The performance of the housing market continues to look promising for property-backed IFISA investors

2020 ended on a high note for the housing market, as over 100,000 mortgages were approved in November – the highest number since August 2007 according to the Bank of England.

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This came after the market proved particularly resilient during a remarkably tough year for almost every sector. 

The surge in mortgage approvals is, of course, good news for home buyers looking to take advantage of the stamp duty holiday, but it also provides a promising outlook for the likes of property-backed IFISA investors. 

For investors, the COVID-19 crisis has reiterated the need for a well-balanced, diversified investment portfolio, as the stock market suffered severe fluctuations and products such as the Cash ISA offered only rock-bottom interest rates. 

And as demand for homes in the UK was, and is, still surging in the midst of the global pandemic, investing into residential property has once again proven to be an important consideration.


A boost for the housing market

After months of staying at home – to work, homeschool and for leisure – a lot of people re-evaluated what they needed from their property. After several months of stagnation for house building during the UK’s first lockdown, this re-evaluation provided a boost to the housing market when it reopened in May 2020.

Often searching for homes with more bedrooms to satisfy the need for a home office, a garden for at-home workouts and leisure activities, and in an area close to excellent local amenities, many started to shun apartments in city centres for houses in the suburbs. 

And when Rishi Sunak, Chancellor of the Exchequer, announced a stamp duty holiday in July 2020, the market boomed even further, as home buyers rushed to take advantage of the cuts. 

Read more:what the stamp duty holiday means for property investors

 Though the stamp duty holiday is due to end on 31st March, a petition to extend the deadline a further six months garnered over 140,000 signatures, leading MP’s to debate the matter virtually on 1st February.

The debate evidenced support for extending the stamp duty holiday in some respect, but Jesse Norman MP, Financial Secretary to the Treasury, stated that while he “absolutely understands people's frustration regarding the forthcoming deadline on the stamp duty land tax holiday [...] as honourable members well know, I cannot comment on tax policy outside a fiscal event.”

A decision on the matter is unlikely to be revealed until the Chancellor of the Exchequer’s Budget in March.


The importance of mixed-tenure

To showcase further how the changing requirements of the housing market can prove beneficial for property-backed IFISA investors, in September 2020, Rightmove revealed the most in-demand property types among renters. 

Number one on the list was a two-bedroom house, in contrast to the previous year, when a studio flat took the top spot. 

This not only exemplifies the changing attitudes towards housing, but also amplifies the demand for mixed-tenure properties, something most regional house builders – those that are often delivering the homes funded by the alternative finance provided by property-backed IFISAs – are able to cater to. 

The ability to be agile with tenure is more important than ever. As the fallout of COVID-19 prompted most lenders to pull 5% mortgages, many first-time buyers had their home ownership dreams halted. 

And this is where renting, as well as schemes such as rent-to-buy and shared ownership, are crucial. 

The forward-thinking nature of small and medium-sized regional house builders means they are able to assess the market-need of an area, providing a tenure that is appropriate. 

One example of this is Homes by Carlton’s (CARLTON Bonds’ strategic housing delivery partner) Cathedral Gates development in County Durham, which comprises a mix of private sale and rent-to-buy properties. 

Read more:our latest lending project: Cathedral Gates, County Durham

For property-backed IFISA investors, a mixed-tenure development could, potentially, be even more advantageous. The tenure of the units available have no impact on investor returns, meaning they have the potential to benefit regardless of whether it’s the sales or rental market that is performing best at any one time.


A promising outlook for property-backed IFISA investors

For experienced investors with the appropriate risk appetite, a property-backed IFISA can have a large amount of advantages. 

To start, the hands-off nature for investors means that no expertise in the field of house building and construction or deal origination is needed. 

At CARLTON Bonds, our advisory team – made up of Homes by Carlton and Growth Capital Ventures – provide the considerable industry expertise needed to ensure the right homes are built in the right places at the right time. 

Read more:download the CARLTON Bonds brochure

 As well as this, property-backed IFISAs offer higher target returns than many mainstream investment products, while the IFISA wrapper renders those returns completely tax-free.

Often, returns can also be realised on a quarterly basis – rather than upon maturity – providing the potential for a steady stream of income.

And amidst an increased demand for housing, in addition to recent tax changes that have made the likes of buy-to-let decrease in popularity, the appeal of the property-backed IFISA has grown, and once more proven its significance as an asset choice for experienced investors.  


The CARLTON Bonds product is available exclusively to experienced investors who are classified as either sophisticated investors, high-net-worth individuals or professional investors and have the knowledge and experience to make their own investment decisions. Investments are high risk and illiquid, your capital is at risk and returns are not guaranteed. Bonds are not protected by the Financial Services Compensation Scheme (FSCS).