A mortgage firm has called for greater freedom in how savers build their pension fund by allowing buy-to-let property to be included in self-invested pension schemes.
Paragon Mortgages, a buy-to-let specialist lender, applauded the greater freedom that the Chancellor has handed to savers in the Budget has called for the change to Sipps.
The firm said that the private rented sector has grown considerably to meet the demand for housing that can no longer be satisfied by owner-occupation, local authorities and housing associations alone.
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John Heron, managing director of Paragon Mortgages, said: "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 their buy-to-let property 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 in 2013, and completed by BDRC Continental, revealed three quarters of landlords (75%) state that their properties are their pension. Of those that made this statement, 65% plan to live off their rental income when they reach retirement.
John continued: "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."