The report also warns potential investors to be on the lookout for inappropriate financial products.
From 6 April 2006, residential property (UK and overseas) will be allowed in a SIPP for the first time. A-Day (as it has become known) has led to industry speculation of a property bonanza, boosting both the buy-to-let and wider residential market.
But new work by RICS forecasts a steady flow, rather than a mad rush, of property into SIPPs. Up to 160,000 extra residential property purchases may be made over the three years following the changes. But this would represent only a fraction of the 4,500,000 total transactions forecast (plus more than 500,000 new homes expected to be built) during that time.
By analysing the pension and savings assets of UK households, the RICS report identifies who will be in a position to take advantage of the tax breaks on offer. Many potential property pensioners share the profile of existing second home owners (male, higher-rate taxpayers aged between 45 and 64) and are likely to be already exposed to the property market through buy-to-let.
The report sounds cautionary notes over the possible mis-selling of ‘property pensions’ and advises all potential investors to consult a qualified Independent Financial Advisor (IFA) before making any important decision on a financial product. The advice of a chartered surveyor will remain indispensable for judgements about the investment potential of individual properties or portfolios.
RICS chief executive, Louis Armstrong, said: "Reports of a mad rush of property to SIPPs are exaggerated. The size of the housing market means that demand can be readily absorbed in most areas. But investors should be selective, watch out for 'get-rich-quick schemes', and take proper professional advice - preferably from a chartered surveyor."
