Calls to include Buy To Let property in personal pensions

Specialist buy-to-let lender Paragon Mortgages has called on the Government to let savers hold residential property in personal pensions.

In his March Budget, Chancellor George Osborne gave savers greater freedom over how to use their pension pots, scrapping the obligation to buy an annuity.

There has been speculation that many will use their pension pots to invest in property at retirement.

Now Paragon has called on the Government to extend this freedom even further, by allowing savers to include buy-to-let property in self-invested personal pensions (SIPPs).

Paragon's managing director John Heron said the private rented sector has grown considerably to meet the demand for housing because landlords have been willing to invest, assisted by the development of buy-to-let lending.

“It is clear from independent research that landlords favour an investment in residential property because it is a physical asset, has a strong performance record through the cycle and acts as a hedge against inflation.

“It is also clear from research that landlords regard their investment in property as part of their wider planning for their financial security in later life.

"The vast majority of landlords hold just one or two properties to augment other savings and investments, but buy-to-let property is unusual in that investors cannot currently hold it in their pension.

"The last Labour Government did look at this but failed in the final analysis to deliver.”

Independent research commissioned by Paragon Mortgages last year showed that 75% of landlords say their properties are their pension.  Of those that made this statement, 65% plan to live off their rental income when they retire.

Heron added: “Private rented property is a popular choice for investors and could sit well in a personal pension because it generates a flow of income, has strong defensive qualities and 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."