Freehold refers to the ownership of land and any improvements on that land. When a freehold property is securitised, it is divided into smaller units, called tranches, which are then sold to investors. This allows investors to own a share of the property, without having to take on the full responsibility of ownership.
One application of securitisation of freehold properties is to provide finance for property developers. Property developers often need large sums of money to finance their projects. Securitisation can provide them with a way to raise this money, without having to go to a bank or other traditional lender.
Another application of securitisation of freehold properties is to provide investors with a way to diversify their portfolios. Investors who own shares in a securitised freehold property will have a stake in a number of different properties, which can help to reduce their risk.
Here are some other applications of securitisation of freehold properties:
- To provide finance for homebuyers
- To provide finance for businesses that own property
- To provide liquidity for the property market
- To reduce the risk of default on property loans
Securitisation of freehold properties can be a useful tool for both property developers and investors. It can provide finance for property development projects and it can also provide investors with a way to diversify their portfolios.