The research conducted among 1,236 mortgage intermediaries this month by Nationwide’s specialist lender, UCB Home Loans, shows that they have a strong personal belief in the benefits of buy-to-let investment.
Furthermore, even if they do not already own a buy-to-let property, over two-thirds of those questioned (68 per cent) will be considering putting buy-to-let property into a Self Invested Personal Pension (SIPP) when this becomes possible next year.
However, 98 per cent of intermediaries said that the government has not given people enough information on the advantages and disadvantages of SIPPs. Over half (52 per cent) also believed that the benefits of putting residential property into a SIPP have been over-hyped by media coverage.
Of those questioned, 68 per cent said that they would be promoting to their clients the ability to put residential property into a SIPP. Most felt that the buy-to-let sector would be boosted by the pension changes, with the majority (65 per cent) believing that it would boost sales of buy-to-let property by between 20 per cent and 40 per cent 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,” said UCB Home Loans managing director, Keith Astill.
“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 SIPP,” he said. “Effectively speaking, if you put property into your pension, it’s there until you retire.”
In its latest report on the buy-to-let sector, published in July, UCB Home Loans said that it believes that the new pension rules will provide a boost of up to 15 per cent in the buy-to-let sector, with between £3 billion and £5 billion being spent on rental property for use within pensions within the first year after the changes come into force.
“The changes won’t benefit everyone though,” warns Astill. “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.”
