A new online platform is promising Gulf investors the chance to become instant residential UK landlords
A new online platform is promising Gulf investors the chance to become instant residential UK landlords, initially in the northern cities of Manchester and Liverpool.
Dot Residential sets up limited companies to own the homes, allowing casual international investors to more easily to build a property portfolio.
Under the company’s model, investors pay a 30 per cent deposit and can complete quickly on a Dot mortgage.
Founded in April this year, the start up company has processed 20 transactions so far. Gray Stern, co-founder and CEO of Dot Residential, said he is specifically looking to target Gulf investors.
Around one third of the firm's buyers hail from the Middle East region, including the UAE, Kuwait and Saudi Arabia.
"There are many Middle Eastern investors who are actively searching for UK property. Our low-hanging fruit will be the British expats who are looking to easily invest in property," Stern said.
The CEO aims to establish a new office in Dubai in 2019 to focus on the regional market.
“We offer a marketplace of high quality property investments… we package up investments so it’s easy for customers – we offer everything in one solution including pre-vetted properties, finance deals, property management and interiors,” said Stern.
Dot Residential bulk-buys properties at a discount from a developer and furnishes them to a ‘boutique hotel’ standard. The landlord must pay for this upfront, but Stern claims this leads to higher rents and less empty days.
The company also charges landlords £500-£1,000 a year for filing accounts and can manage the properties for a 10 percent commission rate.
The business started in Manchester and Liverpool, with 20 properties bought with $3 million in seed funding, mainly from US investors.
The two cities have growing populations of young professionals, while rents in both cities are forecast to keep rising modestly.
Stern said: “The buy-to-let market has moved out of London as yields are higher and stamp duty has chilled the investment market.
"Previously investors would focus on London, but now they are now being a little more sophisticated in their portfolios and looking for cash flow generation assets further afield.”
Louise Emmott, head of North West residential agency at property company JLL, said Manchester is becoming increasingly in demand as a city, as young people are priced out of London and businesses look to north-shore their offices
Emmott said: “The demand for buy-to-let remains strong, especially with high demand for rental properties continuing. We have seen a spike in rental demand for apartments in Manchester city centre, with a 117 percent increase in people moving in to Manchester in July 2019 (compared to the same period last year).
“The city of Manchester continues to prosper and has become a cosmopolitan place to live, with affordable property prices, thriving business, first rate leisure facilities and excellent transport links.”
Dot Residential plans to expand out to the northern UK cities of Leeds and Birmingham this year, as well as US cities such as Austin and Denver, where millennials priced out of big cities are increasingly moving.
Dot Residential aims to provide ‘instant’ property buying services compared to the usual six-month process. “We want to be the Amazon one-click service for property buying. We act as a real estate manager and concierge; we have great partners for all the necessary services – we are a full turn-key solution,” said Stern.
Dot Residential will be seeking Series A funding in early 2020 to expand globally.
Stern said he plans for the firm to be the ‘world’s first tech-enabled global scale property platform’, focused on Middle Eastern and Asian buyers.