It is easy to forget that behind the scenes of the supposed landlord exodus, one in five UK households still rents privately and there are still attractive opportunities in the buy-to-let and build-to-rent sectors.
This truth is not lost on the slew of property investment platforms out there, which continue to grow, many of which are technically peer-to-peer firms or intermediaries rather than asset managers.
You might even say there has been an air of over-confidence, as an explosion in P2P property investment has sparked a flurry of interest from institutional investors.
However, lack of a track record coupled with lingering suspicions surrounding the wildly different range of approaches taken by such firms, has held the sector back.
It is not hard to see why — it is all about risk. At one end of the spectrum, some offer seemingly attractive returns riskier development projects without any concern for their performance.
At the other, you have asset managers with a vested interest in performance.
In every new fintech industry, harsh lessons are learned. Some models fall by the wayside and it is normally those that cut corners. Property investment platforms have not experienced a day of judgement like this yet.
Sky-high default rates sparked a wave of platform collapses in China this year and the Financial Times revealed in November that £112m of the £180m in Lendy’s loan book was at least one day overdue in October. Warning signs the day of reckoning may be closing in?
Natural selection is coming in 2019 and the defaulters will identify the fittest so advisers do not have to.
We just have to get the bloodletting out of the way first.
Source: FT Adviser