A British residential property company is to launch a listed vehicle that will provide ordinary investors with exposure to the country’s housing market for as little as £1,000 each.
Mill Group Residential will announce plans today to start a housing real estate investment trust (Reit) using both crowdfunding and institutional investment.
The Reit —a tax-efficient vehicle for owning property — will be called Mill Residential Reit and will be chaired by Ian Ellis, the former chief executive of Land Securities Trillium.
Mill Group said that the vehicle would be Britain’s first “mainstream” Reit in which people could invest a minimum of £1,000 through SyndicateRoom, an equity crowdfunding platform, alongside professional institutional investors.
David Toplas, the chief executive of Mill Group, said that it was hoping to raise more than £300,000 from SyndicateRoom members, which would be added to the £2 million that has been committed by Mill Group’s management team, professional investors, wealth managers and private client brokers.
He said that the Reit would aim for a stock market listing in the “near future” and would enable investors to gain access to the housing market “without having to physically own property assets”. This could make the Reit particularly attractive to retail investors who have not managed to get a foot on the housing ladder yet.
Reits manage properties and typically are exempt from paying tax on rental income or corporation tax on property capital gains, giving a competitive advantage over non-Reit property companies.
The vehicles are required to pay out 90 per cent of their income in distributions to shareholders, who can buy shares in a Reit as they would in any other listed company. Until now, most Reits in Britain have focused more on commercial property, such as British Land and Land Securities.
Mr Toplas said that if Mill Residential Reit listed successfully it would use its special tax status to buy companies that own residential properties. It has bought a portfolio of seven properties that it said were all in “desirable locations”, mostly let and ranging in value from £180,000 to £430,000.
It will focus on buying houses in London, the south of England and the Midlands but could explore other parts of the country “where good opportunities exist”.
“There is real scope for value to be added through residential development and refurbishment, using the special tax status of a Reit to both acquire and hold residential investment properties in this fragmented market,” Mr Toplas said.
“We recognise the role that crowdfunding platforms such as SyndicateRoom can play in helping businesses like ours to raise finance from retail investors who appreciate the total returns from a residential portfolio and want an easy and liquid alternative to a self-managed, buy-to-let property.”
Mr Toplas founded Mill Group in 1994, and the company will act as investment adviser and asset manager to the Reit in exchange for a fee.
Mr Ellis, who will chair the Reit, said that it would provide investors with “significant opportunity to gain access to the vast and growing UK residential market”.
He added: “Renting long-term is now the accepted norm for a large cohort of young professionals and new families, and the Mill Residential Reit will provide good-quality, private rented accommodation in attractive locations where there is strong local demand.”
A study in May by the Intermediary Mortgage Lenders Association forecast that, by 2032, more than half of all homes in Britain would be rented.
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