§ 12. Hywel Williams (Caernarfon) (PC)What assessment he has made of the likely change in investment in residential property as a consequence of his proposed changes to (a) self-investment and (b) self-arranged personal pension schemes. [151553]
§ The Financial Secretary to the Treasury (Ruth Kelly)The Government's technical paper, "Simplifying the taxation of pensions: the Government's proposals", proposes allowing pension funds to invest in all types of investments, including residential property. The impact of this change, if introduced, will depend on the extent to which trustees and administrators decide that residential property is a suitable pension scheme investment.
§ Hywel WilliamsWill not any conscientious tax adviser advise investment that yields greater returns—for example, in areas such as my constituency, where house price inflation was 30 per cent. last year? Does the Financial Secretary believe that there will be any 384 regional variation in the rate of investment in housing? What would be the impact of that new money on local housing markets and the ability of first-time buyers to participate?
§ Ruth Kelly:Clearly, the overall impact of the changes will depend on how attractive an investment property is seen to be. Concerns have already been expressed that property will not hold its value over the longer term or perform as well as the equity markets. I know that the hon. Gentleman has a particular concern about second homes being bought in Wales, and I understand that. I have checked this point, and a tax charge would apply if second homes were used for private purposes, so there would be no new incentives to buy second homes in Wales through that channel.