Alliance & Leicester has welcomed Browns plans to cut residential property from Self Invested Pension Plans.
Brown announced plans at todays pre-Budget report to remove residential properties from the upcoming changes to pension rules.
SIPPs and all other forms of self-directed pensions will be prohibited from obtaining tax advantages when investing in residential property and certain other assets, such as fine wines, from April 6 2006.
However Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, says although the decision will be bad news for high network individuals, it will mean good news for first-time buyers.
He says: It is surprising to hear that residential mortgages will be left out of SIPPs. This will obviously be bad news for high networth individuals that planned to invest in this area.
“However, it is good news overall for the housing market, as it will allow first-time buyers to come into a market that is not influenced by a house tax.
This action will ensure that tax relief is only given to those whose purpose in making the contribution is to provide themselves with a secure retirement income.
Jeff Knight, head of marketing servcies at GMAC RFC says: “This will disappoint those investors who had been deferring any purchase until next year. But on the whole it will not hold back the buy-to-let market as the potential to invest in propert via SIPPs was a very small and exclusive market.”