The House Crowd founder and chief executive Frazer Fearnhead explains why the North West is particularly attractive for peer-to-peer property investors…
OVER THE PAST FIVE years, various legislative changes have made it virtually impossible for a private investor to build a profitable buy-to-let portfolio. However, property is still undoubtedly viewed as an attractive asset class. What has changed is the way people can invest in it.
With the advent of peer-to-peer property lending, people can now invest in property with less capital outlay for potentially better and more consistent returns. They can also enjoy better security, greater liquidity and tax-free income via a self-invested personal pension or Innovative Finance ISA – all without the hassle of dealing with tenants, burdensome regulations and maintenance issues.
If people can rid themselves of the anachronistic assumption that they need to own an asset to benefit from it, they should appreciate that P2P property lending offers a much better investment than buy to let ever did.
However, even when you are lending against property rather than purchasing, the value of the secured asset and the underlying property market are paramount to the overall success of your strategy. The House Crowd provides development finance throughout the UK, but our focus is predominantly on funding developers in the North West who are building good quality, affordable homes in areas with strong demand. Why do we focus on the North West?
We are based there, so our view that it’s the best place to invest may be biased, but it’s supported by research from Lambert Smith Hampton, which revealed that 68 per cent of property investors see it as the best place to invest. Property values are less affected by Brexit and the vagaries of foreign capital. Capital values are forecast to increase between four and five per cent per year, over the next few years.
Whilst that doesn’t directly affect someone making a P2P development loan, it does mitigate the risk of the development project failing as it has not achieved its predicted sales prices. My top three property investment areas in the North West:
Stockport: The commuter town boasts direct rail services to Manchester, Liverpool, Birmingham and London. With a £42m transport interchange under construction and £1bn being invested across retail, residential and commercial sectors, Stockport is establishing itself as a regional business hub.
Altrincham (including Bowdon and Hale): Altrincham town centre has experienced a fantastic regeneration over the past seven years thanks to the pioneering artisan food and craft market. Regardless of that, entrepreneurs, footballers and celebrities have gravitated towards the area for decades. It’s not cheap: the area has some of the most expensive roads in England outside London. However, with prices increasing steadily year on year, it’s a safe bet.
Wythenshawe: Wythenshawe’s position close to Manchester’s ‘Airport City’ is a huge bonus. There is massive infrastructure investment and many companies are moving there. House prices are predicted to grow by as much as 36 per cent over the next five years.
The House Crowd is based in Altrincham and has a strong team which knows the local markets very well. This focus on the North West gives the firm an unparalleled level of expertise.