do we all drink tea? Well I’ll do my best to educate and explain, and without tea I wouldn’t have the energy to do so.