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Dot Residential is marketing a luxury block in Manchester known as Spectrum, which features one-bedroom layouts with an advertised yield of 7.27 per cent. Photo: Handout

This London online property agent is using group buying power to disrupt how flats are sold to overseas investors

  • UK online property agent Dot Residential provides discounted investment properties targeted at overseas investors
  • Model also enables investors to save on opportunity costs involved in analysing the market and making a transaction

London-based online property agency Dot Residential is seeking to disrupt the traditional British agent model by offering to ­negotiate directly with developers for group discounts on behalf of overseas investors.

The online realtor is brokering commission free sales of properties in Manchester, Birmingham, Liverpool and Leeds featuring guaranteed mortgages and three -year fixed rental income.

“At Dot we work with leading lawyers, accountants, financiers, builders and manufacturers on our investors’ behalf, negotiating wholesale pricing and service-level agreements,” said Gray Stern, chief executive and co-founder at Dot Residential.

An example was the renovated 12-unit Dot Spectrum in Manchester offered for £350 (US$431.67) per square foot, 12.5 per cent lower than similar properties in the market, according to Stern.

“For new builds, we look to negotiate a discount for bulk purchase, whether a small block of apartments or multiple units within a larger development,” said Stern. “This discount varies depending on how motivated the vendor is, but the goal is to offer our investors a better deal than they can get individually so it's a bit like group buying.”

“The vendor will entertain the discount and absorb this cost because it [means] less time, administration and marketing expenses, and in some cases more sales or presales can materially improve their funding or holding costs,” he said. “We can generally negotiate prices from our partner suppliers down. We pass on some of this saving to the investor and some of it is retained for managing the process.”

Gray Stern, chief executive and co-founder at Dot Residential. Photo: Handout

He said target investors are generally busy professionals who don’t have the time to manage their UK property assets.

Investors are charged 10 per cent of rental income as an ongoing fee for managing the properties.

Most investors are from the Middle East and Asia, Stern said.

“At the moment our cheapest unit is £140,000, which you can own for around £54,000, including stamp duty and fees,” he said. “You do not need to meet any credit criteria to qualify for our mortgage.”

He said the model could help reduce the opportunity cost for investors in “spending months sourcing [property], analysing and transacting”.

Other property analysts cautioned, however, that many potential online buyers would be reluctant to pull the trigger without seeing the property first-hand.

The bathroom in a 364-square foot one-bedroom unit in Spectrum, a project in Manchester marketed by Dot Residential. Photo: Handout.

“Buyers are not sure where the projects actually are and the progress of construction,” said Richard Lee, chief executive at agency Hong Kong Property (Services).

Lee added that overseas buyers would benefit from the guidance agents can provide in taxation and mortgages.

Hong Kong barrister Albert Luk said he “definitely would not recommend” buying overseas properties online without the help of local agents.

Luk said working with local agents can help prevent fraudulent transactions and provide peace of mind.

“If the property does not give you the promised returns, how can you pursue it? A lot of people use online platforms to cheat,” Luk said.