The arrangement will enable them to provide jointly a range of products to support buy-to-let investors who wish to place residential property investments into their SIPP, when new rules for qualifying assets are implemented with effect from 6 April 2006.
John Heron, managing director of Paragon Mortgages, says: “A recent survey of our buy-to-let investors indicated that more than half of them intend to place residential property investments inside a SIPP wrapper, or would consider doing so. That suggests that the potential market among our existing landlord clients who want to take advantage of the changes to the rules coming in on 5 April 2006 could be very large.”
“We decided that we needed to partner with a specialist with proven expertise in the pensions field, and we’re delighted to have reached agreement with James Hay, the leading SIPP provider in this country, to co-operate in providing a range of products for residential property investors.”
Jan Regnart, managing director of James Hay SIPP continues: “Partnering with Paragon, the largest specialist buy-to-let lender, makes a lot of sense for James Hay, giving us access to their expertise in residential property investment as well as a good source of potential business. We think this will be a win-win deal for both parties.”
She continues: “The James Hay SIPP products give people maximum choice, control and flexibility over their retirement planning and pension provision, as well as being a tax efficient way of saving for retirement. At the moment, however, residential property does not qualify as a permitted asset for SIPPs. That is set to change from April 2006, opening up huge growth potential for the market.”
The detailed rules regarding the assets that will be permitted under SIPPs have not yet been announced by the government. John Heron continues: “It may be a year away, but the industry really does need the government to announce the precise basis on which residential property can be held in a SIPP, post April 2006. For example, will people’s own residence and second homes qualify? We very much hope that the Chancellor will give further detail in his budget speech next week. If nothing is announced till after the expected election, we’ll be working to a pretty tight deadline.”
