Pensions change could fuel buy-to-let market

New SIPPS regulations could fuel buy-to-let market, says UCB Homeloans

12:45 19 July 2005

According to a new report by UCB Homeloans, a subsidiary of Nationwide specialising in the buy-to-let market, the introduction of new regulations governing the administration of Self Invested Personal Pensions (SIPPS), will herald a 15 per cent boost in the buy-to-let industry.

UCB Homeloans estimates that the new business brought in by the regulations could be between three and five billion pounds as consumers splash out on rental property to use within their pensions.

The new regulations will permit consumers to include residential property in their pensions portfolio for the first time. If the property is being rented out, any income received will be free of income tax and if the property is sold, the profits will be exempt from capital gains tax.

When the new regulations come into effect, mortgage lenders will have to take a decision about whether or not to offer products directly targeted at people with SIPPS.

"The new pensions rules are the biggest change over recent years within the pensions market," Keith Astill from UCB said.

"It will have a marked effect on the buy-to-let market over forthcoming years and will be particularly beneficial to the self-employed sector where individuals have to make their own pension arrangements in the absence of an employer's scheme," he continued.