The survey shows that 53% of intermediaries think that pension reforms will boost buy-to-let business by up to 20%, while a significant 37% believe the changes will result in an uplift of more than 20%.
Contrary to comments from some sceptics, these figures suggest that there will be an increased appetite for investment in buy-to-let when the changes are implemented in April 2006. To this end 68% of intermediaries state that they are planning to actively promote the ability to hold buy-to-let property in a SIPP to their clients. Many however, are frustrated that they are not yet able to brief their clients in full on the changes. 84% of buy-to-let intermediaries are in agreement that the government has left publishing the final SIPPs rules too late, a result which could lead to confusion among their clients.
According to Ian Nie of Lief Financial Services “Many investors still believe they will just be able to transfer existing properties without using a pension fund to provide the deposits.” And although Andrew Frankish from Mortgage Talk believes that the reforms are only likely to be appropriate for those clients who have significant funds already in their pension scheme, he agrees, that “the changes present a significant opportunity but more education and information on the scheme is greatly needed”.
In addition to the positive expectations from the SIPPs changes, the number of intermediaries predicting stable business levels over the next three months is also positive, with the percentage of those expecting to write a similar amount of business rising from 23% in January to 32% presently. While the number of respondents predicting significant increases in business has dropped very slightly, there is no evidence that landlords are considering pulling out of the market. This is demonstrated by the fact that intermediaries expect remortgaging to make up the largest part of their business. With 40% of business coming from remortgaging, this indicates that landlords are continuing to manage their portfolios carefully, not only to ensure their borrowing reflects the current interest rate environment but also in order to release equity for new purchases.
Nicola Severn, Marketing Manager at Mortgage Trust commented: ‘Buy-to-let intermediaries tell us that the buy-to-let market is in good shape; overall confidence in buy-to-let remains high and there is little suggestion of a downturn in business. Intermediaries are looking forward to the introduction of residential property into SIPPs in April 2006, and are crying out for more details from the government to enable them to plan their strategies to make the most of this new opportunity. SIPPs look set to provide a new boost to the buy-to-let market, and we keenly anticipate the publishing of the government’s final rules in September."
