By +Eric Jafari
Following the recent Budget, it's emerged
that Ministers are to consult on whether pension investors could
consider holding residential property in their retirement
Treasury documents revealed the Government will explore with
interested parties whether the conversion of unused space in
commercial properties in high streets and town centres to
residential use could be allowed within pension schemes.
Technically speaking, it is currently possible to hold
property in a self-invested personal pension (SIPP) or small
self-administered scheme (SSAS) but doing so will incur penal tax
charges. It's unlikely, therefore, that any pension scheme
operator would sanction such a move. However, under current
legislation, commercial property held within a pension scheme is
exempt from tax.
The ability to hold residential property, tax-free, within
pension schemes was all set to go ahead some years ago. But
in a last minute change of heart in 2005, Gordon Brown scrapped
it. It left the pensions industry with a massive bill, having
spent millions preparing itself for a flood of enquiries.
In retrospect, it was widely felt the decision to abandon the
proposal was the right one. In addition to concerns about
significant property price inflation, many were worried that
investors might misuse pension funds to purchase homes abroad.
Eight years on, the landscape is very different. Property prices
are languishing, particularly in the commercial sector, with an
ever-increasing number of empty properties falling into
disrepair. As a result, many formerly beautiful and historic
locations throughout the UK are blighted with boarded up premises
and rows of charity shops.
Rather than proposing all forms of residential property could be
held within pension schemes, the focus of the consultation is
limited. The suggestion is that out-of-favour commercial
property in high streets and town centres could be turned into
This initiative has a number of potential benefits. It
could reinvigorate towns and cities in line with recommendations
cited in The Portas Review. It could provide badly needed
additional homes for rent. And it could spark an upward
movement in house prices, to kick-start the market.
Furthermore, it could provide new investment opportunities for
pension schemes, at a time when stock market volatility and a
seemingly endless string of banking scandals has caused many people
to reduce or suspend their pension contributions.
Obviously, the legislation needs to be drafted carefully to
avoid abuse. But as the benefits could be significant, the
consultation process is definitely welcomed.
Keen to add value to the debate by canvassing the opinions of
the widest audience, SIPPclub has just launched a one month
campaign. Already responded are investors, property
professionals, financial advisers, and SIPP and SSAS
operators. The results and analysis of the campaign will be
presented to The Treasury and they will be made available to the
We support the consultation process. To ensure the
Government obtains the views of the largest number of people, we
kindly ask you to give your opinion about this matter.
here to view the survey (a new window will open)
The campaign is being run and co-ordinated by SIPPclub.
24 April 2013
SIPPs,SSAS,Residential Property,Pension Investment