The case for real estate-backed lending

For professional use only, not to be distributed or relied upon by retail investors.

23 July 2026 | Reading time: 5 minutes
Tom Brown, Managing Director, Ingenious Real Estate

Business Relief (BR) investments, by their nature, hold illiquid, privately valued assets. That makes the underlying investment strategy, and the discipline behind how it’s valued and governed, one of the most important things an adviser can look at when recommending a BR service to a client.

We believe real estate-backed lending is an attractive strategy available for these investors. Here’s why we think it holds up well, both as an investment approach and against the standards the FCA has set out for private market valuations more broadly.

Ingenious Estate Planning (IEP) is Ingenious’ range of BR-qualifying investment services, designed to deliver financial and well-being benefits through a straightforward investment strategy, in a tax-efficient manner.

How real estate-backed lending generates returns

Real estate-backed lending is designed to support stable, consistent returns, rather than relying primarily on capital appreciation or market timing. By providing secured loans to borrowers in the property sector, returns are typically generated through contractual interest payments, creating a return profile that tends to be more predictable over time. Every loan is secured by a first legal charge over the underlying property, giving investors priority security ahead of other creditors and a further layer of repayment: even where a borrower’s plans don’t go as expected, the loan is backed by a defined, enforceable claim on a tangible asset. That fits well with long-term estate planning goals, where preserving value matters more than more speculative higher-risk capital gains. Please note though that security isn’t the same as certainty, if a borrower defaults, recovery still depends on the property’s value and marketability at the time.

IEP targets a return of 3 to 5% per annum net of fees. Capital is at risk and returns are not guaranteed, as with any BR investment, but the strategy is built around income generation and disciplined underwriting rather than market-driven capital growth.

Performance history

IEP Private Real Estate has delivered a return in line with its 3-5% target in every calendar year since inception in December 2014.

IEP Private Real Estate – cumulative performance

1-year 3-year 5-year Since inception 5-year annualised returns
3.20% 10.54% 18.99% 66.40% 3.80%

IEP Private Real Estate – discreet annual growth

Dec 21 Dec 22 Dec 23 Dec 24 Dec 25
3.42% 4.09% 3.97% 3.03% 3.20%


Source: Ingenious, December 2025. Past performance is not a guide to future performance. 

IEP Private Real Estate’s performance target is 3–5% per annum net of fees. Returns can vary quarter to quarter depending on the timing of loan interest received. The calendar-year figures above reflect performance over each full year. 

Secured lending: capital discipline over ownership

Unlike buying and managing bricks-and-mortar property directly, our lending-based approach focuses on capital discipline through security and structure:

  • Loans are secured against underlying property assets
  • Ingenious takes a first legal charge over the underlying property on every loan, giving investors priority security ahead of other creditors
  • Repayment is linked to contractual loan terms and asset cover rather than fluctuating market sentiment

The investment outcome is tied to borrower repayment discipline, underwriting quality and asset security, rather than to successfully selling or revaluing a property.

Real estate lending vs direct asset ownership

Both routes give investors exposure to UK property through a BR investment, but the underlying activity, and the risks and rewards that come with it, are quite different.

Real estate lending

Under this approach, the underlying strategy funds a senior lender, providing secured loans to property borrowers rather than buying and holding property itself. 

Investor benefits 

  • Income generated from interest payments, rather than depending on a future sale 
  • Capital returned as loans are repaid, rather than left tied up indefinitely 
  • A first legal charge giving priority ahead of other creditors if a borrower runs into difficulty 

Risks to consider

  • Returns capped at the agreed loan rate, with no share in any growth in the property’s value 
  • Security isn’t the same as certainty, if a borrower defaults, recovery still depends on the property’s value and market sentiment at the time 
  • Concentrated exposure to UK property and construction specifically, so planning delays, build cost inflation and borrower affordability all matter 

Direct asset ownership

Under this approach, the underlying strategy buys and holds the property itself, with all the responsibilities that come with ownership. 

Investor benefits 

  • A direct stake in whatever the property goes on to be worth 
  • Rental income along the way 
  • Control over the timing of any eventual sale 

Risks to consider 

  • Returns dependent on that value materialising, and on finding a buyer when the time comes 
  • Valuations can be harder to pin down, shaped by sentiment as well as fact 
  • Exposure to the practical realities of ownership, void periods, maintenance and tenant risk, and to broader economic conditions such as inflation and interest rates 

How this compares with other BR options

Many BR services aren’t limited to one type of underlying trade or asset class. Established providers typically run diversified portfolios spanning real estate-backed lending, renewable energy, fibre and digital infrastructure, housebuilding, self-storage, forestry and other infrastructure or real asset-backed businesses. 

That diversification can reduce reliance on any single sector, but it also means exposure to a wider range of sector-specific risks, from power prices and grid connection timelines in renewables, to competition and shifting valuations in fibre and digital infrastructure, to planning, build costs and buyer demand in housebuilding. 

A real estate-backed lending strategy takes a more focused approach: returns come from secured lending activity, at Ingenious underwritten with discipline and experience, asset-backed security and controls, rather than from multiple operating businesses. That focus carries its own trade-off. Returns are concentrated in a single sector, so the strategy is more exposed to conditions affecting UK property and construction planning delays, build cost inflation, and interest rates affecting borrower affordability among them. A first legal charge gives investors priority security, but if a borrower defaults, recovery still depends on the value and marketability of the underlying property at the time. Diversified strategies spread risk across sectors at the cost of exposure to more of them individually; a focused lending strategy narrows that exposure but concentrates it, capital is at risk either way.

A clearer basis for valuation

Valuing a stake in a trading business means judging what its future profits might be worth, a call that can shift with sentiment as much as fact. A loan works differently. Its value is anchored to a defined, contractual sum owed over a defined period, agreed at the outset. Each quarter, that sum is tested for impairment, checking whether it remains recoverable. So there’s less scope for subjectivity in assessing the performance of the investment.

Valuation governance 

Private market valuations have faced growing regulatory scrutiny in recent years, from IOSCO, the Bank of England and the FCA, so it’s worth knowing how IEP’s process holds up: 

  • Independent oversight. Valuations are set by an independent Portfolio Board Committee, separate from the investment team, with further review from the Ingenious Board and Audit and Risk Committee 
  • Quarterly reviews. Net asset values are reviewed every quarter, with independent valuers used before lending and monthly monitoring on development sites 
  • Straightforward methodology. Loans are valued at fair value under International Private Equity and Venture Capital Valuation (IPEV) guidelines and tested quarterly for impairment, anchored to a contractual sum owed (see above). There are no equity holdings; the share price is simply net assets divided by shares issued 
  • Regular reporting. Investors receive performance updates 
  • External checks. Independent accountants, auditors and specialist advisers are involved throughout, reviewed regularly by Compliance and the Board 

What this means for advisers

BR investments are, by nature, illiquid and privately valued, that won’t change, and it isn’t unique to any one provider. What differs between providers is how disciplined, transparent and independently governed the valuation process is, and how directly the strategy is exposed to sector-specific risk. We’d encourage advisers reviewing BR options, whether new business or an existing holding, to ask any provider the same questions the FCA is now asking the industry: who sets the valuation, who checks it, how often, and how clearly is it communicated to investors.

Prefer to look through the detail first?

IEP Private Real Estate Quarterly Update

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Want to talk through where IEP fits for a client?

Speak to our Business Development team for more information.

0207 319 4000           investments@theingeniousgroup.co.uk

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More information about the potential benefits and risks can be found in the relevant Brochure, Investor Agreement and Application Form.

The value of an investment may go down as well as up, investors may not get back the full amount invested. Tax treatment depends on individual circumstances and may be subject to change. Past performance is no guarantee of current or future performance. Our investments are considered high risk and investment decisions regarding them should be made with careful consideration.

No Ingenious Group company provides or is authorised to provide investment or tax advice.