The intermediaries surveyed predicted that these changes would lead to an average uplift in buy-to-let business volumes of 10.6 per cent.
70.6 per cent of respondents plan to advise on SIPPs buy-to-let mortgages when the new rules come into effect, and almost half, 47.0 per cent, intend to team up with a pension adviser.
Although the majority of intermediaries believe the pension reforms will benefit the buy-to-let market, a hesitant 35.3 per cent believe the potential effect on the market may have been over exaggerated. Andrew Frankish, managing director at Mortgage Talk, believed there is still a lack of knowledge in the industry about SIPPs and commented: “Placing rental property in a pension scheme will only appeal to a limited number, namely those who have considerable pension funds at present.”
Other respondents were more positive, Martin O’Reilly of Prosperity Wealth Management said: “The buy-to-let market will remain strong and continue to grow, and the SIPP changes will serve to increase demand further and thus drive up market values.”
With many mortgage intermediaries remaining optimistic about the market in light of the pension reforms and the recent cut in interest rates, the number predicting significantly more business over the next three months has risen substantially to 11.8 per cent (5.7 per cent in July). The numbers of brokers predicting less business has fallen, while those predicting stable business levels have grown to 37.3 per cent (34 per cent in July).
Buy-to-let intermediaries’ perception of the interest rate environment has changed somewhat from July, following the 0.25 per cent cut in base rates. 47.1 per cent of respondents believe that interest rates will remain the same over the next three months, while a more optimistic 45.1per cent still think a further cut of 0.25 per cent is likely (down from 52.8 per cent in July). This demonstrates that there is a significant minority who believe that rates will still go down following the August rate cut. The belief that interest are unlikely to rise for the foreseeable future is adding to brokers’ confidence in the market. Buy-to-let business is still expected to consist predominantly of remortgaging (46.6 per cent), with loans to existing landlords expected to account for 37.0 per cent of business.
Nicola Severn, marketing manager at Mortgage Trust, commented: “Mortgage Trust’s September Buy-to-Let Intermediary Forecast shows that the interest rate cut has boosted brokers’ hopes for the sector. The forecast also offers an insight into buy-to-let intermediaries’ views on the pension reforms, and reveals that although there is a need for greater clarification around the rules, the ability to place residential property in a SIPP will undoubtedly provide a boost to the buy-to-let industry.”
