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    • Pingu1
    • By Pingu1 8th Aug 17, 2:03 AM
    • 48Posts
    • 0Thanks
    Zoopler property ISA
    • #1
    • 8th Aug 17, 2:03 AM
    Zoopler property ISA 8th Aug 17 at 2:03 AM
    Hi, I was browsing Zoopler and noticed there is the option to invest in property:

    Has anyone had any experience of this? Whats the catch? I own my own home, so I know a little about property, but not much. I have some savings in a building society savings account, but the interest is minimal.

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    • bowlhead99
    • By bowlhead99 8th Aug 17, 4:53 AM
    • 8,089 Posts
    • 14,744 Thanks
    • #2
    • 8th Aug 17, 4:53 AM
    • #2
    • 8th Aug 17, 4:53 AM
    I almost didn't bother replying, given you called it "Zoopler" in the thread title (not a real word or a brand name) and the first line of the post where you tell us what website you were browsing and again refer to it as Zoopler, when just a few words later you actually paste the web link and we can see you mean Zoopla and you know damn well how to spell it.

    When I'm in a grumpy mood, I generally feel that people who don't bother to take a few seconds to pay attention to detail in what they're writing when asking for help and opinion, probably don't pay much attention to what they're reading either - so probably misunderstand the product and deserve all they get, and probably won't read my reply properly so why should I spend my time on it. But still, we're here now.

    Has anyone had any experience of this? Whats the catch?
    The "catch" depends what you are expecting from the product.

    If you are expecting it will deliver the "simulated historic returns" of 6.5% every year, you might think it's something of a catch if it drops 60% in value over the next couple of years and then when you want to get your money out you face lock-up restrictions because they can't just sell a residential property development overnight for you to take your money out if lots of people want out at the same time and only 10% of their overall assets are in cash.

    I own my own home, so I know a little about property, but not much.
    Right, so if all you know is about owning a single residential property to live in, then you likely know very little about the economics of financing and acquiring a national portfolio of residential properties and getting them let out to tenants over time through a range of market conditions. That's what they'll be trying to do with the money that you and others contribute to the Bricklane fund.

    So, in a sense it's going to be better that you leave it to them to do the work rather than try to build a diversified property acquisition and lettings business yourself. However, appointing someone else like a fund manager to do the legwork means you will be paying them for it out of the available returns, and those available returns can be negative in any given year, or for several years in a row.

    I have some savings in a building society savings account, but the interest is minimal.
    Not negative though, which is a prospect that this fund offers. The factors that cause you to get low returns on your cash accounts are the ones that have helped residential properties make very good returns in recent years, as mortgages on residential properties are super easy to get and incredibly cheap compared to pretty much any time in recorded history. As such, no doubt the "simulated historic performance" will be impressive as prices have risen steadily with ongoing availability of cheap credit. That's something that could easily reverse over next five years or so.

    Presumably you already have more than enough exposure to residential property prices, by owning your own home as your single most valuable asset and perhaps the majority of your personal wealth. If you are going to invest through an ISA, most people might be better served with an S&S ISA invested into a broader spread of asset types, eg. funds that invest in company shares around the world, funds that invest in bonds issued by companies and governments around the world, funds that invest in commercial property (office blocks, shopping centres, logistics depots), Infrastructure etc.

    The fund has not been going long enough to have much of a track record on which to make a judgement on the skill of the fund managers in navigating a range of market conditions. But what you can say is that it's not a particularly low cost proposition (2%fee plus ongoing 0.85% management fee each year) and that's without even clicking through from the headlines in the advert on Zoopla who are promoting the fund, to the real fund manager who is actually offering it, to find the small print.
    Last edited by bowlhead99; 08-08-2017 at 4:58 AM.
    • dunstonh
    • By dunstonh 8th Aug 17, 10:45 AM
    • 93,430 Posts
    • 60,957 Thanks
    • #3
    • 8th Aug 17, 10:45 AM
    • #3
    • 8th Aug 17, 10:45 AM
    Brickline has not been running long and doesnt have many properties. This means the spread is not well diversified. Inevitable given the short time. This also means that their simulated returns are nothing more than a marketing gimmick.

    Liquidity is the main issue as well as the fact that no-one should be investing solely in one asset class. Most of the model allocations have property around 5%-10% of your overall risk based investments. You are considering 100%.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Pingu1
    • By Pingu1 12th Aug 17, 9:41 PM
    • 48 Posts
    • 0 Thanks
    • #4
    • 12th Aug 17, 9:41 PM
    • #4
    • 12th Aug 17, 9:41 PM
    Thank you for the replies, I will look up an S&S ISA instead.
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