Property News: You can earn even by being a shareholder in the property, SEBI has issued a new order, complete details – property news what is fractional ownership platform

What is FOP?

Under this model, investors are made part owners in a building/office space (including warehouses, shopping centres). In this, the cost of buying the property is divided among different investors. The minimum investment in this is up to Rs 10-25 lakh. These buyers invest in securities issued by a Special Purpose Vehicle (SPV) set up by the FOP. In return, this special purpose vehicle buys real estate assets. Investors earn from both rental returns and capital gains (on sale of the building). These platforms charge a fee of three to five per cent at the time of entry and one per cent annually.

Expectation of more income than FD

The promoters of these platforms say that the rental income here can be between eight and nine percent. Experts say that it is expected to get more returns than fixed deposits. Since the investment is made in a ready-made building, there is no development or approval risk involved. Along with this, the tenants or lessees who take place in it are already prepared, so there is no risk of the place remaining vacant.

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What is the concern of SEBI

In its paper, SEBI has emphasized that in the absence of standards and uniform selling practices, and lack of independent valuation, investors may become victims of unfair selling. This has made it clear that many FOPs are registered as real estate agents or brokers who come under the purview of Real Estate Regulatory Authority ie RERA. In such a situation, it is not clear whether everyone actually follows the rules or not and whether all the provisions apply to online platforms.