Profit on the equity from an investment in rental properties of 15–50%? Is this still possible? It turns out that one can achieve such rates of return by investing in rental properties, not in Spain or Dubai but… in the United Kingdom – according to Piotr Kubalka, CEO at J.P. Dauman Group (www.jdauman.com), a consulting firm with many years of experience in investing in real estate in the United Kingdom.
The British real estate market has attracted foreign investors for years, including more and more investors from Poland. In addition to higher profits, stability, high demand for renting and favourable conditions for external financing, which often do not exist in other countries, also matter – points out Piotr Kubalka.
Compared to the Polish market, the United Kingdom offers a number of benefits which make investments more profitable and predictable. According to P. Kubalka, the most important ones include:
1. Stability and long-term value increase
Real estate in the UK has been increasing in value for decades, even despite global crises. The United Kingdom is also distinguished by a relatively low risk of market fluctuations compared to other countries. Long-term price increases result from a limited supply of land and growing demand for flats, particularly in large cities such as London, Manchester and Birmingham.
2. High demand for renting
A significant proportion of the UK society rents flats instead of buying them, which is the result of high prices of real estate and high occupational mobility. This means a stable demand for renting, especially in academic and business centres.
3. Favourable system for external financing
The British real estate market provides investors with extensive financing possibilities, including buy-to-let mortgages that enable the purchase of rental properties with a relatively small personal contribution. It is also possible to repay only the interest on the loan for the duration of financing (the so-called interest-only mortgage), without the need to repay the principal at the same time. Banks and financial institutions are open to investors, and lending is based on the estimated rental income of the purchased property, not on the investor’s personal income, like in Poland.
4. Friendly legal regulations for landlords
The British legal system protects property owners to a greater extent than in Poland. Eviction of problematic tenants is easier, and the contracts are more transparent and protect the interests of the owner.
5. Possible tax optimisation
In the UK, investors can choose from various tax solutions, such as investing through companies (Limited Companies), which allow for deducting many financial costs or through real estate investment trusts (REITs).
Profits are higher by nearly 40% when investing in property through UK REITs
REITs are dividend-paying, legal and tax vehicles which allow small retail investors to build their additional quasi-retirement pensions on the basis of rental income from properties they do not own. More than 70 such entities have been operating in the United Kingdom for over 15 years. UK REITs are exempt from CIT, provided that they pay out to their shareholders at least 90% of the profits generated from renting properties in which they invest. The payment of these dividends is mandatory and can even take place on a monthly basis. In addition, when investing from IKE/IKZE accounts, an investor from Poland does not pay the capital gains tax on the dividends received, which translates into higher profits by a total of nearly 40% – notes Dr Grzegorz Mizerski, CEO of CrowdREIT PLC (www.crowdreitplc.co.uk) – a company that is supposed to become a British REIT.
We have been preparing for this project for over 2 years, and I personally – since 2017, when I started on my doctoral dissertation, which was supervised by Professor Adam Glapiński. I was the creator and founder of a fund in Luxembourg which invested in American REITs listed on the NYSE and NASDAQ. Our investment strategy assumes investing in two markets: in Poland and in the United Kingdom. In Poland, there will be rental apartments in the PRS segment, specifically in a unique franchise residential concept such as in RENTONs. This is a concept owned by brothers Robert, Michał and Piotr Kiereś, known in the blogosphere as Rozsądni Bracia [Sensible Brothers]. There are already nine of them, and new ones are under construction – according to Dr Mizerski. We also build on the market strategy of Cushman & Wakefield Polska, a consulting firm that has developed an investment strategy for Polish REITs. Moreover, we are going to invest in retail – business parks and, opportunistically, in a variety of other real estate assets – he adds.
The market in the United Kingdom forms the second investment leg of CrowdREIT PLC. This is true for at least four reasons – emphasises Mizerski – the first one – low interest rates of approx. 4.5% p.a. The second one – friendly banks that grant financing for the purchase of property on conditions that are unavailable in Poland. The third one – higher rates of return on the rent of apartments and houses, especially outside London, due to millions of immigrants. And the fourth one, perhaps the most important one from the point of view of the Polish investor – we want to offer a profitable method of investment diversification and a ‘safe investment haven’ – points out Dr Mizerski.
London AIM and legal tax optimisation for IKE/IKZE owners
CrowdREIT PLC plans for an IPO on the British AIM. This is an alternative market of the London Stock Exchange – a British equivalent of the Polish New Connect – but approx. 40 times larger – points out Piotr Baran – Head of PCG SA, a Wrocław-based developer – co-founder of CrowdREIT PLC. The British legislator requires that UK REITs be listed on a recognised European stock exchange, but New Connect was not included in that group – he adds. Despite this fact, the company plans for the so-called dual-listing in a few years’ time, i.e. being also floated on New Connect, apart from the AIM, to facilitate investing to Polish investors. We will not be the first ones on AIM – seven other entities of this kind are listed there. Interestingly, one of the largest British REITs listed on the LSE – Segro PLC REIT – with a market capitalisation of more than GBP 10 billion, has been operating in Poland for many years in logistics real estate – he adds.
The structure of CrowdREIT PLC should appeal to the investors in Poland who have IKE/IKZE accounts that account for more than 1 million.
The company will be exempt from CIT, and Polish investors who will invest in its shares will not have to pay the capital gains tax. Thus, we count on their interest in the offer, because it was also designed for them – emphasises Dr Mizerski.
Investing in real estate in the United Kingdom is an attractive option for Poles who are looking for stable, profitable investments. High demand for renting, easier access to financing and friendly legal regulations make the UK a noteworthy market.
We would like to invite all those who are interested to a special free webinar that is going to take place on 18 March at 12:00 p.m. (Polish time). In addition, all participants will receive a free e-book on investing in real estate through UK REITs.
Blog 2
American phenomenon of investing in real estate
2025-02-20
Over 170 million investors. Commercial real estate worth more than USD 4 trillion. Every year, rental profits paid out reach approx. USD 60 billion, which is more than the retirement and health benefits received by all Poles from the Social Insurance Institution (ZUS). More than 200 entities listed on the NYSE and NASDAQ. These figures describe the real estate investment trust (REIT) sector in the USA. According to Dr Grzegorz Mizerski, the author of the first monograph on REITs in Poland, and the creator and President of the Management Board of CrowdREIT PLC, these dividend-paying quasi-investment funds that invest exclusively in rental properties emerged in 1960 thanks to President D. E. Eisenhower, who facilitated investing in real estate and lifted barriers to that investing for millions of Americans by signing the act on US-REITs.
Why are REITs so popular worldwide?
According to President Mizerski, REITs stand for regular and stable payments of profits based on rental income from real estate. These funds are exempt from CIT, provided that almost all of their profits are mandatorily paid out to shareholders. This is an opportunity to build an additional source of private retirement pensions with payments received even on a monthly basis. Limited level for incurring debts. The majority of real estate in the portfolio must generate revenue from rental income. Developer investments generate high profits, but also high risk – limited (usually up to approx. 20%–25% of the total asset value) – he adds. Obviously, REITs are not the Holy Grail of investing, but their legal and tax framework (including exemption from CIT and the obligation to pay out dividends) forces us to pay attention to that instrument – states Dr Mizerski. In turn, according to Dr Hab. Mirosław Bojańczyk – Professor at the Vistula University – the obligation of being listed on a recognised stock exchange ensures liquidity for investors. REITs’ shares are a hybrid instrument which combines a bond (a fixed coupon) with shares (potential for share price increase). Tax exemption is combined with an obligation to pay out dividends even on a monthly basis. These are the main reasons for which retail investors invest in REITs’ shares – says Professor Bojańczyk. And he adds – currently, these companies already operate in over 40 countries, including Australia, Canada, France, the United Kingdom, Spain, Belgium, the Netherlands, Ireland, Germany, and the number of these entities exceeds one thousand worldwide.
The Polish market is underprivileged
Unfortunately, several attempts to create legal regulations for Polish REITs based on Polish capital failed. Meanwhile, foreign REITs have been active for over 20 years and according to the Foundation for Education and Research on REITs, they took over Polish commercial real estate worth more than PLN 20 billion: the best commercial real estate in Warsaw – shopping centres: Galeria Złote Tarasy, Galeria Mokotów, Galeria Arkadia, Sadyba Best Mall, commercial facilities, thousands of rental apartments, and tens of logistics centres situated in critical locations. All this real estate was taken over by American, Australian, French, and British REITs.
The first Polish REIT in the world is coming soon!
Dr Grzegorz Mizerski and Professor Mirosław Bojańczyk are the faces of a new initiative, and they are launching the first ‘Polish’ REIT in the world. We had enough of the sector’s endless moaning about how the Polish government failed to tackle such an important issue. We have analysed many jurisdictions in Europe and we have selected the United Kingdom to launch the first ‘Polish REIT’ in the world. This is why we established CrowdREIT PLC – a joint-stock company that we are preparing for UK REIT status – announces Dr Mizerski, who became the President of the Management Board of the company – the future UK- REIT.
We want to propose investing in commercial real estate through Polish REITs to Polish investors, despite the fact that there is no act on Polish REITs. CrowdREIT PLC is ‘Polish’ because it was invented by Poles, it is managed by Polish managers, it is financed by Polish entrepreneurs, it is addressed to Polish retail investors and invests in real estate located in Poland – adds Professor Bojańczyk. We are going to operate based on stable British law, which supports such initiatives. We have the initial capital, our first commercial real estate, and over a dozen shareholders who brought in the seed capital and their great ambitions – emphasises President Mizerski. Also, Piotr Baran – Head and co-founder of PCG SA, and Jakub Mrówka – President and owner of Novisa Development and Crowder SA, are among the founders.
In Q1 2025, when we meet all the criteria, we will file an application to HM Revenue & Customs, i.e. the British equivalent of the Polish tax office, for granting a special tax status – and we will become a UK REIT. We do not expect this process to last more than two or three months – adds Mizerski.
Investing in real estate in Poland and in the United Kingdom
We have been preparing for this project for over 2 years, and I personally – since 2017, when I started on my doctoral dissertation, which was supervised by Professor Adam Glapiński. I was also the creator and founder of a fund in Luxembourg which invested in American REITs listed on the NYSE and NASDAQ. Thus, I have in-depth and unique knowledge of how REITs work worldwide – points out Dr Mizerski. We know the Polish real estate market, but our investment strategy assumes investing in two markets: in Poland and in the United Kingdom. In Poland, there will be rental apartments in the PRS segment, specifically in a unique franchise residential concept such as in RENTONs. This is a concept owned by brothers Robert, Michał and Piotr Kiereś, known in the blogosphere as Rozsądni Bracia [Sensible Brothers]. There are already nine of them, and new ones are under construction – indicates Dr Mizerski. We build on the market strategy of Cushman & Wakefield Polska, a consulting firm that has developed an investment strategy for Polish REITs. Moreover, we are going to invest in retail – business parks and, opportunistically, in a variety of other real estate assets – he adds.
The market in the United Kingdom forms the second investment leg of CrowdREIT PLC. This is true for at least four reasons – emphasises Professor M. Bojańczyk, CFO at CrowdREIT PLC – the first one – low interest rates of approx. 4.5% p.a. The second one – friendly banks that grant financing for the purchase of property on conditions that are unavailable in Poland. The third one – higher rates of return on the rental income of apartments and houses, especially outside London. And the fourth one, perhaps the most important one from the point of view of the Polish investor – we want to offer an attractive method of investment diversification and a ‘safe investment haven’ in case of any turmoil in Poland, which will hopefully never happen – he points out.
London AIM and legal tax optimisation for IKE/IKZE owners
CrowdREIT PLC plans for an IPO on the British AIM. This is an alternative market of the London Stock Exchange – a British equivalent of the Polish New Connect – but approx. 40 times larger – points out Piotr Baran – Head of PCG SA, a Wrocław-based developer – co-founder of the fund. The British legislator requires that UK REITs be listed on a recognised European stock exchange, but New Connect was not included in that group – he adds. Despite this fact, the company plans for the so-called dual-listing in a few years’ time, i.e. being also floated on New Connect, apart from the AIM, to facilitate investing to Polish investors. The former President of the Warsaw Stock Exchange, Dr Ludwik Sobolewski, is supposed to help with that. We will not be the first ones on AIM – seven other entities of this kind are listed there. Interestingly, one of the largest British REITs listed on the LSE – Segro PLC REIT – with a market capitalisation of more than GBP 10 billion, has been operating in Poland for many years in logistics real estate – he adds.
The structure of CrowdREIT PLC should appeal to the investors in Poland who have IKE and IKZE accounts that account for more than 1 million. The company will be exempt from CIT, and Polish investors who will invest in its shares will not have to pay the capital gains tax. Thus, we count on their interest in the offer, because it was also designed for them – emphasises Professor Bojańczyk.
In March 2025, we are planning a public listing of shares of CrowdREIT PLC – perhaps by way of a memorandum, which will allow us to acquire equity capital of even EUR 5 million. We also have other sources of capital – he adds. In any case, we would like to invite all those who are willing to work on this project – emphasises Dr Mizerski.
