An MP has told the Treasury that personal pensions should be invested in shared-equity housing to increase the number of homes in the sector.
Andrew George, Liberal Democrat MP for St Ives in Cornwall, called on the ODPM and Treasury to consider the idea in a parliamentary debate on housing last Wednesday.

He said more shared-ownership homes were needed and these could be built if personal pensions were invested in shared-ownership homes.

Individuals will be allowed to invest private pensions in property from 2006. George is concerned that funds would be diverted to second homes, exacerbating the housing crisis. The move follows changes to the law highlighted in last year’s pre-Budget report (HT 19 December 2003, page 15).

George said: “If investment were restricted to portfolios of shared-equity housing, the investor would benefit from the relatively stable and growing value of the property market over time.

“There would be a beneficial social outcome and housing stock would increase for people who need affordable housing.”

He urged ODPM minister Phil Hope to put the idea to Treasury ministers.

But Derek Joseph, director of consultant Hacas Group, said there were problems with the idea.

The main concern was that the homes could not easily be sold if backers wanted to realise their investment, although he added “it could work if there was a fund that owned 500 or so homes”.

Joseph also fears that a fund made purely of shared-equity homes at reduced rents would not bring in the big returns needed to tempt investors.

“You wouldn’t be able to do it on shared ownership because the returns are 2-3%, which is not enough for a pension scheme. But if it was private shared ownership with people paying commercial rents, I don’t see why it couldn’t be done,” he added.

He said returns could also be boosted by mixing investment in shared ownership with other, more lucrative, types of property.

An ODPM spokesperson said: “This needs careful consideration before we can give a full response.”

Source

Housing Today