Housing fear over pensions move

Some rural villages have a high proportion of holiday homes

Changes to pensions legislation could have an impact on house prices in rural areas, a Nationalist MSP has warned.

The SNP's economy spokesman Jim Mather attacked plans to allow people to add residential property to their personal pension portfolios.

He said Chancellor Gordon Brown's move could have "unintended consequences".

"It could have a disastrous effect on rural communities in Scotland and squeeze first-time buyers out of the market," he predicted.

The MSP said pensions experts were predicting another property boom next April.

This will undoubtedly dry up the supply of affordable houses available for first-time buyers Jim Mather SNP economy spokesman

"This is when residential property becomes an eligible investment for pension plans, enabling a taxpayer in the 40% bracket to buy a £200,000 property for a net cost of £120,000 after tax," he said.

"Billions of pounds could be invested in buy-to-lets and holiday homes as a result, with some recent surveys suggesting that many higher-rate taxpayers are likely to invest in property this way.

"This will undoubtedly dry up the supply of affordable houses available for first-time buyers, particularly those in rural areas already under financial strain from record fuel costs and the decline of traditional rural industries such as fishing. Rental will become the only option for many people."

He said he was lodging questions with the Scottish Executive on the subject.