One of the more discussed developments in property investment over the past few years has been the emergence of platforms that allow investors to own fractions of property — either through conventional share-based structures or through blockchain-based tokenisation. The promise is compelling: access to property investment returns without the capital required for whole-property ownership, with the possibility of greater liquidity than traditional direct investment.
This guide examines what these models actually offer, where their real limitations lie, how they compare to established alternatives, and what the current state of the market means for investors in 2026.
Two Distinct Models
Fractional Ownership Platforms (Non-Tokenised)
Conventional fractional property platforms work through established legal and financial structures. A Special Purpose Vehicle (SPV) — typically a limited company — acquires a property. Investors buy shares in the SPV, receiving:
- A proportional share of rental income (net of platform fees and costs)
- Proportional exposure to capital gain or loss when the property is eventually sold
- Rights that are defined by the SPV's articles of association and the platform's investor agreement
Platforms that have operated in this model include Bricklane (UK) and Property Partner (rebranded as London House Exchange). These are regulated as collective investment schemes or alternative investment fund managers under FCA oversight.
The advantages of this model over tokenisation are significant: it operates within established legal frameworks, investor rights are well-defined, and the regulatory structure provides some protection. The disadvantage is that secondary market liquidity is limited — you can typically sell your fraction only when the platform matches a buyer, which may take weeks or months, or only at exit events when the property is sold.
Tokenised Property (Blockchain-Based)
Tokenised property replaces the SPV share structure with a blockchain-based token. Each token represents a defined interest (typically an economic interest, not a direct legal title) in a property. The token is issued on a blockchain (Ethereum is common; other chains are used) and in principle can be traded 24 hours a day, seven days a week, on a secondary marketplace.
The theoretical advantages are:
- Fractionalisation to very small amounts — tokens worth £10–£100, enabling micro-investment
- Global access — any investor with a crypto wallet and the required KYC verification can in principle participate
- 24/7 liquidity — secondary market trading without stock exchange opening hours
In practice, as of 2026, these advantages are largely theoretical.
The Reality of Tokenised Property in 2026
Regulatory Uncertainty
The fundamental question — what is a property token, legally — remains unresolved in most jurisdictions. Is it a security? A collective investment scheme? A commodity? A utility token?
In the UK, the FCA has taken the position that most property tokens are likely to constitute regulated investments, requiring the issuer to be FCA-authorised. The FCA's ongoing work on the crypto assets regulatory regime (following HM Treasury's consultations) has not yet produced a comprehensive framework specific to property tokens.
In the EU, the Markets in Crypto-Assets (MiCA) regulation (in effect from 2024) provides a framework for crypto assets, but property tokens that qualify as financial instruments remain under MiFID II — not MiCA. The result is regulatory complexity that deters institutional participation and reduces investor confidence.
Liquidity Is Overstated
The promise of 24/7 liquid markets for property tokens has not materialised in practice. Secondary markets for most tokenised property products are thin — very few buyers and sellers at any given time. This means:
- Tokens may be difficult to sell at anything close to fair value
- Bid-ask spreads on thinly traded tokens can be very wide
- In a market stress event, liquidity may effectively disappear entirely
True liquidity requires deep, reliable secondary markets with many participants. These do not yet exist for property tokens in the way they exist for listed equities or REITs.
Platform Risk
The largest risk specific to fractional and tokenised property platforms — beyond the underlying property risk — is the platform itself. If the operating company becomes insolvent:
- Who holds the legal title to the properties?
- What happens to investors' economic rights?
- Is investor capital held separately from the platform's own funds?
- How are tokens redeemed or property assets distributed to token holders?
These questions have no universally satisfactory answers, and the answers vary significantly by platform and jurisdiction. Some platforms have structured their SPVs to be bankruptcy-remote from the operating company (a positive feature). Others have not made this structural protection explicit. Investors should scrutinise the platform's structure and legal documentation carefully.
Tax Treatment Uncertainty
The tax treatment of property token income and capital gains is not yet fully settled in most jurisdictions:
- In the UK, HMRC has published guidance on the tax treatment of crypto assets generally, but property-specific token guidance is limited
- It is likely that rental income distributed from a property token is taxable as property income, and capital gains on token sale are subject to CGT — but the mechanism of calculation (particularly where tokens are traded on secondary markets at varying prices) requires care
- Seek specific tax advice before investing in any tokenised property product
Positive Developments: The Dubai Land Department Pilot
The most significant institutional endorsement of property tokenisation to date is the Dubai Land Department's (DLD) pilot programme, which launched its first phase in March 2025 and progressed to a Phase 2 — enabling secondary-market resale of tokens — from February 2026. The DLD pilot aims to enable the registration of tokenised property titles on a blockchain maintained by the DLD itself — essentially allowing the official land registry to record fractional token-based ownership.
If the pilot succeeds and is expanded:
- If fully implemented, tokenised ownership could be granted the same legal standing as conventional title registration
- International investors could acquire fractional registered title in Dubai properties without the current structural ambiguities
- Secondary market trading of DLD-registered tokens could provide genuine liquidity
This is genuinely significant. The DLD is a credible, well-regulated authority and Dubai's property market is liquid and internationally oriented. The pilot deserves monitoring — if it expands to full implementation, it could become one of the first genuinely robust tokenised property systems in the world.
As of mid-2026, however, it remains a pilot and is not yet widely accessible to retail investors.
RICS Position on Tokenisation
The Royal Institution of Chartered Surveyors (RICS) has acknowledged that tokenisation has the potential to increase market liquidity and lower barriers to property investment. RICS guidance notes that for tokenisation to deliver on this potential, the market needs:
- Clear regulatory frameworks that define the legal status of tokens
- Robust valuation standards for tokenised properties
- Standardised smart contract structures
- Reliable title registration linkage (as the DLD pilot attempts to provide)
RICS is not opposed to tokenisation but is clear that the infrastructure does not yet exist to make it a mainstream, reliable investment vehicle.
REITs: The Established Alternative
For most investors seeking fractional exposure to property income and capital values without direct ownership, listed Real Estate Investment Trusts (REITs) remain significantly more suitable than most fractional or tokenised platforms.
| Feature | Fractional/Tokenised Platforms | Listed REITs |
|---|---|---|
| Regulation | Variable, often limited | Strong (listed company regulation) |
| Liquidity | Thin secondary market | Stock exchange liquidity |
| Minimum investment | Low (£10–£100) | Low (cost of one share) |
| Transparency | Variable | High (listed company reporting) |
| Diversification | Single property | Portfolio of properties |
| Tax treatment | Uncertain | Established |
| Platform risk | Significant | Minimal (publicly listed) |
| Dividend income | Net of platform fees | 90%+ of taxable income distributed |
UK-listed REITs such as LondonMetric Property, Tritax Big Box, Segro, and others provide exposure to diversified portfolios of professionally managed properties, with full stock exchange liquidity and established tax treatment under the REIT regime.
For internationally oriented exposure, global REIT ETFs (exchange-traded funds) offer diversified exposure across property types and geographies through a single, liquid, low-cost instrument.
When Fractional Platforms Might Make Sense
Fractional platforms are potentially appropriate for:
- Small experimental allocations — investors who wish to understand the model with limited capital at risk
- Investors who cannot access direct property investment — below the capital threshold for whole-property ownership and for whom REITs are too diversified away from specific locations or property types
- Sophisticated investors with legal and tax resources — who can properly evaluate the platform structure, regulatory status, and tax treatment before committing material capital
They are not appropriate as a replacement for direct property investment for investors with sufficient capital, or as a primary vehicle for any significant portion of an investment portfolio in the current state of market development.
Related Guides
- Emerging vs Established Property Markets
- Interest Rates and Global Property Cycles in 2026
- Property Exit Strategies Compared
- How to Finance Overseas Property
How Global Investments Can Help
Global Investments takes a measured view of new investment structures. We are interested in genuine innovations that serve our clients' interests — including the Dubai Land Department's tokenisation pilot, which we are monitoring closely. We are equally clear-eyed about the current limitations of most fractional and tokenised property products.
Our role is to help you invest in structures that we believe are sound, legally robust, and appropriately regulated — not to chase every new product that generates press attention. If you are considering fractional or tokenised property exposure and want an honest assessment of the specific platform or product, we are well-placed to help.
The information in this guide is for general educational purposes. The regulatory treatment of crypto assets and tokenised property changes rapidly — always check current FCA guidance and seek specific tax and legal advice before investing. The value of investments can fall as well as rise.
Frequently asked questions
What is the difference between fractional property ownership and tokenised property?
Fractional ownership platforms (such as Bricklane in the UK) operate through conventional regulated structures — investors buy shares in a Special Purpose Vehicle (SPV) that holds the property. Tokenised property uses blockchain technology to represent ownership interests as digital tokens, enabling 24/7 trading and global access. In practice, both involve holding a partial economic interest in a property rather than direct freehold ownership.
Is tokenised property investment regulated in the UK?
Most property tokens are likely to constitute collective investment schemes or securities under UK law, falling under FCA regulation. In practice, the regulatory treatment of specific token products varies and the FCA has not yet issued comprehensive guidance specific to property tokens. Investors should check the regulatory status of any platform carefully before investing.
What is a REIT and how does it compare to fractional property investment?
A Real Estate Investment Trust (REIT) is a listed company that owns a portfolio of income-producing properties. REITs are regulated, listed on major stock exchanges, highly liquid (you can buy and sell shares during market hours), and distribute at least 90% of rental income as dividends. For most investors seeking fractional exposure to property income, REITs are more practical, more liquid, and better regulated than most fractional ownership platforms.
Is the Dubai Land Department's tokenisation pilot significant?
It is a meaningful signal that a major property market regulator is taking tokenisation seriously. The DLD pilot — launched in March 2025, with a Phase 2 enabling secondary-market resale of tokens from February 2026 — aims to enable tokenised trading of registered property titles on the blockchain. If successful, it could increase transaction liquidity and reduce friction for international buyers. However, as of mid-2026 it remains a controlled pilot and is not yet widely available to retail investors.
How much of my portfolio should I put into fractional property platforms?
At most, a small experimental allocation — for most investors, no more than 5% of a property investment portfolio. The platforms themselves are early-stage, regulatory frameworks are evolving, secondary market liquidity is thin, and platform failure risk is real. For meaningful fractional property exposure, established REITs are significantly more appropriate.
This guide is for general information only and does not constitute financial, legal or tax advice. Programme rules, prices and tax rates change; verify current requirements with a qualified adviser before acting.