Landlords are coming under increasing cost pressure due to regulatory changes, like the Healthy Homes Guarantee Act and the removal of negative gearing.

Investor advocates have long said that the changing environment will have the most impact on new and/or smaller scale “mum and dad” property investors.

Now peer-to-peer mortgage lender Southern Cross Partners reports they are getting a growing number of inquiries about alternative investment options which are connected to property.

Southern Cross Partners CEO Luke Jackson says their feedback indicates that small mum and dad investors are increasingly uncomfortable with the increased liabilities and obligations of being a landlord.

They are concerned about the costs of making their investment properties compliant with new legislation, the new government’s promises to boost tenant rights and the threat of costs from meth contamination, he says.

“While many of the changes mean that we may well see rent increases, actual rental yields aren’t expected to change.

“Even with the relaxation of the LVRs, property is an investment that is still tying up more capital than what was historically the norm.

“Previously, investors could recoup this with strong capital gains, but with a slowing property market investors are now unsure if any net gain will be realised.”

This all means that property investment is losing its shine for some investors and they are looking for alternatives, Jackson says.

“Which is why we’re getting calls and why we’re gearing up to provide more education to potential investors around the subject of peer-to-peer mortgage lending.

“The concept of peer-to-peer lending is new to many, but they understand property and they don’t want to give up on it completely.”

Southern Cross Partners is a lending matchmaker that brings borrowers and investors together to facilitate a residential property loan supported by a registered mortgage over the borrower’s property.

Borrowers are sourced through a network of mortgage advisers.

They tend to be people who fall outside a typical banks’ lending criteria even though they may have good equity to back their loans, such as self-employed people.

Investors invest their funds in a loan which the investor owns – along with other investors who contribute to that loan - while Southern Cross Partners manages the loans.

If no investors put their hands up to invest in a loan, Southern Cross Partners will fund and retain that loan itself.

Jackson adds that it may actually be good news that property investors are looking at alternatives.

“It could mean more houses on the market for first home buyers and greater availability of funds for borrowers who want to get into those homes.”