Brokers say SIPPs will boost B2L

Mortgage Trust says 64.7% of buy-to-let mortgage brokers believe that the changes allowing residential property to be held in self invested personal pensions will boost the buy-to-let market.

Intermediaries surveyed in MT’s September Buy-to-Let Intermediary Forecast predict the changes would lead to an uplift in buy-to-let business volumes of 10.6%.

Some 70% of respondents plan to advise on SIPPs buy-to-let mortgages when the new rules come into effect and almost half, 47%, intend to team up with a pension adviser.

Although the majority of intermediaries believe the pension reforms will benefit the buy-to-let market, a hesitant 35.3% believe the potential effect on the market has been exaggerated.

Andrew Frankish, managing director of Mortgage Talk, believes there is still a lack of knowledge in the industry about SIPPs.

He says: “Placing rental property in a pension scheme will only appeal to a limited number of people, namely those who have considerable pension funds at present.”

But Martin O’Reilly, mortgage intermediary at Prosperity Wealth Management, says: “The buy-to-let market will remain strong and continue to grow, and the SIPP changes will increase demand further and thus drive up market values.”

With many brokers remaining optimistic about the market in light of the pension reforms and the recent cut in interest rates, the number predicting significantly more business over the next three months rose substantially to 11.8% from 5.7% in July.

The number of brokers predicting less business fell, while the number predicting stable business levels grew to 37.3%.