Lee Grandin, managing director of Landlord Mortgages has commented on the announcement within the pre-budget speech that “SIPPs and all other forms of self-directed pensions will be prohibited from obtaining tax advantages when investing in residential property”:
“We never believed that SIPPs were going to set the property world alight and this announcement simply confirms our fears that this investment option was being over hyped. Even with the generous tax breaks people believed they would provide when investing in residential property, we were sceptical!
“Many of our landlords are investing in residential property for their retirement but have chosen to ignore the option to use a SIPP post A-day. These product are simply too restrictive and required a higher capital investment than most people could or even wanted to make.
“Some consumers may still choose to invest directly in residential property using their SIPP but I think the majority are going to use REITS or other property funds to diversify their portfolio. This is likely to lead to some financial services companies, who have based all or part of their business plan around providing access to residential property for SIPP holders, facing difficulties.”
“Anything, that encourages people to save for their retirement should be applauded but I don’t necessarily feel that SIPPS (especially with the new announcement) are the vehicle that will do this.”
