Tokenised Real Estate

The Case for Tokenised Real Estate

Real estate is the world's largest asset class — an estimated $379 trillion globally. But it's notoriously illiquid, requires large capital outlays, and involves complex legal structures for ownership transfer. Tokenised real estate addresses these issues by representing property ownership as blockchain tokens that can be bought and sold with minimal capital, settled instantly, and traded 24/7.

A £500,000 buy-to-let property in Manchester can be split into 500,000 tokens at £1 each. Investors can buy £50 worth and receive a proportional share of rental income and capital appreciation. The property is managed by a professional operator; the tokens represent legal ownership claims enforced through an SPV (Special Purpose Vehicle) structure.

How It Works Legally

Tokenised real estate typically uses one of these legal structures:

• SPV tokenisation — a property is held in a limited company (SPV), and shares in that company are tokenised. Investors own tokens that represent shares in the SPV, which owns the property.
• Fractional deed ownership — the property deed itself is divided into fractional interests, with tokens representing each fraction. This is legally more complex and only available in certain jurisdictions.
• REIT tokenisation — a Real Estate Investment Trust is tokenised, giving investors exposure to a portfolio of properties through a single token.
• Loan tokenisation — instead of owning property, investors fund mortgages or development loans and earn interest. The token represents a debt claim, not equity.

Key Platforms

RealT

RealT is a US-based platform that tokenises single-family rental properties in Detroit, Chicago and other US cities:

• Each property is held in an LLC; tokens represent membership interests
• Properties are fully managed — tenants found, maintenance handled, rent collected
• Rental income is distributed daily in USDC to token holders
• Minimum investment: around $50 per property
• Tokens trade on RealT's secondary market and on Uniswap
• Over 400 properties tokenised since 2019

Lofty

Lofty (lofty.ai) tokenises US rental properties with a similar model:

• Properties held in Delaware LLCs; tokens represent beneficial ownership
• Rental income distributed daily to token holders
• Minimum investment: $50
• Properties across multiple US states
• Secondary market trading on the Lofty platform

Landshare

Landshare focuses on UK and European real estate:

• Tokenised property investments on BNB Chain and Ethereum
• Both equity (property ownership) and debt (property-backed loans) products
• APY targets of 8–15% depending on the investment type
• Minimum investment: typically $100–$500

Other Notable Platforms

• Property.fi — UK-focused fractional property investment via tokens
• Brickblock — European platform for tokenised real estate funds
• Meridio — US platform for tokenised property shares (acquired by Propy)
• Propy — blockchain-based real estate transaction platform with NFT deed capability
• Secret Estates — tokenised UK property investments with blockchain transparency

Tokenised Real Estate in the UK

The UK regulatory landscape for tokenised real estate is evolving. The Financial Conduct Authority (FCA) has indicated that tokenised securities representing property ownership would likely fall under existing securities regulations. Key considerations for UK investors:

• Property tokens may be classified as security tokens under UK law, triggering FCA compliance requirements
• Platforms must conduct KYC/AML checks on investors
• Rental income from tokenised property is subject to UK income tax
• Capital gains on token sales are subject to CGT
• Stamp Duty Land Tax (SDLT) may apply depending on the legal structure used

The UK government's 2023 consultation on tokenised funds signalled support for innovation, and the FCA's regulatory sandbox has admitted several property tokenisation projects.

Risks of Tokenised Real Estate

• Property market risk — property values can fall; rental income can drop if tenants default
• Platform risk — if the tokenisation platform fails, the legal link between tokens and property may be disrupted
• Liquidity risk — secondary markets for property tokens can be thin, especially during market downturns
• Legal enforceability — the legal claim that a token represents ownership of a property is only as strong as the legal structure behind it
• Operational risk — property management (maintenance, tenant disputes, insurance) depends on the platform's competence
• Regulatory risk — tax treatment and regulatory requirements may change

The Bottom Line

Tokenised real estate is one of the most exciting RWA use cases because it democratises access to property investment — historically the preserve of the wealthy. Platforms like RealT and Lofty have demonstrated the model works at scale. However, investors must understand that they're investing in real property with all its inherent risks (market downturns, tenant defaults, maintenance costs) plus the additional layer of platform and smart contract risk. For UK investors, the tax and regulatory landscape requires careful navigation.

Learn More

• RWA vs Traditional Investing — how tokenised assets compare
• How to Invest in RWA Tokenisation — practical UK guide
• Risks of RWA Tokenisation — comprehensive risk assessment

Nothing on this site is financial advice. All content is for educational purposes only. Always do your own research and consult a qualified financial adviser before making investment decisions. Back to all guides