A-Day will boost property purchases by 160,000

The Royal Institution of Chartered Surveyors is predicting an extra 160,000 property purchases following the introduction of self invested personal pensions on April 6 2006.

However, the report from RICS warns that although regional hotspots could get even hotter, SIPPs will have a minimal impact on the majority of the market.

The report also suggests potential investors be on the lookout for inappropriate financial products and avoid get-rich-quick schemes.

RICS forecasts a steady flow rather than a mad rush of property into SIPPs, as the 160,000 extra residential property purchases represent a fraction of the 4,500,000 total transactions forecast, plus the 500,000 new homes expected to be built, in the three years from A-Day.

By analysing the pension and savings assets of UK households, the RICS report identifies who will be in a position to take advantage of the tax breaks on offer. Many potential property pensioners share the profile of existing second home owners (male, higher rate taxpayers aged between 45 and 64) and are likely to be already exposed to the property market through buy-to-let.

The report sounds cautionary notes over the possible mis-selling of property pensions and advises all potential investors to consult a qualified IFA before making any important decision on a financial product.

Louis Armstrong, chief executive of RICS, says: “Reports of a mad rush of property to SIPPs are exaggerated. The size of the housing market means that demand can be readily absorbed in most areas.

“But investors should be selective, watch out for get-rich-quick schemes and take proper professional advice – preferably from a chartered surveyor.”