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The merits of a start-up property ISA as a solution to the housing crisis

    One welcome side effect of the current housing market is the way in which its very frustrations have acted as a catalyst for entrepreneurship. With a shortage of dynamic solutions from government, some alternatives have emerged from the world of start-ups.

    The best known from the world of proptech may be Goodlord, which simplifies renting by digitising tenancy agreements and handling all deposits and fees. Another, Landbay, supports buy-to-let mortgages through peer to peer lending. But Bricklane, which launched in September last year, is much more ambitious. The actual premise is simple: open a property ISA and invest tax free in a range of homes. These properties are let out to tenants and professionally managed on behalf of the investors, with rental income earned on top of the investment.

    But apart from accessibility (you can put in as little as £100, with the fees being 2% of that) the main selling point is that by taking advantage of Bricklane you could gradually save up for a deposit on a house of your own. On their website they claim a typical first time buyer will be able to afford a home four years sooner.

    So far the company's rise has been swift. Not long after it was founded online property giant Zoopla provided seed funding as part of a strategic partnership. That’s hardly surprising - people would love to buy a home, and Zoopla, as a property portal, would benefit if more of them were able to.

     The site may have more success than alternative innovations in the property sector. The Help to Buy ISA, launched in December 2015, hasn’t exactly caught fire. A bonus of 25% is applied to the money saved, but the maximum amount is restricted to a mere £3,000. On top of that, you won’t be able to open a new Help to Buy ISA after November 2019, at which point the only option will be a Lifetime ISA. Rather harshly, this applies a penalty for exiting the scheme early.

    But as useful as Bricklane might be it is at best a painkiller, rather than a credible cure for Britain's housing problems. It can help you keep up with the market, but won’t resolve what remains at the heart of the crisis: a basic mismatch between supply and demand - too many prospective buyers and not enough new homes to have any bearing on soaring prices. With the exception of Central London, where prices fell last year, they have continued to increase in the rest of the country.

    Worse still, the recent Housing White Paper, though it had a few interesting measures ( such as the consideration of the CPS’ idea of ‘Pink Zones’) did not live up to the hype. Most notably, there was a lack of action on toppling the nimbyist totem-pole that is the Green Belt, with Communities Secretary Sajid Javid anxious to get across that tight restrictions would remain in place.

    Speaking to City AM, Co-founder Simon Heawood emphasised the social benefits of Bricklane, pointing out that tenants in invested properties will feel happy knowing that ‘their cash is going towards helping someone in the same situation as them’. This is all well and good, but by itself it will not dismantle the social inequality generated by an over-regulated planning system. For there is one mundane caveat: your capital is at risk as it is with any other investment, and not enough people will be willing to make this leap to spark a revolution. Bricklane is a nice venture, but without far-reaching planning reform generation rent is here to stay.

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