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Jubilee links to housing

Jubilee Financial Products has created two structured products that are linked to UK residential property prices through the perfomance of the Halifax House Price index.

HPI Growth Plan Issue 1 and HPI Deposit Issue 1 are almost identical except that the former is a structured investment and the latter is a structured deposit. Structured deposits are cash-based products that provide greater security than structured investments in that Financial Services Compensation Scheme protection will apply to eligible investors if the deposit taker goes bust. However, the cash Isa limit of £5,340 applies to the deposit version, and investors who choose this option will need to meet the £10,000 minimum investment by investing the remainder outside the Isa wrapper. The investment version qualifies for the stocks and shares Isa limit of £10,680, so meeting the minimum investment is not an issue for those investors.

The plans are also taxed differently, with returns from the deposit plan taxed as income, while returns from the investment plan are taxed as capital gains.

Both products give investors the choice of a five-year term, or five years and six months. The shorter term provides a return of 100 per cent of the growth in the index plus 7.5 per cent, provided the index does not fall by 7.5 per cent or more. The longer term provides 100 per cent of the growth in the index plus 10 per cent, provided the index does not fall by 10 per cent or more.

Both plans also return investors’ capital in full at the end of the term regardless of index performance.

Jubilee believes the attraction of this product is to providing exposure to UK house prices without the costs of owning and maintaining a portfolio of bricks and mortar investments. Falling house prices may represent a good entry point for investors in these products, but some investors will be put off by the uncertainty surrounding house prices over the next five to six years, despite the capital protection on offer.

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