Advisers divided over private property sales to funds

Even with the possibility of capital gains tax (CGT) deferral, IFAs are split as to whether their clients should be considering the option of selling their properties at this time.

The research from Reita, the education and awareness campaign for property investment and REITs, found that over a third (39 per cent) of the professional advisers surveyed said clients should be interested, including 8 per cent who thought they should be very interested.

However, a further 43 per cent of advisers said their clients should not be interested, of which 12 per cent said their clients would definitely not be interested.

This left almost one in five advisers (18 per cent) who just did not know one way or the other.

Plans to encourage pension funds to invest in private rented housing were unveiled last Friday by the Homes and Communities Agency (HCA) in what has been branded as a major lobbying victory for the British Property Federation (BPF).

According to a statement released earlier by the BPF: "Around eight organisations have reportedly been in talks with the HCA over building rented accommodation, and therefore supporting builders during the housing market recovery.

"They are rumoured to include two institutions, two housing associations and one or two big name pension funds. The project could see thousands of new homes built for long term rent."

Meanwhile, the Reita survey also revealed that nearly half (46 per cent) of professional advisers believed that given declining house prices and increasing residential yields, their clients should be interested in buy-to-let.

However, another 45 per cent disagreed, saying clients should steer clear of the sector.

Philip Fry, programme director of Reita, said: "The divided response from professional advisers on the topic of buy-to-let and residential property investment generally is perhaps understandable given the lack of clarity and consensus in recent research reports on the state of the UK housing market.

"Indeed, financial markets in general are mostly viewed with mixed opinion in this current climate of volatility."

Fry continued: "It is interesting that the majority (67 per cent) of our 'expert panel' who we surveyed last month agreed institutional investors should now be 'very' (17 per cent) or 'slightly' (50 per cent) interested in residential property as an asset class.

"The panel did, however, agree that there should be some notes of caution and clarification as the focus on yield and management has to be absolutely right and therefore some qualification of this result is sensible."

Elsewhere in the survey, there seemed to be growing pessimism over commercial property prices among advisers as confidence in the speed of recovery of the commercial property market slowed further, with over a third of advisers (36 per cent) now predicting it will not happen until after 2010.