Mortgage brokers rush to put property in to pensions

Research conducted by UCB Home Loans shows that intermediaries have a strong belief in the benefits of buy-to-let, with 46% already owning buy-to-let properties themselves.

Furthermore, even if they do not already own a buy-to-let property, 68% will be considering putting buy-to-let property into a Self Invested Personal Pension when this becomes possible next year.

However, 98% of intermediaries said that the government has not given people enough information on the advantages and disadvantages of SIPPs.

Over half also believed that the benefits of putting residential property into a SIPP have been over-hyped by media coverage.

Of those questioned, 68% said that they would be promoting to their clients the ability to put residential property into a SIPP.

Most felt that the buy-to-let sector would be boosted by the pension changes, with 65% believing that it would boost sales of buy-to-let property by between 20% and 40% in the first year.

Keith Astill, managing director of UCB Home Loans, says: “The research indicates that brokers are way ahead of the rest of the population when it comes to owning buy-to-let properties, and of the benefits of putting them into SIPPs.

“SIPPs will be beneficial for a small proportion of the UK population, but it has to be remembered that people will not have the usual level of control over a buy-to-let property if they put it into their SIPP.

“Effectively speaking, if you put property into your pension, its there until you retire.”

In its latest report on the buy-to-let sector, published in July, UCB Home Loans said that it believes that the new pension rules will provide a boost of up to 15% in the buy-to-let sector, with between 3bn and 5bn being spent on rental property for use within pensions within the first year after the changes come into force.

Astill warns: “The changes wont benefit everyone though.

“You will need to have at least two-thirds of the price of the property already in your pension fund, so it is generally geared more towards the middle and upper income brackets.

“Also, it would be unwise to put all your eggs in one basket by investing your pension money solely in property.

“Pensions advisers would normally advise people to spread their risk over a range of areas.”