PROPERTY lending platform Propio is launching an Innovative Finance ISA (IFISA) before the end of the tax year.
Propio said on Wednesday that its tax wrapper will come in three versions – cautious, balanced or adventurous – depending on investors’ appetite for risk. It will offer a fixed rate return of up to seven per cent a year, with investors’ capital spread across a portfolio of property-backed loans throughout the UK.
Money invested through the platform is used to provide loans to property professionals, helping them build and refurbish properties. Each loan is selected by the platform’s in-house team of property experts and underwriters. Investors can sign up, lend and withdraw money via a smartphone app.
The Property ISA offers the potential for better returns than the traditional asset classes of equities, bonds and cash, Propio said.
Read more: IFISA guide: Property loans
The minimum investment is £100, up to the £20,000 ISA allowance for this tax year, which ends on 5 April.
“People are sick of earning peanuts on cash ISAs,” said Tom Buttress, the firm’s co-founder.
“IFISAs, like ours, offer the potential for better returns by opening up access to alternative asset classes. Some people are scared by the volatility of stocks, and while investing in small-cap companies can generate strong returns, property is largely seen as more defensive and lower risk because investments can be backed by real assets.
“Our Property ISA is designed to sit in between cash and equities, offering better returns than a basic savings ISAs but without the unpredictability of equities.
“Unlike buy-to-let, with Propio you’re not actually buying property but investing into a loan secured against it – a bit like a mortgage but over much shorter time scales. This means that you’re less exposed to the fluctuations of the property market, making it a way of gaining access to the asset class without all the risks and hassle of ownership.”
Buttress added: “We know that traditional property investing requires time, money and patience, making it inaccessible to most people. So, we’ve come up with a smarter way for everyday people to access better, more stable property returns. One that works for a new generation of investors and helps build much needed homes for people in the UK at the same time.”
Propio was launched a year ago and has since seen almost £8m invested via the platform.