Since 2009, the price of the REIT has grown by 125%.
If you were to buy a house based on being a mortgage lender, which would require a deposit, upkeep costs, alongside interest paid, I’m not too sure the growth in your house price would be reflected that well against owning a REIT such as Land Sec PLC.
As a note, I’m totally considering this from an investment point of view, not the utility one can gain from living in a house with a mortgage.
What’s more, you earn a yield yearly for owning a REIT. Think of this almost as rental income. This is because the company distributes taxable income amongst its shareholders.
So you really have two benefits here.
Firstly, you own a liquid asset which you can sell at any point, unlike with owning brick and mortar; secondly, you remain invested in property while not being subject to issues with interest payable; and thirdly, not having a huge liability sitting on your balance sheet since buying a REIT is considered an asset. The biggest benefit to young people like you and I (is 25 young anymore?) is that this can be maxed out in your stocks and shares ISA, making £20k of your holding totally tax free.
What else is out there?
Land Sec PLC isn’t just the only REIT, they’re probably just the biggest and most lucrative. Another one I really like is Unibail-Rodamco who have recently bought Westfield Group.
Since 2013, their price has increased by 50%, again, very good gains.
The third one that I like the look of is Shaftesbury Group purely because it has a good dividend, paying 7.9% last year (although its price looks pretty overvalued at 350% growth since 2013).
Take a look… It looks like the increase in the Bank of England’s balance sheet.
Email David any questions at firstname.lastname@example.org or visit his website.
Just a final warning, investing does carry risk and this is simply commentary and not intended to be used as investment advice.