Osborne urged to offer tax relief for property pensions
Property professionals and financial firms are campaigning for Chancellor George Osborne to allow buy to let homes as property pension investments.
Osborne has faced a barrage of demands from pension providers, financial advisers and landlords urging him to change pension rules.
The law forbids residential investment property holdings in a registered pension, like a SiPP or Qualifying Recognised Overseas Pension Schemes (QROPS).
But as property becomes a retirement investment of choice for many, the cries for reform are becoming louder.
Property Investors Network is one group seeking a change in property pension rules. The network has just published research showing 42% of members are relying on rents and property price rises to fund their retirement instead of pensions.
Another 49% will boost their other pension arrangements with income from property investments.
The network claims investors no longer trust traditional pensions and annuities in the wake of the Financial Conduct Authority report that found investors lost income because the annuity process rewards providers for failing to give advice about better products offered by rivals.
“Many ordinary savers are relying on bricks and mortar to fund their property pensions,” said Simon Zutshi, founder of the network.
“They believe they should have access to better tax benefits along the lines of pension contribution relief on commercial property in a SiPP.”
“Highly paid bankers have been reckless with other people’s money and just don’t trust them any longer,” he said. “We believe SiPP rules should be changed to include residential investment property.”
Zutshi also points out that lots of workplace pensions are underfunded, but homes have historically offered investors good yields and that an argument could be made for including them in property pensions.
“Our hope is these findings will add to the debate, especially in the run up to Budget 2014,” he said.
Article courtesy of LandlordZone