Government forcing landlords to house non-paying tenants for lengthy periods11:18 AM, 15th September 2020
About A week ago 40
Business leaders are urging the government to make a major shift in pension rules to let retirement savers invest in property.
The Confederation of British Industry (CBI) has suggested the change as part of a raft of ideas aimed at kick-starting the housing market.
Allowing property investors to stake their pension money on homes is a major shift in thinking for the government.
The Labour government had a clause written in to pension legislation allowing the move for the A-day reform in April 2006, but backed out at the last minute over concerns that pension investors would put their own homes into the schemes and derive a massive tax benefit.
Current rules ban residential property in any form from pension investments. They are classified as ‘taxable property’ and any saver who tries to buy a home with pension funds faces drastic penalties as the funds released for the purchase will be considered an unauthorised pension withdrawal.
The CBI wants to unlock pension cash along with resurrecting mortgage indemnity guarantee insurance.
Other longer term recommendations include cutting regulations for housebuilders and easing the planning system.
John Cridland, CBI Director-General, said: “We have to do more to give our young people hope in the future and support their aspirations to be home-owners. While we would not want to see a return to overly-risky lending practices and unsustainable personal debt levels, it is important that we get credit flowing to those who need it most.
“We could reduce the risk of higher loan-to-value mortgages if the government encouraged lenders to take out insurance against the borrower failing to meet payments.
“We can also jump-start the housing market by allowing first-time buyers to boost their deposits by borrowing their own pension savings, and ensuring existing owners who want to move house have more options. It’s also crucial that the government presses ahead with relaxing some planning rules for “change for use”, particularly from commercial to residential.
“Owning a home has been a natural aspiration for generations of Britons since the 1950s, and should not become the preserve of a lucky few. Without a steady stream of first and second-time buyers, the housing market freezes and the whole economy suffers.”
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.