Survey results published by Sipp provider AJ Bell suggest buy-to-let properties in the UK will attract the most money from those intending to buy into the asset class post-A-Day.
Based on responses from 1,650 current Sipp customers, the research finds that 64% of respondents will, or are likely to use their Sipps to purchase residential property after A-Day.
56% have said they favour buy-to-let, 29% favour the holiday home, and 15% would look to the main residence.
60% of respondents say they favour UK property against overseas.
Use of gearing to fund such purchases is popular too: 84% say either ‘yes’ or ‘likely’ when asked whether they will borrow from their Sipps to fund their purchases.
Spain and France get 9% of votes respectively, followed by ‘other Europe’ and ‘other’ at 5%, America at 4%, Portugal and Italy on 3%, and Dubai and Ireland on 1% each. Germany scored 0%.
Andy Bell, managing director, says it is not clear from the results - as the question was not posed - as to whether those intending to acquire buy-to-let properties have done so in the past, or whether this is being considered only now because of the changes resulting from new pension rules.
However, the hope is this would not be people's first foray into residential property, Bell says.
"Those with greater funds may be in the mindset of looking to buy their kids a flat at university, or buying a house in the sun."
The results showing the spread of favoured geographical locations for acquiring residential property may make Sipp providers think twice about offering services easing such acquisitions, Bell says.
This is because of the associated costs of overseas property, which may be seen as not worthwhile if only a few percent of clients want to buy property in places such as Portugal, Italy and elsewhere. Even Spain and France may be a struggle given the results noted.
One factor Bell says is in favour of the Sipps industry is timing: if the rules had come into effect, say, in early 2004, then it may have been the case of a "wall of money" going into property. As it stands, given the state of the UK property market now it may help keep unrealistic decisions in check.
Another point noted by Bell is results from the question: "Who will your Sipp purchase residential property from?".
Although 35% have answered 'Third party', a quarter say it will be a 'connected person', which Bell says suggests people will sell their own property into the Sipp.
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 Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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