In his latest Mortgage Solutions blog Brian Hall (pictured), founder of market analysts The Model Works, said there was a risk these new funds could cause an asset price bubble.
The annuity market in 2013 saw 353,000 annuities purchased, with a value of £11.9bn, while Hargreaves Lansdown believed around 32,000 savers would cash in their pension pot next year and invest in property.
The Model Works has predicted that crowd funded buy-to-let will provide a higher return than conventional savings on a modest net rental yield.
With stable returns of over 6%, cheap online distribution and streamlined processes, economies of scale and building and buying properties off plan at lower cost, crowd funding could raise standards and drive down private sector rents.
Hall added: “Increased competition might cause geared investor margins to reduce causing them to exit the market.
“If the sector were to transition from a mostly private geared investor to a crowd funded cash buyer foundation, it would help the UK in terms of deleveraging particularly if this can be achieved without triggering an asset price bubble.”
Read the full blog post on Mortgage Solutions tomorrow.
