Investing in 2025 feels harder than ever. Interest rates are shifting, inflation concerns linger and political uncertainty keeps markets on edge. But with over half of property investors looking to expand their portfolio in 2025, the question isn't just what to invest in, it's how to spread risk across multiple asset classes.
Our Investor Relations team are seeing a clear shift in investor behaviour at Somo. Sophisticated investors are actively seeking alternatives to traditional stocks and bonds and property-backed lending is emerging as a cornerstone of well-diversified portfolios - and for good reason.
Contents
- The 2025 Investment Landscape: What's Changed
- What We're Seeing from Our Investors
- Why Property-Backed Lending Is Different
- The Three Pillars Behind Effective Property-Backed Lending
- The Somo Difference: Why Our Track Record Matters
- Real-World Resilience: How We Performed Through Recent Volatility
- Is Property-Backed Lending Right for Your Portfolio?
- Final Thoughts: Diversification Is Personal, But The Principles Are Universal
The 2025 Investment Landscape: What's Changed
The past five years have rewritten the investment rulebook. UK base rates have swung from 0.1% to 5.25% and back down. Inflation spiked to levels not seen in decades. Both stocks and bonds fell simultaneously in 2022 - something the traditional 60/40 portfolio was supposed to prevent.
For investors who lived through this volatility, the lesson is clear: traditional diversification isn't enough anymore. You need assets that don't move with public markets. You need tangible security. This is where bricks and mortar property-backed lending comes in.
What We're Seeing from Our Investors
Capital preservation is the top priority.
“Over the past 18 months, we've noticed a consistent theme in conversations with our investor base. After so much market turbulence, investors aren't chasing the highest returns, they're looking for assets that protect capital first. Our zero capital loss track record* since 2014 resonates - it’s one of the top reasons Investors choose Somo and keep coming back.” - Simon Cottrell, Investor Relations and Recoveries Director.
Industry research confirms that 46% of UK investors now prioritise portfolio diversification, yet only 8% currently hold property-backed investments offering returns that don't correlate with stock market swings or bond yield curves and providing the genuine diversification investors are seeking. Our CEO, Louis Alexander, explores this further in his analysis of the resilience of property-backed private lending vs the stock market.
Why Property-Backed Lending Is Different
When most people think "property investment," they picture buy-to-let portfolios or property development. But there's another way to gain exposure to property without the headaches of tenants, maintenance, or market timing: property-backed lending.
At Somo, we provide bridging loans secured against UK property. Investors in these loans benefit from:
- A Security: Loans are backed by tangible UK bricks and mortar assets.
- Returns: Can often be higher than traditional bonds or savings accounts.
- Zero capital losses: Since 2014, Somo investors have experienced no capital losses.*
The Three Pillars Behind Effective Property-Backed Lending
1. Sensible Loan-to-Value Ratios
A cautious approach to loan-to-value (LTV) helps maintain a comfortable buffer between the amount lent and the underlying value of the property. This ensures there is typically sufficient equity within the security to protect the position of all parties involved.
2. Robust Due Diligence
Responsible lenders carry out a wide range of checks on both the borrower and the property to verify key details and reduce potential risks. This may include identity verification, credit assessments, solicitor checks, and the use of advanced fraud-prevention technology to confirm authenticity and accuracy of information.
3. Clear Repayment Strategies
Every facility should be supported by a well-defined plan for repayment, often through the sale or refinancing of the secured property, or via proceeds from another venture. In many cases, lenders will look for more than one potential exit route to strengthen the overall security of the loan.
The Somo Difference: Why Our Track Record Matters
Our investors include banks, institutions, hedge funds, and family offices - sophisticated capital that demands both performance and security. Since 2014, we've built a reputation for quality over quantity with our ethos ‘slow and steady wins the race’. The results speak for themselves:
- £440 million lent across thousands of loans
- Zero capital losses for investors since inception*
- Rated No. 1 for financial health by 4thway
- Best Regional Bridging Lender at the Bridging & Commercial Awards 2025
Real-World Resilience: How We Performed Through Recent Volatility
The true test of any investment is how it performs during turbulent times. Consider what happened between 2020-2024:
- 2020 pandemic: Throughout the pandemic, Somo continued lending and delivering returns to investors.
- 2022 inflation spike: As bonds suffered their worst year in decades, property-backed lending provided stable income.
- 2023 rate rises: When the Bank of England raised rates to 5.25%, our flexible loan terms allowed us to adjust - protecting both borrowers and investors.
Through it all, our zero-loss record remained intact.*
Is Property-Backed Lending Right for Your Portfolio?
Property-backed lending isn't for everyone. It's best suited for investors who:
- Are High Net Worth or Sophisticated Investors
- Seek income generation alongside capital preservation
- Want exposure to UK property without direct ownership
- Can commit capital for 1-24 month periods
- Appreciate tangible security over paper assets
Final Thoughts: Diversification Is Personal, But The Principles Are Universal
There's no one-size-fits-all investment strategy. What works for a 25-year-old with decades ahead will look very different from a retiree's portfolio.
But the principle of diversification is universal. Spreading risk across asset classes - and within them - is one of the few investment rules that stands the test of time.
Choosing to invest with Somo means choosing a business that has been successfully lending for over 10 years. Our £440 million track record with zero capital losses isn't just a statistic, it's a testament to robust underwriting, LTV ratios that make good commercial sense and a passion for protecting investor capital.
Ready to find out more about diversifying your portfolio with property-backed lending?
*Historical Performance Risk Statement
All investors received 100% of their capital investment across over 1,600 redeemed loans from inception in 2014 to March 2025. A capital loss is categorised if and when there are no reasonable avenues of recovery still to progress.
Categories: Investor News
