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Osborne urged to relax Sipp residential property investment rules

Chancellor George Osborne is facing calls to hand further freedom to savers by relaxing rules that prevent Sipp investors from using their pension to buy residential property.

In his Budget speech on Wednesday the Chancellor announced that from April next year anyone who is aged 55 or over will be able to take their entire pension fund as cash. The move is designed to give savers greater flexibility and choice when they reach retirement.

However Government rules around pension investment remain strict and prevent personal pension savers from using their fund to invest in residential property.

Paragon Mortgages managing director John Heron says the Government should rethink this rule.

He says: “Private rented property is a popular choice for private investors and could sit well in a personal pension arrangement because it generates a flow of income, has strong defensive qualities and has an excellent track record for producing good returns.

“Having given more choice to how we take our pension benefits, the Government should consider how we can be given more flexibility in building our pension savings and allow individuals to include in their pension the one asset that many investors regard above all others, an investment in housing.”

Brokers believe the pension reforms announced in the Budget will see a surge in buy-to-let investment, as well as the number of borrowers paying down interest-only mortgages.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. What a ridiculous suggestion. Given that so many people are likely to take money from pensions and stick it straight into residential property stoking the furnace of unreasonable property prices even further, who in their right minds would think it a good idea to exacerbate the situation by reverting to that nonsensical idea of letting resi property be held in a pension also? So when the the property market overheats and crashes, who is going to pick up the pieces of all the consumers shouting “mis-sold”?

  2. Edward – You’ve hit the mail on the head, it would result in a massive increase in property prices, creating further in balance between those that have and those that haven’t simply due to when people were born,

  3. Not a good idea. If taking assets out of a pension fund is going to “pour jet fuel onto the buy to let market” this would be the equivalent of lobbing a few sticks of dynamite on there too.

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