Mortgage intermediaries say the government has not done enough to inform consumers about the benefits and possible pitfalls of self-invested personal pensions (SIpps), new research reveals.
A survey conducted by UCB Home Loans, finds over half (52%) also believed that the benefits of putting residential property into a SIPP have been over-hyped.
That said, over two-thirds of mortgage brokers (68%) will be considering putting buy-to-let property into SIpp when this becomes possible next year, the research indicates.
Most brokers feel the buy-to-let sector will be boosted by the pension changes, with the majority (65%) believing that it will boost sales of buy-to-let property by between 20% and 40% in the first year.
"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," Keith Astill, managing director at UCB Home Loans says.
"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 Sipps. Effectively, if you put property into your pension, it’s there until you retire."
In its previous report on the buy-to-let sector, published in July, UCB Home Loans said it believed the new pension rules would 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.
But Astill warns the changes won’t 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."
The Treausry is tommorrow expected to publish a consultation document on the possible regulation of Sipps. One of the proposals likely to be put forward is that they are put in a new regulated activity under the Financial Services Authority.
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