Type: Capital-protected bond
Aim: Growth linked to the performance of the Halifax House Price Index
Minimum-maximum investment: 3,000-500,000
Term: 10 years
Return: 200% of the rise in the Halifax House Price Index at the end of the term
Guarantee: Original capital returned in full at the end of the term regardless of the performance of the index
Closing date: November 4, 2005, October 21, 2005 for Pep/Isa transfers
Commission: Initial 3.5%
Tel:0800 328 1903
Abbey for Intermediaries and Knight Frank have established the residential property plan, a capital-protected bond linked to the performance of the Halifax House Price Index over a 10-year term. It is marketed as a way that self-invested personal pensions and small self-administered schemes can access the residential property market six months ahead of proposed changes to pension arrangements on A-Day 6 April 2006.
Highclere Financial Services partner Alan Lakey says: “This is a 10-year investment plan with capital security and the potential for doubling the increase to the Halifax House Price Index.”
He points out the product is open to new Isa, Sipp or SSAS investments as well as transfers into these and Peps. “It represents an opportunity to enjoy access to residential property growth prior to April 6, 2006. The final year averages the Halifax index,” says Lakey.
There is nothing Lakey dislikes about this product. “It appears to have no negative aspects,” he says. He feels the initial commission of 3.5 per cent reflects the lack of renewal commission available.
Scanning the market for possible competitors Lakey believes this is a unique product which may suffer competition from Britannic, Norwich Union and New Star on the investment side.
He concludes: “Since the Halifax index started in 1983 there has not been a 10-year period where it has fallen. The worst period in 1989-1999 showed a 12 per cent gain and the best period in 1994-2004 showed a 149 per cent increase.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Good