Osborne urged to relax Sipp residential property investment rules
03-24-2014
By Tom Selby
John Heron
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.