GRAY Stern (pictured), the co-founder of buy-to-let peer-to-peer lender Landbay, is aiming to shake up the UK property market with his new company.
The investment portal, called Dot, enables amateur landlords to invest in UK and US properties that it has already sourced via estate agents and property portals. The properties come with a pre-approved mortgage, enabling anyone with a 30 per cent deposit to buy them instantly.
“Landbay has done a great job of specialising in and targeting professional landlords who run their business as a businessmen,” Stern told Peer2Peer Finance News. “I saw the opportunity to provide that professional solution to amateur landlords – people who don’t have time to build a property portfolio at the same time as holding down a day job.”
As part of its package, Dot provides all the services a landlord would need, including insurance, tax compliance, lettings and management, thereby taking some of the hassle out of the process.
Stern suggested many of Dot’s customers would be higher-rate taxpayers who have built up enough savings for a deposit and want to take advantage of the tax benefits of buy-to-let property. However, he claimed young Londoners who can’t afford a property locally could also use Dot as a way of getting onto the housing ladder.
Dot’s mortgages are around 0.5 to one per cent more expensive than those provided by Landbay and challenger banks because they do not require a personal guarantee.
“If something goes dramatically wrong then the maximum liability owed by the investor is the deposit,” Stern explained. “With traditional mortgages, the lender can pursue you personally through the courts.”
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Stern also said that because Dot is lending against the property’s expected rental income, rather than the customer’s credit score, it can provide a mortgage to pretty much anyone – as long as they can afford the deposit.
“The private rental sector is an incredibly important part of the housing mix in the UK,” he added. “Any product that is designed to make the market more efficient is good for developers – and the more sales and bigger margin they generate, the more they will invest in building new homes.”
This article featured in the July edition of Peer2Peer Finance News, now available to read online.