Note: The chancellor’s announcement today (see U-turn on residential property pensions  Dec 6) makes this story a little ‘dated’ but as the item also contains interesting details about how first-time buyers are looking at Hips, we are leaving it here for you to read:

Would be first-time buyers are worried plans to allow residential property to be held in pensions wrappers from next April will make it even harder for them to buy in a market once more on the rise.

They are, however, looking to the introduction of sellers’ packs in 2007 to provide some sort of relief.

According to Yorkshire Bank research, more than one in three (35%) first-time buyers think they’ll face a greater struggle to get on the property ladder from April 2006 when investors begin to take advantage of new changes to Self Invested Pension Plans (Sipps).

The changes will allow residential property to be put into a pension, free from capital gains tax and usually income tax –meaning more people are likely to buy second house as a buy-to-let property.

Gary Lumby, Yorkshire Bank’s head of retail, said: "With the Royal Institution of Chartered Surveyors reporting property prices are set to pick up - making it even harder for first-time buyers to afford a home - it is no surprise they aren’t welcoming the new Sipp legislation."

"The extension of Sipps to include property could spell good news for the buoyancy of the property market. However, first-time buyers are worried their chances of losing out on properties could be increased as it is likely Sipp investors will be targeting similar properties."

"Investors are likely to hold the upper hand, though, as they will be able to extend their budgets further on buy-to-let properties - safe in the knowledge that they’ll get their money back in the long run."

Seller Packs Could Help

Although Sipps could make it even harder for first-time buyers to get on the property ladder, Yorkshire Bank found one in five (20%) think the introduction of sellers packs in 2007 - which will cover the cost of a survey up-front rather than the buyer having to pay - will be a significant help.

Gary Lumby added: "Sellers packs will cost around £1,000, which the seller will have to pay for. This will save first-time buyers the expense of a survey and searches which, in the long run, will also speed up the buying process as buyers will be informed on every aspect of the property at an early stage."

Speeding up the moving process is the reason why Yorkshire Bank found one in five (21%) sellers would not mind paying the £1,000 survey fee.

Buyers also appear to be looking forward to their introduction with just one in seven (15%) showing hostility towards them - claiming they would not trust the packs because sellers might try hide some negative aspects of a property when the survey is undertaken.

Interesting times

Following market predictions of further Bank of England rate cuts, Yorkshire Bank found just four out of 10 Britons (40%) think rates will go up in the near future - the lowest figure for three years.

Gary Lumby said: "The Bank of England’s decision to cut interest rates appears to have had a positive impact on buyers’ and sellers’ confidence towards the property market. However, this may add to first-time buyers’ list of concerns as rising prices will stretch their already tight budgets even further."

"However, now could be the best time for them to buy. Interest rates are low and the property market in the run up to Christmas is typically quiet. The longer they wait, the greater the likelihood they will be competing with new Sipps investors."