As much as £6.5bn is expected to be invested in property through Sipps in the first year, following the implementation of new rules at A-Day on 5 April 2006, new research indicates.
A survey conducted at the Property Investor Show finds £1.75bn from the above figure is expected to displace existing pension investments, with the remaining £4.75bn representing a growth boost and taking the UK annual private pension contribution of approximately £70bn up by 7%.
New pension rules will enable investors to use their pension funds to buy residential property both in the UK and overseas.
Director at financial management company Astute, Justin Jordan says there is already an increase in activity within the market.
He says: “Many of our clients are already making moves to restructure their pension funds in order to buy property after A-Day. It is even possible to buy off-plan property now and then make the full purchase as soon as the regulations come into force next year. This is going to pump literally billions of pounds into the property market – the take up is going to be massive.”
Managing director of the Property Investor Show, Nick Clark adds A-Day changes will provide more flexibility to pension investment and combined with the attractiveness of the housing market to investors is likely to encourage more people to look at investing more substantially in their pensions.
Clark says: “In particular, the ability to invest a pension in overseas property is going to encourage many people to take advantage of some of the countries where property prices are still seeing rapid growth, which could substantially boost their funds. Additionally, with the flexibility to gear properties in a SIPP, investors will have more opportunities to maximise their returns.”
The Property Investor Show will take place Friday 23 to Sunday 25 September at the ExCeL Centre in London’s Docklands, and will include seminars and workshops on the opportunities resulting from A-Day.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Gareth Vorster on 020 7968 4554 or email [email protected].IFAonline
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
Senior Managers Regime
Interest rate outlook unchaged