SIPPs will boost buy-to-let market

Self-invested pension plans reforms will boost buy-to-let but intermediaries do not feel sufficiently informed to advise on them, says Mortgage Trust.

Mortgage Trusts November buy-to-let intermediary forecast reveals intermediaries are predicting the reforms allowing residential property to be held in a SIPP will boost the buy-to-let market.

Almost 50% of intermediaries surveyed believe SIPP reforms will have a major impact on the buy-to-let market, boosting market growth by 15% or more, and almost a third predict a boost of more than 30%. As few as one in 10 intermediaries said that they didnt expect the reforms to have any effect on business volumes.

However, the majority of intermediaries surveyed admit they know very little about how the process of buying and holding buy-to-let in a SIPP actually works. 91% of intermediaries say they need further information on SIPP buy-to-let, and their knowledge of the rules is insufficient to feel confident advising or answering SIPP related questions.

In the run up to A-Day, intermediaries are expecting the buy-to-let market to grow or remain stable, and 38% believe business will remain steady over the next three months. Loans to new landlords are expected to increase slightly relative to remortgages and loans to first-time landlords. The outlook for rents is also favourable – 96% of intermediaries expect them to increase slightly or remain the same over the next three months.

Meanwhile, intermediary expectations for interest rates have shifted in line with the general consensus; the percentage of brokers expecting rates to decrease has fallen from 47.2% to 35.4% this month. This is reflected in the product types chosen, with 54% of landlords opting for fixed buy-to-let mortgage deals

Nicola Severn, marketing manager at Mortgage Trust, says: “There is obviously still a need for a concise and comprehensive information source for intermediaries who will be dealing with SIPP buy-to-lets. Mortgage Trust is launching a set of products tailored specifically for those investing in SIPP buy-to-lets. However, because the flow of information from government has been limited to high level guidance, we will be insisting that any intermediary wishing to access Mortgage Trust SIPP buy-to-let products have registered to our online panel and have received the detailed literature that we have produced.”