Abbey goes residential

13 September 2005
Abbey launched its new residential property plan this week in association with Knight Frank Corporate Finance.

The plan, designed to protect buyers from the headaches associated with house-buying for investment purposes, will be available until the beginning of November this year.

Head of business development at Abbey financial markets, Mike Brown, said: "Although many investors are aware of the benefits of including residential property in their investment portfolios, some are deterred by the associated risks of direct investment or do not have sufficient funds to directly invest into the residential property market. This product offers investors the benefits of investing directly in the UK housing market without the associated risks."

The plan, based on the Halifax house price index, offers buyers exposure to the UK property market as well as offering capital protection, without requiring direct investment in the property. Customers can invest in the plan directly or through stocks and ISAs.

The minimum investment in the plan has been set at £3,000, the maximum £500,000. Customers' money must then stay invested for ten years, during which time they will receive no income.

At the end of the ten-year period Abbey pays out the original investment plus double the growth in the Halifax index during the period. If house prices fall, Abbey will repay the full initial investment.

This is not the first time that Abbey has offered a plan like this. It previously launched a similar product in Dublin in partnership with the Newcastle Building Society, but it featured a deposit structure, where the new product in association with Knight Frank property agents involves the actual purchase of shares.

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