When I talk to people about democratising property investment, I’m sometimes met by a look of confusion. Owning your own home is a pipe dream for many young people. Long gone are the days where you could buy a house for £800 - that is now worth £550,000. 

If a person can’t afford their own property, how can we expect them to believe that having funds to invest in real estate is attainable?

Digital property investment platforms, which utilise the fractionalisation of investments, are the answer.

Property investment is a rigged game

It is increasingly difficult to get onto the property ladder thanks to the pandemic, as well as political factors such as Brexit, and the cost of inflation and supply chain issues we are currently experiencing. 

Halifax has estimated that families will have to spend an additional £145K, in order to be able to buy the most desirable type of property: a semi-detached house. 

The result is people are renting for longer or staying at home with their parents well into their 30s. Government schemes such as shared ownership can help but those participating do not own the property in its entirety.

The situation is no better for part-time landlords. Buy-to-let used to be an accessible way for the middle class to make their savings work harder in a tangible asset and was heavily pushed in the 1990s by the incumbent government. Today, it’s a shadow of its former self. A flood of tax and regulatory changes in recent years have made it too costly and too risky for most part-timers – leaving it the preserve of big-time letting agents and property magnates.  

It is extremely difficult to buy property, but by letting people invest in property through fractional ownership, it is possible to not be completely put out by rising property prices. 

New options mean wider accessibility

We don’t have to subscribe to the status quo, which is dominated by banks and the uber wealthy; we can all have a piece of the pie.

Digitisation, like most things, has its positives and negatives, albeit there are more of the former than the latter. A system that enables direct investment allows for those providing capital to “cut out the middleman”; it removes a layer of bureaucracy and additional fees that would otherwise be present.

Not only is it possible to use platforms that allow investment into shares and bonds, but now fractional investment is an option too. The UK has always been an innovator when it comes to evolving market trends, and bringing about lower thresholds for property investment and making it more accessible for retail investors is yet another example of this. The reason for this is that alongside innovation, comes sensible regulation, to ensure that retail investors are protected.

For example, the FCA recently consulted industry experts on the promotion of “high-risk” investments as part of a clampdown on misleading marketing in alternative asset classes. The likes of investment-based crowdfunding and peer-to-peer lending agreements were under the spotlight. Having this type of consultation helps offer a layer of protection for investors as these innovations evolve and grow. Such innovation means that a global pool of investors now have access to a property sector they previously would not and co-investment can make property investment affordable to more than the world’s richest 1%. 

The future is digitalised

Whilst the housing crisis in the UK is set to continue, we can still encourage investment into real estate for those who have been priced out of traditional bricks and mortar purchases, through the use of technology. It is high time that the property market capitalised on the technological advances of the 21st century. Digitalising this sector has the capacity to make real estate investment simpler, more affordable, whilst widening accessibility.