Bricklane - Property ISA

Bailey90

Hi all...
I came across Bricklane - Property ISA earlier today and wondered if anyone had invested money in this way?
How easy is it to access money once invested?
How profitable is it? .
And what are the real risk?

Thanks in advance
:beer:

bigfreddiel

What did their prospectus say?

assured

I'm interested in what others think too.

Presumably the rental income is equivalent to share dividends? If so this is only around 4.4%. Not sure how they reach the 6.5% they advertise.

Bailey90

I can't seem to find anyone or get further information from the Web... until I do. I don't want to risk it. The limited information on the site doesn't seem to be backed up by anything.

AnotherJoe

Its not really a property ISA, since, for a start, there is actually no such thing.

AFAICS from a quick skim, its really just an S&S ISA in which 100% of the investment is with one single company. That company acts as a landlord, owning property and letting it out. So its no different to opening an ISA, putting all the money into say AstraZeneca, and then calling your ISA a "Health ISA".

It does seem to be genuine, eg its not an actual scam, which doesn't mean it will work out of course.

It might be an alternative to being a direct landlord, either for people who dont want the hassle and risk (all eggs in one basket especially), or who would like to be a landlord but dont have enough money to buy a property, or dont want to leverage their money via a BTL mortgage. You'd get the returns, minus of course overheads.

What they evade in the detail on their website is that since its an ISA, you cannot also put money into an ordinary S&S ISA in the same tax year and i find it extremely poor (to say the least) that this is skated around and not explained explicitly in their FAQ especially since they do talk about cash ISAs in that respect, but not S&S ISAs.

dunstonh

There is no such thing as a property ISA. However, certain property investments can be held within a stocks & shares ISA.

Whilst it is genuine I do have some concerns of the marketing of it:

Their website shows their "property ISA" vs a cash ISA and the difference in return over 5 years. First of all, this is a stocks and shares ISA and should not be compared like that against a cash ISA in isolation. This is a investment risk whereas cash ISA does not have investment risk. It should be up against other property share and bricks and mortar property funds if you really wanted a close comparison. Or even a similar risk multi-asset fund.

Also, the 5 year performance is simulated. Not real. It also doesnt state the dates of the simulated 5 year period. Past performance indicators should do this as a compliance requirement. There is a link that gives more detail of the dates and calculation but its almost as if it hidden away on purpose given the crude nature of it.

It is also expensive. 2% initial from the provider in an era when no initial other than advice cost is the norm makes it expensive. 0.85% is fair enough for what it is depending on what costs are built into that 0.85% and how many are not included but suffered by the REIT.

In most of the model allocations for investing, property tends to be around 0-15% of the portfolio. It does make sense to include property as part of most portfolios and there are plenty of long standing property share and bricks & mortar funds with long histories out there. Both active and passive in the case of property share. However, this shouldnt be a 100% investment.

On the risk scale, in isolation of other assets, this would appear to be very high risk. 100% in one company in a niche area. AFAIA, the fund does not appear on the whole of market and is a non-traded REIT. So, you are limited in building a proper portfolio as you cant spread your S&S ISA annual allowance over multiple providers to create that balance. Also, that means that the level of disclosure is lower than you would see on whole of market investments. There is also very high liquidity risk on this type of fund as the assets are not liquid. Withdrawals could be suspended/delayed or reduced in value. A risk in common with bricks and mortar funds.

Finally, as it stands, it owns just one property (bought in Oct 16) with several under offer. It is new. No track record, low liquidity and a high risk capital at risk investment. It is genuine but you are taking one hell of a leap of faith if you go with it.

The blackrock global property securities equity tracker fund
made 26.7% in the last 12 months, 10.4% in the year before, 6.3%, 14.4% and 13.5% in the earlier three years.
The M&G Property portfolio made -6.6%, 10.8%, 13.8%, 3.4% & 1.9%.

The negative year in the latter reflecting the liquidity issues of the UK market following the Brexit referendum result and larger than normal volumes of investors wanting their money out.

Bailey90

Hi all,

Thanks for all your replies it has been really helpful in me making the decision not too invest in this way.

I hope the thread continues to help others make up their mind in what seems like a bit of an over sell in their marketing

Thanks Again

jimjames

Bailey90 wrote: »

Hi all,

Thanks for all your replies it has been really helpful in me making the decision not too invest in this way.

I hope the thread continues to help others make up their mind in what seems like a bit of an over sell in their marketing

Thanks Again

What other investments do you have? Are you looking at different non cash investment options for this years ISA allowance?

AnotherJoe

dunstonh wrote: »

There is no such thing as a property ISA. However, certain property investments can be held within a stocks & shares ISA.

Whilst it is genuine I do have some concerns of the marketing of it: Ditto. Very dodgy given what you've explained below.

<snip>

Finally, as it stands, it owns just one property (bought in Oct 16) with several under offer. It is new. No track record, low liquidity and a high risk capital at risk investment. It is genuine but you are taking one hell of a leap of faith if you go with it.
.

OK I've changed my mind, it is verging towards a scam.

One measly house ?And they've given a five year history despite owning that one house for five minutes? And give the impression they have property in 3 or 4 cities? Shysters IMO.

Also numerous newspapers have written these guys up as if they have a large portfolio of houses? IMO they are equally complicit in making this look much more legitimate than it is.

assured

Thanks. Appreciate your help with this. I wonder if there's any benefit of investing in BrickLane's actual bricks and mortar over using a property index tracker?

They say you'd own shares in the property.

bowlhead99

assured wrote: »

Thanks. Appreciate your help with this. I wonder if there's any benefit of investing in BrickLane's actual bricks and mortar over using a property index tracker?

The benefit would be if the value of the properties they acquired in their small concentrated investment portfolio - and therefore the value of their investment vehicle in which you have a stake - went up in value much more than the weighted average return of all the other worldwide property investment portfolio companies that think they are doing a good job of it too.

I'd suggest you don't have sufficient information to be confident that that's the case. The comments from dunstonh and others are sensible, as usual.

They say you'd own shares in the property.

Having shares in the actual bricks and mortar and getting registered as a part owner of all the land and buildings at the land registryregistry (i.e. shares in the actual property) is *not* what is going to happen because doing that with hundreds of part owners is entirely impractical.

I haven't looked them up, but the way this would be done would surely be that you own some share of their investment company or other suitable vehicle which in turn buys the property or lends money to another company to allow it to buy the property. You don't literally buy an individual brick of the property for yourself.

That's basically how property investment companies and investment funds work, and there are hundreds to choose from - I assume they aren't breaking new ground here.