The Chancellor of the Exchequer is expected in his Budget speech on Wednesday 17th March to announce new procedures that will allow individuals holding Self-Invest Personal Pension plans (SIPPs) to include residential property investment in their pension assets.
A SIPP offers all the usual tax benefits of a regular pension plan (including income and capital gains free of tax) but also allows the individual, through a pension trustee, to control much more closely the choice and management of his or her investments. A broad range of asset types can be invested in, including equities, bonds and commercial property, but so far residential property has been excluded. Gordon Brown is expected to extend the list of qualifying investments to residential property as a means of encouraging individual pension provision in this country.
John Heron, managing director of specialist buy-to-let lender Paragon Mortgages, comments: "This would be excellent news for buy-to-let investors. For many landlords, providing for their financial needs in retirement is one of their key motivations for investing in buy-to-let.
Depending on what Mr Brown announces on Wednesday, we would expect that many of our existing buy-to-let borrowers would want to take advantage of the new arrangements in order to benefit from the tax advantages of the SIPP. We are working with major providers in the field of pension provision to develop a simple, flexible solution to enable our customers to invest in residential investment property under a SIPP wrapper."
