Proptee: £0 commission property stock exchange | Hacker News Reader

Proptee: £0 commission property stock exchange

proptee.io

33 pointsaluxian57 comments

Whilst this is no doubt innovative, everything that is abysmally wrong with property ownership in the UK stems from complicated ownership structures like that being proposed here. Just look at the leasehold scandal (and upcoming reform), the push for commonhold, and the things that go wrong (such as the cladding scandal following Grenfell).

Homes are not investment vehicles to make people wealthy - they are a fundamental human right that many people are priced out of, or subject to unscrupulous landlords and freeholders exploiting what is still essentially a feudal system.

Homes are not investment vehicles to make people wealthy..

A huge number of people use the equity from investing in a house as a retirement fund. They very literally are investment vehicles. You can argue that they shouldn't be, or that there should be a class of housing that isn't treated like an asset, but that would be very hard to achieve without some serious market manipulation.

>or that there should be a class of housing that isn't treated like an asset

No need to talk in hypotheticals, this was once the case.

https://en.wikipedia.org/wiki/Public_housing_in_the_United_K...

https://en.wikipedia.org/wiki/Housing_Act_1980

> that would be very hard to achieve without some serious market manipulation.

Note that the housing market's already heavily manipulated, in an effort to keep the Ponzi scheme going a bit longer (e.g. Help to Buy, etc.)

Isn't Help to Buy only for first time buyers, so it biases against Buy to Lets?

Yes but I imagine the argument would be that it leads to a reduction in supply & increased demand meaning fewer houses available to compete over which results in a higher over all price which can be applied to all houses, inflating the price beyond a houses intrinsic value.

There's a very large difference between an individual using a house as a home, then selling and realising any increase in value, vs. a commercial company owning a property as an investment vehicle (in the literal sense - people can invest in the company!) and then letting the property out (or selling a time-based lease to a leaseholder).

We should try and stop this thinking. This is going to hurt a lot of people (my parents included) who are in their 50s and 60s now when they soon try and sell their homes to retire.

Any asset that can maintain or increase its value over time can be an investment vehicle and thus in practice is an investment vehicle.

It is not a human right to own property. Having a roof over your head and owning that roof outright are not the same thing.

If the rent is disconnected from the property value, then there is a speculative bubble.

If the rent goes up faster than wages, people become homeless.

It's hard to see how rent can be disconnected from the property value because if the achievable rent for a property skyrockets that will pull the property's value up.

If rent goes up faster than wages, which cannot go on forever, it means an imbalance between supply and demand. The best way to address this is to rebalance supply with demand, not to be tempted to control prices or whatnot that do not resolve the root cause.

It must also be accepted that the most sought-after areas will be the most expensive and probably out of the reach of many.

Edit: So much for mature discussions, I see...

> It's hard to see how rent can be disconnected from the property value because if the achievable rent for a property skyrockets that will pull the property's value up.

In a free market (the UK is about as free a market as you get in relation to property ownership and rental), this might be true. But it does depend on how regulated the market is, in terms of rent controls etc. I'm not sure this would hold for an older, or bigger, or more difficult to maintain property in an area with a high percentage of renter competition in some European countries, for example (e.g. Germany).

Rent controls do not solve any issues. They certainly don't make it easier to find a home. They only tend to restrict supply and to discourage people from moving.

They solve predatory rent increases.

> It's hard to see how rent can be disconnected from the property value because if the achievable rent for a property skyrockets that will pull the property's value up.

It's the other way around that disconnects happen: rents stay the same and property prices go up.

But that's not why you got downvoted, no. You misunderstand price controls. It doesn't mean that everybody should have access to a nice apartment in a sought-after area. It means that I should have access to a nice apartment in a sought-after area.

> It means that I should have access to a nice apartment in a sought-after area.

Yes, that sums it nicely.

> Having a roof over your head and owning that roof outright are not the same thing.

But they are two sides of the same coin.

By the market pricing you out of being able to own your property (whether it be through foreign investment into buy-to-let, poor supply of affordable housing stock, inherited money passed down between generations further entrenching the difference between those that have and those that do not etc. etc.), people remain an asset to be sweated at the benefit of the property owners. That, as I said, is simply a regulated feudal system.

It's completely different.

Mass ownership only started in the 1960s/1970s. Before that most people were tenants. In the UK there were large scale council housing so people had moderate rent and security of tenure but they were still only tenants.

Again there is no human right to own property and that would not make much sense unless you want to create another scandal down the line of shoddy, worthless properties that were built in order to be affordable to people who can only afford £15,000 over 25 years...

Read again. I said the right to a home is a human right, not the right to home ownership.

I'm not sure how innovative this is. https://www.propertypartner.co has been going since 2015 doing essentially the same thing.

"Safer than stocks. The stock market is volatile and risky compared to property ownership"

That's a bold statement. Property markets can crash too. And what happens if a crappy tenant trashes the place, or the property turns out to have subsidence, or asbestos, or covered in dangerous cladding? And insurance doesn't pay (for whatever reason, plenty of real world examples of this)

Also in the stock market you have some stronger notion of the efficient market hypothesis working in your (or better the average persons) favour

> Proptee is responsible for managing the entire investment portfolio. Operating fully in-house allows us to keep your fees to the minimum. At the moment, we charge only a small management fee of 0.85%.

So Proptree is going to find tenants, clear blocked drains and repair leaking roofs all for 0.85%?

Or are they going to hire their mates to do it out of the capital amount, who will take massive commissions?

It has to be 0.85% of what people invest, so 0.85% of the fund value, which is ~ the capital amount.

So for a £300k house that rents for £9,600 pa I read that as their fee is £2,550 pa, not £81.6 pa... A letting agent would probably take ~15% of rent so ~£1,450 pa. Repairs are generally charged in addition to the management fee and it's quit possible that they will do the same by deducting the costs from the fund.

Isn't this just a REIT with no diversification?

And higher management fees probably.

came here to say this. But maybe REITs don't exist in every country?

You could say the inverse: A REIT that allows you to cherry-pick its assets.

Just what this country needs, more barriers to entry for struggling would be owner occupiers.

Will be interesting to see how they build their management fee in, what realized fees look like, how units are valued and whether that price can be independently verified. Clearly the aim is to dress this up to feel like exchange trading, but there is no open market for some standardized unit of "fractional landlording", so presumably they are always on the other side of every transaction.

I would happily be on the other side of many of their transactions... I imagine they'll be severely short of liquidity, and therefore there'll be a decent opportunity for anyone willing to provide that...

It must be said that in the UK property is governed by specific law and specific rules. These may vary per country (E.g. Scotland vs England), I'm only familiar with England.

For example a contract to sell/buy property must be done by deed, which among other things requires special wording and witnessed signatures.

Owners are also registered with Land Registry and there is a limit to 4 legal owners. If there are more owners a legal instruments like a trust must be setup in order to create beneficial owners.

Bottom line: it is not simple. Whatever this website allows to sell and buy it is unlikely to be actually shares in properties, but rather some contractual rights to receive a share of profits based on level of investment (however that might be calculated as it's not clear), like property investment funds, which this effectively likely is.

Values of properties do go up and down. How can they adjust on a daily basis? They cannot. Best one can do is to hire a Chartered Surveyor every 6 months or so to get an independent valuation.

I wonder, what happens when this become ubiquitous? We're all just homeless landlords, paying rent to each other?

Universal socialization of housing wouldn't be the worst end state.

Aside from morality / economics, this is hardly innovative. Tokenised property investment has been going on in the UK for years. The biggest players now are: https://www.propertypartner.co who started in 2015...

They even have a secondary market or exchange which is a regulated MTF (https://www.investopedia.com/terms/m/multilateral_trading_fa...) where you can trade your investment using limit and market orders.

What happens to the costs of ownership? e.g. service charge, boiler repairs etc?

Probably distributed evenly over the 'shareholders'.

Their screenshot doesn't show "Your share of the leaky roof repair bill: £1400"!

Also, Proptee is in a very powerful position being able to choose which contractor fixes that leaky roof. Plenty of other management companies only hire their mates who give big kickbacks and charge skyhigh rates for basic maintenance.

I wonder if there's buyer-side liability. If you purchase a property which then incurs vast costs due to a technicality in the deeds (example would be a duty to maintain something), who pays?

Whoever is foolish enough to invest in this fund is surely going to find out. Best of luck there.

See https://landx.id for the equivalent for property micro investments in Indonesia.

Context: We pivoted our crypto exchange startup into LandX because we (the founding team) got sick of people trading over hype. Fractional ownership of cryptocurrency is awesome because it let anyone get into the game. What if we can do the same for something solid on the ground? So LandX -- for Indonesia.

When is someone bringing this out for infrastructure investments. I want to be able to own 0.0001% of a sub-sea cable between UK and Europe.

Can't you buy into the company that owns it (assuming it is publicly listed) as a proxy for that?

So I guess since there is no commision all taxes, fees and inevitable maintainance and renovation costs are already priced in, which is not bad but interesting.

It's similiar to Real Estate Development Funds we have in my country but out of tha stock exchange.

Oh this is cool. However always wary of what happens to my property investment when the startup folds.

In the equilibrium, this would probably lower rents and increase house prices?

What a great idea! It complements really well with stock investments.

Good luck!

Seems like an interesting idea.

I happen to know the founder and he is a really smart and a hard working person, with quite a lot of experience trying out different ideas, so I wish him and the team a lot of success!

Will this offer a way of shorting these stocks too?

It would be neat to see them issue ERC20 or some sort of ethereum token associated with a given property. Though I am unsure if that would work with the current legal structure.

Love the idea! Especially in the age of Robinhood, I can really see this taking off (and I hope so too I'd love to use it).

Sok sikert :)

Leasehold https://leasehold.io/ is an alternative which uses a deflationary blockchain cryptocurrency to distribute profits to token holders.

It distributes profits via a token buyback (and burn) mechanism which maximizes the reward for long-term token holders. When the buyback comes at the end of each month, you can sell tokens back to Leasehold Holdings on one of the exchanges and cash out or you can hold your tokens and instead benefit from capital appreciation of those tokens. Capital appreciation is guaranteed (in the long run) since each buyback reduces the remaining total circulating supply of tokens (in a cryptographically verifiable way).

Also, Leasehold plans to become a multi-company blockchain project to benefit from network effects.

Our community also runs a decentralized exchange so that anyone can trade the Leasehold token against a mainstream cryptocurrency (Lisk) https://ldex.trading/ - The DEX code is fully open source so anyone can launch their own decentralized market to trade the Leasehold token against any other compatible token.

A very good reason to avoid this company like the plague!

The term "leasehold" has very negative connotations in the UK, just so you know.

https://www.thisismoney.co.uk/money/mortgageshome/article-85...

https://www.bbc.co.uk/news/business-54023631

https://www.which.co.uk/news/2019/06/leasehold-scandal-one-y...

We're going to try to work to change that. In the long term, our approach should help democratize property ownership. It should also create fundraising opportunities for new projects; either using LSH token as the shared currency or using a 'sidechain' (this can help to facilitate some degree of inter-generational wealth transfer).

That sounds like bitcoin "hodling" effect, but squared in a cryptographically verifiable way.

That's the idea. HODLing is the new saving. A way to reward savers over consumers. The complete transparency aspect of blockchain helps a lot with that.

So the idea is for it is to be a bad thing? Transparently, though!

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