Chancellor derided for U-turn on SIPP proposal

Chancellor Gordon Brown has been accused of gross incompetence over his U-turn on self-invested personal pension proposals.

In his pre-Budget statement last week, Brown ruled tax relief would not be allowed on residential properties placed in SIPPsThe decision has met with a mixed reaction in the mortgage industry as lenders count the cost of plans that had already been put in place. HBOS is believed to have been planning to distribute SIPPs through its Bank of Scotland brand, with industry figures saying it has now lost hundreds of thousands of pounds.

Paul Fincham, spokesman for HBOS, is unable to say how much money the group has put into SIPPs. He says it was something it was looking at but had no set plans.

Melanie Bien, associate director at Savills Private Finance, says though she can’t comment on how much the company has lost, its plans were quite advanced.

She says: “We were in talks to provide SIPPs under our own brand. We were also looking to put our overseas property in SIPPs.”

And Ray Boulger, senior technical manager at John Charcol, has called into question Brown’s position as the next possible Prime Minister, calling him cowardly.

He says: “It was typically cowardly of Brown to not make a firm reference to something in his speech that is going to impact a lot of people and businesses.

“To change plans at the 11th hour, four months before the rules are due to start, is gross incompetence. Brown should have done his homework properly before announcing the plans. If we can’t trust what he says, it calls into question his suitability as the next Prime Minister.”

But Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, says: “This is good news for the housing market as it will allow first-time buyers to come into a market that is not influenced by a house tax.”

And Andrew Moss, product development manager at Mortgage Express, says: “We didn’t expect the anticipated changes to generate the large additional lending volumes some commentators had predicted. Buy-to-let will continue to be used as part of long-term retirement planning by many people.”