A substantial proportion of UK top end advisers believe up to 25% of their clients are likely to include residential property in a Self invested persoanl pension (Sipp), according to new research released by Winterthur Life.
Mike Morrison, pensions strategy manager, at Winterthur Life, says the findings are significant, as they suggest in spite of a sluggish housing market, it looks as though the momentum for property will continue through to A-Day and beyond.
“The current low levels of interest rates, low unemployment and demand for housing will, I am sure, continue to underpin property as a viable long-term investment vehicle. Add to this the capital gains, income and inheritance tax benefits and its attraction is even clearer,” he says.
But Morrison also urges investors to be cautious: “While residential property may initially appear to be an attractive option, many investors will discover more glitter than gold when they look into the matter more closely. For a start there will be limits to the number of people who can take advantage of it. The size of the average pension fund, combined with the new borrowing rules will also act as a natural constraint.
Along with these issues, elements of cost and control have to be considered, he says. The average house price at £184,924, combined with the potential cost of property agents, which many providers may require, all contribute to this.
Morrison also questions whether people really understand the lack of control they will have, as any property purchased in this way effectively belongs to the pension fund and not the individual.
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