Sipps, the investment plan which will enable investors to include residential property in a pension which would qualify for tax relief, is being much lauded of late as a good potential option for investment. However, some doubt that second homes will be included in the final legislation which comes into force on April 1.

Chas Roy-Chowdhury, Head of Taxation at the Association of Chartered Certified Accountants (ACCA), believes the residential housing option could still be eliminated from the final draft before the law comes into effect. He is warning that those looking to take early advantage of the scheme, and buy now, may be in for a shock.

?Given concerns expressed about the impact this will have on first time buyers who may be priced out of the market by wealthy investors taking advantage of a significant tax break, the possibility should not be discounted that the loophole will be closed, with second homes being excluded from the final legislation,? he said.

?It seems unlikely that the Government intended to help fund second homes in the UK at the expense of other taxpayers or the Treasury.?

?Our advice to investors is to be prepared for changes which may see the tax relief disappear or a tightening of the rules on which type of investment property may qualify for tax relief.?

However, Nicholas Barnes from Knight Frank told Countrylife.co.uk that he thought the drafted legislation for SIPPS was unlikely to change much: ?What we have is the press painting a picture of lots of wealthy people snapping up houses and pricing first-time buyers out of the market altogether.?

?But we need to look at what is behind the SIPPS in the first place,’ he said. ‘The Government is encouraging people to save for their retirements in different ways. Investing in many things, including commercial property, is already an option with Sipps,? he said. ‘It is just that residential property is now going to be added to the list.’

?I really do not think the market is going to be flooded with these people desperate to buy more property, and the Government would have no reason to remove this clause as a result.?

The scheme is not designed to suit every investor with a bit of money spare anyway, says Mr Barnes. You can only invest a maximum of £215,000, which does not buy much in the property market at the moment. In addition to this, the investor incurs the added worry or expense of maintaining the property, and possibly of selling, while any profit from sales or rent can only be ploughed back into the fund.

This, bearing in mind that owning a second home is not as economical as it once was, since local authorities were given the powers to raise the levels of council tax one pays on a second home to up to 90%, may put some potential takers off the scheme altogether.

?It is not an easy money making scheme, or a tax break,? Mr Barnes points out. ?It will only work for a certain kind of investor.?

Whether the Government decides it has to remove the cause or not, we will not know until coming months. For those thinking of investing in residential property, the word seems to be, at least for now, wait and see.